Front Burner - How a Canadian-led company became a public enemy in Puerto Rico

Episode Date: January 19, 2023

In 2017, Hurricane Maria ravaged Puerto Rico, and its aging electrical grid. In the hurricane's aftermath, and after decades of neglect and underfunding, the island's public electrical utility, PREPA, went bankrupt. In 2020, the government made the controversial choice to hand control of the grid over to the private sector. They awarded a 15-year contract to a new Canadian-American company, LUMA Energy. And since LUMA Energy took over the electrical grid, the company has been a source of controversy, and faced harsh criticism on the island. There have been weekly protests against LUMA Energy, reggaeton star Bad Bunny has called the company out at concerts, and the governor of Puerto Rico has called on the CEO to resign. Today, CBC senior investigative reporter Jonathon Gatehouse and Front Burner producer Allie Jaynes explain how Luma Energy and its Canadian co-parent became embroiled in controversy and what it all means for Puerto Rico's access to reliable electricity. Update: After this episode was released, five changes were made to the content. We originally reported that a penalty leveled at the Canadian co-parent company ATCO was described as the largest of its kind in Canadian enforcement history. The penalty was among the largest of its kind. We also reported that a company called ASL could have made up to $100 million on a contract. The $100 million figure represents the capital costs of the project and not the profit. Additional information provided by Luma after publication was added at the end of the episode. The headline was changed in the online and podcast version of this story. When published, the headline was "How a Canadian company became a public enemy in Puerto Rico." The headline is now, "How a Canadian-led company became a public enemy in Puerto Rico," to better reflect the leadership of the company. Two sentences were altered following the receipt of additional information provided by LUMA Energy, after publication, that specified when a private firm was hired to make electrical repairs at Escuela Rafael Rivera Otero, and by whom.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Jamie Poisson. Today, I'm going to hand over the reins to our producer, Ali Jane. She's been working with two journalists and CBC's investigative unit on a story about the controversial private company in charge of Puerto Rico's electrical grid and its connections to Canada. It's a really

great story. I hope you guys enjoy it. In 2017, Puerto Rico's public electrical utility went bankrupt. The utility, called PREPA, had been neglected and underfunded for years. Then, just a couple months later, Hurricane Maria slammed into the island. It was catastrophic, and the electrical grid got rocked. Maria is the first Category 4 to hit there in nearly a century. 150 mile an hour winds ripping buildings apart, knocking out power everywhere. All of the electricity is out tonight. Without electricity, the mosquitoes, the heat, we're going to help.

Nearly one year after Hurricane Maria slammed Puerto Rico, a staggering new number, 2,975 people, lost their lives due to Maria. The power out for months, medicine in short supply... So in 2020, the government made the controversial choice to hand control of the grid over to the private sector. They awarded a $1.5 billion, 15-year contract to a new Canadian-American company, Luma Energy. Half owned by Houston's Qantas Services, half by Calgary-based Atco. Half owned by Houston's Qantas Services, half by Calgary-based ATCO. Integrity. Agility. Caring. Collaboration.

These aren't just ATCO's corporate values. They're the values that convinced Puerto Rico to award us the opportunity to modernize and operate their electrical system after the devastating hurricanes of 2017. The CEO of Luma is a Canadian who worked at ATCO for decades, Wayne Stensby. The company described the deal as a historic win for ATCO that would deliver lasting benefits to the people of Puerto Rico. Our plan will employ and empower local communities and ultimately support the long-term prosperity of Puerto Rico. It all starts with a new company, Luma, that will bring ATCO's expertise and community-focused solutions to the island.

From the prairies to Puerto Rico and everywhere in between, you can always count on us. Luma took control of the grid in June 2021. And since then, let's just say that things have been a little rocky. Take, for example, when armed deputies in bulletproof vests arrived at Luma's headquarters in November 2021. They had a warrant for Stensby's arrest. The warrant was issued after Luma hadn't complied with a court order to hand over documents to Puerto Rico's House of Representatives. Lawmakers were investigating Luma's use of public money.

Police didn't end up finding Stensby that day, and the warrant was eventually called off, after Stensby handed over a memory drive with the documents. But mere months into Luma's control of the grid, this didn't seem like a great sign. Take the time last summer, when reggaeton star Bad Bunny held a concert in the capital, San Juan, and said, Luma pal carajo. Luma, go to hell. Just listen to the intensity of these cheers. I was actually in Puerto Rico at the start of September visiting friends, and I was struck by how angry people were at this company. I heard it from my friends. I saw it in graffiti all over the place. Fuera Luma. Luma out.

And then on September 18th, another hurricane, Fiona, hit the island. Hurricane Fiona is slamming the island with 85 mile per hour sustained winds, nearly five years to the day of Hurricane Maria. The entire island losing all electricity. More than three million residents face a dark and dangerous night ahead. And that's when the criticism of Loomer really went into hyperdrive. Puerto Ricans were told that once a private company was in charge, the service would be better.

Fourteen people were arrested after lying down in front of the governor's mansion. They were protesting the government's contract with a U.S.-Canadian company that's now in charge of distributing energy to Puerto Ricans. The group says the contract with Luma has led to a war... I started looking into Luma and their Canadian co-parent Atco around that time. And then I found out that two journalists in CBC's investigative unit, Jonathan Gatehouse and Sildan Gilchrist, were doing the same. So today, Jonathan and I are going to tell you the story of how this Canadian-American company ended up at the center of a fight over keeping the lights on in Puerto Rico. We'll first hear from Jonathan about

what they saw on a trip to the island last month. Then I'm going to talk about a previous scandal involving ATCO in Alberta and what some people worry that could mean for Puerto Rico. Hi Jonathan, thanks so much for coming on FrontBurner. Oh, you're very welcome. So for starters, just really broadly, what was it about Hurricane Fiona that increased the criticism of Luma so much? Well, I mean, in really broad terms, it was the blackout. I mean, this was a Category 1 storm. It started as a tropical storm, became a Category 1 storm, kind of skirted the southern coast of the island, came ashore for a little bit before heading north to eastern Canada where it caused so much damage.

But at this point, it wasn't that big a storm. And so there was a lot of consternation about this because what happened was the grid went down and it stayed down. Now, for a lot of people, you know, it still took more than a week, up to 12 days to get their power back. But then there were pockets of the island, like a community. We visited a city on the northwest coast, Aguadilla, where it took up to 45 days for everybody to be reconnected again. Wow. Wow. Yeah.

And I mean, like you're saying, this storm was not like Hurricane Maria in 2017, which I think major, major hurricane. Yeah, exactly. I mean, and in that case, it took the better part of a year for a lot of people to get their power back. So people have an understanding of what these storms can do, but, you know, they looked out their windows, they lived through this storm and they said, you know, this isn't that big a deal. Why is it taking so long?

Why is the grid down again? Right. So let's get into, I mean, some of the details of what you and your producer, Sylvain Gilchrist, saw when you visited the island last month. I would like to start at a school called Rafael Rivera Otero that you visited. It's about 15 minutes from Luma headquarters, right smack in the middle of San Juan. What did you see there? Right. I mean, this is an elementary school in a working class neighborhood in San Juan, as you said.

Just a short drive from Luma's corporate headquarters. And when we visited in December, they had been without electricity for two months ever since Fiona. So the rest of the power came back on, but not at the school. And as a consequence, there was some sort of dispute with Luma about who was going to pay for these repairs, who was going to do the repairs. And the school was being dismissed every day at 1130. And parents had to come, interrupt their work days, pick up their kids. And the kids were only getting three and a half hours a day of instruction, which was really disruptive. Of course, after COVID, after hurricanes, after all the stuff that's gone on in Puerto Rico and elsewhere.

And what people were being told was that there was no fix, that the only options were to have this half school day or shut the school down and move the kids to an entirely different school. Oh, my gosh. I mean, you talk to some of the parents outside the school. What did they tell you? They were livid, as you might imagine, right? I mean, you know, their whole lives have been turned upside down for two months. Their kids were getting half an education at best. And they couldn't understand why Luma couldn't come and fix the power. We spoke to one mother and she told us in Spanish how difficult it's been, how the kids need their education. And she couldn't understand why the other schools were all up and running, but not theirs. And she talked about how difficult it was in terms of being able to work, having to interrupt her day and come there to pick up her child.

We also spoke to another mother who said that, you know, told us that she has a job as a house cleaner. told us that she has a job as a house cleaner. And how difficult it was because she has to go to work and start cleaning a house and then leave and come and pick up her kid and then bring the kid back with her to work while she finishes her day. Oh my gosh. Wow. So, I mean, were you able to see what was going on inside the school? We asked to interview, to shoot inside the school for our TV piece

and to interview the principal, and the board denied our request. And then the next day, the lights were back on. No way. So, like, they have power at the school now, as far as you know. As far as we know. Wow, that's amazing. You also visited a hospital. How have they been impacted since Fiona?

Right. This was in a mountain community called Castaner, and it serves an area of about 12,000 people. So small hospital, a nice little hospital, actually, but only 12 beds and has an emergency ward and a bunch of other things. But, you know, power has been a long-term problem for this hospital. They were without power for the better part of a year after Maria. And those problems have continued ever since. After Fiona, they had to run on a generator for more than a month. There's a huge industrial-sized generator in the parking lot. And in fact, in this beautiful,

lush little green town, that's all you really hear is the sound of generators because everybody has one. Power is so unreliable there. We talked with a hospital administrator, a woman named Robin Russell-O'Rama, and she talked a bit about how difficult the situation was and in fact, how there was no power on the day we visited well right now we haven't been told why we don't have power today and how long what time did the power go off early in the morning early in the morning it was it was around six o'clock in the morning and we're we're at the end of the working day it's almost five o'clock at night and you still don't have power no not not now. It happens up here a lot.

That's why we've tried to get prepared. So, I mean, having this intermittent power that goes on and off, on and off, what does that mean for how the hospital is able to run? Well, with a generator, the hospital can run and do all the things it normally would. But the problem is when the power goes on and off. This is something we've heard from other people that since Luma took over, there's been an issue with voltage surges. And in particular, at this hospital, it's an issue with the equipment. They've had a lot of expensive equipment damaged by these voltage surges. The administrator, Robin Russell-Rama,

told us that there were problems with imaging machines, problems with machines in the lab. And each of these machines, they cost $10,000, $13,000, $15,000 US. And they've had to be entirely replaced out of their normally tight budget because of these surges. Wow. Basically, the power comes back on and the machines get fried. Absolutely. That's the thing.

And this happens not just in hospitals. This is happening in people's homes. Their home appliances are getting fried. Absolutely. That's the thing. And this happens not just in hospitals. This is happening in people's homes. Their home appliances are getting fried, their fridges, their stoves, their wet washers and dryers because of these voltage surges. Oh my gosh. God, that is awful to have to live with that. I mean, especially like this is a territory with like very low income. I think that the median household income is something like $22,000. So the idea of like you lose your fridge, you lose appliances, like you can't necessarily just go and buy another one. It's a really big deal. You're correct. I mean, it is.

It's $22,000, the median household income. And the comparison is, you know, on the mainland in the United States, it's over $70,000, the median household income for a family. So that gives you a sense of, you know of how poor this place is to begin with. And as you say, when you're faced with a major appliance that you need to go out and buy, it's trouble. I mean, you know, speaking of what I guess, you know, regular people are experiencing, another person you spoke to was the mayor of this city that you were talking about earlier, Aguadilla. And you did kind of a walk around with him. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem.

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create a financial vision together. To listen to this podcast, just search, Money for Couples. I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Can you tell me a little bit about what you saw there? Yeah. This mayor is a guy named Julio Rodan. He's a relatively new mayor, and Fiona was one of his first big tests as well. He took us around to see some of these neighborhoods where, as I'd mentioned, it had been 45 days that they were without power after the storm. And what Julio told us is that, you know, that he had major difficulties with Luma in the aftermath of Fiona. He was on the phone almost constantly trying to get these crews to come out to repair the damage, to deal with the fallen trees, to reattach the wires that had been knocked down and start this cleanup so that people could get power again.

But, you know, after 10, 12 days of begging on the phone and no one showing up, he got really frustrated and he took matters into his own hands. Luma don't do nothing in Aguadilla, in Puerto Rico when this happened. A lot of mayor had to do it by himself. In Puerto Rico, when this happened, a lot of mayor had to do it by himself. He hired a bunch of former workers who used to be employed by the old public utility that Luma has replaced, a body called Prepa. And they created these teams. He called them shark teams. And they went around town and they started doing the work that they were waiting for Luma to come and do. We take care of everything.

Yeah. Yeah, we finish everything in Aguadadilla we fix every problem that fiona do before luma could ever show up yeah because they came okay and so my understanding is that that ended up kind of creating let's say some tension with luma uh how how does he say that Luma responded? Yeah, what he told us was that when he told Luma that he was going to do this, Luma said that they were going to have him arrested. I say, Luma, they said they're going to arrest me.

And then I say, I'm going to send you my pin location and you can't arrest me right now. In fact, he made it a bit of a campaign thing. He ended up creating t-shirts with this on, you know, come and arrest me on them. I love my city. I love my people. And no matter what I have to do, my people have to be okay, you know? But that's not the only mayor who has a similar story.

There have been a number of mayors in the aftermath of Fiona who, from the hard-to-state communities, who went to the press to say that they'd had a similar experience. I mean, what does Luma say about that? Well, Luma disputes Roldan's version of the events that happened after it, but they do admit that they warned mayors off of creating these brigades to do the work. And they say that that was an issue of safety, that line workers need to be certified every year and that these former paper workers no longer have that certification. And so that it was a matter of they needed to protect their own employees from possible danger that these lines had been reattached incorrectly. But one of the things

we did ask Luma about was, you know, aren't there situations where the safety of the community trumps the potential danger for workers? And they said that their hands are tied, that these are standards that must be respected. And I mean, like to be clear, we're talking about former long-term workers who were doing this job for the Puerto Rican government for years. Oh, yeah. I mean, these are not amateurs. These are not people that didn't know what they were doing. There are people in many cases that had worked for PREPA, the former public utility, for decades. So they knew their way around the power system, perhaps even better than a lot of

the Luma employees who have come from the continental United States and don't necessarily know the ins and outs of this old and kind of creaky grid. So, I mean, speaking about those paper workers, you spoke to one of them. I think his name is Robert Garcia Cooper. What's his story? Well, Robert Garcia Cooper is a guy who did work for PREPA for 20 years.

He was a metering specialist. He's actually gone on and he's a master electrician. He's been working on his masters about microgrids and solar power. Seems like the sort of guy who has a lot of valuable knowledge about how the system

in Puerto Rico works. But he got caught up in the same thing that thousands of his former colleagues did, which was that PREPA went bankrupt, like the Puerto Rico government, trailing, I think, $9 billion in debt. There was a restructuring. As part of that restructuring, LUuma was brought in to run the grid and manage the grid and oversee these improvements. Now, part of the condition of Luma taking over was that they had to give first dibs for these jobs to former PREPA workers. But the conditions,

the contracts that were offered weren't quite the same. And in Garcia Cooper's case, and like a lot of his colleagues, he said that basically he was going to lose all of his seniority and that his benefits were going to be a lot more expensive out of pocket working for Luma than they were for Prepa. So effectively, it seemed like a salary cut. The choices were you either accept starting from scratch with Luma Energy or you either accept going to another agency. So those were the two options or resign. He didn't want to take it. He was in the same situation as a lot of his former colleagues. They opted to stay working with the Puerto Rican government

and they were transferred to other agencies. In Garcia Cooper's case, he went off to an agency, was told that he was going to be working as a master electrician, got there, found out that they contracted out that work and he ended up as a janitor. Wow. Okay. And so, I mean, how many people are in that kind of situation? Like how sort of stripped down is their workforce compared to what was there before? So Prepa had almost 6,000 employees when it went bankrupt. About 1,200 of them ended up working for Luma. And Luma's workforce is about two-thirds the size that Prepa's was. So, you know, what that means in real terms is there's about 3,000 plus former highly qualified Prepa employees who no longer work for the utility. So we have moderately trained people, lesser number of people,

trying to uphold a grid that was upheld with over 3,000 other people that were displaced. I mean, are there concerns about what that means for the kind of service that Luma is able to provide? Yeah. I mean, a lot of the criticism that's being leveled at Luma is about these former workers. You know, people say that, hey, the old utility prep used to have a lot more people doing these jobs, right? That there are more people available to fix the lines when a storm comes through and they went down. Fiona revealed how poorly managed our electrical system is. It reveals that they either have little personnel and the personnel that they have does not have the experience. And again, this whole notion of, you know, it's a really old and creaky grid and you've

got to give Luma some slack in this sense. You know, they's a really old and creaky grid and you've got to give Luma some slack in this sense. You know, they inherited a really bad system with lots and lots of problems. But, you know, as people point out, maybe it would have been wiser to have more of these Prepa employees who know the ins and outs and how to sort of coax the system along, how to keep it running while you're trying to do all these repairs and improvements. The criticism of this company obviously didn't start with Hurricane Fiona. I mean, you know, like I was saying in the intro, I saw a lot of anger directed at Luma when I was there, which was just before the hurricane.

And definitely what I heard a lot about was basically that by some measures, apparently the outages had actually gotten longer since Luma took over. times, which is a big deal because as I understand it, Puerto Ricans now pay more for electricity than any other U.S. territory except Hawaii, even though like as we were talking about earlier, I mean, the median household income is a fraction of what it is in the U.S. It's only $22,000. So like this is obviously a really big expense for people. So, I mean, what does the company say about those kind of complaints? Well, you know, what Luma will say to you is that they don't set the rates. And that's true. They don't. The rates are a function of the generating system.

The generating system is still being run by PREPA, though just the other day the Puerto Rican government announced its intention to privatize the generating system, which will be a new and very controversial thing on the island. But at the end of the day, even if Luma doesn't set these rates, which are affected by the cost of fuel for the most part because the generating stations in Puerto Rico run on oil or natural gas, but it's Luma's name on the bill. They're the interface with the customers. And so the customers are getting these bills and they see that they've skyrocketed over the course of the last 18 months. And, you know, they're fixating their anger on the name at the top of the bill, Luma Energy. I mean, tell me more about your interviews with Luma employees. How do they respond to the other kinds of complaints that we've been talking about? You know, I think I wouldn't say that they're defensive, but they will certainly defend the company. They say that, you know, that they've inherited these problems and they're correct. A lot of these problems are inherited.

They say that people need to be a little more patient, that 30 years of mismanagement, of underinvestment, it's not going to be corrected in 18 months or even two years. They point out that Luma, for example, has repaired 10,000 streetlights, many of which were broken ever since Maria, that they've replaced 3,800 poles so far. And, you know, they point out that money is coming. It's going to start flowing. Now, the U.S. government, FEMA, the disaster recovery branch of the U.S. government has already earmarked $12 billion to repair the grid and upgrade power in Puerto Rico. And soon, they say, people will start seeing the effects of that. But, you know, it's a lot of work that remains to be done. I know you requested an interview with the CEO, Wayne Stensby. What did the company say about that? Mr. Stensby was not made available to us. Instead, the company gave us access to four of his deputies. These are people that are in charge of things like regulatory affairs and customer service and some of the technical aspects of it.

And we had a long sit down with them. We spent an hour talking with them one morning when we were in San Juan. And as I say, they defended the company's action. They say they're proud to work for this company, that it is a company that employs 3,000 Puerto Ricans, all of whom have a stake in making things better. But they acknowledge that it's taking longer than they would like and certainly longer than Puerto Ricans would like. There were pretty serious calls for Luma's contract to not be renewed this past November.

And also for Stensby to step down as the CEO. I mean, even Puerto Rico's governor, Pedro Pierluisi, has called for him to resign. But obviously neither of those things has happened. What does the company say about that? The company says that, you know, it's not just about the CEO. It's about all of these other employees, that Luma is a collection of these over 3,000 people. And that Stensby is going to remain in place. We also asked Atco, the parent company, the Canadian parent company, and they said that they have full confidence in Wayne Stensby and his team.

You know, it's obviously an uncomfortable situation. And you mentioned FEMA contracts a minute ago. Tell me more about that, because my understanding is that there are some concerns from Luma's critics about how Luma's parent companies could stand to benefit from those. Yeah, that's right. I mean, listen, at the end of the day, this is a vast amount of money, what it's going to take to rebuild the system in Puerto Rico and create a modern electrical grid. You know, the estimates right now are 20 billion US. That's 26 billion Canadian. And you've got two parent companies, Atco out of Calgary and Qantas Services out of

Houston that have expertise, that have the workforce that might well be the kind of company that could bid on this. And, you know, Luma's response is right now that those companies, their parent companies aren't allowed to bid on this. Well, we know that those companies actually do have interest in bidding. I mean, Atco said as much to us the other day when we reached out to them that there could be a project down the line where their expertise might be useful and they might be interested in bidding on it. Qantas Services has said the same to its investors. Now, Luma sets the rules about these contracts.

It administers them. It writes the proposals for the bids. And while right now, ATCO and Qantas Services can't bid, Luma writes the rules so it could change the rules. Okay, so I'm going to take it from here now and talk about a case involving ATCO back in Canada. Again, this is the Alberta-based company that co-owns Luma. And how that case has raised some questions for critics of Luma about what that could mean for Puerto Rico. So, Jonathan, thank you so much for this. It was fascinating. And I guess we'll have to see what happens from here for Puerto Rico. So, Jonathan, thank you so much for this. It was fascinating. And I guess we'll have to see what happens from here. My pleasure.

So last year, ATCO Electric, a subsidiary of ATCO, which supplies electricity to large parts of Alberta, was fined $31 million by the Alberta Utilities Commission. They said in their decision that the company had, quote, embarked upon a campaign of concealment and deception. And they accused them of, quote, self-dealing. This is among the largest fines of its kind in Canada. I talked to a lawyer named Jim Watchwich in Edmonton who represents a watchdog group called the Consumers Coalition of Alberta. They were involved in this case as what's known as an intervener. This kind of floored me to be candid. A company with a reputation like Atco would have had this happen within its ranks. This really wasn't something I would have ever fathomed.

Jim called this a kind of watershed event because it was the first time the lid had really been blown off a case like this. And instead of letting them package an answer, we got to see after the fact the real-time communications between members of the ATCO employees. I've read through the regulators' enforcement documents on this, so I'm going to break down what they said. In 2017, ATCO Electric was building a new transmission line in Alberta,

and they had to subcontract out some work. They're publicly regulated, so it had to be fair. Open bidding, market price, lowest qualified bidder wins. They followed the rules. But then they canceled that bidding process and awarded a sole source contract at millions of dollars above market rates to a company owned by the Simp First Nation. The thing to understand here is that this transmission line and another project,

the Trans Mountain Pipeline Expansion, both ran through Simp Land. And the Simp already had an agreement with a different ATCO company called ASL to build some work camps for the Trans Mountain project. Documents showed that those work camp contracts were worth $80 to $100 million. According to the enforcement documents, ASL thought that the Trans Mountain work camp contracts could be in jeopardy, unless this separate ATCO company, ATCO Electric, awarded Simp Resources that contract for work on the electrical transmission line. So that's what they did. ATCO Electric overpaid a contractor so that its sister company could keep a lucrative deal.

And there was some trading of favors within the corporate relationship between the ATCO companies and this outside provider. Problem is, you can't do this. Authorities say this amounted to self-dealing and that it broke a number of rules. And documents show that ATCO Electric knew this wasn't allowed and that they took a number of steps to conceal what they had done from regulators. and that they took a number of steps to conceal what they had done from regulators. Then, a couple years later, they tried to recoup the cost of overpaying for that contract by passing those costs on to their electrical customers. That's when an employee blew the whistle, and this all came to light.

Atco Electric ended up being fined $31 million. Jim says their reputation has suffered too. I think the reputational damage is huge. Now forever, for a long time, we will be asking ourselves, is the information we're getting correct? In an email, an Atco spokesperson told us that the company has taken full accountability for this issue and that they've acknowledged that they made has taken full accountability for this issue, and that they've acknowledged that they made regulatory and administrative errors in this case.

He also noted that they've taken actions to improve and learn from this issue, and have committed to, quote, strengthen controls within our businesses to ensure we are meeting the highest standards. But why am I telling you all of this? Well, it comes back to Luma in a couple ways. Firstly, Luma CEO Wayne Stensby. According to the enforcement decision, he held the most senior position at Atco Electric when this deal, this so-called trading of favors, went down.

To be extremely clear, he was no longer there when Atco Electric tried to pass off these extra costs to customers. But according to the documents, he was directly involved in the discussions that led to approving that sole source contract. And he was still at the company when employees took active steps to hide what they had done from regulators. I also spoke to one critic of Luma who says this should raise questions about how ACCO and Luma might deal with those FEMA contracts if they do end up bidding on them. It's a parallel to this, an example, an active example

of maybe something that we are concerned about in Puerto Rico. Tom Zanzillo is finance director with the Institute for Energy Economics and Financial Analysis. They've extensively studied Puerto Rico's power grid. I shared the documents from the Alberta Utilities Commission's enforcement decision with Tom to get his take on them. Seeing this ethical violation in Canada, those officials in Puerto Rico should be calling ADCO on the carpet and asking them to explain what is going on and what went on and what was their defense and who was involved, particularly if the people involved in that, those transactions are the same as those providing service and a lead role in Puerto Rico.

If they are the same people, that really raises a lot of questions. And they should be asked to call to account and why we should continue to trust them. Unfortunately in Puerto Rico, these things just go by the by. And that's probably what will happen. So while it is a clear red flag, it's a red flag that the regulators in Puerto Rico will probably turn a blind eye to. We asked ATCO for a response to Tom's comments. They wrote, quote, we would direct interested parties to ATCO's numerous examples of world-class utility and energy infrastructure operations over several decades, paired with our well-known, community-focused approach in the regions we serve.

After we published this story, we heard from Luma again, who wanted to underline a few points. On the topic of the company's response to Hurricane Fiona, Luma says it acted swiftly, dispatching 3,000 workers who restored service to 90% of its customers in 12 days. Regarding the dispute over the power outage at the school, Escuela Rafael Rivera Otero, Luma says that the issues were never its responsibility and had nothing to do with the grid. Luma denies threatening to arrest mayors who set up their own work crews to restore power. And finally, with regards to who can and who can't bid on FEMA contracts, while Luma had told CBC it did play a role in writing the procurement manual that covers bidding,

the company underlines that there are also government rules and regulations that must be respected in that process. That's it for today. I'm Allie Janes. Thanks for listening to FrontBurner.