ICSE takes LUMA liability exemption fight to Supreme Court

The Institute for Competitiveness and Economic Sustainability has asked the Puerto Rico Supreme Court to strike down an exemption shielding LUMA Energy from consumer damage claims, arguing the clause is unconstitutional and was improperly granted by the Puerto Rico Energy Bureau.

The organization filed a brief in support of the Department of Consumer Affairs, which in 2025 sued LUMA to challenge the exemption contained in its public-private partnership contract. ICSE, which first contested the clause in 2021, joined as amicus curiae to provide legal analysis alongside the Legislative Assembly.

According to ICSE, only the Legislature, with the governor’s signature, has the authority to grant such an exemption. The group stated that LUMA’s legal defense rests on the Energy Bureau’s administrative powers, an argument ICSE rejected.

“LUMA cannot identify a single case in our jurisdiction or administrative action that supports such a position,” the brief said.

ICSE called LUMA’s legal strategy a diversion.

“LUMA’s effort to complicate the controversy is merely a smoke screen,” the group stated.

The core issue, ICSE argued, is whether the Energy Bureau has the power to create an exemption from liability for damages due to fault or negligence, a power the group says is established exclusively by Puerto Rico’s Civil Code.

LUMA has also pointed to a liability exemption for the Puerto Rico Electric Power Authority dating back to 2011. ICSE countered that this was not an exemption but an interpretation clarifying when negligence applies.

That interpretation, ICSE explained, excluded cases involving force majeure, such as hurricanes, or service interruptions from scheduled repair and maintenance work. “One of the essential elements for liability — negligence — is simply not present,” the brief said.

ICSE claimed the bureau’s decision reversed more than a century of Supreme Court jurisprudence on damages and liability for entities providing electric service.

“The exemption granted to LUMA by the Energy Bureau through administrative fiat nullified over 100 years of jurisprudence developed by this Supreme Court regarding damages and liability,” the brief said.

LUMA has further argued that the bureau can limit liability as part of its rate-setting authority. ICSE rejected that claim, stating that “there is no law in Puerto Rico, nor a single case, that indicates that a rate review process can alter the fault-negligence-causation-damage relationship.”

The group added that its position is not to impose liability when LUMA is not negligent, but to ensure accountability when negligence is present.

ICSE concluded that the exemption shielding LUMA must be declared illegal, reiterating its stance that only legislative action — not an administrative order — can limit consumer rights under Puerto Rico’s Civil Code.

Founded as a nonprofit, ICSE’s mission is to research and advocate for reforms that promote sustainable development and socioeconomic well-being in Puerto Rico through education, alliances, and public-interest initiatives with measurable impact.