McKinsey & Co., the consulting powerhouse that advises not just Puerto Rico’s government but also the primary contractors and vendors for the island territory’s energy system, is facing scrutiny in the wake of the power grid’s continued dysfunction, WSJ Pro Bankruptcy reported. Since McKinsey was hired as the top consultant to Puerto Rico’s financial-oversight board, which oversees public spending, the firm has helped officials shape efforts to overhaul the territory’s electricity system through a privatization process that resulted in a venture backed by one of McKinsey’s clients winning the lucrative contract to operate the grid. Puerto Rico now faces a major reconstruction of its energy infrastructure after last month’s Hurricane Fiona, another challenge for residents who have endured years of costly, unreliable electricity service. Even before Fiona hit the island, hundreds of demonstrators gathered in the streets of Old San Juan in recent months to protest the frequent blackouts and high costs plaguing consumers. Much of the public anger has centered on Luma Energy LLC, a joint venture half-owned by McKinsey client Quanta Services Inc. that in 2020 won the $1.5 billion grid operation contract. Blackouts in some parts of Puerto Rico have increased since Luma took on the contract, Puerto Rican residents said. In August, the Puerto Rico Energy Bureau found a key metric on reliability “indicates that Luma has yet to realize improvements in reliability in terms of outage durations.” On other metrics, such as customer response times and workplace accidents, the data show improvements under Luma, according to regulatory data.
