Puerto Rico’s governor seeks to end deal with small Montana grid repair company [updated]
On Sunday, Puerto Rico’s governor Ricardo Rosselló demanded that the state-owned utility end its $300 million grid-repair deal with a small, Montana-based energy company called Whitefish Energy, amid intense scrutiny of the deal.
Whitefish Energy's $300 million deal to repair Puerto Rico’s grid was made public in the aftermath of Hurricane Maria. The deal quickly drew scrutiny after the Puerto Rico Electric Power Authority (PREPA) did not seek mutual aid—that is, offers from other US utilities to come help out—shortly after the hurricane struck. The choice also caused concern as Whitefish had only been in operation since 2015 and it employed just two full-time employees at the time the hurricane struck (the company hires contractors to complete projects). Furthermore, Whitefish is based in the same town that Interior Secretary Ryan Zinke is from, and one of its financial backers, HBC Investments, has contributed thousands of dollars to Republican candidates, including Trump, according to the Associated Press.
PREPA's director, Ricardo Ramos, said that the power company reviewed “five or six” offers before deciding to go with Whitefish. Ramos claimed this was because Whitefish offered rates similar to other companies' offers, but it didn’t require a downpayment, which was a boon for the already-bankrupt power company.
Although both PREPA and Whitefish both say nothing more than luck facilitated their deal, the House Natural Resources committee started asking about the deal earlier this week. On Thursday, details of the contract (PDF) started emerging. Notably, the contract added, "PREPA hereby represents and warrants that FEMA [the Federal Emergency Management Agency] has reviewed and approved of this Contract," but on Thursday FEMA said such language was inaccurate and it had not approved the deal after all. FEMA also expressed concerns that the contract included unreasonable prices. As the AP reports:
…the deal included $20,277 an hour for a heavy lift Chinook helicopter, $650 an hour for a large crane truck, $322 an hour for a foreman of a power line crew, $319 an hour for a journeyman lineman and $286 an hour for a mechanic. Each worker also gets a daily allowance of $80 for food, $332 for a hotel room and $1,000 for each flight to or from the mainland.
On Friday, more new details emerged about a clause in the PREPA/ Whitefish contract that precluded the FEMA Administrator, the Commonwealth of Puerto Rico, PREPA, and the Comptroller of the United States from exercising oversight with respect to the cost or profit elements of Whitefish's labor rates. Democratic Sens. Maria Cantwell and Ron Wyden subsequently requested an investigation of the deal from the Government Accountability Office.
Governor Rosselló reportedly said on Sunday that his demand to cancel the Whitefish contract came from the fact that “There cannot be any kind of distraction that alters the commitment to restore electrical power as soon as possible in Puerto Rico.” At the same time, the governor instructed PREPA to work with the Florida and New York state governments to get Puerto Rico’s grid back up as quickly as possible. Rosselló appointed an “an outside coordinator to oversee the power company's purchase and contracting division,” according to the AP, and he noted that PREPA had paid $8 million to Whitefish as of Sunday.
Also as of Sunday, about 70 percent of the grid-connected island is still without power.
Update: On Sunday afternoon Whitefish Energy issued a statement saying, "We are very disappointed in the decision by Governor Rosselló to ask PREPA to cancel the contract which led to PREPA's announcement this afternoon. The decision will only delay what the people of Puerto Rico want and deserve—to have the power restored quickly in the same manner their fellow citizens on the mainland experience after a natural disaster. We will certainly finish any work that PREPA wants us to complete and stand by our commitments knowing that we made an important contribution to the restoration of the power grid since our arrival on the island on October 2."