Advertisement

Congressman slams Puerto Rico utility for 'competence deficit' in hurricane contract

Congressman slams Puerto Rico utility for 'competence deficit' in hurricane contract
From CBC - November 14, 2017

Puerto Rico's bankrupt electric utility ignored advice from its own lawyers before signing an expanded contract worth $300 million US with a tiny Montana company to repair its damaged power grid, newly released documents show.

The law firm, Greenberg Traurig, recommended that the state-run power authority be allowed to terminate the deal within 10 days for any breach by the company, Whitefish Energy Holdings. The firm also recommended that the utility be allowed to seek damages from Whitefish and the company be required to hold a bond for such a large contract, the documents show.

Those recommendations and others were ignored as the power authority expanded a no-bid deal with Whitefish, which is based in Interior Secretary Ryan Zinke's hometown and had just two employees when Hurricane Maria hit in September.

The Puerto Rican Electric Power Authority, also known as PREPA, signed an expanded contract with Whitefish on Oct. 17 without making changes recommended by the law firm. The contract built on an earlier agreement PREPA and Whitefish signed days after the hurricane hit on Sept. 20.

"In retrospect, there are some steps in our contracting process with Whitefish that we could have done better." - Ricardo Ramos of PREPA

The Oct. 17 contract raised the total payments allowed to Whitefish to $300 million, including linemen hired at a rate of more than $300 per hour.

The documents were released by the House Natural Resources Committee ahead of a hearing Tuesday.

Representative Rob Bishop, a Republican from Utah who is the panel's chairman, said "a legacy of dysfunction" at PREPA has created "a competence deficit" that threatens Puerto Rico's ability to improve conditions for its 3.4 million citizens.

"Confidence in the utility's ability to manage contracts and time-sensitive disaster related infrastructure work is long gone," Bishop said.

The utility's executive director acknowledged mistakes Tuesday as the utility sought immediate help in the aftermath of the storm, which destroyed the island's power grid. Nearly 60 per cent of the island remains without power nearly two months later.

"In retrospect, there are some steps in our contracting process with Whitefish that we could have done better," Ricardo Ramos told the Senate energy and natural resources committee. "I chose to contract with Whitefish because my priority was securing the immediate assistance that we needed to begin restoring power as quickly as possible to our most critical customers."

Whitefish accused of price gouging

Whitefish was one of only two companies that offered immediate services, Ramos said. The other company required a guaranteed payment of $25 millionmoney the bankrupt utility did not have, he said.

Advertisement

Continue reading at CBC »