Puerto Rico util­ity ig­nored ad­vice on deal

Lawyers ad­vised against $300M con­tract.

The Citizens' Voice - - Nation & World - BY MATTHEW DALY

WASH­ING­TON — Puerto Rico’s bank­rupt elec­tric util­ity ig­nored ad­vice from its own lawyers be­fore sign­ing an ex­panded con­tract worth $300 mil­lion 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 that 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 Rico 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.

The au­thor­ity moved to can­cel the con­tract Oct. 29 at the urg­ing of Puerto Rico Gov. Ri­cardo Ros­sello, al­though White­fish re­mains in Puerto Rico and is ex­pected to con­tinue work through Nov. 30. The com­pany has been paid more than $10 mil­lion so far.

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.

Rep. Rob Bishop, R-Utah, 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. More than 50 per­cent of the is­land re­mains with­out power nearly two months later.

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