Puerto Rico to scrap power deal
$300-million contract with a tiny Montana company created ‘an enormous distraction.’
SAN JUAN, Puerto Rico — The head of Puerto Rico’s power company said Sunday the agency will cancel its $300-million contract with Whitefish Energy Holdings amid increased scrutiny of the tiny Montana company’s role in restoring the island’s power system after Hurricane Maria.
The announcement by Ricardo Ramos came hours after Gov. Ricardo Rossello urged the utility to scrap the deal for Whitefish’s help in rebuilding the electrical system.
“It’s an enormous distraction,” Ramos said of the controversy over the contract. “This was negatively impacting the work we’re already doing.”
The current work by Whitefish teams will not be affected by the cancellation and that work will be completed in November, Ramos said. He said the cancellation will delay pending work by 10 to 12 weeks if no alternatives are found.
Ramos said he had not talked with Whitefish executives about his announcement. “A lawsuit could be forthcoming,” he warned.
Whitefish spokesman Chris Chiames said that the company was “very disappointed” in the governor’s decision and that it would only delay efforts to restore power.
He said Whitefish brought 350 workers to Puerto Rico in less than a month and it expected to have 500 more by this week. Chiames said the company completed crucial work, including a project that will soon lead to half a million people in San Juan getting power.
“We will certainly finish any work that [the power company] wants us to complete and stand by our commitments,” he said.
About 70% of the U.S. territory remains without power more than a month after Maria struck on Sept. 20 as a Category 4 storm with winds of up to 154 mph. Ramos said Sunday that the total cost of restoring the system would come to $1.2 billion.
The cancellation is not official until approved by the utility’s board. Ramos said it would take effect 30 days after that.
Ramos said the company already has paid Whitefish $10.9 million to bring its workers and heavy equipment to Puerto Rico and has a $9.8-million payment pending for work done so far.
Ramos said cancellation of the contract will not lead to a penalty, but it’s likely the government will pay at least $11 million for the company to go home early, including all costs incurred in the month after the cancellation.
Federal investigators have been looking into the contract awarded to the small company from Interior Secretary Ryan Zinke’s hometown, and the deal is being audited at the local and federal level.
Ramos said the company contacted Puerto Rico’s Electric Power Authority two days before the storm hit, at a time when it was becoming clear the hurricane could cause massive damage.
Ramos earlier said he had spoken with at least five other companies that demanded rates similar to those of Whitefish but also wanted a down payment the agency did not have.
He said Sunday he hadn’t consulted with anyone else about signing the deal and didn’t notify the governor’s office for a week. He again praised Whitefish’s work.
“They’re doing an excellent job,” he said.
“There’s nothing illegal here .... Of that, we’re sure,” he said, adding that he welcomes a federal investigation. “The process was done according to the law.”
Ramos said his agency at first believed the Federal Emergency Management Agency preapproved contracts, something the agency has denied.
FEMA said it has not approved any reimbursement requests from the power company for money to cover repairs to the island’s electrical system. The contract said the utility would not pay costs unallowable under FEMA grants, but it also said, “The federal government is not a party to this contract.”
FEMA has raised concerns about how Whitefish got the deal and whether the contracted prices were reasonable. The 2-year-old company had just two fulltime employees when the storm hit.
The White House had no comment Sunday. Last week, White House Press Secretary Sarah Huckabee Sanders said the federal government had no role in the process that led to awarding the contract.
Rossello said he has requested that crews from New York and Florida come help restore power in Puerto Rico as he criticized the U.S. Army Corps of Engineers for not meeting its goals. The agency could not be immediately reached for comment.
The governor also announced the appointment of an outside coordinator to oversee the power company’s purchase and contracting division.
“If something illegal was done, once again, the officials involved in that process will feel the full weight of the law, and I will take administrative actions,” Rossello said.
A Whitefish contract obtained by the Associated Press found that 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.
The company is based in Whitefish, Mont. Zinke, a former Montana congressman, knows Whitefish Chief Executive Andy Techmanski, and Zinke’s son had a summer job at a Whitefish construction site.
“I had absolutely nothing to do with Whitefish Energy receiving a contract in Puerto Rico,” Zinke said recently in a statement.
Democrats also have questioned the role of HBC Investments, a key financial backer of Whitefish. The Dallas company’s founder and general partner, Joe Colonnetta, has contributed thousands of dollars to President Trump and other Republicans. Chiames, the Whitefish spokesman, has said that Colonnetta’s political donations were “irrelevant” and that the company would cooperate with any federal authorities.