Cancels controversial energy contract

Puerto Rico utility cancels controversial energy contract

By COLIN WILHELM

Puerto Rico’s Electric Power Authority canceled its $300 million contract with Whitefish Energy, a Montana-based company, after additional scrutiny surrounding the repair contract worth hundreds of millions of dollars.

The move comes after Puerto Rico Gov. Ricardo Rosselló called for the cancellation of the contract Sunday morning. Rosselló’s public call to the federal oversight board of Puerto Rico happened after days of resisting any change to the contract, according to a source with knowledge of the situation.

A spokesperson for the governor did not immediately respond to a request for comment.

Rosselló publicly objected last week to the oversight board’s installation of an emergency chief transformation officer to oversee the recovery of PREPA, Puerto Rico’s beleaguered government-backed power utility, after the board filed in court to do so last week. That board-installed officer is placed above PREPA’s Executive Director Ricardo Ramos, who signed off on the Whitefish contract. That contract uses federal funds overseen by the utility to repair Puerto Rico’s electrical grid, most of which remains offline weeks after Hurricane Maria hit the island.

The law passed by Congress last year allows the board to act as trustee for any Puerto Rico government entities that seek to reorganize their debt in court, a process similar to bankruptcy. A judge overseeing the restructuring of Puerto Rico’s debt granted the request, according to a court document.

Several congressional committees sent investigative inquiries about the contract last week, and members of the House Natural Resources Committee also sought information as to why Rosselló did not seek to activate "mutual aid" agreements with nearby states to increase the number of work crews available, an action Rosselló ultimately took Sunday.

"Transparent accountability at PREPA is necessary for an effective and sustained recovery in Puerto Rico,” said Parish Braden, a spokesperson for that committee, in an email to POLITICO. “Immediate actions must also be responsibly aligned with long-term rebuilding and revitalization efforts. Success depends on the cooperation and coordination of the Governor, the Oversight Board, PREPA’s Chief Transformation Officer and federal partners."

In a news conference Sunday, Rosselló urged the immediate end of an agreement between PREPA, and Whitefish Energy, a two-year-old company whose selection for a no-bid contract worth hundreds of millions of dollars has drawn intense political scrutiny. Rosselló also criticized the federal government for a delay in sending brigades from the U.S. Army Corps of Engineers.

In a news release sent Sunday, Rosselló said his comments were “intended to reaffirm our commitment to transparency in the contracting process in the government of Puerto Rico and to achieve the highest degree of efficiency possible in the restoration of the power grid of our island, in the shortest amount of time possible.”

"The goals I established are aimed at achieving 30 percent of the power generation capacity. I am grateful for the effort that the PREPA staff is doing together with the contracted companies,” Rosselló said in the release. “At the moment, PREPA and its contractors have 404 brigades working on the island, while the [Army Corps of Engineers] has seven.”

Earlier this month, The Washington Post reported that Whitefish had previously employed the son of Interior Secretary Ryan Zinke and that the company was selected despite having no experience in large-scale electrical repairs and with only two full-time employees. The company has subcontracted out its work on the island.

Since then the contract, initiated by PREPA using federal emergency funds, has come under congressional scrutiny and put Zinke on the defensive.

Zinke on Friday said he had “absolutely nothing to do” with the awarding of the contract to Whitefish, which is from his hometown. "Any attempts by the dishonest media or political operatives to tie me to awarding or influencing any contract involving Whitefish are completely baseless. Only in elitist Washington, D.C., would being from a small town be considered a crime," Zinke wrote in a statement.