Puerto Rico: Whitefish energy grid deal to be scrapped

The island’s power grid will have to be completely rebuilt

29 October 2017 |Paul Blake | BBC

“Puerto Rico’s governor has called for the cancellation of a contract given to a tiny Montana firm to help rebuild the island’s power grid.

The head of the US-controlled island’s power authority said he accepted Ricardo Rossello’s recommendation and intended to cancel the deal.

The contract was given to Whitefish Energy, which has little experience of work on such a scale, without a public bid process.

Several inquiries are under way.

More than 70% of people on Puerto Rico were without power as of Sunday morning – more than five weeks after the powerful hurricane devastated the power grid.

The governor said he had asked the board of governors of the Puerto Rican Electric Power Authority (Prepa) to cancel the Whitefish contract.

Trump administration rushes to distance itself from Whitefish Energy’s contract with Puerto Rico: 

FEMA has 'significant concerns' about Whitefish's contract to rebuild Puerto Rico's electric grid

A $300 million contract recently awarded to a small Montana electrical company is threatening to become a big headache for the Trump administration.

Whitefish Energy, based in tiny Whitefish, Montana, had two full-time employees on Sept. 20, the day Hurricane Maria devastated Puerto Rico and destroyed much of the island’s electrical grid.

“There can be no distraction to alter the commitment to restore the power system as quickly as possible,” he said.

In response, the Prepa Executive Director Ricardo Ramos said he was seeking the contract’s cancellation.

The governor also said he had instructed Prepa to “immediately coordinate with the states of Florida and New York to reinforce brigades” that are currently rebuilding the grid on the island.

Concerns had also been raised about why Puerto Rican authorities had not requested “mutual aid” from other public power authorities, as is typical during disasters in the US.

In a statement reacting to the news, Whitefish Energy said it was “very disappointed in the decision” and that the decision would “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”.

The White House and the Federal Emergency Management Agency (Fema) distanced themselves from the deal late last week.

The company has its headquarters in the town of Whitefish, the hometown of US Interior Secretary Ryan Zinke. Mr Zinke has denied any involvement or wrongdoing.

Whitefish has said that it secured the $300m (£228m) deal in a legitimate manner.

Earlier this week, Fema denied allegations by Prepa, the US territory’s main utility, that it had reviewed the deal.

The contract states that “Prepa hereby represents and warrants that Fema has reviewed and approved of this Contract”.

In a statement on Thursday, Fema said: “Any language in any contract between Prepa and Whitefish that states Fema approved that contract is inaccurate.”

Fema also said it had “significant concerns” with how Prepa had procured the contract and had “not confirmed whether the contract prices [were] reasonable”.

More than five weeks after Storm Maria most light on the island is generator-driven


It is unclear what will happen to any outstanding costs.

Walt Green, a former director of the US National Center for Disaster Fraud, told BBC News earlier this week that it was “impossible” to say at this stage who was responsible for costs.

“Any dispute may result in appeals, administrative hearings and lawsuits,” he added.

Puerto Rican authorities initially said Fema would pay for the deal.

They later said there was “nothing illegal” about the contract.

A truck with Whitefish Energy's logo and a Puerto Rican flagImage copyrightREUTERS
Image captionWhitefish Energy is based in the hometown of US Interior Secretary Ryan Zinke

Prepa and the Puerto Rican government are saddled with massive debts. The power authority declared bankruptcy in July.

The US House of Representatives Natural Resources Committee, which has jurisdiction over the Caribbean island, is also scrutinising the contract.

On Friday, top Democrats from that panel and the Transportation and Infrastructure Committee sent a letter asking the Department of Homeland Security’s inspector general to launch an investigation.

The correspondence follows similar requests from other members of Congress to the interior department’s inspector general.

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