Puerto Rico power company cancels US$300 million Whitefish contract

Monday, October 30, 2017

At the request of Puerto Rico Governor Ricardo Rosselló, the Puerto Rican Electric Power Authority (PREPA) yesterday announced it has cancelled a US$300 million contract with a Montana-based company called Whitefish Energy Holdings amid concerns it may have been awarded improperly and the prices may be unusually high. Whitefish was to have rebuilt parts of the United States commonwealth’s energy infrastructure, which was recently destroyed when Hurricane Maria struck the island.

According to Whitefish spokesperson Chris Chiames, Whitefish was “very disappointed” and may consider a lawsuit. He also said about 350 Whitefish employees have been working on Puerto Rico for the past month, and their efforts will restore power to much of San Juan soon. He noted, “We will certainly finish any work that [PREPA] wants us to complete and stand by our commitments.” According to Governor Rosselló, Whitefish has already been paid eight million dollars.

The U.S. Federal Emergency Management Agency (FEMA) questioned whether the prices negotiated were reasonable and how Whitefish came to be awarded the contract. Whitefish is two years old, when the contract was signed only two people worked for it full-time, and it has connections to the current U.S. Secretary of the Interior. According to PREPA head Ricardo Ramos, FEMA approved the Whitefish deal, but FEMA officials said they did not.

Whitefish is based in the town of Whitefish, Montana, the hometown of Ryan Zinke, who is currently serving as U.S. Secretary of the Interior in the administration of the US President Donald Trump. Zinke and Andy Techmanski, Whitefish’s chief executive, are acquaintances, and Zinke’s son worked for Whitefish one summer. The founder of one of Whitefish’s financial backers, HBC Investments, has made nontrivial campaign contributions to Republicans and specifically to Trump.

Zinke told the public, “I had absolutely nothing to do with Whitefish Energy receiving a contract in Puerto Rico[…] Any attempts by the dishonest media or political operatives to tie me to awarding or influencing any contract involving Whitefish are completely baseless.”

Zinke also posted online, “Only in elitist Washington DC would being from a small town be considered a crime.”

The head of the U.S. House of Representatives natural resource committee, Republican Rob Bishop, has sent PREPA a letter requesting documentation of the deal and an explanation of the means by which it was made.

Maria Cantwell, a Democrat serving on the Senate Committee on Energy and Natural Resources called for “an investigation to determine how we got into this situation in the first place,” saying “taxpayers should pay a fair rate for the emergency repairs Puerto Rico desperately needs, […] not be gouged by Whitefish Energy or anyone else.”

According to the Associated Press, in one copy of the Whitefish contract, each employee would be paid a US$80 food allowance each day, and US$1000 each time they fly to or from the mainland U.S., with hourly pay rates for foremen, linemen and mechanics in the hundreds of dollars.

The federal control board in charge of Puerto Rico’s finances recently said they had appointed retired Air Force Colonel Noel Zamot to oversee the restoration of Puerto Rico’s power infrastructure, but Governor Rosselló said Puerto Rico’s own government is responsible for the power company, which has debts in the billions.

The category 4 Hurricane Maria struck Puerto Rico several weeks ago with high winds and intense rain. About 70% of Puerto Rico still has no electricity.

Puerto Rico was colonized by Spain and came under U.S. control in the Spanish-American War in 1898, along with Guam and the Philippines. Every person born in Puerto Rico is a United States citizen by birth. Puerto Rican residents do not participate in national elections, and have a non-voting representative in the U.S. congress. Mostly, they are exempt from federal income tax but not other federal taxes.