Tiny Montana firm's Puerto Rico power
deal draws scrutiny
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[October 28, 2017]
By Susan Heavey, Richard Cowan and Scott DiSavino
WASHINGTON/NEW YORK (Reuters) - Federal
emergency officials raised "significant concerns" on Friday about a $300
million contract between Puerto Rico's storm-hit power utility and a
tiny Montana firm, as Democratic lawmakers stepped up calls for an
investigation of the deal.
The Federal Emergency Management Agency said in a statement that after
its initial review it "has not confirmed whether the contract prices are
reasonable" under the agreement between Puerto Rico Electric Power
Authority and Whitefish Energy Holdings, a two-year-old firm with just
two full-time employees.
The contract between PREPA and Whitefish was awarded without a
competitive bidding process.
Whitefish spokesman Ken Luce said the deal was secured when its chief
executive and co-owner, Andy Techmanski, flew to Puerto Rico on Sept.
26, six days after Hurricane Maria tore into the bankrupt U.S. territory
and knocked out power to all 3.4 million residents.
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The contract, and the slow restoration of power on the island, has
raised questions about who is effectively managing PREPA's response to
the hurricane, as about 75 percent of homes and businesses still lack
electricity after several weeks.
Jose Roman, interim chairman of Puerto Rico's Energy Commission, said
the commission is looking into how Whitefish got the contract as part of
a larger investigation to "determine the prudence of the actions of
PREPA; not just the Whitefish contract," he said.
PREPA did not respond to requests for comment.
Puerto Rico's financial oversight board earlier this week said it would
appoint an emergency manager to oversee PREPA, though that has met with
pushback from Governor Ricardo Rossello, who may challenge such an
effort in court.
It took more than a week after Maria hit the island for a damage
assessment to be completed by PREPA, the chronically underfunded state
utility. Eventually, FEMA put the U.S. Army Corps of Engineers in charge
of short-term power restoration.
ZINKE: I HAD "NOTHING TO DO" WITH CONTRACT
A growing number of U.S. lawmakers have raised questions about the
contract, the slow pace of power restoration, and Interior Secretary
Ryan Zinke's connections with Whitefish.
Representative Raul Grijalva, the senior Democrat on the Natural
Resources Committee, and Representative Peter DeFazio, the top Democrat
on the Transportation Committee, asked the Department of Homeland
Security's inspector general in a letter to investigate the contract's
execution, its terms, and "whether there was any political impetus
behind the contract."
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The representatives noted that Whitefish is based in Zinke's hometown
and that Zinke's son once worked for Whitefish. The letter also stated
that a Whitefish financial backer, HBC Investments, was founded by Joe
Colonnetta, a contributor to President Donald Trump's campaign, as well
as "many other Republican candidates."
Zinke said in a release that "I had absolutely nothing to do with
Whitefish Energy receiving a contract in Puerto Rico." After the initial
contract was awarded, "I was contacted by the company, on which I took
no action," he said.
White House spokesman Raj Shah said that the administration's
"understanding" was that the contract was awarded solely by PREPA, and
they are "not aware of any federal involvement" in the deal.
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![](../images/102817pics/news_I13.jpg)
A pick up from Montana-based Whitefish Energy Holdings is parked as
workers (not pictured) help fix the island's power grid, damaged
during Hurricane Maria in September, in Manati, Puerto Rico October
25, 2017. REUTERS/Alvin Baez
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U.S. Senate Democrats urged FEMA and the U.S. Army Corps of
Engineers in a letter to unify efforts to restore power on the
island.
They also called on FEMA and PREPA to name a top official to oversee
all electrical contracts, and urged federal officials to more
quickly clear crews from two companies, Fluor Corp <FLR.N> and
PowerSecure, so they can begin restoration work.
Several utilities are involved in restoration, including Fluor,
Whitefish, JEA, New York Power Authority, and others. Whitefish and
its subcontractors have more than 300 people on the island, Luce
said.
Techmanski first got in touch with PREPA following Hurricane Irma,
during a bidding process to repair damages from that storm, which
hit Puerto Rico two weeks before Maria, Luce said.
A copy of the contract surfaced online Thursday night, raising more
questions, particularly over language blocking oversight of costs
and profits.
"In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA
administrator, the Comptroller General of the United States or any
other authorized representatives have the right to audit or review
the cost and profit elements," said the document, published by
several media outlets, whose authenticity was confirmed by
Democratic staffers for the Natural Resources Committee.
House Democratic Leader Nancy Pelosi called for the immediate
termination of the contract, saying "no federally-funded contract
should be immune from routine oversight or circumvent a federal
audit."
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Costs listed for hourly wages ranged in the hundreds of dollars and
daily per diems of more than $330 for accommodations and nearly $80
for food, according to the "bid schedule" published online. The
document put the cost of one-way airline flights for employees at
$1,000.
Luce defended the deal, saying the company welcomed an audit or
questions from Washington. "The contract was done in good faith with
PREPA," he said.
Rossello has also defended the contract, even as he ordered an
audit. Initial results of the audit are expected to be released
later on Friday, according to NBC News.
(Reporting by Susan Heavey, Richard Cowan, Timothy Gardner;
additional reporting by Scott DiSavino, Jessica Resnick-Ault and
Nicholas Brown; editing by Tom Brown and Diane Craft)
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