The head of Puerto Rico’s government power company says the agency will scrap a $300 million contract with Whitefish Energy Holdings once it finishes current work on Hurricane Maria recovery efforts.
Power company director Ricardo Ramos said Sunday that he’s bowing to a demand by the U.S. territory’s governor, Ricardo Rossello. Ramos says the cancellation will delay work by 10 to 12 weeks.
Roughly 70 percent of the island remains without power more than a month after Hurricane Maria struck the U.S. territory on Sept. 20.
Earlier, Puerto Rico’s governor demanded that the board of the island’s power company cancel the $300 million contract with Whitefish Energy Holdings amid increased scrutiny of the Montana company’s role in Hurricane Maria recovery efforts.
The announcement by Rossello comes as federal legislators seek to investigate the contract awarded to the small company from Interior Secretary Ryan Zinke’s hometown.
“There cannot be any kind of distraction that alters the commitment to restore electrical power as soon as possible in Puerto Rico,” Rossello said, adding that nearly $8 million has been paid to Whitefish so far.
A Whitefish spokesman, Chris Chiames tells The Associated Press the company is “very disappointed,” and that Sunday’s cancellation will only delay efforts to restore power for Puerto Rico, which was hit hard by Hurricane Maria.
Chiames says Whitefish has already brought 350 workers to the island and it expected to have a total of 500 this week. He says it has completed critical work, including a project that will soon lead to a half million people in San Juan getting power.
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.
Audits of the Whitefish contract at a local and federal level are ongoing, and 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.
Roughly 70 percent of the island remains without power more than a month after Hurricane Maria struck the U.S. territory on Sept. 20 as a Category 4 storm with winds of up to 154 mph (245 kph).
Ramos has said that PREPA reached a deal with Whitefish just days before the hurricane struck, saying that he spoke with at least five other companies that demanded similar rates, in addition to a down payment the agency did not have. Ramos also said the Federal Emergency Management Agency had approved of the deal, 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 full-time employees when the storm hit, but it has since hired more than 300 workers.
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.
Whitefish Energy Holdings is based in Whitefish, Montana. Zinke, a former Montana congressman, knows Whitefish CEO Andy Techmanski, and Zinke’s son also 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 recently said in a statement linked to a tweet. “Any attempts by the dishonest media or political operatives to tie me to awarding or influencing any contract involving Whitefish are completely baseless.”
Democrats also have questioned the role of HBC Investments, a key financial backer of Whitefish Energy. The Dallas-based company’s founder and general partner, Joe Colonnetta, has contributed thousands of dollars to Trump and other Republicans. Chiames has said Colonnetta’s political donations were “irrelevant” and that the company would cooperate with any federal authorities.
This week, Rep. Rob Bishop, the Utah Republican who heads the House Natural Resources Committee, sent the power company director a letter demanding documents, including those related to the contract with Whitefish and others that show what authority the agency has to deviate from normal contracting processes. A Bishop spokesman did not immediately return a message for comment on Sunday.
A federal control board that oversees Puerto Rico’s finances announced this week that retired Air Force Col. Noel Zamot will be in charge of power reconstruction efforts. Rossello and other officials have rejected the appointment, saying the local government is in charge of a power company that is $9 billion in debt and that had struggled with ongoing outages before hurricanes Irma and Maria hit last month.