Puerto Rico power company chairman defends new CEO’s pay
SAN JUAN – The chairman of the Puerto Rico Electric Power Authority’s governing board, Ernesto Sgroi, listed a 2016 local law as one of the reasons the utility agreed to pay $450,000 a year, plus bonuses, to Walter Higgins, Prepa’s new executive director and chief executive officer.
In a statement, Sgroi revealed Higgins plans to consolidate Prepa’s real estate as a way to save money.
“There have been questions about the compensation of Walt Higgins. PREPA’s Governing Board (GB) would like to address these questions directly about how we came to the decision to hire Mr. Higgins, who is scheduled to make $450,000 base salary with the possibility of earning incentives based on his performance,” the public utility chairman said in a statement.
One of the reasons for the salary, considered to be the highest ever paid to an agency head, was a 2016 law that required Prepa to pay competitive salaries to hire the best leaders for the public corporation.
“That is why (the Legislature) passed Public Law 4-2016 that instructed the Board of Prepa to use market compensation rates for electric utilities of similar size and complexity as a guide for compensation. We did as we were ordered and we think Higgins is an expression of the government’s desire to have the best and the brightest people working to solve Puerto Rico’s challenges,” Sgroi said.
The law states that “the compensation of executive officers shall be comparable to that received by professionals holding similar positions in electric utility companies of similar size, complexity, and risks as the Authority, and may be dismissed by the Executive Director or the Board, at their discretion, with or without cause, but shall never be dismissed for discriminatory reasons.”
The governing board, Sgroi said, worked with executive search firm Heidrick & Struggles to determine that Higgins’ compensation was appropriate and in line with power companies that were comparable to Prepa.
While the board had other qualified candidates, Sgroi said Higgins has more than 40 years of experience leading and managing major utilities through long-term transformation, including deregulation, mergers, acquisitions, and diversifying and repositioning.
Higgins has held senior management positions at Portland General Electric Co., Louisville Gas and Electric Co., AGL Resources, Sierra Pacific, and Ascendant Group/Bermuda Electric Light Co., where he handled complex transactions and reforms.
“The GB learned that he is uniquely experienced, in that Higgins has worked at larger, complicated electric and natural gas utilities before, but unlike many of his peers, he also has experience working in an island environment. As president and CEO of Ascendant Group, the parent company of Bermuda’s sole electric utility, among other energy holdings, he led the company through some turbulent times with very high oil prices, difficult leadership changes, the need for a major upgrade in electric infrastructure, and an electric rate structure that was challenging for low usage, vulnerable customers,” he said.
Caribbean Business reported that Higgins has a history of seeking utility rates, according to news articles from Nevada and Bermuda where he had worked. However, Sgroi said Higgins has a record of saving customers money.
“Higgins will provide Prepa with in-house leadership and knowledge that will eliminate unnecessary internal functions, implement industry best practices, and be able to determine how PREPA can better serve its customers,” Sgroi added. “He is already planning to consolidate Prepa’s real estate, which is expected to save over $2 million in the first year of implementation.”