Monday, July 16, 2018

Puerto Rico power company director resigns after few months

By on July 11, 2018

Prepa Executive Director Walter Higgins (Jaime Rivera/CB)

SAN JUAN – The director and chief executive officer of the Puerto Rico Electric Power Authority (Prepa), Walter Higgins III, has resigned, Gov. Ricardo Rosselló confirmed Wednesday, citing personal reasons, which several sources said had to do with his salary being reduced.

“He will submit his resignation for purely personal reasons. He had an unexpected family incident that was going to cause him to be out of Puerto Rico on many occasions,” the governor said during a press conference Wednesday.

In a letter to Prepa employees, Higgins said his decision had to do with it becoming “clear  to me that the politics related to my compensation made it impossible for the contract to be fulfilled.”

However, in a statement to clarify the matter Wednesday afternoon, Higgins wrote: “It is true that the Governor was also fully aware that my wife and I are facing a serious health situation within her family. This has placed many new and unexpected pressures on us. This situation has required frequent absences by Mrs. Higgins from Puerto Rico and occasional unplanned absences by me. This health situation is one which cannot be resolved and will create additional burdens on us, and in fact, already is. The Governor was correct in stating that this situation was also an important factor in my decision to step down. My message to you my fellow employees was limited, for personal reasons, to those internal matters related to PREPA such as compensation.”

Rosselló said Higgins wants to collaborate in the public corporation’s privatization process.

Prepa’s Governing Board, which had its ordinary meeting originally scheduled for Thursday, met Wednesday and announced one of its independent members, Rafael Díaz-Granados, will become the utility’s CEO on July 15 and make $750,000 a year.

New Puerto Rico power company CEO to make $750,000 a year

Regarding the salary for Higgins’s replacement, Rosselló said he was requiring of Prepa’s board that it take into account that the person can carry out the process toward privatization, is paid according to the limitations of the market and is committed to implementing the changes.

Two sources close to the utility assured the resignation came about after the Senate passed a resolution, followed by a Justice Department opinion that bonuses paid to Higgins were illegal. The bonuses raised his annual salary to nearly $500,000.

Freddyson Martínez, vice president of the Irrigation & Electrical Workers Union (Utier by its Spanish acronym), said the association had received information about dissatisfaction with Higgins’s work due to a dearth of materials and job-position freezes at the utility.

His resignation would not be effective immediately but on July 14, Caribbean Business sources had said earlier Wednesday, adding Higgins would be replaced by Díaz Granados.

Minority Popular Democratic Party Sen. Aníbal José Torres demanded to know if Higgins would receive any pay after his exit.

“Given the lack of transparency that has characterized the administration of Governor Rosselló, I call upon the governor and the Prepa Governing Board to explain to the country whether the product of the ‘mutual agreement’ reached for the departure of Walter Higgins as executive director of the corporation public includes some payment, remuneration or bonus,” Torres said in a statement.

Higgins was hired in an effort to prepare Prepa for its privatization.

In an interview with Caribbean Business in late May, Higgins predicted that privatizing the power utility would be a lengthy and complicated process and that it would take about six to eight weeks to have provide service to the thousands of utility customers that remained without power since September. He was preparing the utility at the time for the next hurricane season.

Higgins previously served as CEO of Ascendant Group Ltd., a Bermuda-based energy and infrastructure holding company. The veteran energy expert took over Prepa’s transformation at a time when the public company’s staff had shrunk from 8,000 to 6,000 in less than two years.

Regarding the ideal companies or people to take over the utility’s powerplants or take the concession of its power transmission and distribution (T&D) system, Higgins said the process of privatizing Prepa and putting its T&D under concession are two different matters.

Putting the T&D system under a private concessionaire would be a lengthy and complicated process that involves a lot of money over a long period and would have an impact on people’s lives. “And that means the proponents must have experience…. This is not ‘let’s have some fun,’ three of us here in San Juan, and put together some money,” he said.

Selling the powerplants could happen in a competitive market or through a common market that entails the legislature’s approval and the issuance of requests for proposals in which the buyer provides details on its future plans for facilities and how much it would charge per kilowatt-hour to do it. The buyer must have financial viability and expertise. “If they are going to take a powerplant and run it, the commonwealth must know it will be run safely and according to environmental regulations,” he said.

Asked if he had already received offers to buy Prepa, Higgins replied, “There is a lot of loose talk,” but declined to provide names. “Having been doing this a long time, I’ve heard every imaginable story, both credible and incredible, about what people will do, right up until they have to put money on the line and prove they can actually do it,” he added.

Prepa Governing Board Chairman Ernesto Sgroi confirmed Higgins’s appointment nearly four months ago, on March 20, which also included his serving as the power company’s CEO, a newly created position at the utility.

At the time, however, Gov. Rosselló admitted not knowing about the Prepa board’s decision to name Higgins.

After taking office on March 25, controversy ensued over Higgins’s annual $450,000 salary, plus bonuses. More recently, the contracting of Víctor H. Peña Vargas caused controversy because of alleged ties to Higgins and for his consulting salary of reportedly $22,500 a month, or up to $315,000 a year.

Higgins’s knowledge of the island’s grid and his absence while thousands of Prepa customers remained without power since Hurricane Maria also raised questions

Before Higgins, Prepa was in the hands of Justo González, as interim director, substituting former Director Ricardo Ramos, who left the corporation amid controversies after Maria, such as hiring Whitefish Energy, a small contractor, as of the first to assist the utility in dealing with the aftermath of the historic hurricane. González then served as executive deputy director under Higgins but recently retired.

Puerto Rico House Speaker Carlos “Johnny” Méndez said early Wednesday he was not aware of Higgins’s potential departure.

“Yes, definitely. Yes, that’s a surprise. I didn’t see that coming. There were no signs to indicate he was going to leave the Authority,” Méndez said in a WKAQ radio interview. “The last few times I interacted with him, I saw him very enthusiastic working in the Authority and on the reformulation of what the Electric Power Authority is going to be.”

–Cybernews contributed to this report.

Capitol leaders denounce pay set for new Puerto Rico power company CEO

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