Class-action Suit Filed Against Prepa for Overbilling
SAN JUAN – Residents and businesses have filed a class-action suit against the Puerto Rico Electric Power Authority (Prepa by its Spanish acronym) in U.S. District Court for allegedly perpetrating an oil fuel fraud that resulted in customers paying over $1 billion more for electricity since 2002.
The suit was filed against the utility, employees of Prepa’s Fuel Purchase Office, the world’s largest fuel oil suppliers – including Brazilian state-owned Petrobras and Shell Trading Co. (U.S.) – and local fuel oil laboratories for perpetuating an extensive fuel oil fraud, resulting in users of electricity in Puerto Rico being overcharged by more than $1 billion dollars for electricity since 2002, according to attorneys at Hagens Berman.
The suit names 20 defendants for receiving kickbacks and payments for colluding to raise fuel oil prices, which were directly passed on to the utility’s customers, when agreeing to use non-compliant fuel oil and falsifying lab tests, according to a published statement.
The attorneys allege that Prepa fraudulently agreed to accept millions of barrels of fuel oil that did not meet specifications of contracts between Prepa and its fuel suppliers, or specifications set by the Environmental Protection Agency (EPA). Prepa accepted this non-compliant fuel in exchange for kickbacks and commissions from suppliers, according to the complaint. Prepa served approximately 1.5 million customers in 2012.
The lawsuit was filed while the Puerto Rico Senate is conducting public hearings investigating claims that the utility paid for oil that contained levels of sulfur that were in violation of the law and an alleged scheme fuel-purchase scheme.
The fifth day of public hearings of the special Senate committee investigating the utility concluded abruptly Wednesday when the interim administrator of the utility’s Fuel Purchase Office, Edwin Rodríguez, left the hearing after his attorney was asked to leave the room for interrupting investigator Luis Enrique Romero’s questions.
Rodríguez, who in the course of the hearing was repeatedly reprimanded for disrupting the line of questioning, left his seat along with his legal representative, José Andreu Fuentes, who was asked to leave for having interrupted committee President Aníbal José Torres’ line of questioning.
Sen. Torres scolded Andreu Fuentes several times during the hearing to refrain from questioning interrogators and for repeatedly instructing his client on how he should answer the questions.
Senate rules stipulate that a witness’ legal counsel at public hearings may only advise their client with the approval of the committee’s president.
Moments after Rodríguez and his lawyer left the Capitol, they released a press release.
“The press release issued by Mr. Edwin Rodríguez Pérez before the public hearing was over shows there was a conspiracy to flout the questions that the committee and the investigators made to the administrator of the Fuel Purchase Office,” Torres, the president of the Special Committee for the Study of the Rules and Regulations Related to the Purchase and Use of Petroleum by Prepa, said in a statement.
In a Thursday statement, Senate President Eduardo A. Bhatia, said he rejects “any attempt to obstruct the course of this investigation on the purchase of fuel by the Electric Power Authority,” adding that Rodríguez Ruiz’s “premeditated actions…disrespected the order and respect of the Senate of Puerto Rico and the country.”
“Let it be clear that nothing will daunt the work of the committee, and the Senate of Puerto Rico will continue to investigate this matter until its final consequences and until the truth about the waste of hundreds of millions of dollars in the illegal purchase of oil is known. Sen. Aníbal José Torres and the committees’ investigators have my full support. I will continue to participate with him in the hearing process as soon as I return from my official business in Washington, D.C., as I have done at previous hearings.”