Whitefish to continue Puerto Rico work until power lines are up
SAN JUAN – The contract with Whitefish Energy will end once the company hands over two transmission lines the contractor is working on to avoid more delays in the efforts to restore electricity to Puerto Rico, Electric Power Authority (Prepa) Director Ricardo Ramos said Sunday afternoon.
After Gov. Ricardo Rosselló said earlier Sunday morning that he would ask Prepa’s governing board to cancel the contract, Ramos explained he must first request authorization from the public utility’s board and coordinate the handover of the lines Whitefish was working on.
The contract between Prepa and Whitefish, which has been under public scrutiny since it was announced at the beginning of October, mainly due to the way it was granted and its conditions, has a clause that provides it can be canceled at any time, but the government must notify the company 30 days in advance.
Ramos said in a press conference he was sending a letter to Prepa’s board requesting authorization to cancel the contract, and “secondly, to terminate the emergency contracting process,” which allowed him to sign without prior authorization from the utility’s board.
Among the announcements made by the governor Sunday morning was the naming a “special outside coordinator” to oversee future contracts to be awarded by the public corporation.
Ramos said the contract’s cancellation could cause delays of about 10 to 12 weeks in the repair of the island’s electric grid, thus the adjustments that will have to be made to minimize that time are being evaluated.
To questions from the press, Ramos explained that Whitefish has already been paid $10.9 million, has an invoice charging an additional $9.8 million for work performed to date, and can bill for work underway to repair two transmission lines between Aguirre and Aguas Buenas, as well as for “reasonable and justifiable” costs for moving its crews off the island.
Prepa paid $10.9 million to bring the company to the island after Hurricane María made landfall, but Ramos believes the cost of flying it out could surpass said amount since it was not planned.
Facing pressure from the private sector and public criticism about the pace at which power service is being restored on the island, Rosselló imposed a timetable a few weeks ago for Prepa to increase generation to 30% by Oct. 30; 50% by mid-November; and 95% by December.
In order to meet these goals, the utility had indicated it was essential to increase the number of crews working on the grid, which had collapsed almost entirely due to Hurricane María’s strong winds.
According to the numbers provided by Prepa last week, despite the 1,200 crews needed to meet those goals, Prepa had 231 of its own, Whitefish Energy about 24; Jacksonville Electric Authority 41; and another 31 work for other local private contractors.
It was expected that additional crews would arrive this week, about 75 working for Whitefish; 275 with Cobra Acquisitions; seven with the U.S. Corps of Engineers (USACE) and 200 from Flour Corp., which was subcontracted by the corps. In total, 200 crews hired by USACE and 750 by Prepa were estimated.
Among the alternatives to continue the work performed by Whitefish, Ramos said the utility is evaluating increasing the role assigned to Cobra, which has a $200 million contract; directly hiring companies subcontracted by Whitefish to perform part of the work; and requesting assistance from the American Public Power Association (APPA).
Part of the questioning behind the Whitefish contract, is what motivated Prepa to hire a private company without much recognition among electrical contractors, instead of requesting assistance from the APPA, an organization to which it belongs.
Happy with the job done
Despite the resulting delays from canceling the contract, Ramos said he welcomed the governor’s request because the Whitefish scandal was distracting the island’s recovery process.
Ramos reiterated that Prepa was satisfied with the work by the contractor, which has 400 employees in the field, most of them subcontracted from stateside utilities such as Jacksonville Electric Authority, Orlando Utilities Commission, Kissimmee Utility Authority and Lakeland Electric.
Prepa’s director said he will accept the request of the governor to cancel the contract but maintained there is “nothing” that in his opinion leads him to think there was anything irregular with the agreement. Ramos indicated that the reason for canceling it was based on the distraction caused by the media in its coverage of the controversy surrounding the small, Montana-based company, whose hiring has been alleged to have ties to President Donald Trump’s administration, which has denied any involvement and welcomed any investigation.
Ramos also acknowledged that clause 68 of the contract, which refers to the Federal Emergency Management Agency (FEMA) having reviewed the contract and accepting its conditions should have been eliminated before being signed.
“That clause was there because Prepa intended the contract to be pre-approved by FEMA,” Ramos said, admitting that representatives of the federal agency later indicated it does not pre-approve agreements.
Ramos also said that the contract signed on Oct. 17, which includes amendments to comply with FEMA provisions, was reviewed by the agency’s legal advisers and by the law firms Ankura Consulting and Greenberg Traurig. Both firms are also Puerto Rico government advisers, the former in financial matters and the latter in legal issues for the Fiscal Agency and Financial Advisory Authority.
Disappointed with the decision
Whitefish, meanwhile, reacted to the government’s decision via a press release in which it admits being “disappointed” with the cancellation of its contract.
“The decision will only delay what the people of Puerto Rico want and deserve – to have the power restored quickly in the same manner their fellow citizens on the mainland experience after a natural disaster,” the statement reads, adding that the company will finish whichever projects Prepa requests of it.