The head of Puerto Rico’s power company on Sunday said the agency is canceling its US$300 million contract with Whitefish Energy Holdings amid scrutiny of the tiny Montana company’s role in restoring the island’s power system.
The announcement by Ricardo Ramos came hours after Puerto Rican Governor Ricardo Rossello urged the utility to scrap the deal for Whitefish’s help in rebuilding the electrical system from the damage inflicted by Hurricane Maria.
“It’s an enormous distraction,” Ramos said of the controversy over the contract. “This was negatively impacting the work we’re already doing.”
The current work by Whitefish teams will not be affected by the cancelation and that work will be completed next month, Ramos said.
He said the cancelation would delay pending work by 10 to 12 weeks if no alternatives are found.
Ramos said he had not talked with Whitefish executives about his announcement.
“A lawsuit could be forthcoming,” he said.
Whitefish spokesman Chris Chiames told reporters that the company was “very disappointed” in the governor’s decision and said it would only delay efforts to restore power.
He said Whitefish brought 350 workers to Puerto Rico in less than a month and it expected to have a total of 500 this week.
Chiames said the company completed critical work, including a project that will soon lead to 500,000 people in San Juan getting power.
“We will certainly finish any work that [the power company] wants us to complete and stand by our commitments,” he said.
About 70 percent of the US territory remains without power more than a month after Maria struck on Sept. 20 as a Category 4 storm with winds of up to 245kph.
Ramos on Sunday said that the total cost of restoring the system would come to US$1.2 billion.
The cancelation is not official until approved by the utility’s board.
Ramos said it would take effect 30 days after that.
Ramos said the company has already paid Whitefish US$10.9 million to bring its workers and heavy equipment to Puerto Rico and has a US$9.8 million payment pending for work done so far.
Ramos said cancelation of the contract will not lead to a penalty, but it is likely the government will pay at least US$11 million for the company to go home early, including all costs incurred in the month after the cancelation.
Federal investigators have been looking into the contract awarded to the small company from US Secretary of the Interior Ryan Zinke’s hometown and the deal is being audited at the local and federal level.
Ramos said the company contacted Puerto Rico’s Electric Power Authority two days before the storm hit, at a time when it was becoming clear the hurricane could cause massive damage.
Ramos earlier said he had spoken with at least five other companies that demanded rates similar to those of Whitefish, but also wanted a down payment the agency did not have.
On Sunday, he said he had not consulted with anyone else about signing the deal and did not notify the governor’s office for a week.
He again praised Whitefish’s work.
“They’re doing an excellent job,” he said.
“There’s nothing illegal here ... Of that, we’re sure,” he said, adding that he welcomes a federal investigation. “The process was done according to the law.”
Ramos said his agency at first believed the US Federal Emergency Management Agency preapproved contracts, something the agency has denied.
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