Puerto Rico Governor Asks Power Authority To Cancel $300M Contract With Tiny Montana Firm
Update, October 30: Puerto Rico governor Ricardo Rosselló has announced that he is asking PREPA to cancel its $300 million contract with Whitefish Energy, which has been the subject of intense scrutiny from the press, public officials and FEMA.
Thirty-nine days after Hurricane Maria hit the territory, Gov. Ricardo Rosselló said that he is requesting assistance from Florida and New York under "mutual aid" arrangements that utilities traditionally activate during emergencies…
"As a result of the information that has been revealed and the need to protect the public interest, as governor I am asking the power authority to cancel the Whitefish contract immediately," Rosselló said in a news conference at La Fortaleza, the governor's mansion. He did not cite specific information beyond what has been reported in media coverage.
Previously: The Puerto Rico Electric Power Authority (PREPA), the government-owned corporation in charge of Puerto Rico's power grid, has given a $300 million contract to a tiny, relatively unknown firm from Whitefish, Montana to repair Puerto Rico's electrical infrastructure after Hurricane Maria. This highly unusual deal has raised eyebrows both because the company's CEO is friendly with Interior Secretary Ryan Zinke and because the company is funded by a major Trump donor. Here's what we know about the mysterious case of Whitefish Energy.
Most Utilities Use 'Mutual Aid' Arrangements To Restore Service After Disasters
PREPA did not attempt to take advantage of "mutual aid" agreements, the most common way for American utilities in disaster areas to get help in recovery efforts.
If it had the money, the authority could have partnered with power providers in the American Public Power Association. Under a mutual-aid agreement, utilities send crews from outside a storm-damaged area. But that system — used to deploy thousands of line workers after hurricanes hit Texas and Florida — requires that a stricken utility cover the costs of helping.
"We did not hear from them," said Meena Dayak, a spokeswoman for the 1,400-member public power association. The group, along with other electric companies, have said they remain eager to help.
Whitefish Had Only Two Full-Time Employees When Maria Hit Puerto Rico
At the time it received the $300 million contract with PREPA, Whitefish had only ever gotten two contracts with the Department of Energy to execute projects in Arizona worth $172,000 and $1.3 million, respectively, according to the Washington Post. What's more, the company only comprised two people when Hurricane Maria hit Puerto Rico.
For the sprawling effort to restore Puerto Rico's crippled electrical grid, the territory's state-owned utility has turned to a two-year-old company from Montana that had just two full-time employees on the day Hurricane Maria made landfall…
Whitefish said Monday that it has 280 workers in the territory, using linemen from across the country, most of them as subcontractors, and that the number grows on average from 10 to 20 people a day.
There Was No Formal Bidding Process For The Contract
In an interview with CNN's Bill Weir, Whitefish CEO Andy Techmanski explained the contract by saying, "We took the call and we're here." Asked to clarify whether PREPA had called him, he said, "We called each other." He gave slightly more information to the Washington Post, but his explanation was still vague:
He said he had been in contact with the utility two weeks before Maria "discussing the 'what if' scenarios" of hurricane recovery. In the days after the hurricane, he said, "it started to make sense that there was a need here for our services and others."
Whitefish's CEO Is Friendly With Secretary Of The Interior Ryan Zinke
Techmanski knows Interior Secretary Ryan Zinke and has employed Zinke's son — but both Techmanski and Zinke's office deny that Zinke played any role in helping Whitefish get the contract.
Whitefish Energy is based in Whitefish, Mont., the home town of Interior Secretary Ryan Zinke. Its chief executive, Andy Techmanski, and Zinke acknowledge knowing one another — but only, Zinke's office said in an email, because Whitefish is a small town where "everybody knows everybody." One of Zinke's sons "joined a friend who worked a summer job" at one of Techmanski's construction sites, the email said. Whitefish said he worked as a "flagger."
Zinke's office said he had no role in Whitefish securing the contract for work in Puerto Rico. Techmanski also said Zinke was not involved.
However, earlier this month, Techmanski told a local news station that he'd been in touch with Zinke to ask for help getting workers to the island.
Techmanski said planes are backed up at the airports so getting the personnel and equipment down there has hit a snag. He's been in touch with Interior Secretary Ryan Zinke to try to free up more resources.
Zinke's office told the Washington Post, "Neither the Secretary nor anyone in his office have taken any meetings or action on behalf of this company."
Whitefish Is Financed By A Firm Founded By A Major Trump Donor
The Daily Beast reports that Whitefish has financial ties to a major Republican donor named Joe Colonnetta, whose wife has posted pictures of herself with Ben Carson and Rex Tillerson on Facebook.
The private-equity firm that finances Whitefish, HBC Investments, was founded by Joe Colonnetta, who serves as its general partner.
Federal Elections Commission data compiled by The Daily Beast shows Colonnetta contributed $20,000 to the Trump Victory PAC during the general election, $2,700 to Trump's primary election campaign (then the maximum amount permitted), $2,700 to Trump's general election campaign (also the maximum), and a total of $30,700 to the Republican National Committee in 2016 alone.
A Puerto Rican Lawmaker Has Criticized The Contract As A 'Sweetheart Deal'
At least one Puerto Rican politician has criticized PREPA for awarding the contract to a tiny, unknown company with no real ties to Puerto Rico.
Luis Vega-Ramos, member of the Puerto Rico House of Representatives, told The Daily Beast, "Whitefish's most important expertise or assets seems to have been… having the U.S. secretary of the interior, Ryan Zinke, as their former congressman and current ally and having the wisdom to retain the services of key people close to the governor [of Puerto Rico]." …
"Whitefish seems to be nothing more than a glorified middleman to get the real providers of the services, with which PREPA [the Puerto Rico Electric Power Authority] could have contracted directly," Vega-Ramos said. "It is a cozy sweetheart deal in which Whitefish gets a gratuity for subcontracting the actual providers."
A former Energy Department official also told the Washington Post, "The fact that there are so many utilities with experience in this and a huge track record of helping each other out, it is at least odd why [the utility] would go to Whitefish."
PREPA Has A Long History Of Mismanagement And Corruption
Whether or not the Whitefish deal amounts to outright graft, PREPA certainly has a history of betraying the public trust. PREPA declared bankruptcy in July after years of questionable management practices.
A 2016 report on PREPA commissioned by the Puerto Rican government is scathing. In the latter months of that year, for example, Puerto Ricans experienced four to five times the number of service outages as U.S. customers on average, though they pay the second-highest rates in the U.S. after Hawaii. Instead of investing in preventive maintenance, PREPA operates in a permanent state of triage. Its budget is "opaque and discretionary." Record keeping is "subpar." A third of the capital budget is spend on discretionary administrative expenses, hinting at a slush fund.
[Slate]