Electric Utility Whitefish Loses Puerto Rico Power Restoration Contract; Now Under FBI Investigation

Less than a week ago, Montana-based electric utility Whitefish Energy was in charge of a $300-million job to restore power to Puerto Rico’s electricity grid, which was destroyed by Hurricane Maria. Criticisms mounted in the last week of October over the company’s size and experience as well as contract terms that blocked government auditing, prompting the Department of Homeland Security and several House committees (among others) to investigate the no-bid contract. As a result of the controversy, on Oct. 29, the bankrupt Puerto Rico Electric Power Authority (PREPA) moved to cancel the Whitefish contract, and the following afternoon, the FBI reportedly opened an investigation.

Category 4 Hurricane Maria hit Puerto Rico with 155 mph winds on Sept. 20, leaving virtually the whole island without power. According to Caribbean Business newspaper, Whitefish Energy was “selected by PREPA before Maria hit on Sept. 20," and by Sept. 26, the company had 300 employees and subcontractors working in Puerto Rico with plans for 700 more.

Now terms of the contract and PREPA’s choice of a small, unknown company are being heavily scrutinized.

Concerns surround terms that include an employee per diem of more than $400 for food and accommodation, provisions that prevented Puerto Rico from making a claim against Whitefish for work delays or completion and a clause that states, “In no event shall [government bodies] have the right to audit or review the cost and profit elements.” The contract was not competitively bid.

Questions are now being raised about how PREPA selected Whitefish.

At the time Hurricane Maria hit, Whitefish Energy had only two full-time employees and had only ever received small contracts. The company’s connection to Interior Secretary Ryan Zinke has also raised concerns. The company, led by chief executive Andrew Techmanski, is based in Zinke’s hometown Whitefish, Mont., and the Washington Post reported connections between the Zinke and Techmanski families, though both deny Zinke helped Whitefish to secure the Puerto Rico contract.

In a statement, FEMA said it had not helped in the selection of Whitefish and had not and would not release federal funds before looking into the contract. PREPA defended its selection. In an interview with the Wall Street Journal, Executive Director Ricardo Ramos explained that PREPA had rushed to have the contract signed, resulting in mistaken language and a failure to demand certain protections or look into Whitefish’s corporate history. However, he still defended the selection of Whitefish as the company had not required substantial upfront costs and would only receive small payments of $1–3 million after work had been completed.

However, hours after Puerto Rican governor Ricardo Rosselló released a statement urging the public utility to cancel the contract, PREPA announced it would invoke a cancellation clause in its contract. As per the contract, Whitefish will continue working for 30 days, finishing construction on two transmission lines to avoid delays, while Puerto Rico seeks mutual aid agreements with Florida and New York to replace Whitefish workers.

On Oct. 30, the Wall Street Journal reported that the FBI is now looking into PREPA’s decision to work with Whitefish Energy. The article states, “Agents from the FBI’s San Juan field office are looking into circumstances surrounding the deal that the public power monopoly known as PREPA signed with Whitefish Energy Holdings LLC, according to the people familiar with the matter.”

It is just the latest organization to look into the contract as the House Energy and Commerce Committee, the Natural Resources Committee, FEMA, the Department of Homeland Security and the Puerto Rican government began investigations last week.

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