Whitefish-PREPA contract aimed to avoid government oversight
- As Puerto Rico struggles to restore power to its citizens, a leaked recovery contract awarded to Montana's Whitefish Energy appears to reveal one-sided commitments and stipulations that government agencies cannot review the project's finances.
- Whitefish's contract has been under increasing scrutiny. In the days after Hurricane Maria struck the island, the Puerto Rico Electric Power Authority (PREPA) declined mutual aid offers from other utilities, opting for a $300 million contract with the little-known Montana firm for power restoration.
- And with most of Puerto Rico still without power, Rhodium Group has run the numbers and determined that Hurricane Maria's hit on the island has caused the largest blackout in the United States' history. The storm has so-far disrupted 1.25 billion hours of electricity supply for American citizens, and three quarters of the island still has no power. To date, that's about twice the length of outages caused by Hurricane Katrina in 2005.
Puerto Rican officials, the federal government, aid organizations and private companies are all working on the island to restore power. But the $300 million contract granted to Montana's Whitefish Energy is spurring new questions about how that restoration process is being conducted.
Whitefish was hired by PREPA before mutual aid programs could be coordinated in the wake of Hurricane Maria. Whitefish hails from Interior Secretary Ryan Zinke's hometown of the same name, prompting questions over how a little-known company landed such a high-profile gig.
Caribbean Business reported on the contract last week, writing that Whitefish was "selected by PREPA before Maria hit on Sept. 20." But the terms of the Whitefish agreement went largely unnoticed until Thursday, when journalist Ken Klippenstein spotlighted the document on Twitter.
Klippenstein noted the contract includes an employee per-diem in excess of $400 for accommodations and food as well as a passage ensuring that, "In no event shall [government bodies] have the right to audit or review the cost and profit elements."
Whitefish contract states, "In no event shall [government bodies] have the right to audit or review the cost and profit elements." Wow. pic.twitter.com/dIyQXb6AK0— Ken Klippenstein (@kenklippenstein) October 27, 2017
The contract also specified that Puerto Rico can not make a claim against Whitefish for work delays or completion.
The contract was signed by PREPA Executive Director Ricardo Rodriguez and Whitefish Energy Holding CEO Andy Techmanski.
It is unclear year if the contract with Whitefish will stand. Lawmakers in Puerto Rico and the mainland have called for reviews, suspicious that there could be a connection between Techmanski and Interior Secretary Ryan Zinke, who both hail from the small town of Whitefish, Montana, and reportedly know one another.
This week, Puerto Rico Gov. Ricardo Rossello said in a tweet that he had asked the Office of the Inspector General to conduct a review of the contracting process. Democratic Sen. Maria Cantwell has called for the Government Accountability Office to look into the contract. Democratic Rep. Raúl Grijalva from Arizona also said in a statement that "Congress needs to understand why the Whitefish contract was awarded."
The mayor of San Juan also called for the contract to be voided, sparking a Twitter feud with Whitefish in which the company threatened to pull its workers out of the island. Whitefish apologized Thursday in a separate tweet.
We’ve got 44 linemen rebuilding power lines in your city & 40 more men just arrived. Do you want us to send them back or keep working?— Whitefish Energy (@WhitefishEnergy) October 25, 2017
As the blackout continues, it is likely to put even more distance between the size of this electrical outage and other historical events. The 1.25 billion outage hours following Maria already easily exceeds 1998's Hurricane Georges, which caused approximately 1 billion outage hours. Katrina caused less than 700 million hours of lost power, and the Northeast Blackout of 2003 was less than 600 million. Hurricane Irma, also this year, created about 750 million outage hours.
Rhodium called it "a blackout without rival."
"We can find no event in recorded US history where there were as many people without power for as long as has occurred over the past month in Puerto Rico and the US Virgin Islands," the firm said.
This post has been updated to include reporting from Caribbean Business.
- Rhodium Group America's Biggest Blackout
- Caribbean Business Puerto Rico Gov’t Signs 3rd MultiMillion-Dollar Contract to Reestablish Electric Grid
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