Puerto Rico’s financial oversight board is moving to install an emergency manager at the island’s state-owned utility amid criticism of a $300 million contract it awarded to a small Montana energy firm for work on the territory’s crippled electrical grid.
The board said Wednesday that it intends to appoint Noel Zamot, a retired Air Force colonel and member of the oversight panel, to oversee daily operations of the Puerto Rico Electric Power Authority.
The decision comes as House and Senate Democrats called for an investigation into the utility’s agreement with Whitefish Energy. Sen. Lisa Murkowski (R-Alaska) pledged to examine the grid-rebuilding efforts at an upcoming hearing of the Committee on Energy and Natural Resources, which she chairs. San Juan Mayor Carmen Yulín Cruz on Tuesday told Yahoo News that the contract should be “voided right away.”
The Washington Post reported on Monday that Whitefish had only two full-time employees on the day Hurricane Maria hit the island and had never taken on repairs on the scale of the destruction suffered in Puerto Rico. Whitefish has said that its expertise working in mountainous terrain qualifies it for the job and that its business model calls for rapidly expanding using subcontractors.
Whitefish and the utility struck an agreement on Sept. 26, six days after Maria swept through, without a formal bidding process. About 80 percent of customers still have no electricity.
Under the contract, Whitefish is charging $330 an hour for a site supervisor and $227.88 an hour for a “journeyman lineman.” The cost for subcontractors, which make up the bulk of Whitefish’s workforce, is $462 per hour for a supervisor and $319.04 for a lineman.
“PREPA has made clear it is not equipped for the enormous task of quickly restoring the Island’s power,” Rep. Nydia M. Velázquez (D-N.Y.) said in a statement, using the acronym for the utility. “The Authority’s dubious decision to contract with a small, inexperienced and obscure company further underscored the need for intervention.”
House Minority Leader Nancy Pelosi (D-Calif.) called the contract with Whitefish “highly suspect” and urged inspectors general to investigate.
Whitefish on Wednesday clashed with San Juan’s mayor on Twitter, saying her frustration was “misplaced” and “demoralizing” to workers who had come to the island to work on the recovery. “We’ve got 44 linemen rebuilding power lines in your city & 40 more men just arrived,” Whitefish replied. “Do you want us to send them back or keep working?”
Puerto Rico Gov. Ricardo Rosselló said in a statement Tuesday that he had directed his budget office to review the contracts awarded by the island’s utility.
His spokesman, Carlos Mercader, on Wednesday appeared to reject the idea of an emergency manager.
“The law is very clear,” he said, referring to the legislation that created the oversight board this year when Puerto Rico could no longer meet payments on more than $70 billion in debt. “The board can recommend whatever it wants, but it’s the decision of the governor how he is going to run the government. The law that was enacted does not allow them to do a takeover of the government.”
The law says the oversight board “may establish policies to require prior oversight board approval of certain contracts.”
Parish Braden, a spokesman for the House Natural Resources Committee, which oversees the board, said the naming of an emergency manager was a tough but necessary move. “The Board, created under the Obama administration and appointed on a bipartisan and bicameral basis, is doing its work.”
The Senate on Tuesday approved a supplemental appropriations measure passed by the House that includes $4.9 billion for Puerto Rico and financial experts say that the territory will need more early next year.
Damian Paletta and Arelis R. Hernández contributed to this report.