The head of Puerto Rico’s public utility company, PREPA, resigned Friday afternoon following a series of blunders in the effort to restore Puerto Rico’s power grid.
The head of Puerto Rico’s power utility resigns after the Whitefish debacle
And more than half of the island is still in the dark.
Ricardo Ramos, who had been the executive director of PREPA since March, became a “distraction” from the island’s efforts to rebuild after the Hurricane Maria disaster, Gov. Ricardo Rosselló said a press conference on Friday.
It’s been nearly two months since the hurricane made landfall on Puerto Rico and knocked out 80 percent of power transmission lines, leaving the entire island in the dark. As of Friday, less than half of the island had power. Even cities that PREPA managed to reconnect to the grid, like San Juan, have since been subject to major blackouts. The ongoing lack of power is the central factor in the $20 billion to $40 billion in economic losses the island has sustained since the storm, and is prompting thousands of Puerto Ricans to flee for the mainland.
PREPA was in bad shape long before Ramos took the reins. Its ancient electric grid was in disrepair, requiring expensive shipments of imported oil to operate. The company’s finances were a mess too. After years of selling bonds to pay its bills, PREPA filed for bankruptcy-like protection in July. It currently owes $9 billion to Wall Street investors.
But in the hurricane’s aftermath, the utility has further muddied its standing.
Chief among PREPA’s gaffes is the $300 million contract it signed with Whitefish Energy, a tiny Montana company that was hardly equipped to rebuild Puerto Rico’s fragile power grid.
As part of the contract, Whitefish ended up charging Puerto Rico more than double the regular wages for utility crew line workers and higher-than-normal daily meal rates. The energy company also struggled to get equipment to the island, leading the Puerto Rican government to hire expensive charter flights, according to the newly publicized details of the botched deal.
The contract drew scrutiny almost immediately because it was so unusual. Typically in the wake of a major blackout, local governments invoke a mutual aid agreement with experienced public US utility companies, which can send crews at minimal cost to restore power.
Instead, Whitefish Energy subcontracted with these public utility crews and overcharged PREPA for their labor, the records submitted to congressional investigators reveal. PREPA, which filed for bankruptcy-like protection earlier this year, was expecting to get reimbursed for the contract through the Federal Emergency Management Agency’s public assistance grants.
Reports of the shady deal alarmed members of Congress, who launched separate committee investigations in October. A House committee released the results of its investigation on Monday, and the conclusions were harsh. PREPA was “inept” and “dysfunctional.”
“Given the substantial amounts of taxpayer dollars that will be invested in Puerto Rico for rebuilding after Hurricane Maria, these findings raise grave concerns about PREPA’s ability to competently negotiate, manage, and implement critical infrastructure projects without significant independent oversight,” investigators wrote in a memo Monday to committee chair Rep. Rob Bishop (R-UT).
Even though Ramos didn’t negotiate the deal himself, he was the target of the backlash. The Whitefish deal seriously damaged the credibility of Puerto Rico’s government in the eyes of Congress and the American public. Carmen Yulín Cruz, the outspoken mayor of San Juan, welcomed his resignation.
Justo González, PREPA’s director of energy generation, has been named interim director of the public utility.
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