FEMA: Not involved in Puerto Rico’s deal to restore electricity

Puerto Rico's electrical power grid was destroyed by Hurricane Maria, and on Friday FEMA announced it had no involvement in a $330 million contract to help restore electricity. Photo by Sgt. Alexis Velez/PRNG/UPI

Oct. 27 (UPI) — In a statement Friday, FEMA, the federal disaster management agency, said it had no involvement in Puerto Rico’s choice of a company to restore its power grid.

Up to 85 percent of people living on the island, a U.S. territory, are still without electrical power after it was struck by Hurricane Maria on Sept. 20. Officials say it could take six months before the power grid is fully restored.

PREPA, the Puerto Rico Power Authority, chose not to seek help from the American Public Power Association, which normally aids in disaster recovery efforts. Instead, it signed a $330 million contract with Montana’s Whitefish Energy. The two-year-old company had two employees when the hurricane struck, but now has over 300 people, largely subcontractors, USA Today reported on Friday.

Puerto Rico Gov. Ricardo Rossello asked the Department of Homeland Security’s inspector general to {link:investigate the contract. He also asked Puerto Rico’s Office of Management and Budget to audit the contract to insure it complies with federal law.

The issue has concerned Washington, where legislators of both parties have called from investigations. The Whitefish Energy is headquartered in Whitefish, Mont., hometown of Interior Secretary Ryan Zinke. It is backed by private equity company HBC Investments, which was founded and is managed by Joe Colonnetta, a major donor to President Donald Trump‘s presidential election campaign.

The statement from FEMA cast doubts on whether the contract between PREPA and Whitefish was reasonable and legally arranged.

“FEMA has not provided any reimbursement to Puerto Rico to date for the PREPA contract with Whitefish Energy. Regardless, FEMA will verify that the applicant (in this case PREPA) has, in fact, followed applicable regulations to ensure that federal money is properly spent. Based on initial review and information from PREPA, FEMA has significant concerns with how PREPA procured this contract and has not confirmed whether the contract prices are reasonable. FEMA is presently engaged with PREPA and its legal counsel to obtain information about the contract and contracting process, including how the contract was procured and how PREPA determined the contract prices were reasonable.”

PREPA filed for bankruptcy in July, seeking to restructure $9 billion in debt. It is owned by the Puerto Rican government.


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