Puerto Rico electric utility awards $300 million contract to tiny Trump-connected company

Experts are scratching their heads over power-restoration contract.

A brigade from the Puerto Rico Electric Power Authority repairs distribution lines damaged by Hurricane Maria in San Juan, Puerto Rico. CREDIT: AP Photo/Carlos Giusti
A brigade from the Puerto Rico Electric Power Authority repairs distribution lines damaged by Hurricane Maria in San Juan, Puerto Rico. CREDIT: AP Photo/Carlos Giusti

Ties to the Trump administration and lack of experience are drawing attention to Puerto Rico’s decision to award a $300-million contract to a tiny Montana company to reconstruct a large portion of the island’s electrical infrastructure.

Whitefish Energy Holdings reached an agreement with Puerto Rico’s government-owned electric utility on September 26 — five days after Hurricane Maria left the island in the dark — to help restore power to the island’s 3.4 million residents. The company had only two full-time employees and an annual revenue of $1 million before Maria hit Puerto Rico.

The government-owned Puerto Rico Electric Power Authority (PREPA) is notorious for being able to operate without regulation or oversight, and critics contend reckless spending accelerated a decade-old debt crisis at the electric utility.

PREPA’s decision to hire Whitefish Energy isn’t helping improve that image. Whitefish Energy’s chief executive has a personal relationship with Interior Secretary Ryan Zinke, and the company’s financial backers have close ties to the Trump administration. The Washington Post reported Monday that Whitefish Energy’s chief executive, Andy Techmanski, acknowledged knowing Zinke, who owns a house in Whitefish, Montana,  where the company is based.

The Zinke family connections extend to one of his sons who “joined a friend who worked a summer job.” A Whitefish Energy official told the Post the younger Zinke worked as a flagger at construction sites. The Interior secretary’s office said Zinke had no role in Whitefish Energy winning the contract to rebuild the electric grid in Puerto Rico. Techmanski also told the Post that Zinke was not involved in the PREPA awarding Whitefish Energy the no-bid contract.

HBC Investments, one of the private-equity firms that backs Whitefish Energy, was founded by Joe Colonnetta, who contributed $20,000 to the Trump Victory PAC during the general election and $27,000 to Trump’s primary election campaign, The Daily Beast reported. Shortly after Trump’s victory, Colonnetta’s wife, Kimberly, gave $33,400 to the Republican National Committee, the maximum contribution permitted for party committees in 2016.

In the wake of extensive storm damage or a disaster, states and municipalities normally contact a “mutual aid network” that can quickly mobilize thousands of workers to help with electric grid repairs — a step Puerto Rico reportedly never took.

“Puerto Rico never said ‘Hey, we need crews,’” Mike Hyland of the American Public Power Association, which represents 1,100 municipal and public power utilities, told The Economist.

PREPA explained it did not reach out to mainland utilities that were offering assistance because the utility could not afford to reimburse the utilities for equipment and workers, E&E News reported. But money does not appear to be a concern for PREPA in its contract with Whitefish Energy. The Montana company is charging PREPA nightly accommodation fees of $332 per worker and almost $80 per day for food, according to the Washington Post.

The total cost so far to repair the island’s grid stands at $815 million in contracts awarded by PREPA and those coordinated through the U.S. Army Corps of Engineers.

“Whitefish seems to be nothing more than a glorified middleman to get the real providers of the services, with which PREPA could have contracted directly,” Luis Vega-Ramos, member of the Puerto Rico House of Representatives, told The Daily Beast. “It is a cozy sweetheart deal in which Whitefish gets a gratuity for subcontracting the actual providers.”

Whitefish Energy was incorporated in 2015 and is backed financially by HBC Investments and Flat Creek Capital, both based in Dallas.

Prior to the $300 million contract with PREPA, the largest contract Whitefish Energy had won was a $1.3 million deal with the federal government to do work on a 4.8-mile electric transmission line in Arizona. The company also won a $172,000 contract from the Department of Energy to replace a metal pole structure and install new conductor and overhead wire in Arizona, according to the Post.

“The fact that there are so many utilities with experience in this and a huge track record of helping each other out, it is at least odd why [the utility] would go to Whitefish,” Susan Tierney, a former senior official at the Energy Department and state regulatory agencies, told the Post. “I’m scratching my head wondering how it all adds up.”

The company now has more than 300 employees in Puerto Rico and others from Florida’s Jacksonville Energy Authority, Orlando Utilities Commission, Kissimmee Utility Authority, and Lakeland Electric are working as subcontractors. Each of these utilities, like PREPA, are government- or municipally owned electric utilities.

Techmanski told Caribbean News that by the end of October, he hopes to have 500 people working on grid repair in Puerto Rico. Within the past week, PREPA also has signed contracts with PowerSecure and Fluor Corp. to help with the power restoration. But Techmanski told the news site he is not familiar with these other contracts. “I really don’t think any of them are here yet so we haven’t had to coordinate jobs yet. But we’re open to working with whomever is hired,” he said in the interview.