November 15, 2017 / 1:21 AM / a year ago

UPDATE 1-Puerto Rico officials defend power decisions in Capital Hill grilling

(Recasts, adding comments from House Natural Resources Committee meeting)

By Jessica Resnick-Ault and Daniel Bases

Nov 14 (Reuters) - Puerto Rico Governor Ricardo Rossello spent six hours on Capitol Hill on Tuesday defending his government’s actions over the handling of power restoration on the island in the wake of Hurricane Maria’s devastation.

For Rossello, who has just requested $94.4 billion in federal assistance to rebuild the U.S. territory better than it was before the Sept. 20 storm, and Ricardo Ramos, director of the Puerto Rico Electric Power Authority (PREPA), who also testified, the battle to win approval from Congress appears to be an uphill battle.

Ramos, speaking before the U.S. Senate’s Energy and Natural Resources Committee in the morning, defended PREPA’s decision not to seek mutual aid from mainland utilities immediately after Maria hit.

“I cannot overstate the extraordinary challenges that we have faced,” Ramos said.

PREPA was criticized for signing a $300 million, no-bid contract with tiny Whitefish Energy Holdings to lead power restoration efforts. The deal sparked an uproar over its provisions and the Montana company’s lack of experience with projects that big.

The contract was canceled by PREPA on Oct. 29 after Rossello urged that it be scrapped.

In a second three-hour hearing before the House Committee on Natural Resources in the afternoon, Rossello washed his hands of the contract and told committee members he ordered two investigations into the matter.

“I took decisive action without waiting for the results of the investigations because I believe that continuing with the Whitefish contract would distract from the recovery and would damage our government’s credibility,” Rossello said.

The chairman of the House Committee, Republican Rob Bishop of Utah, who led the effort to write the 2016 Puerto Rico rescue law known as PROMESA, said the devastation he saw firsthand warranted the money being spent. But he had a warning too.

“Now one of the things I think we are walking into with this effort is a tremendous credibility gap based on Whitefish and other subsequent decisions going on there. You are asking for an unprecedented $94 billion. That is a lot of money,” he said.

“Simply telling me that you have launched two investigations into your own administration isn’t sufficient. That doesn’t give the confidence we need going forward,” Bishop said.

The U.S. commonwealth, already crippled by $120 billion in debt and pension liabilities it could not pay before the storm, already had a power grid teetering on collapse before Hurricane Irma hit in early September only to be followed by Maria.


About 49 percent of the island’s power has been restored nearly two months after Maria, Ramos and Rossello said.

PREPA lacked the logistical resources to seek mutual assistance from other utilities immediately after the devastating storm, Ramos said, responding to pointed questions from the committee chair, Senator Lisa Murkowski, and ranking member Senator Maria Cantwell.

Cantwell countered that utilities were eager to come to Puerto Rico’s aid at cost, rather than charging the inflated prices that Whitefish required. If logistical challenges had been raised with mainland utilities, they would have overcome the hurdles, she said.

“The notion someone comes in to gouge the Puerto Rico government and U.S. taxpayer, charging them exorbitant rates, than writing a contract so it can’t be reviewed properly, was a great injustice to the U.S. taxpayer,” Cantwell said.

In response to questions, Ramos said he did not know of any kickbacks paid by Whitefish.

But Ramos maintained that PREPA was unable to participate in mutual aid agreements after the storm.

“After the devastation of Hurricane Maria I believed that PREPA was unable to meet the requirements for mutual assistance,” Ramos said.

The utility required contractors who could provide self-contained “military-style” units, he said because it lacked water, ice, housing and fuel for trucks.

PREPA turned to Whitefish after considering five other offers to help restore power, said Ramos.

“As we start rebuilding, we are working with the White House and OMB (the Office of Management and Budget) for transparency,” Rossello said.

Reporting by Jessica Resnick-Ault and Daniel Bases; Editing by G Crosse and Lisa Shumaker

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