Climate Disasters – Corruption opportunity of a Lifetime

November 13, 2017


Pays to be friends with Trump cabinet members.

A Tiny Montana company, with only two employees and scant experience (but connections to Interior Sec. Ryan Zinke) scored a 300 million dollar contract to rebuild the Puerto Rico electrical grid.
A lot of people were outraged by the exorbitant rates Whitefish Energy was charging struggling Puerto Ricans.
Now revealed, the company has been charging $319/hr per lineman, while only paying said lineman $63/hr.

Trumpians don’t get climate change, but whether it’s Iraq, Turkey, or Puerto Rico – they’ve got corruption down to a science.

Ars Technica:

Since Puerto Rico was struck by Hurricane Maria in late September, the island has struggled to repair power lines, water pumps, cell phone towers, roads, and bridges. The electrical system has come under the most scrutiny. The commonwealth’s power provider—Puerto Rico Electric Power Authority or PREPA—was bankrupt going into the disaster, and has faced scandal after scandal in recent weeks. After reconnecting more than 40 percent of its customers early last week, a major power line failed on Thursday, reducing the number of reconnected PREPA customers to 18 percent. Although the line was quickly fixed, currently only 47 percent of PREPA’s customers have power now, according to statistics from the Puerto Rican government.

That means that more than 50 percent of previously-connected Puerto Ricans have been living off generators or solar panels for nearly 7 weeks, or they live without power.

New York Times:

SAN JUAN — The small energy outfit from Montana that won a $300 million contract to help rebuild Puerto Rico’s tattered power grid had few employees of its own, so it did what the Puerto Rican authorities could have done: It turned to Florida for workers.

For their trouble, the six electrical workers from Kissimmee are earning $42 an hour, plus overtime. The senior power linemen from Lakeland are earning $63 an hour working in Puerto Rico, the Florida utility said. Their 40 co-workers from Jacksonville, also linemen, are making up to $100 earning double time, public records show.

But the Montana company that hired the workers, Whitefish Energy Holdings, had a contract that allowed it to bill the Puerto Rican public power company, known as Prepa, $319 an hour for linemen, a rate that industry experts said was far above the norm even for emergency work — and almost 17 times the average salary of their counterparts in Puerto Rico.

A spokesman for Whitefish, Chris Chiames, defended the costs, saying that “simply looking at the rate differential does not take into account Whitefish’s overhead costs,” which were built into the rate.

“We have to pay a premium to entice the labor to come to Puerto Rico to work,” Mr. Chiames said. Many workers are paid overtime for all the time they work. Overtime pay varies by type of worker, union membership, mainland utility company and many other factors.

Questions are already being raised about a second contract that Prepa signed, this one with an Oklahoma company, Cobra, which was the highest bidder, required a $15 million down payment and — like the doomed Whitefish agreement — included a clause that said the deal could not be audited.

At issue is managing what can be conflicting dynamics — the need to get essential work done quickly and the potential for it to be done at exorbitant prices. With roads and bridges wiped out, schools across the island damaged and health care needs expected to soar, the repair contracts are just two of many that are expected to easily cost billions of dollars.

The markup is among the reasons that federal officials are scrutinizing all other contracts involving Puerto Rico. The control board that oversees Puerto Rico’s finances is seeking more authority over the billions headed the island’s way, including the power to review big contracts and randomly inspect smaller ones.

Two weeks after Prepa abruptly withdrew the contract from Whitefish following strong criticism by federal and congressional officials of the company’s expected ability to perform the work needed, more questions are being raised about the deal, including how much it will actually cost. Whitefish will keep repairing power lines until Nov. 30.

As the Trump administration prepares to spend billions of dollars on rebuilding Puerto Rico’s infrastructure, the Whitefish deal — hatched in a dim powerless room six days after a storm packing winds of nearly 150 miles an hour knocked down thousands of power poles and lines — has served as a cautionary note about the potential for soaring costs that are common in the wake of disasters.

The situation in Puerto Rico is dire: According to the research firm Rhodium Group, this is the largest blackout in United States history. After Hurricane Maria struck Puerto Rico on Sept. 20, power was knocked out at every home and business. On Sunday, 54 days later, the grid was working at 47.8 percent of capacity.

The Army Corps of Engineers, which is overseeing power restoration in Puerto Rico, did not hire Whitefish because its prices were more than double what the agency considered reasonable, according to the Senate Committee on Homeland Security and Governmental Affairs.

“They are paying $3 million for hotels and $80 a day each for food,” said Johnny Rodríguez Ortiz, president of the organization of retired electrical workers in Puerto Rico. “I just had lunch with my wife, and it cost me $14.”

Prepa agreed to pay Whitefish three times the going rate for aviation fuel, and about double what a helicopter specially equipped for transmission line construction should cost, according to industry insiders and people with knowledge of the Whitefish contract. The company is also billing about $4,000 an hour to rent a helicopter; companies that specialize in transmission line construction said that price is more than double what they charge.



One Response to “Climate Disasters – Corruption opportunity of a Lifetime”

  1. indy222 Says:

    a clause, that the deal “cannot be audited”…. WHAT?!

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