When Hurricane Maria devastated Puerto Rico, the entire electrical grid was basically demolished. Actually, that’s putting it lightly. So, getting a firm to come in and begin the repairs was priority number one, considering so many were without power. When Whitefish Energy was awarded the $300 million contract to restore the power grid, it instilled some hope into some. At least, until they found out just what was awarded in the contract.
The problem with Whitefish Energy was the fact that before Hurricane Maria it only had two full-time employees. It had not been in business that long, either. This little tiny outfit in Montana was awarded a $300 million contract to restore power to a entire island. Furthermore, the “coincidence” that the company was also based in Secretary of the Interior Ryan Zinke’s hometown was just too much. Yes, Zinke knew the CEO of Whitefish Energy. His son even held a summer job at the company.
After this and other startling facts surrounding the contract were revealed, the governor of Puerto Rico, Ricardo A. Rossello, asked the Puerto Rico Electric Power Authority to cancel the contract.
More information is being revealed now, and it’s quite shocking and sickening. Specifically, the information revolves around just how much Whitefish Energy was billing Prepa for their work. The New York Times reported Whitefish Energy’s contract allowed for them to charge $319 an hour for linemen to do the job. The catch is the linemen were only receiving $63 an hour and earning up to $100 double time.
‘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.’.
Now, the linemen definitely deserve to be paid well. They are doing a job that is dangerous and in terrible conditions away from their homes. However, when looking at the rates of other companies, what Whitefish is charging Prepa is still much higher than the norm.
‘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 spokesperson for Whitefish tried to explain the costs. He commented:
‘We have to pay a premium to entice the labor to come to Puerto Rico to work.’
There are other costs than just paying the actual lineman, such as lodging and food costs. However, when examined, it was found Whitefish Energy is paying $3 million for hotels and $80 a day for food. Anyone with any sense knows it does not cost $80 a day to feed anyone. There are additional issues with the prices Whitefish Energy is charging Prepa.
‘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.’
The CEO of Whitefish Energy, Andy Techmanski, however, has tried to claim they would not be profiting much off of the Florida linemen; however, the Kissimmee Utility Authority’s vice president for communications, Chris Gent, commented they were invoicing Whitefish Energy for “straight costs.”
— Gabe Gutierrez (@gabegutierrez) October 29, 2017
Additionally, Gent noted, according to the New York Times:
‘Normally, when utilities help each other recover from disaster under mutual aid agreements, “nobody is marking anything up,’ Mr. Gent said.’
When in need, utility companies don’t price gouge.
Energy law professor and former chairman of Prepa, Luis A. Aviles, commented on the amount Whitefish is charging Prepa:
‘Linemen cost $60, $70, maybe $100 an hour. Let’s say you put an overage on it, because it’s a special emergency circumstance. But $300 an hour? No way.’
Furthermore, the Lakeland authority that sent workers into Whitefish claimed they were only charging for labor and had no clue how much Puerto Ricans had to pay Whitefish.
When asked to review the contract, Jeffrey Bartel, who was a former senior executive at Florida Power & Light, remarked:
‘Possibly most egregious is that this all takes place with a dire and desperate circumstance where people’s lives are at immediate danger without power, and therefore, there is unequal bargaining position by Puerto Rico, which allows for the possibility of price gouging.’
Can we just break this down into simple terms? Whitefish Energy is price gouging for their services. They took advantage of an entire island in need of electricity to line their pockets with cash.There is a special place in hell for people like Techmanski, who claims the investigations into the contract are just witch hunts. They will continue to provide service to the island until November 30.
Featured image by Mario Tama/Getty Images.