Questions arise about Whitefish company's Puerto Rico contract

A Whitefish-based power company has secured a $300 million contract to restore electricity to Puerto Rico in the wake of Hurricane Maria, spurring questions from government agencies and Congress about why the 2-year-old operation from Montana was selected over larger, more experienced providers.

When Maria hit on Sept. 20, Whitefish Energy had just two employees, a spokesman told the Washington Post, and their largest contract to date was a $1.3 million agreement to repair a 4.8-mile transmission line in Arizona. A month later, Whitefish Energy announced their partnership with the government-owned utility Puerto Rico Electric Power Authority, and reported they had been working with the company since Sept. 26 to repair and construct electrical transmission infrastructure on the island.

Puerto Rico’s power grid has been virtually destroyed by the storm, leaving an estimated 80 percent of residents without power weeks after the hurricane hit. Since arriving on the island, Whitefish Energy has provided daily updates of their work, along with video footage and photos of their crews in action on the company’s Facebook page. The company reported Monday that they had 280 workers on the island and has plans to mobilize an additional 700 personnel.

But the House Committee on Natural Resources is investigating the circumstances surrounding the awarding of the contract to Whitefish Energy. Communications director Parish Braden told the Daily Inter Lake on Tuesday that his agency wants to learn why the private entity was utilized as opposed to a cost-sharing agreement with other utilities.

“PREPA has stated that the upfront cost with the cost-sharing association would have been insurmountable, on the other hand, a $300 million contract somehow was,” Braden said.

Also causing concern is the state of PREPA itself, which is currently $9 billion in debt, not to mention Puerto Rico’s own dire situation — the U.S. territory filed for bankruptcy earlier this year with $72 billion of debt.

Monday, committee representatives met with an oversight board that was created to help manage the island’s debt, and will be in Puerto Rico this week to gather more information from PREPA and the U.S. Army Corps of Engineers, which is also working to repair the island.

Braden said the committee is working to verify that there is a “level of transparency” established to ensure that money is being spent properly, given Puerto Rico’s limited resources.

“(We’re) making sure duplicative money’s not being spent as far as work that Army Corps is doing and what PREPA is (doing),” he said. “This is a humanitarian crisis …. If you look into PREPA, there is a culture of corruption and mismanagement. Given the circumstance that they’re in now, 80 percent of the island without power …. at the end of the day, maybe this is the contract that would help expedite the work … we just don’t have the information.”

In an interview with Caribbean Business, Whitefish Energy Chief Executive Andy Techmanski defended his company’s work in Puerto Rico.

“We have mobilized hundreds of workers in a matter of weeks, we have a robust logistics team, we have about 12 people in Jacksonville, [Florida] who are managing the whole team and the people we bring in, plus the ones we have here,” he told the news outlet. “We are hiring staff and companies from here for various functions, translators, logistics personnel who know the island are helping us. And that has helped us accelerate the process.”

Techmanski is known locally for his proposal to develop a transformer manufacturing factory at the former Columbia Falls Aluminum Co. site last December. He lauded that the venture would create up to 1,000 jobs once the factory hit full production. The project would depend on $20 million in pre-odors for transformers from power companies Flathead Electric and NorthWestern Energy, before Techmanski would invest the $40 million necessary to construct the factory.

“Part of that was they wanted us to guarantee several years worth of orders ahead of time and we were reluctant to do that,” said NorthWestern Energy spokesman Butch Lacrombe. “Since then we haven’t heard much more about that.”

Lacrombe said NorthWestern has since purchased transformers through Brazlian transformer manufacturing company Comtrafo, which acquired 51 percent of Whitefish Energy last year.

The Post reported that Whitefish was one of two companies that PREPA reached out to in the wake of Hurricane Irma, which struck the commonwealth in early September, just a few weeks before Maria made landfall. After Maria hit, the other company in talks with PREPA requested $25 million to get to work, while Whitefish Energy was able to begin initial operations with less funding. Thus far, they’ve received $3.7 million to mobilize personnel and equipment, according to a copy of the contract obtained by the Inter Lake.

The contract also outlines hourly wages and supplementary employee charges. For example, hourly wages for a site supervisor are listed at $330, a project manager will earn $247 an hour and journeyman lineman will make $228 per hour. When asked for the reason behind the high wages, Whitefish Energy representative Brandon Smulyan told the Inter Lake he could not give an immediate answer.

For comparison, the national average hourly wage for a journeyman lineman is $37 per hour, according to Glassdoor.com.

“Something that we believe is really important is Whitefish Energy is down there working …. these guys are doing things every single day when other groups are still trying to plan and get things going,” Smulyan said.

The first Whitefish Energy workers had boots on the ground in Puerto Rico Oct. 2, and landed in groups of between 10 and 30 in subsequent days from all over the mainland, Braden said.

The company, founded in 2015, was designed to “scale up and down as big or as small as it needs to be,” Smulyan said Tuesday.

In addition to incurring criticism due to the size and young age of the company, Whitefish Energy has come under fire because of alleged ties to Interior Secretary Ryan Zinke, whose hometown is Whitefish.

Zinke’s office told the Inter Lake neither he, nor anyone in his office have taken any meetings or action on behalf of Whitefish Energy.

“The Zinkes and the Techmanskis know each other because they both live in a small town (population 6,000) where everyone knows everyone, and his son joined a friend who worked a summer job at one of their construction sites,” Interior press secretary Heather Swift stated in an email.

Democratic congressman Rep. Raul Grijalva of Arizona called for an investigation into the awarding of the contract, the Post reported Tuesday. He told the Post that Congress “needs to understand why the Whitefish contract was awarded and whether other, more cost-effective options were available.”

The contract between Whitefish and PREPA also outraged Luis Vega-Ramos, a member of the Puerto Rico House of Representatives, who told the Daily Beast he considered Whitefish Energy “nothing more than a glorified middleman to get the real providers of the services”

“It is reprehensible that shameless profiteering is going on literally on the back of the devastated people of Puerto Rico,” he said.

Smulyan countered that the company is committed to their mission of restoring the island’s grid and has the skills necessary to do the job.

“I just think that Whitefish Energy is committed to seeing the mission through,” Smulyan said. “They were among the first on the ground and they are among the only groups out there in the field doing work every single day.”

Reporter Mackenzie Reiss may be reached at 758-4433 or mreiss@dailyinterlake.com.