U.S. Markets closed

Whitefish Shuts Down Operations In Puerto Rico, Claims It's Owed $83 Million

Hayley Miller

Whitefish Energy is halting work on Puerto Rico’s hurricane-ravaged electrical grid after claiming the U.S. territory owes the company $83 million.

Puerto Rico Electric Power Authority failed to make “timely” payments to the Montana-based energy firm, which has resulted in Whitefish being unable to pay its subcontractors and 516 workers, according to a letter obtained by HuffPost that was signed by Whitefish CEO Andy Techmanski and dated Sunday.

“There is no basis for PREPA to withhold payments from Whitefish Energy and PREPA’s refusal to make timely payments is a breach of the contract,” Techmanski wrote to Justo Gonzalez, PREPA’s interim director. 

Whitefish said in a statement that it’s now “standing down on performing additional work” until PREPA pays some of what it owes.

“We have met the terms of the contract ― including completing difficult work on time and under challenging conditions,” according to the statement.

Whitefish Energy Request For Payment by Hayley Miller on Scribd

In the letter, Whitefish claimed PREPA had already audited and approved $26 million to be paid to the company, but had not followed through.

Whitefish said it believed PREPA, already strapped for cash and holding roughly $9 billion of Puerto Rico’s $73 billion in government debt, would be funded by federal agencies, which would help PREPA make the necessary payments to Whitefish.

PREPA told HuffPost that it stopped pending payments to Whitefish last week after one of the company’s subcontractors reached out. The subcontractor requested PREPA stop making payments to Whitefish because Whitefish owed the subcontractor money, according to PREPA.

“Faced with this claim, PREPA had to stop the pending payments to Whitefish
until the situation with the Whitefish subcontractor is clarified,” a PREPA spokeswoman told HuffPost in a statement Tuesday.

The statement continued: “PREPA is in communication with Whitefish and the subcontractor to clarify the situation and reach a satisfactory agreement for all parties.”

Whitefish did not immediately respond to HuffPost’s request for comment about the alleged complaint from its subcontractor.

Last month, PREPA canceled its controversial contract with Whitefish after lawmakers and federal agencies expressed doubt over the ethical viability of the business deal as well as Whitefish’s ability to take on such a major project. Whitefish was expected to continue its work in Puerto Rico until Dec. 1, per the contract’s terms.

The two-year-old energy firm, financially backed by a major donor to President Donald Trump’s 2016 campaign and based in the Interior Secretary Ryan Zinke’s hometown, was awarded the contract in October without a proper bidding process.

The contract, which stipulated that subcontractors would be paid hundreds of dollars per day for food and living expenses and barred government bodies from conducting an audit into rates charged, is now under investigation by the Federal Emergency Management Agency.

Whitefish’s decision to shut down its operations comes just days after Ricardo Ramos resigned his position as PREPA’s director amid backlash over his decision to sign the Whitefish contract. 

“The controversy that the contract has generated is truly immense,” Ramos said during a news conference last month announcing the contact’s cancellation. “It’s a huge distraction. So as I understand it, it’s the better of two evils to cancel the contract.”

In the nearly two months since Whitefish arrived in Puerto Rico, just 50 percent of the island’s power has been restored. Many vulnerable communities are still without access to basic necessities such as food and shelter. It’s unclear what plans Puerto Rico has for restoring its energy grid come Dec. 1.

CORRECTION: An earlier version of this article misstated the number of people PREPA was unable to pay. It was subcontractors and 516 workers, not 500 subcontractors.

  • This article originally appeared on HuffPost.