Energy Regulators Launch Investigation Into Puerto Rico Electric Grid Rebuild Effort

“The commission has started an investigation to get the evidence regarding the prudence of all the actions that PREPA has taken,” said one commissioner.

Energy regulators on Friday launched a broad investigation of Puerto Rico Electric Power Authority’s effort to rebuild the island’s hurricane-wrecked electric grid, BuzzFeed News has learned.

The Puerto Rico Energy Commission’s probe will include examining how and why the state-owned utility awarded a $300-million contract to the small Montana company Whitefish Energy, a decision that has drawn increasing scrutiny from Congress, federal officials, and others.

“The people of Puerto Rico are suffering,” Commissioner José H. Roman told BuzzFeed News. “There are still a lot of people without power. We need to find out and address and fix what has been going, and if there’s anything going wrong with PREPA’s performance.”

An eight-page resolution summarizing the investigation in Spanish was obtained and translated by BuzzFeed News. It proposes a wide look into the entire system, ensuring a future one is capable of better withstanding a natural event like Hurricane Maria, but that the rebuild is done so in “an efficient manner and at just and reasonable prices.”

Although the resolution does not mention Whitefish Energy by name, Roman said this contract, and all the others secured by PREPA, are included in its scope.

“The commission has started an investigation to get the evidence regarding the prudence of all the actions that PREPA has taken, from its preparation before Maria arrived and then the actions after,” Roman said. “And that includes all the contracts that they have executed.”

The probe “includes the Whitefish contract, but it’s not just a focus on Whitefish,” he added.

PREPA and Whitefish Energy did not immediately return a request for comment.

In emergency situations, PREPA has the authority to secure contracts without first getting the energy commission’s approval, according to Roman. But the utility will have to prove to the commission that the contact was prudent. With this request, the commission will gain access to the documents it needs — including the Whitefish contract — to help make its determination.

The energy commission learned of the Whitefish Energy contract after it was struck, in early October.

The document also criticizes the utility for taking a “reactive” approach to maintenance of its system, and not taking steps to prepare for an event like the hurricanes.

“The delicate condition and operation of the Authority and the absence of a proactive maintenance program – as opposed to reactive maintenance work in response to service calls, which characterized its maintenance program in the last years – reduced the capacity of the electrical system to confront and resist the damage of Hurricane Maria and limited the agility of the Authority to respond and begin to restore electrical power,” the document reads.

More than one month after the hurricane struck Puerto Rico, about 75% of its 3.4 million customers still do not have power.

One of the investigation's key objectives is to determine how to strengthen the current electrical system in the short, medium and long range, as well as look at how to restore electricity across the island. Another priority is to establish regulations and measures to modernize and strengthen the system to make it less vulnerable to natural events, in a way that the services are “just and at reasonable prices.”

The commission reviewing Puerto Rico’s system appears to have the authority to request documents, contracts, testimony and inspections, depending where the investigation leads.

The type of information that can be sought by the commission can including “any other type of activity deemed needed or convenient to complete the goals outlined,” according to the document, giving the commission wide range as long as it involves the island’s electric grid.

Depending on the probe’s results, the commission has the authority to order an audit of PREPA’s work and expenses and potentially even cancel contracts.

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