Puerto Rico Cancels Whitefish Energy Contract to Rebuild Power Lines

Facing withering criticism from members of Congress and the Federal Emergency Management Agency, the governor of Puerto Rico moved on Sunday to cancel a $300 million contract awarded to a small Montana company to rebuild part of the island’s battered power grid.

While government officials in Washington and San Juan have argued over how a company from Whitefish, Mont., with connections to the secretary of the interior but only two full-time employees secured an emergency contract that requires the work of thousands of people, the majority of Puerto Rico is still without electricity, nearly six weeks after Hurricane Maria knocked down thousands of poles and lines.

Some stores, medical centers, restaurants and a fortunate few private residences are running on generators, but most of the island’s 3.4 million people are plunged into darkness after sunset.

The Puerto Rico Electric Power Authority, known as Prepa, is generating just 30 percent of its normal output, the Puerto Rican government said. The power grid is in such bad shape that the power authority does not know exactly how many of its customers are without power. The authority has estimated that repairs will cost at least $1 billion.

Gov. Ricardo A. Rosselló announced on Sunday that he had asked the power authority’s board — which he appoints — to cancel the contract with Whitefish Energy Holdings, two days after FEMA issued a strongly worded statement criticizing the deal. FEMA said it had “significant concerns” and warned that it might refuse to cover the costs of the contract if it was found to be improper.

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Mr. Rosselló said he had asked for a federal investigation of the contract award process, and for the power authority to appoint a trustee to review contract bidding. He stressed that no wrongdoing had been discovered, but he said that the contract had become a “distraction” and that attention had to be refocused on restoring service.

“I am making this determination because it is in the best interest of the people of Puerto Rico,” Mr. Rosselló said at a news conference.

The contract had been attracting intense scrutiny in Washington. The House Committee on Natural Resources, which oversees Puerto Rican affairs, sent a letter on Thursday to the power authority demanding all records connected to the contract. That same day, the inspector general’s office at the Department of Homeland Security said it was investigating. Mr. Rosselló also ordered an audit of the contract, and the board that Congress created to oversee Puerto Rico’s financial affairs asked a federal court to appoint a new manager to supervise the utility.

The chief executive of the power authority, Ricardo Ramos, defended the contract, which he awarded. But he said on Sunday that he understood the governor’s decision to cancel it because negative publicity and politics on the mainland had made the situation untenable.

Mr. Ramos said Whitefish had recently requested security protection because people had started throwing rocks and bottles at the company’s crews on the island, in the belief that the contract had been awarded corruptly.

“If you are in your house without power, and there’s a sense that the energy authority gave away $300 million to a company that either had or did not have experience, the reaction is not positive, and we’re seeing that,” Mr. Ramos said.

Democrats on the mainland and opposition politicians in Puerto Rico questioned the deal and were alarmed to see that the company’s chief executive, Andy Techmanski, came from the same small town in Montana as Interior Secretary Ryan Zinke. In an interview shortly after securing the contract, Mr. Techmanski told a local news station that he had been in touch with Mr. Zinke for “more resources.” Mr. Zinke’s son worked for Whitefish last summer.

Both the Department of the Interior and Mr. Techmanski denied any impropriety in connection with the contract.