Whitefish Energy Stops Work on Puerto Rico's Power Grid for the Most Predictable Reason

Image by Western Area Power, via Flickr Creative Commons https://www.flickr.com/photos/westernareapower/

Image by Western Area Power, via Flickr Creative Commons https://www.flickr.com/photos/westernareapower/


Sometimes, says the poet, you don’t need a weatherman to see which way the wind is blowing.


Part of the ongoing drama in Puerto Rico is the story of a $300 million contract the bankrupt and criminally incompetent Puerto Rico power utility, PREPA, awarded to a small Montana energy company called Whitefish Energy. There were a lot of questions raised about why this company got the contract and the rates they charged. A few of the questions were legitimate, most were strictly the result of the same Puerto Rican political infighting that has resulted in mayors only providing food and water to political allies. As I’ve noted in my post on the subject, virtually all parts to the contract can be explained by the fact that PREPA is bankrupt and inept; they are under the gun to get power up; no one wants to do business with an inept and bankrupt client; all equipment used by subcontractors has to be shipped/flown to Puerto Rico, and PREPA is bankrupt and inept. Did I mention that PREPA is bankrupt and inept?

Political pressure loomed and in late October PREPA canceled the contract and gave Whitefish until December 1 to wind down its operations. Turned out they didn’t need to wait. Today, Whitefish pulled the plug on the contract for the most unexpected reason (I’m just joking):

Whitefish Energy is stopping its work to restore Puerto Rico’s broken electricity grid because the company says it is owed more than $83 million by the island’s power authority.

Whitefish CEO Andy Techmanski told CNN that repeated requests for agreed payments were not met and there was no choice but to suspend work.

He claimed credit for the restoration of transmission lines by his contractors, even after his company’s controversial contract with the Puerto Rico Electric Power Authority (PREPA) was set to be voided.

“We stopped because of the financial situation, lack of payment with PREPA has gotten beyond its maximum threshold and what we can sustain as a business,” he said.

A letter sent by Whitefish to PREPA and seen by CNN accuses PREPA of delaying payments. As of Sunday, Whitefish said $83,036,305.09 was outstanding, including more than $26 million that it said had been audited and approved by PREPA already. Without payment to Whitefish, contractors and subcontractors were also going unpaid, the letter said.

According to the company, its work in Puerto Rico has involved more than 500 contractors and subcontractors.

“It may have not been the best business decision coming to work for a bankrupt island,” Techmanski told CNN. “We were assured PREPA was getting support from FEMA and there was money available to pay us for 100% of our work.”


That last paragraph has a place waiting for it in the “Understatement Hall of Fame.”

The kicker is, PREPA is saying it stopped payment because one of Whitefish’s subcontractors complained it hadn’t been paid.

That non-payment is a direct result of PREPA being $83 million in arrears. In my earlier post, I discussed how Whitefish was using a very short window of reimbursement, seven days rather than the more common thirty days, in order to keep up a cash flow. It seems like Whitefish seemed to have confused PREPA approving invoices with PREPA cutting checks. I imagine that once you look inside of this, Whitefish’s line of credit stopped accepting PREPA receivables and Whitefish’s money dried up.

And as Twitter has a surfeit of ignoramuses, they are now crawling out of the woodwork:


Yep…that’s how it works. If you cancel a contract for convenience, which is what PREPA did, you are still on the hook for contract termination costs. All that equipment Whitefish paid to move to Puerto Rico has to go home. Whitefish has other sunk costs, too, like its own contract termination penalties.

The next stage will see a massive court fight with PREPA, Whitefish, and all the subcontractors suing each other. The big winner will be PREPA. It is already in bankruptcy and owed $9 billion. It is hard to see how any blood is squeezed out of that particular turnip.


Join the conversation as a VIP Member

Trending on RedState Videos