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Puerto Rico's new governor suspends contract for firm rebuilding grid

Puerto Rico's new governor is suspending a pending $450,000 contract with a Canadian consulting firm aimed at rebuilding and hardening the U.S. territory's hurricane-ravaged power grid.

Four days after assuming office following the resignation of former Gov. Ricardo Rosselló, Gov. Wanda Vázquez on Aug. 11 announced that her administration is moving to suspend the pending contract between the government-owned islandwide utility, the Puerto Rico Electric Power Authority, or PREPA, and Stantec Inc.

In an attempt to explain the move, Vázquez took to Twitter to stress the need for transparency. "We are evaluating all government contracts, without exceptions," said Vázquez of the pro-statehood New Progressive Party. "In this administration, there is no room for unreasonable expenses and we will ensure the fiscal health of our people."

On Aug. 12, the governor met with PREPA Executive Director and CEO José Ortiz to discuss the deal. The PREPA chief urged Vázquez to let the contract be signed and submitted by Oct. 6 so Puerto Rico can obtain federal hurricane recovery funds from the U.S. Federal Emergency Management Agency, or FEMA, to rebuild its grid. The grid was destroyed by Hurricane Maria in September 2017 when the Category Five storm knocked out power to nearly all of Puerto Rico by downing transmission and distribution infrastructure. The Caribbean island has struggled to recover from the hurricane — electric service for some PREPA customers was not restored until August 2018 and Puerto Rico's old, fragile power grid remains vulnerable to future storms.

According to PREPA, its pending contract with Stantec merely extends by one additional month services the company already has been providing for approximately eight months.

As part of its efforts to rebuild the grid, PREPA initially signed a $300 million repair contract with Whitefish Energy Holdings LLC, a small private Montana company from U.S. Interior Secretary Ryan Zinke's hometown that only had two employees when Maria made landfall. Later, then-Gov. Rosselló of the New Progressive Party successfully pushed PREPA to cancel the controversial contract with Whitefish.

Another leading private entity under scrutiny for its contracts to rebuild Puerto Rico's grid is Mammoth Energy Services Inc., a small Oklahoma City-based company. In a series of contracts signed in 2017 and 2018, PREPA tapped Mammoth's subsidiary Cobra Acquisitions LLC for a total of $1.8 billion to repair storm damage of the island's grid. PREPA, FEMA and Mammoth now are under federal criminal investigation into how the company came to win the contracts.

In a statement, Stantec spokesperson Danny Craig acknowledged that Vázquez reserves the right and responsibility to further evaluate Stantec's contract with PREPA. Further, he said Stantec always remains open to discuss its work with clients.

"We fully stand by the caliber and ethics of our work, as well as the plans we outlined to help the communities of Puerto Rico," Craig said. "We take this responsibility seriously, just as we have in supporting several other communities on behalf of local and national authorities throughout North America when recovering from natural disasters."

Along with contracting with private entities to rebuild the grid, PREPA, under the weight of more than $9 billion of debt, has been prompted to pursue the sale of its generation assets and long-term leasing of its transmission and distribution infrastructure to private entities. In addition to these privatization sales and efforts to strengthen its power system against extreme weather, Puerto Rico is working to transition its grid towards more renewable energy sources. In April, Rosselló signed legislation that targets getting 100% of the island's power from renewable resources by midcentury.