This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2017/11/17/us/prepa-ceo-resigns-puerto-rico.html

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
C.E.O. of Puerto Rico Power Authority Resigns C.E.O. of Puerto Rico Power Authority Resigns
(about 3 hours later)
SAN JUAN, P.R. — The chief executive of Puerto Rico’s troubled public electric company stepped down on Friday amid a two-month island-wide blackout and weeks of bruising public outcry over a costly contract to restore service.SAN JUAN, P.R. — The chief executive of Puerto Rico’s troubled public electric company stepped down on Friday amid a two-month island-wide blackout and weeks of bruising public outcry over a costly contract to restore service.
The resignation of Ricardo L. Ramos, the chief executive of the Puerto Rico Electric Power Authority, known as Prepa, was effective immediately.The resignation of Ricardo L. Ramos, the chief executive of the Puerto Rico Electric Power Authority, known as Prepa, was effective immediately.
The governor, Ricardo A. Rosselló, told reporters that he accepted the resignation because Mr. Ramos had become a “distraction.” A spokeswoman for Mr. Rosselló said the governor had not asked for Mr. Ramos to step down.The governor, Ricardo A. Rosselló, told reporters that he accepted the resignation because Mr. Ramos had become a “distraction.” A spokeswoman for Mr. Rosselló said the governor had not asked for Mr. Ramos to step down.
Mr. Ramos’s resignation caps a yearslong saga of dysfunction and controversy at Prepa, which filed for bankruptcy in July. Mr. Ramos, an engineer, had been at the helm of the company for six months when Hurricane Maria destroyed the island’s power grid on Sept. 20. “There is an investigation that we’ve called upon for the whole contracting situation,” Mr. Rosselló said in an interview. “The truth of the matter is that this decision was taken with the best interests of the people of Puerto Rico.”
He immediately came under withering criticism for awarding a $300 million contract to a small private company from Montana, Whitefish Energy Holdings, to help repair the grid. Prepa had agreed to pay $319 an hour for electrical linemen; the average salary in Puerto Rico for that work is $19 an hour. The authority later canceled the contract. Mr. Ramos’s resignation caps a yearslong saga of dysfunction and mismanagement at Prepa, which filed for bankruptcy in July. Mr. Ramos, an engineer, had been at the helm of the company for six months when Hurricane Maria destroyed the island’s poorly maintained power grid on Sept. 20.
Mr. Ramos faced a skeptical Senate hearing on Tuesday. He told lawmakers that there had been no kickbacks, but acknowledged that the company had long been rife with political patronage, where up to half the employees got their job from an important connection. He immediately came under withering criticism and congressional and federal review for awarding a $300 million contract to a small private company from Montana, Whitefish Energy Holdings, to help repair the grid. Prepa had agreed to pay $319 an hour for electrical linemen; the average salary in Puerto Rico for that work is $19 an hour. The authority later canceled the contract, even while defending it.
Mr. Ramos faced a skeptical Senate hearing on Tuesday. Lawmakers were hesitant to approve the governor’s request for $94 billion in aid while questions remained unanswered about the power grid contract. Mr. Ramos told lawmakers that there had been no kickbacks, but acknowledged that the company had long been rife with political patronage, and that up to half of the employees were the family members of politicians.
Mr. Ramos has given various contradictory explanations for why he chose Whitefish over mutual aid agreements with other utility companies, which are customary after disasters.Mr. Ramos has given various contradictory explanations for why he chose Whitefish over mutual aid agreements with other utility companies, which are customary after disasters.
He told The New York Times last month that he preferred Whitefish because he expected the United States Army Corps of Engineers to pay the company, which meant the bankrupt utility would not have to front any of the money for repairs. Under mutual aid agreements, Prepa would have to pay for the work and then seek reimbursement from the Federal Emergency Management Agency.He told The New York Times last month that he preferred Whitefish because he expected the United States Army Corps of Engineers to pay the company, which meant the bankrupt utility would not have to front any of the money for repairs. Under mutual aid agreements, Prepa would have to pay for the work and then seek reimbursement from the Federal Emergency Management Agency.
But Mr. Ramos told legislators on Tuesday that he went with the private contractors because he did not have the resources to find lodging for workers borrowed from other utilities, even though emails released this week by the House Committee on Natural Resources show that Whitefish could not find housing, either. “This is a cash flow problem for Prepa,” he said.
It has been a rough week for Mr. Ramos. But Mr. Ramos told legislators on Tuesday that he went with the private company because he did not have the resources to find lodging for workers borrowed from other utilities. But emails released this week by the House Committee on Natural Resources show that Whitefish could not find housing, either.
“There has to be some level of corruption. Otherwise, how can somebody be so incompetent?” said Ramon J. Cruz, a former member of Puerto Rico’s energy commission who has been following the issue closely.
It had been a rough week for Mr. Ramos.
On Monday, The New York Times reported that some of the subcontractors Whitefish had hired to do the work — people Prepa could have hired itself — were earning just $42 an hour. At the Senate hearing on Tuesday, Mr. Ramos fended off accusations of price gouging.On Monday, The New York Times reported that some of the subcontractors Whitefish had hired to do the work — people Prepa could have hired itself — were earning just $42 an hour. At the Senate hearing on Tuesday, Mr. Ramos fended off accusations of price gouging.
On Wednesday, Mr. Ramos and the governor proudly hailed an important milestone: The company had finally reached 50 percent of its power capacity. Minutes later, a key line failed, again plunging the northern half of the island into darkness. Another line failed on Thursday.On Wednesday, Mr. Ramos and the governor proudly hailed an important milestone: The company had finally reached 50 percent of its power capacity. Minutes later, a key line failed, again plunging the northern half of the island into darkness. Another line failed on Thursday.
Some 58 days after the storm, the grid is generating power at 45 percent of capacity. Nearly two months after the storm, the grid is generating power at 45 percent of capacity. Most homes are without power and traffic lights remain out. Several hospitals are still running on generators and thousands of small businesses are closed.
On Friday, a local newspaper reported that Mr. Ramos had hired a friend who was once implicated in a federal criminal case to help advise the company. Mr. Ramos posted a cheerful technical update in a video on Facebook in which he defended the new hire, whom he described as an experienced electrical engineer. Mr. Ramos quit 20 minutes later. On Friday, a local newspaper reported that Mr. Ramos had hired a friend who was once implicated in a federal criminal case to help advise the company. Mr. Ramos posted a cheerful technical update in a video on Facebook defending the consultant, whom he described as an experienced electrical engineer. Twenty minutes later, the company announced that Mr. Ramos had quit.
“It’s shocking that it took so long,” said Austin Evers, executive director of American Oversight, a liberal watchdog group that is investigating the contract. “And I also think it’s critical that investigations continue, because it’s not credible that Mr. Ramos was the only person involved in this.”
Prepa is the largest of Puerto Rico’s many government enterprises, responsible for $9 billion of the government’s $74 billion debt. It was also the first branch of the government to go broke, running out of cash in 2014. Since then, its lenders have kept it afloat with money to buy fuel and repay its older debts.
The company provides free power to Puerto Rico’s municipalities, in exchange for not having to pay local property taxes. For years it told investors the municipalities were paying cash for the power, creating the illusion that it had plenty of money to repay its bonds. The Securities and Exchange Commission is investigating the disclosures as a possible securities fraud.