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Puerto Rico's Path to Restore Power Shifts After Whitefish Exit

by Reuters

   NEW YORK --

   Efforts to restore electricity to Puerto Rico nearly six weeks after
   Hurricane Maria are shifting as the island's utility and its
   regulators, along with U.S. authorities, removed a key contractor and
   moved to triple the funding of another.

   The U.S. Army Corps of Engineers, which is leading the federal power
   restoration effort, said it plans to boost the size of a key contract
   awarded to Fluor Corp by $600 million, to $840 million, according to a
   government filing.

   The Army Corps said it was modifying the contract to ensure "continued
   execution of the critical repair and restoration of the electric power
   grid in Puerto Rico."

   It comes a day after Puerto Rican Governor Ricardo Rossello and the
   Puerto Rico Electric Power Authority (PREPA) said they would cancel a
   $300 million contract with Whitefish Energy Holdings, after an uproar
   over the deal's provisions and the tiny Montana company's lack of
   experience with projects of such a large size.

   Fluor, which declined comment, was already in the process of bringing
   in people to help restore transmission and distribution of power to the
   U.S. territory. Hurricane Maria knocked out power to all 3.4 million
   residents of Puerto Rico, and only about 30 percent of power has been
   restored nearly six weeks later.

   The Army Corps' action on Monday signals that Fluor is now the primary
   contractor on Puerto Rico. The Army Corps awarded the original $240
   million Fluor contract. The more controversial Whitefish contract was
   handled directly with PREPA.

   The Whitefish deal came under fire after it was revealed last week that
   the terms were obtained without a competitive public bidding process.
   Residents, local officials and U.S. federal authorities all criticized
   the arrangement.

   Conflict over who should lead the process of restoration and oversee
   PREPA has hampered efforts. PREPA, the island's bankrupt power utility,
   and the governor have argued that the utility should maintain control,
   while a fiscal control board created by U.S. Congress last year to
   restructure the island's finances has also jockeyed for control.

   "PREPA and the governor of Puerto Rico and the administration here need
   to make a decision on who is in charge of PREPA," said Ariel Horowitz
   of Synapse Energy Economics, a consultant to Puerto Rico's energy
   regulator.

   Puerto Rico's energy commission, a small regulatory board tasked with
   overseeing PREPA, has the option of assigning an independent adviser to
   monitor progress in restoring the grid, but has not done so yet.

   Isolation a problem

   Currently, there are about 400 subcontracting crews on the island
   working to bring back power. Rossello said he wants to have 1,000 crews
   by Nov. 8, leaning on so-called mutual aid from utilities in New York
   and Florida, which have crews on the island.

   Getting assistance from other utilities, which usually help one another
   after storms, may continue to be complicated by Puerto Rico's isolation
   and lack of investment in its system.

   A private sector source, who could not be named, said the transition
   from Whitefish, should it be handled smoothly, will hopefully
   accelerate the restoration of power. He said PREPA'S goal of restoring
   95 percent of power by mid-December -- a full three months after the
   hurricane -- is slow for a typical utility.

   PREPA did not respond to a request for comment.

   Whitefish said it has completed significant work on two major
   transmission lines that crossed over the mountains of Puerto Rico. A
   person familiar with PREPA's operations said on Monday that Whitefish
   would complete work on critical lines despite the cancellation of the
   contract.

   Several other utilities are on the island, as well as private
   contractors that include Southern Co.'s PowerSecure unit and Fluor.

   An Army Corps spokesman said the Corps is not currently planning on
   hiring those reporting to Whitefish, but the subcontractors - Fluor and
   PowerSecure - might. Officials at Fluor and Southern did not comment on
   that possibility.

   JEA, the municipal utility for Jacksonville, Florida, said it would
   keep its crew of about 40 people on the island, even if it no longer
   reports to Whitefish.