Ethics

Whitefish Energy Triple Billed Puerto Rico for Linemen

JM Ashby
Written by JM Ashby

Citizens, industry experts, and members of Congress were alarmed when the Whitefish Energy contract for repairing Puerto Rico's power grid revealed that the company would pay linemen extremely high hourly rates far above the industry average, but that was apparently only half the story.

Actually, I suppose it was a 3rd or 4th of the story.

Linemen contracted by Whitefish have been paid between $40 to $100 per hour, but Whitefish billed the local Puerto Rican power authority over $300 per hour for each lineman.

[The] Montana company that hired the workers, Whitefish Energy Holdings, had a contract that allowed it to bill the Puerto Rican public power company, known as Prepa, $319 an hour for linemen, a rate that industry experts said was far above the norm even for emergency work — and almost 17 times the average salary of their counterparts in Puerto Rico.

A spokesman for Whitefish, Chris Chiames, defended the costs, saying that “simply looking at the rate differential does not take into account Whitefish’s overhead costs,” which were built into the rate.

As you may know, Whitefish had just two(!) employees before Hurricane Maria struck Puerto Rico. They appear to have hired some additional staff since then, including a spokesperson, but the company's hourly "overhead costs" are roughly 3 to 4 times higher than what they're paying linemen on the ground in Puerto Rico.

Quick napkin math tells me if the company has 280 contracted employees in Puerto Rico as they claim, they've billed the island roughly $89,000 per hour ($319 for each employee) while spending about $19,000 per hour (average) on labor. Assuming a 12-hour work day, that would mean their "overhead costs" amount to $840,000 per day. Holy Jesus.

This raises additional questions. For example, if other larger companies with more employees and proven track records offered to do the work for similar rates (as previously reported), how can Whitefish justify paying themselves that much money? They only had two employees when they obtained this contract.

Whitefish Energy's contract to repair and rebuild Puerto Rico's power grid was canceled last month but the company will continue working (and billing) on the island until the end of November.

If it weren't canceled, their contract would have been good through the next year. It seems reasonable to think $300 million would not have been the total cost given what we know now.

  • muselet

    Overhead costs? Overhead costs?

    Fleecing the government of Puerto Rico when the island is desperate and then trying to sell an excuse like that takes, as Charlie Pierce says, a big, clanging pair of brass ones.

    And an almost unimaginable level of sociopathy.

    –alopecia

  • Badgerite

    This was what went on in the after math of the Iraq Invasion with no-bid contracts with exorbitant fees and sub par performance given out to companies with personal connections to the administration. Otherwise known as corruption or “the swamp”. A lot of tax dollars ‘disappeared’ in Iraq. But Puerto Rico is not a foreign country. WTF.

    • Marianne

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    • Christopher Foxx

      There is no purpose for “no bid” contracts OTHER than to over charge and chaet someone.