[News] Armed Federal Agents Enter Warehouse in Puerto Rico to Seize Hoarded Electric Equipment

Anti-Imperialist News news at freedomarchives.org
Thu Jan 11 17:22:33 EST 2018


  Armed Federal Agents Enter Warehouse in Puerto Rico to Seize Hoarded
  Electric Equipment

Kate Aronoff - January 10, 2018

_On Saturday, a_ day after becoming aware of a massive store of 
rebuilding materials being held by the Puerto Rico Electric Power 
Authority, the U.S. federal government — the Federal Emergency 
Management Agency, the U.S. Army Corps of Engineers, along with their 
security detail — entered a Palo Seco warehouse owned by the public 
utility to claim and distribute the equipment, according to a 
spokesperson for the Corps.

Rumors of a tense standoff had been circulating on the island, but the 
encounter was confirmed to The Intercept in a statement from the U.S. 
Army Corps of Engineers. Asked if the federal officers were armed when 
they entered the warehouse, USACE spokesperson Luciano Vera said they 
were indeed accompanied by security detail and quickly began 
distributing the material after seizing it. Vera declined to say whether 
there was a confrontation at the entrance, saying only that PREPA 
officials ultimately toured the warehouse along with the feds:

    Leadership responsible for restoring the Puerto Rico power grid and
    their security detail toured the warehouse in cooperation with
    PREPA. USACE conducted a full inventory and immediately sent out
    critical materials to contractors at work sites. USACE will continue
    to distribute critical materials from the site to contractors. The
    hope is to strengthen the partnership between PREPA and its
    restoration partners, while increasing visibility of the inventory
    of all materials on the island. PREPA has invited FEMA and the Corps
    to visit its warehouses anytime and to distribute material as needed.

The federal government “began distributing [supplies] to contractors,” 
Vera said, including hard-to-find full-tension steel sleeves, critical 
to rebuilding. “We obtained several hundred of these sleeves on 
Saturday,” Vera added.

The armed encounter comes as around half of Puerto Ricans still remain 
without electricity well over 100 days after Hurricane Maria. As PREPA 
hoards crucial resources that could help remedy the island’s dire 
situation, the Puerto Rican government is attempting to annihilate the 
power provider’s only regulator.

“Warehouse 5” — the one which USACE and FEMA entered Saturday — “falls 
under the control of the [PREPA] transmission division and has lacked 
transparency in inventory and accountability,” the email from Vera 
continued. Carlos Torres, appointed by Puerto Rico Gov. Ricardo Rosselló 
to oversee power restoration, was on site as well.

“Due to the size of the warehouse,” Vera said, accounting for everything 
contained therein is still underway days later. Among the materials 
recovered so far are “2,875 pieces of critical material to contractors” 
along with the sleeves of full-tension steel, a component of Puerto 
Rican electrical infrastructure required to erect new power lines. PREPA 
did not respond to The Intercept’s request for comment, though in a 
statement <https://apnews.com/1ccde02ad9de439eb2bc58f62f7baaff>to the 
Associated Press, it rejected allegations that it had failed to 
distribute the warehouse’s contents. The AP only reported that 
“officials over the weekend also discovered some needed materials in a 
previously overlooked warehouse owned by Puerto Rico’s Electric Power 
Authority.” How they discovered them and how they were obtained is a 
story that has not been fully told.

_Together, FEMA and_ the USACE are the main federal agencies responsible 
for getting Puerto Rico’s grid up and running after it was leveled by 
Hurricane Maria. Under the Stafford Act, utilities can receive 
reimbursement from FEMA for reconstruction efforts in the wake of a 
major disaster. Another standard practice is for utilities to enter into 
mutual aid agreements with public and private utilities. For reasons 
that remain unclear, PREPA chose not to do so in Maria’s immediate 
aftermath, instead signing a series of controversial deals with private 
contractors. The most dubious of those — with the novice Montana-based 
firm Whitefish Energy — was withdrawn amid public outrage on the 
mainland and the island alike.

Still, the Whitefish contract was far from the only issue plaguing 
PREPA’s recovery efforts and keeping Puerto Ricans from getting their 
lights turned back on. Even now that PREPA is finally pursuing mutual 
aid agreements with mainland power companies, supply problems — the kind 
the unified command’s warehouse raid might help alleviate — have kept 
linemen on the island from being able to do their jobs.

A security contractor who recently returned from Puerto Rico told The 
Intercept that crews of linemen brought down from the U.S. were 
frustrated about the lack of rebuilding materials, which made it 
virtually impossible for them to fix downed infrastructure. Paraphrasing 
conversations with the electric crews he accompanied, the source said 
one worker told him that “we just sat in the truck and watched a movie 
because we have nothing to do today. … Around Christmas, a lot of the 
power workers were saying, ‘We’re going on vacation because we couldn’t 
do our job because PREPA was making it so difficult.’” The source’s job 
involved escorting contractors tasked with reconstructing downed power 
lines; he was deployed on the island for over a month by a subcontractor 
of Cobra Acquisitions LLC, which in the fall received a$200 million 
PREPA to repair its grid.

“They didn’t have anything to do or to work on,” he said of many of the 
linemen he interacted with. “They had had a bunch of poles but no lines, 
or any of the stuff that goes on the poles. They were just setting bare 
poles, getting as far as they could go.”

“We were in a town for two weeks and barely got anything done because 
they didn’t have the supplies,” the source noted of one crew they 
accompanied on the island’s southeast. UTIER — the utility workers’ 
union — has leveled similar complaints 
their employer.

Frustrated by the slow pace of recovery, a number of mayors around the 
island have begun taking matters into their own hands, reportedly buying 
grid restoration supplies out of municipal budgets. Javier Jiménez 
Pérez, mayor of San Sebastián, compiled a team of electricians, retired 
PREPA employees, and volunteers to form the Pepino Power Authority 
referring to a longer version of the town’s name in Spanish. As of 
December 28, the makeshift recovery crew had restored power to 2,000 
homes, with smaller teams splitting up to return electricity to 
different neighborhoods. Residents in some areas of San Sebastián told 
El Nuevo Dia they never saw PREPA post-Maria.

Mismanagement is not a new phenomenon for PREPA, which for decades has 
been Puerto Rico’s sole power provider. For most of that time, it had 
been self-regulated, with a board comprised largely of political 
appointees with little to no background in the electricity sector. The 
lack of oversight created conditions for corruption and disinvestment, 
with its generation and transmission capacity falling into severe 
disrepair over many years.

In 2014, Puerto Rico’s legislature undertook a reform effort. That 
involved moving the board selection process away from its reliance on 
political appointments, as well as the establishment of the Electric 
Commission, a three-member body tasked with regulating PREPA and setting 

Ramón Luis Nieves served in Puerto Rico’s State Senate from 2013 to 2016 
and was part of the push to get PREPA’s house in order. During his 
tenure in the legislature, he chaired the Senate Energy Committee, 
responsible for creating the Energy Commission in 2014 through Act 57. 
“For the first time in seven decades of existence,” he told The 
Intercept of the board reforms, “PREPA had the benefit of having a 
governing board composed of non-partisan professionals.”

“When the current administration was in the opposition,” Nieves says of 
Rosselló’s New Progressive Party, “they opposed all the energy reform 
bills. Now that they are in power, they have been trying to eliminate 
the energy regulator and the reforms that were passed.”

When Rosselló moved into the governor’s mansion early last year, his 
administration quickly reverted back to the previous board selection 
process and replaced much of the utility’s leadership. Among those 
ousted in the process were the board’s three elected consumer advocates, 
who — as a former member told me in September — had to be removed via 
special legislation.

Since that time, the governor has been outspoken about his support for 
privatizing PREPA and other government services, a position he shared 
with the Washington-appointed Fiscal Oversight Board now overseeing the 
island’s finances.

_On Wednesday, Rosselló_ is set to present a new fiscal plan to the 
board that may well move in that direction. Already, though, his office 
has unveiled a number of sweeping, board-friendly policies under the 
auspices of the New Government Law, approved by the legislature just 
before Christmas. On Monday, Puerto Rico’s Secretary of Public Affairs 
and Public Policy Ramón Rosario Cortés announced 
proposals to dramatically reorganize the island’s government in 
pursuance with the new law — including what would amount to a 
liquidation of the Energy Commission.

The plan would consolidate five separate regulatory agencies into a 
single, three-member commission, eliminating the Telecommunications 
Regulatory Board, Public Service Commission, Energy Commission, Energy 
Administration, and the Independent Office for Consumer Protection as 
independent entities. In their place would stand the Public Service 
Regulatory Board, which officials argue would operate along the lines of 
state-level Public Utility Commissions in the U.S. It’s unclear which 
functions of the previous agencies would continue in the new body.

Rosselló’s proposal is billed as a cost-saving measure, although neither 
the Telecommunications Regulatory Board nor the Energy Commission, at 
least, receive funding from the state or federal governments. The former 
is funded via a fee on telecommunications’ customers monthly bills, and 
the latter by PREPA via its ratepayers, who furnish the independent 
commission with its annual $5 million budget.

While Nieves — like many — favors some level of private investment in 
PREPA, which is $9 billion in debt, he’s weary of attracting 
corporations to the utility without a competent regulator. “If you do 
away with an independent and strong regulator, you’ll have Whitefish all 
over again,” he said. “If they remove the Energy Commission, they should 
rename PREPA the Whitefish Energy Company of Puerto Rico.”

Since its establishment, the Energy Commission has taken a number of 
steps to help bring the island’s electricity sector into the 21st 
century, including an Integrated Resource Plan that laid out a path for 
transitioning the island off expensive imported oil and toward 
renewables. It helped defend ratepayers against the island’s 
bondholders, too; when the National Public Finance Guarantee Corporation 
a 4.2 cent per kilowatt hour rate hike in September, the commission 

The commission also just recently unveiled the country’s first-ever 
regulatory rulebook for microgrids, a form of decentralized power 
generation that allows small geographic areas — neighborhoods or 
hospitals, for instance — to generate power locally and bring 
electricity back online quickly after major natural disasters and 
outages. Included in the suite of regulations was a mandate that any 
microgrids developed on the island use renewable fuel sources, although 
the rule would not apply to microgrids developed by PREPA itself.

Those regulations were opened for public comment this week, yet the 
future of that and other Energy Commission-created rules will be up in 
the air if the governor’s proposal is eventually approved by the 
legislature and fiscal control board.

Another likely casualty of the reorganization proposal would be the 
Independent Office for Consumer Protection, which helps customers bring 
complaints against PREPA and seek remuneration for any utility 
wrongdoing. The agency’s 2014 establishment was heavily pushed for by 
the AARP, which received complaints from elderly Puerto Ricans about 
their electricity service. Asurvey 
that same year by the group found that 82 percent of Puerto Ricans ages 
25 and older “do not believe their interests are fairly represented and 
taken into consideration when electric rates are set by PREPA”; 86 
percent supported the establishment of a consumer advocate office.

A Puerto Rico Electric and Power Authority lineman attaches an 
electrical insulator to a new utility pole in a residential area in 
Gurabo, Puerto Rico, on Nov. 29, 2017.

_The push to_ upend popular regulation over PREPA, of course, comes 
after several decades of austerity, jumpstarted after the PROMESA bill — 
passed by Congress in 2016 — that tasks the Fiscal Oversight Board with 
getting the island’s fiscal house in order and handling its at least $74 
billion in municipal debt. Other recently announced cost-cutting 
measures include the governor’s Voluntary Transition program aimed at 
incentivizing public employees to quit their jobs and seek work with 
non-profits or the private sector, and the privatization of the Puerto 
Rico Institute of Statistics.

As American Statistical Association President Lisa LaVange pointed out 
in a recent letter, such a move would be darkly ironic considering the 
government’s gross miscounting of the number of deaths that have 
occurred since Maria. LaVange chided the governor for not allowing 
experts to help revise the death count and his proposal to disband PRIS. 
“Government statistics play a powerful role in any democracy. They 
empower the economy, serve the health and welfare of its citizens, 
improve governance, and inform decisions and policies in the public and 
private sector, among many other vital functions,” she wrote.

And though media attention has largely cycled away from Puerto Rico, 
conservative think tanks are continuing to outline plans for still more 
massive blows to the island’s public sphere. In a Decemberstatement 
the Fiscal Oversight Board, American Enterprise Institute Resident 
Fellow Desmond Lachman argued that “what is desperately needed” in 
Puerto Rico “is a comprehensive IMF-style structural adjustment 
program,” including a deep cut to the island’s minimum wage. Oversight 
Board member Andrew Biggs has been a resident scholar at AEI since 2008.

The path to any economic recovery from Puerto Rico will ultimately run 
through its ability to rebuild a functional energy grid — a future all 
too unlikely amid austerity and deregulation. Combined with other kinds 
of storm damage, the loss of power has fueled a rapid uptick 
in emigration from the island, as people struggle to attain jobs and 
basic services; an estimated 300,000 people have moved to Florida alone, 
a scale of emigration that could further downsize the island’s already 
shrinking tax base. Nieves calls those who’ve left “energy refugees,” 
for whom “the lack of energy was the last straw.”

“Most of them,” he predicts, “will not return.”

*Update: Jan. 10, 2018, 7 p.m.*

Sen. Eduardo Bhatia, minority leader of the Senate of Puerto 
Rico, provided a statement to The Intercept on the hoarded electrical 

    The news that has come out today about the discovery made by armed
    federal agents of thousands of electrical spare parts hidden in an
    PREPA warehouse borders on a criminal act by its managers. It is
    time for people to stand up and demand answers. Hundreds of
    thousands of families have been in the dark for more than 125 days,
    people keep dying, and businesses continue to close due to the lack
    of energy while the necessary spare parts were in the possession of
    PREPA. Lying about not having the parts to cover the inefficiency of
    PREPA is outrageous and those responsible must be taken before state
    and federal authorities to be criminally processed immediately.

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