House questions FEMA over Puerto Rico power contracts

WASHINGTON/NEW YORK (Reuters) - The U.S. House of Representatives' energy committee on Wednesday said it wants the Federal Emergency Management Agency (FEMA) to explain how it is overseeing contracts for rebuilding Puerto Rico's power grid after it was devastated by Hurricane Maria.

In a letter to FEMA, the committee raised questions about contracts between Puerto Rico's Electric Power Authority (PREPA) and two companies: Whitefish Energy Holdings and Cobra Acquisitions LLC, a subsidiary of Mammoth Energy Services Inc.

Six weeks after the hurricane swept across the island, two-thirds of its residents are still without electricity. Washington is preparing to spend billions on relief for the territory, home to 3.4 million Americans, with assistance for the grid seen as one of the most expensive and complex pieces of the aid.

The House Energy and Commerce committee - one of several panels of lawmakers keeping a close eye on Puerto Rico projects - said in its letter that "federal leadership and strategic coordination" are needed to restore power, and outlined a series of concerns about the role played so far by FEMA.

Usually, power utilities seek help from other utility companies to restore power immediately after disasters. But Puerto Rico first turned to contractors, as utilities were leery about getting paid by PREPA, which declared bankruptcy in July.

On Sunday, Puerto Rican Governor Ricardo Rossello and PREPA said they would cancel a $300 million contract with Whitefish Energy Holdings, after a controversy over the deal's provisions and the Montana company's lack of experience with projects of such a large size.

The committee said it was concerned about FEMA's oversight of the Whitefish contract. "We have a contract with PREPA, and how PREPA and FEMA are interacting, that is PREPA’s issue," a spokesman for Whitefish said in a statement.

Lawmakers also questioned provisions in a PREPA contract issued to Cobra Acquisitions, including "language which would appear to have the effect of preventing government oversight of the agreement."

In a statement, Cobra said its managers met with PREPA at its command center and "described the company’s experience, ability to mobilize quickly and its plan to aid in the restoration of power to the island. We also met with representatives of FEMA, the Army Corps of Engineers and other key agencies."

FEMA asked the U.S. Army Corps of Engineers on Sept. 30 to take on an extra role in emergency repairs of the grid because of the scope of the damage. The Army Corps has awarded some of its own contracts and is boosting its presence.

The lawmakers asked FEMA to brief its staff by Nov. 15. The agency did not immediately respond to a request for comment on Wednesday.

FEMA Administrator Brock Long testified to a Senate committee on Tuesday that the agency was not notified until "several weeks after the fact" that PREPA had contracted with Whitefish, and had not agreed to the contract language.

"Not one dollar has gone toward that contract from FEMA," Long said, telling senators that the agency is making sure PREPA has not asked for reimbursement for the work.

Long told senators that FEMA's coordinator on the island has asked PREPA to "make sure that we are unified with the Army Corps so we're not working in separate streams, but we're working together in a consolidated effort."

(Reporting by Roberta Rampton and Richard Cowan in Washington and Jessica Resnick-Ault in New York; Editing by Tom Brown and Matthew Lewis)