Puerto Rico still owes company $350 million for restoring grid in 2017 as it faces fresh hurricane outages
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An Oklahoma-based energy company has repeated calls for the Puerto Rican government to complete a payment for work it did restoring the island’s power grid years ago.
Mammoth Energy said the Puerto Rico Electric and Power Authority (PREPA), the now-defunct government agency that previously oversaw the territory’s power grid and transmission infrastructure, still owes about $365 million for a contract the company was awarded in 2017. PREPA awarded the company’s subsidiary, Cobra Acquisitions, contracts worth $1.6 billion to restore Puerto Rico’s decimated grid following Hurricane Maria.
The company, which has worked on 17 other natural disaster clean up projects, was ultimately owed a total of $1.3 billion after completing its work and departing earlier than expected in 2019. When Cobra workers left the island, PREPA still owed $224 million, an amount which has swelled to more than $360 million when factoring in interest.
“We treated it almost like a military action which it was,” Mammoth Energy CEO Arty Straehla told Fox News Digital in an interview. “At one point, we had 1,000 people on the island that were working to restore electricity because the devastation was so bad. When we got down there, 100% of the island was down.”
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“It was one of the most devastating things that I’ve seen,” he continued.
Hurricane Maria struck Puerto Rico and surrounding islands in mid-September 2017, severely devastating the island’s power grid, medical services and utilities like running water. While the hurricane initially killed dozens of Puerto Ricans, a Harvard University study estimated that in its aftermath, it caused another 4,645 deaths.
The National Centers for Environmental Information reported that the storm caused $107.1 billion in damage, making it the third-costliest U.S. storm on record. The Bipartisan Budget Act, which former President Trump signed into law in February 2018, provided $2 billion to restore Puerto Rico’s grid and nearly $90 billion in total for disaster relief after a series of storms, including Hurricane Maria.
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Less than a month after Cobra signed the contract with PREPA in October 2017, the company sent multiple barges full of equipment and hundreds of workers to Puerto Rico to fix the grid.
“We went down, went through all the adversity,” Straehla said. “We ended up taking our own lodging down there because we didn’t want to take away from the resources of the island. So, we took barges down there where our men could be housed offshore.”
“They’d go out and work 16-hour days and then come back.”
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Cobra completed its work and departed Puerto Rico in March 2019, according to Straehla. He said the company had successfully executed its job, restoring the island’s electricity, and was lauded by the Federal Emergency Management Agency (FEMA).
The RAND Corporation, a research and analysis firm, issued a report for FEMA after the company completed its work, saying the contract was fairly priced. The report did not analyze whether Cobra properly implemented the contract.
“Cobra’s billable rates to PREPA fall within those representative ranges and are therefore reasonable for the emergency repair work performed by Cobra,” the report concluded.
Straehla, though, said that PREPA, which was provided taxpayer funds via FEMA, has been in violation of its contract since his firm completed its work.
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He added the agency filed for bankruptcy shortly after Hurricane Maria, and Mammoth Energy has been involved in those court proceedings. PREPA’s assets were sold to private sector firm LUMA Energy.
However, Straehla said Mammoth Energy has been financially impacted by the alleged contract violation. The company has been forced to shed hundreds of workers as a result of the situation.
“It had a tremendous impact on us — it certainly changed the trajectory of the company,” he told Fox News Digital. “We want to get paid, we want to reinvest, we want to build more jobs, and continue to grow this company.”
“For a company our size, $365 million makes a dramatic difference in our trajectory.”
In a statement, FEMA spokesperson Jeremy Edwards said the agency continues to fund emergency and permanent work in Puerto Rico related to Hurricane Maria. He also noted FEMA has awarded more than $11 billion in federal funding for these needs, adding that the Puerto Rican government is required to ensure certain requirements are met when issuing grants.
“Prior to using FEMA funds, the Government of Puerto Rico and its subrecipients must ensure grant program requirements are met,” Edwards told Fox News Digital. “FEMA commends the Government of Puerto Rico’s development of strong accounting and fiscal management practices put in place since 2017 to ensure appropriate use of federal funds.”
FEMA does not have the authority to force PREPA to complete payments to contractors and subcontractors.
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Straehla’s pleas for PREPA to complete its payments to his firm come as Puerto Rico faces fresh devastation after Hurricane Fiona slammed into the island this week. The storm has killed eight people and left most of the island without power.
LUMA Energy did not respond to a request for comment.