Fri | Nov 16, 2018

Judge: Outsider will not oversee Puerto Rico power company

Published:Wednesday | November 15, 2017 | 12:00 AM
A man and child walk down a street strewn with debris and downed power lines in the aftermath of Hurricane Maria in Yabucoa, Puerto Rico.

Puerto Rico's government scored a big win in court Monday after a judge rejected the appointment of a former military officer to oversee the US territory's troubled power company.

A federal control board overseeing Puerto Rico's finances had sought to appoint retired Air Force Col Noel Zamot to supervise the reconstruction and operations of Puerto Rico's Electric Power Authority after Hurricane Maria caused an islandwide blackout on September 20. The utility has been plagued by accusations of mismanagement and is generating only 48 per cent of its normal output nearly two months after the Category 4 storm.

But US District Judge Laura Taylor Swain said the Financial Oversight and Management Board for Puerto Rico cannot unilaterally seize control of the territory's government agencies.

The ruling is a significant win for the administration of Governor Ricardo Rossello and others who have argued that no independent official should oversee a local government agency.

"Our position has been validated and it has been recognised that the administration and public management of Puerto Rico remains with the democratically elected government," Rossello said.

It is unclear if the board plans to appeal the ruling. Board spokesman Jose Luis Cedeno did not return a message for comment.

The ruling comes as Puerto Rico struggles to recover from Hurricane Maria, with many still without power after the storm battered the island with winds of up to 154mph, causing the longest blackout in US history.

The Electric Power Authority is $9 billion in debt and continues to face scrutiny after signing a $300-million contract with Montana-based Whitefish Energy Holdings. The contract was cancelled on October 29 at Rossello's request but is undergoing federal and local audits.

Economist Vicente Feliciano said Monday's decision could prompt board members to lobby Congress to obtain more power over Puerto Rico's government as it seeks to restructure a portion of its $73-billion public debt load amid an 11-year recession.

"It is an important ruling," he said. "It certainly draws a more clear line in terms of powers and responsibilities of both the board and the Puerto Rican government."

Both sides have clashed in recent weeks as the board announced it would review local government contracts worth $10 million or more.

- AP