Update: On July 18, Puerto Rico's Electric Power Authority (PREPA) selected José Ortiz as its new CEO — its second in one week. He replaces Rafael Díaz-Granados, who resigned last week, and starts July 23. PREPA set Ortiz's salary at $250,000, a dramatic decline from Díaz-Granados's controversial $750,000 salary. The new CEO served as head of PREPA's board from 2011 to 2013.
The drama continues inside Puerto Rico's embattled utility.
Controversy over a new CEO caused a political shakeup within the Puerto Rico Electric Power Authority last week, just as the utility pursues a restructuring plan.
A day after getting approved as the new CEO of PREPA, Rafael Díaz-Granados came under fire for a $750,000 compensation package. He was pushed out by Governor Ricardo Rosselló. Five of the utility's seven board members followed.
The shakeup left Governor Rosselló with more power. He chose two new board members for PREPA in order to create a quorum. In a statement, PREPA said the newly formed board would choose a different CEO this week.
This is just the latest in a long series of controversies for PREPA. After Hurricane Maria destroyed the island’s power system in September, debate raged over how the financially distressed utility should rebuild. PREPA is coping with poor financial health, coming privatization, and a decrepit transmission and distribution system that was severely damaged in the storm. On July 16, the island’s electric authority reported that 955 customers still don't have service.
In a letter, resigning board members argued that politics left them feeling unsupported “to perform the politically unpopular tasks necessary to drive the change from within PREPA.”
In his criticism of the new CEO selection, Governor Rosselló said the salary granted to Díaz-Granados was “not proportional to the financial condition of PREPA, to the fiscal situation of the government, or to the feeling of the people who are making sacrifices to raise Puerto Rico.” He asked members of the governing board to resign if they didn't agree to change the executive compensation package.
Díaz-Granados, a former executive at General Electric and an adviser to a renewables investment fund in Latin America, has served on the PREPA board since June 2017. In an announcement selecting Díaz-Granados, PREPA said his salary “will be consistent with market rates for CEO compensation of a company the size and scope of PREPA.”
According to a 2016 study conducted by data company Equilar for the Associated Press, the average compensation for U.S. utility CEOs topped $9.7 million.
After the resignations, Rosselló said in a statement he rejects any “allegations of political interference” that came from the board.
New board member Ralph A. Kreil Rivera previously worked as president of the Puerto Rico College of Engineers and Surveyors, and has a Master of Science degree in electrical engineering. Eli Díaz Atienza formerly worked as an infrastructure adviser to the government, and is certified as a lawyer and an engineer.