Judge: Outsider will not oversee Puerto Rico power company

san juan puerto rico elp

SAN JUAN, Puerto Rico (AP) — Puerto Rico's government scored a big win in court Monday when a judge rejected the appointment of a former military officer to oversee the U.S. 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 (PREPA) after Hurricane Maria caused an island-wide blackout Sept. 20. The utility has been plagued by accusations of mismanagement and is generating only 48 percent of its normal output nearly two months after the Category 4 storm.

U.S. 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 was a win for the administration of Gov. 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 recognized that the administration and public management of Puerto Rico remains with the democratically elected government," Rossello said.

It was unclear if the board planned 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 Maria, with many people still without power after the storm battered the island with winds of up to 154 mph, causing the longest blackout in U.S 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 canceled Oct. 29 at Rossello's request but is undergoing federal and local audits. Both Rossello and power company director Ricardo Ramos are scheduled to testify Tuesday at a hearing by the U.S. Senate's Energy and Natural Resources Committee.

Economist Vicente Feliciano said Monday's decision could prompt the control board's 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.

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