Dive Brief:
- Walter Higgins, CEO of the Puerto Rico Electric Power Authority, announced on Wednesday that he will resign at the end of this week after fewer than four months on the job.
- Family health issues and problems securing his salary prompted Higgins to resign, he said in a letter to employees, while sources close to the utility say the CEO clashed with senior management at PREPA.
- Rafael Diaz-Granados, a former General Electric executive, will step in as PREPA's new CEO, the utility announced Wednesday, and will make nearly double the salary that Higgins was promised.
Dive Insight:
Higgins' resignation presents a disruption for PREPA as it struggles to repair a grid system ravaged by Hurricane Maria and dig out from $9 billion in debt.
The CEO, who most recently headed an energy infrastructure company in Bermuda, told employees Wednesday that his decision to step down came because of struggles securing his salary. Higgins was hired in March on a $450,000 contract, with the potential to earn twice as much if he hit certain performance benchmarks.
"After weeks of discussion and much hard work done by the Governing Board, it became clear that it was not possible for the original contract under which I was hired to be achieved with respect to compensation," Higgins wrote to employees. "Even if some legal arguments could have been made, it became very clear to me that the politics related to my compensation made it impossible for the contract to be fulfilled."
In a Wednesday press conference, Puerto Rico Gov. Ricardo Rosselló appeared to contradict Higgins, saying he would resign due to family health issues. Higgins then sent a later statement to employees, saying he and his wife are facing "a serious health situation within her family" that also played into his decision.
Higgins also failed to gel with senior management at the state-owned utility, said one source close to PREPA. The CEO does not speak Spanish and had no professional experience working in Puerto Rico before his appointment.
"Higgins had a handicap because he could not communicate directly with the Puerto Rican people," said the source, who was not authorized to speak on the record about Higgins. "This morning, the new director of PREPA was in the media talking to the Puerto Rican people. He doesn't start until Sunday and was already on the radio."
Higgins will accept an invitation from Rosselló to join the PREPA Board of Governors. He will be replaced as CEO by Rafael Diaz-Granados, a 15-year GE executive who served as CEO of GE Spain and Portugal and GE Mexico.
In Mexico, Diaz-Granados “led the first large-scale cogeneration project for PEMEX and the installation of thirteen aero power turbines with a 400 MW distributed energy capacity for Luz y Fuerza in Mexico City,” PREPA said in a statement.
Diaz-Granados, who speaks English, Spanish, Portuguese and German, will make $750,000, a contract that has already sparked some backlash in Puerto Rico.
“What brazenness! And what lack of respect for the country and the workers of PREPA," Ángel Figueroa Jaramillo, head of the union that represents PREPA employees, said on Twitter. "While they take away our rights, they threaten our Health Plan and Retirement System. They grant these salaries never seen in the Government, to the businessmen who want to steal from the country.”
