At Puerto Rico’s Power Company, a Recipe for Toxic Air, and Debt

As a lab director at Puerto Rico’s power authority, Abraham Ortiz uncovered what he suspected was a pattern of lawlessness in the authority’s purchasing department, a secretive place where officials controlled contracts to buy billions of dollars’ worth of oil.

For years, he reported to his superiors, the authority bought cheap, residual oil that failed to meet federal clean-air standards, and faked tests to make it look like it had passed. Ledgers were falsified too, he said, to make it appear as though the authority had actually bought the higher-grade oil, which cost more. The higher price was then passed on to consumers.

Giving some credence to Mr. Ortiz’s first complaints in the 1990s, the Environmental Protection Agency found that the oil being burned by the authority did, indeed, contain unacceptable levels of sulfur, which rained down in a toxic mix on neighborhoods near the power plants for years.

Where did the warnings get Mr. Ortiz? The utility closed his lab and sent him to work in another department, where he would not have oversight duties for the testing of oil.

Now, about 25 years later, Mr. Ortiz is being heard. A committee of the Puerto Rico Senate has been pulling back the curtain on the mysterious purchasing department, the Fuel Procurement Office. And Mr. Ortiz, now retired, has been a star witness.

“It was a scheme,” he told the senators last week, “and it went on for years.”

The questions about the oil are part of a much larger mandate the Senate has taken on — determining how the authority became mired in more than $9 billion in debt it says it cannot pay. The debt troubles could not be more pressing, as the legislature faces a deadline on Tuesday for a vote on the authority’s plan for renegotiating that debt.

While it is clear that the authority’s financial downfall is complex and multifaceted, the question of whether it bought dirty oil while billing customers for clean oil stands out as one of the most charged issues it is facing. If true, the accusations would go beyond errors in judgment and amount to a decades-long fraud.

Abraham Ortiz has been testifying before a committee of the Puerto Rico Senate about the Fuel Procurement Office. Credit Jose Jimenez-Tirado for The New York Times

By MARY WILLIAMS WALSH

At Puerto Rico’s Power Company, a Recipe for Toxic Air, and Debt