Fiscal board officially explains revocation of temporary generation contract

By THE STAR STAFF

The Financial Oversight and Management Board for Puerto Rico has formally revoked its approval of the Puerto Rico Electric Power Authority’s (PREPA) temporary emergency generation contract with Power Expectations, Enchanted Rock and Reyes Contractor, explaining its reasons for terminating the agreement following allegations that Enchanted Rock’s name and signature were used without authorization.

In a letter sent Monday to Gov. Jenniffer González Colón, Energy Czar Josué Colón, PREPA Executive Director Mary Zapata and Third‑Party Procurement Office President Osvaldo Carlo, the oversight board said it withdrew approval after ERock Inc., the holding company of Enchanted Rock, informed the regulator on Aug. 7 that it “is not a party to the temporary power generation project” and that its signature on the contract was unauthorized.

As previously reported by the STAR, the contract, valued at $5.9 billion over 10 years, was intended to deploy 400 megawatts of temporary generation to address Puerto Rico’s ongoing energy emergency. The board said Enchanted Rock’s participation was essential because the other consortium members lacked the experience and financial capacity required for the project.

The letter states that Power Expectations transferred Enchanted Rock’s interest to Flotek Industries on June 12, two days after the contract was signed, without PREPA’s consent and without notifying the oversight board. PREPA later consented to the substitution on July 31, unaware that Enchanted Rock had already raised concerns about the signature weeks earlier.

The board said it was not informed of the allegations until Aug. 7, when it received a media inquiry. It noted that both the Public‑Private Partnerships Authority (P3A) and 3PPO had been aware of the issue since June 16.

The letter also cites additional concerns, including the absence of a required $1.18 billion performance bond, unmet milestones, and inconsistencies in communications between PREPA, 3PPO and the board.

The oversight board said the procurement was “fundamentally flawed” and that continuing the project would be inappropriate given the lack of progress. It urged PREPA and the Puerto Rico Energy Bureau to pursue alternative measures to address the island’s generation shortfall, including repairs to existing units and acceleration of other projects.

The board’s decision follows earlier referrals by the P3A and the energy czar to the island Justice Department and federal authorities for independent review of the allegations.

PREPA has not yet commented publicly on the termination directive.