Fiscal board to refer $5.8 billion temporary emergency contract to authorities

Financial Oversight and Management Board Executive Director Robert F. Mujica Jr. (YouTube Live via Financial Oversight and Management Board)

By THE STAR STAFF

Puerto Rico’s temporary generation project was at the center of a scandal last week after the Financial Oversight and Management Board disclosed that ERock, formerly known as Enchanted Rock, said its name and signature were used without authorization in the Puerto Rico Electric Power Authority’s (PREPA) $5.8 billion emergency‑power contract.

In an Aug. 7 letter to Third‑Party Procurement Office (3PPO) President Osvaldo Carlo Linares, the oversight board’s executive director, Robert F. Mujica Jr., said the allegation is “extremely troubling” and has prompted the board to consider revoking its approval of the contract and referring the matter to authorities. The oversight board emphasized that Enchanted Rock’s participation was a key factor in determining that the seller consortium had the technical and financial capacity to deliver 400 megawatts of temporary generation.

The board’s warning comes as the project shows no signs of progress. Fifty‑seven days after the contract was executed on June 10, PREPA has reported no installation work at the Aguirre power plant, no completed milestones, and no delivery of the required $1.18 billion performance bond. PREPA also confirmed that the seller requested a schedule extension, which the utility denied.

In a statement, ERock confirmed it was never a party to the project.

“ERock is not a party to the temporary power generation project referenced,” the company said. “We have become aware that our company’s name and signature were used without our authorization in connection with this procurement. We have reported this matter to the Independent Third‑Party Procurement Office and are cooperating fully with their review.”

The oversight board said ERock’s confirmation raises serious questions about how the contract was executed and whether misrepresentations occurred during the procurement.

The board’s letter outlines a troubled history. The original emergency‑generation solicitation in March 2025 collapsed amid regulatory objections and legal challenges. A second solicitation in July 2025 produced three finalists, Power Expectations, Gotham and Javelin, but PREPA waited six months before submitting the proposed contract to the board, despite the island’s ongoing generation shortfall.

During its review, the oversight board found significant deficiencies: unenforceable milestones, weak delay remedies, inconsistent bid‑bond valuations, including a $300,000 surety bond for a multibillion‑dollar project, and a financing model dependent on PREPA receivables despite no guaranteed runtime. The board also noted that Power Expectations and Reyes Contractor lacked experience with utility‑scale projects and had limited financial capacity, making Enchanted Rock’s involvement essential.

Although the oversight board ultimately granted conditional approval in May 2026 due to Puerto Rico’s urgent need for generation, it required strict revisions. Those were incorporated before execution on June 2.

But two days after the contract was signed, Power Expectations informed PREPA that Enchanted Rock no longer wished to participate and that its interests had been assigned to Flotek Industries of Houston. PREPA later confirmed the substitution.

In social‑media posts, Carlo offered a sharply different account of the controversy. He said Power Expectations had a valid representation agreement allowing it to sign contracts on Enchanted Rock’s behalf in Puerto Rico and that PREPA received a corporate resolution identifying the authorized signatory. The contract, he said, was executed through DocuSign.

Carlo argued that the dispute arose only after Enchanted Rock reorganized under a new parent entity, “E Rock,” and later questioned whether the consortium still had authority to sign. He described the matter as a legal disagreement between private companies -- one he believes is now moot because Enchanted Rock is no longer part of the contract.

He also defended the broader procurement, noting that Puerto Rico’s emergency‑generation deficit forced the Puerto Rico Energy Bureau to issue a solicitation with unusual terms: no minimum‑use guarantees and payment only for energy consumed. Carlo said those conditions made the market extremely narrow and that Power Expectations was the only bidder able to meet all requirements.