Lawmaker calls for probe into $5.8 billion temporary generation contract at Aguirre

Rep. Swanny Enit Vargas Laureano (Facebook via Swanny Enit Vargas Laureano)

By THE STAR STAFF

The Puerto Rico House of Representatives may investigate the controversial $5.8 billion contract awarded for 400 megawatts (MW) of temporary generation at the Aguirre power complex in Salinas, following a series of irregularities, missed deadlines and allegations of possible fraud surrounding the project, if legislation to that effect is approved.

The resolution, filed by Rep. Swanny Enit Vargas Laureano, directs the House Committee on Economic Development, Planning, Telecommunications, Public‑Private Partnerships and Energy to conduct an “exhaustive and comprehensive” probe into every stage of the procurement and execution of the agreement between the Puerto Rico Electric Power Authority (PREPA) and a consortium led by Power Expectations. The contract, approved in June, was intended to address an urgent generation shortfall of 700 to 850 MW amid ongoing blackouts and system instability.

According to the resolution, the procurement process was troubled from the outset. During the request for proposals issued on July 15, 2025, unidentified “interested parties” introduced “non‑negotiable terms” that only Power Expectations could meet, effectively excluding potentially cheaper or cleaner alternatives. The document notes that a financial capacity analysis prepared by the Third‑Party Procurement Office (3PPO) on Aug. 28, 2025 found that the consortium lacked sufficient organizational and financial strength to sustain a contract of this scale, warning that the annual value of the agreement was disproportionate to Power Expectations’ reported annual revenues of just $17 million.

Despite those concerns, the Financial Oversight and Management Board conditionally approved the contract on May 8 of this year, authorizing its execution on June 2. Two days later, however, Enchanted Rock -- the partner whose technical and financial capacity had been central to the consortium’s evaluation -- withdrew from the project, assigning its interests to Flotek Industries.

By early August, PREPA had informed the oversight board that the consortium had failed to submit the required $1.18 billion performance bond and had not met any of the mandatory project milestones, despite 57 days having passed since the contract’s execution.

The situation escalated sharply on Aug. 7, when Enchanted Rock’s parent company notified the oversight board that the firm’s name and the signature of one of its executives had been used without authorization in documents related to the procurement process, as previously reported by the STAR. The board described the allegation as “extremely concerning” and said it was evaluating revoking its approval of the contract and referring the matter to authorities.

The resolution notes that, if confirmed, the alleged misrepresentation would constitute a fraud scheme “of unprecedented magnitude,” drawing comparisons to the Whitefish contract after Hurricane Maria and the early‑pandemic COVID test procurement scandal.

The House investigation will examine who introduced the non‑negotiable terms, why the contract was awarded to the lowest‑scoring and highest‑risk proponent, the legality of Enchanted Rock’s replacement by Flotek, the role of PREPA, the Public‑Private Partnerships Authority and 3PPO, and the potential fiscal and rate impacts on customers.

The committee is authorized to hold public and executive hearings and compel testimony. It must deliver its findings and recommendations -- including any referrals to state or federal authorities -- within 90 days of the resolution’s approval.