Power Expectations pushes back against PREPA bid to dismiss federal lawsuit
Says utility is trying to ‘sidestep’ PROMESA jurisdiction
By THE STAR STAFF
Power Expectations LLC has urged the U.S. District Court to reject the Puerto Rico Electric Power Authority’s (PREPA) attempt to dismiss, or transfer, the company’s lawsuit over PREPA’s termination of a 400‑megawatt (MW) emergency generation contract, arguing that PREPA is mischaracterizing both the nature of the dispute and the court’s authority under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).
In a recent filing responding late last week to federal Judge Raúl Arias-Marxuach’s order to show cause, Power Expectations insisted the case properly belongs in federal court because it is directly “related to” PREPA’s ongoing Title III bankruptcy, citing PROMESA’s provisions. The company said the lawsuit challenges PREPA’s termination of the Power Purchase and Operating Agreement (PPOA) and seeks reinstatement of the contract, damages and declaratory relief, claims that necessarily affect PREPA’s rights and liabilities as a Title III debtor.
“This action directly concerns PREPA’s contractual rights, liabilities, obligations, options, and freedom of action under a post‑petition agreement,” Power Expectations wrote, adding that any monetary judgment “would directly affect [PREPA’s] assets and financial liabilities while its Title III case remains unresolved.”
PREPA, in its own motion filed a day later on Friday, asked the court to dismiss the case outright, arguing that because Power Expectations itself claims the matter is “related to” PREPA’s Title III proceeding, the lawsuit must be filed as an adversary proceeding before Judge Laura Taylor Swain, who oversees the bankruptcy. PREPA said the plaintiff failed to follow PROMESA procedures, including filing the required PROMESA cover sheet and initiating the case under the Federal Rules of Bankruptcy Procedure.
PREPA also argued that the relief sought, which is an injunction forcing the utility to perform under what it calls a “nearly $6 billion” contract, cannot be granted outside the Title III forum.
“This case is therefore wholly procedurally improper and should be dismissed without prejudice,” PREPA wrote, adding that at minimum the case should be transferred to Judge Swain under Local Rule 3A.
Power Expectations countered that PREPA’s procedural arguments ignore the substance of the jurisdictional question. The company pointed to recent federal decisions -- including the 2025 LUMA ruling -- in which the court held that disputes affecting PREPA’s contractual rights and operational obligations fall squarely within PROMESA’s “related to” jurisdiction.
The PPOA itself, Power Expectations noted, explicitly ties PREPA’s payment obligations to its Title III case and requires validation by the oversight board’s Title III professionals before any payment becomes due. The contract also contains forum‑selection clauses directing disputes to the U.S. District Court for Puerto Rico when they relate to PREPA’s bankruptcy.
The PPOA “expressly incorporates PREPA’s ongoing Title III proceeding into the treatment of PREPA’s contractual payment obligations,” the company wrote.
PREPA separately filed an emergency motion asking the court to suspend all deadlines -- including its Sept. 16 deadline to respond to the preliminary injunction request -- until the dismissal or transfer issue is resolved. The utility argued that responding to the injunction before determining jurisdiction would be inappropriate.
Arias-Marxuach has not yet ruled on jurisdiction, dismissal, or PREPA’s request to halt deadlines.
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