PREPA is sued over canceled 400 MW emergency power contract

The Aguirre power station in Salinas

By THE STAR STAFF

Power Expectations LLC has sued the Puerto Rico Electric Power Authority (PREPA) after the utility terminated a contract expected to provide 400 megawatts of temporary generation to support Puerto Rico’s fragile electric power grid.

The company, which led the winning consortium for the project, filed a verified complaint Tuesday in the U.S. District Court for the District of Puerto Rico alleging breach of contract, bad faith and violations of obligations under the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA. The Financial Oversight and Management Board had revoked approval of the agreement and directed PREPA to terminate it after Enchanted Rock alleged its name and signature were used without authorization.

Because PREPA has been in bankruptcy since 2017, the complaint raises questions about whether the utility can be sued while litigation is generally stayed. Power Expectations is seeking a permanent injunction barring PREPA from terminating or transferring the contract and requiring the utility to provide bond language and bank details needed for performance security.

The case, assigned to Judge Raúl Arias Marxuach, centers on PREPA’s Aug. 18 termination of the Power Purchase and Operating Agreement, 81 days before the first generation units were scheduled for deployment. Power Expectations says PREPA stopped the project before any energy was sold or payments were made, despite the company’s readiness to mobilize the first 40 megawatts.

Power Expectations argues PREPA relied on two manufactured grounds for termination: the lack of a performance bond and an alleged improper assignment of contractual interests. The company says PREPA caused the bond issue by repeatedly failing to provide language the surety required, despite written requests on July 9, July 21, Aug. 6 and Aug. 13.

The complaint also disputes PREPA’s reliance on the oversight board’s concerns about an assignment involving Enchanted Rock and Flotek Industries, saying PREPA had already approved the assignment under Article XVI of the contract.

The filing describes a 15-month partnership between Power Expectations and Texas-based Enchanted Rock, a natural-gas microgrid company whose parent, ERock Inc., went public on June 10 of this year, the same day the contract was signed. The companies began collaborating in early 2025 on an 800-megawatt generation concept for Puerto Rico and submitted a unified bid for the emergency procurement.

According to the lawsuit, Enchanted Rock appointed Power Expectations as its exclusive agent and representative in Puerto Rico through a March 19, 2025 memorandum of understanding (MOU). The MOU authorized Power Expectations to market Enchanted Rock’s products, negotiate contracts, participate in bids, and bind the company within that authority.

Power Expectations says that authority was written, apparent and ratified. It cites Enchanted Rock’s CEO signing a bid-support letter and a financial commitment backing a $57 million bid bond, joint visits to PREPA’s Costa Sur plant, and technical presentations by Enchanted Rock staff at the company’s Houston headquarters.

The complaint says Enchanted Rock did not revoke or limit that authority before the agreement was executed. But days before signing, the company allegedly reversed course, which Power Expectations attributes to ERock’s pending initial public offering. To avoid collapse of the project, Power Expectations says it proceeded under the MOU and a board resolution naming Jobadiah “Jhoby” Weeks as Enchanted Rock’s authorized signatory.

Power Expectations argues PREPA acted unlawfully by terminating the contract on one day’s notice, despite what it says was a 90-day notice requirement for terminations not based on seller default. It is seeking declaratory relief, damages, and an injunction preventing PREPA from awarding the Aguirre project to another provider while the case proceeds.

The dispute comes as Puerto Rico’s power system remains unstable and intermittent blackouts continue to affect residents. Power Expectations says it remains prepared to deliver the temporary generation and wants to be restored to the position it held before the termination.

Neither PREPA nor the Public-Private Partnership Authority responded to a request for comment.