Former PREPA Director Admits She Signed Power Expectations Contract Without Knowing of Signature Irregularities
U.S. District Judge Laura Taylor Swain has ordered Power Expectations, LLC and the Puerto Rico Electric Power Authority (PREPA) to file a joint status report by September 25, a move that effectively pauses the federal lawsuit over PREPA’s canceled emergency generation contract at the same time lawmakers in San Juan are probing how the troubled procurement unfolded.
The order, issued recently, came after the court reviewed Power Expectations’ request for a preliminary injunction and PREPA’s emergency motion seeking to suspend all deadlines in the case. Judge Raul M. Arias‑Marxuach, who initially oversaw the suit, on September 17 transferred the dispute directly to Swain, who has overseen every major development in PREPA’s restructuring since it filed for bankruptcy in 2017.
Swain instructed the parties to outline their positions on further briefing and propose a schedule, while also addressing several threshold issues, including PREPA’s legal representation under PROMESA, whether the Financial Oversight and Management Board must be joined as a party, and how PROMESA’s automatic stay and section 305 may limit the court’s authority.
The lawsuit filed by Power Expectations stems from PREPA’s cancellation of the $5.9 billion temporary power generation contract after the Oversight Board revoked its approval, citing severe operational and compliance deficiencies. The most consequential development occurred when ERock, Inc., the holding company for consortium partner Enchanted Rock, informed the Oversight Board that it was not a party to the project and that its name and signature had been used without authorization.
The federal court’s intervention coincides with new revelations from former PREPA executive director Mary Carmen Zapata Acosta, who testified Monday before the House Government Committee that she signed the Power Expectations contract without knowing that one of the signatures from the consortium was invalid or unauthorized. Zapata Acosta said she executed the agreement late on June 10 only after it had received approvals from PREPA’s governing board, the Energy Bureau, the Oversight Board and PREPA’s legal division.
She told lawmakers that PREPA was excluded from key early stages of the procurement process, including the drafting of the request for proposals for temporary generation. According to her account, the utility received the final RFP less than an hour before its publication and had no meaningful opportunity to review it.
Zapata Acosta testified that PREPA first learned on June 17 that the Third‑Party Procurement Office (3PPO) was evaluating a request to replace Enchanted Rock with Flowtech as a consortium partner. She said documents showed Power Expectations had already signed a substitution agreement on June 12 without PREPA’s authorization. She later signed PREPA’s consent on July 31 after 3PPO issued a favorable recommendation.
The former director said she only became aware of a dispute between Enchanted Rock and Power Expectations on August 7, when she received questions from a television program. She testified that both the Public‑Private Partnerships Authority and 3PPO had information about the controversy since mid‑June, but neither she nor PREPA’s legal counsel had been informed.
After the Oversight Board withdrew its approval of the contract and PREPA identified issues with the performance bond, the utility terminated the agreement on August 18. Zapata Acosta said that between September 1 and 2, PREPA referred matters related to the controversy to the Department of Justice, the Office of the Comptroller, the Office of the Inspector General, the Office of Government Ethics, the General Services Administration, the FBI and the Securities and Exchange Commission.
Swain’s order leaves PREPA’s deadline to respond to the federal complaint on hold until the joint status report is filed and reviewed. The report is expected to determine how the case proceeds within the broader context of PREPA’s long‑running Title III bankruptcy, now entering its ninth year under Swain’s supervision, and may intersect with the legislative investigation into how the contract was approved, altered and ultimately revoked.
