Power Expectations, LLC has sued the Puerto Rico Electric Power Authority (PREPA) in U.S. District Court, alleging that the public utility unlawfully terminated a multimillion-dollar temporary generation contract and derailed a project intended to stabilize Puerto Rico’s increasingly fragile electric grid.
The lawsuit, which was assigned to Chief Judge Raúl Arias-Marxuach, accuses PREPA of breaching the contract, violating PROMESA-related obligations, acting in bad faith, and relying on unfounded accusations to justify an abrupt termination that the company says has cost it millions and undermined a critical emergency power initiative.
At stake is one of the largest single contracts in PREPA’s recent history. The Financial Oversight and Management Board approved the deal in June as a $5.8 billion to $5.9 billion, 10-year agreement, covering just 400 megawatts of what was explicitly framed as temporary emergency generation at the Aguirre plant.
The decade-long term for a stopgap project, and the roughly $1.45 billion-a-year price tag it implies, had already drawn scrutiny from the oversight board and is now part of a broader legislative reconsideration of how Puerto Rico procures emergency power.
Halted procurement and a regulatory rethink
The Power Expectations collapse is not an isolated failure. It is one half of the same troubled 3PPO procurement round that also produced a companion $2.4 billion, 10-year contract with Gothams Energy for 200 megawatts of floating LNG generation at the San Juan plant, approved with conditions alongside the Aguirre deal in May. Both contracts trace back to a March 2025 PREB directive ordering 3PPO to close an anticipated 700-to-850-megawatt gap, a target the island is now further from meeting than it was when the process began.
The fallout has already forced regulators to restart planning from scratch. On Aug. 20, six days after the FOMB voted to revoke its approval of the Power Expectations contract, PREB ordered grid operator LUMA Energy to produce, within 10 days, an updated assessment of how much temporary generation the island still needs, stating that existing studies predating this month’s collapse could no longer be relied upon. The Puerto Rico House of Representatives’ Government Committee, invoking House Resolution 42, has separately given PREPA, the Public-Private Partnerships Authority, 3PPO, and PREB 10 days to turn over communications, legal opinions, and internal analyses related to the contract’s evaluation and approval.
The most consequential response may be legislative. Rep. Víctor Parés Otero, the Government Committee’s chairman, said lawmakers are reviewing amendments to Regulation 8815, the rule governing energy procurement, that would strip 3PPO of its role overseeing temporary generation contracts and transfer that authority directly to PREB.
“Given what happened with 3PPO and the Power Expectations contract, that model is not viable,” Parés Otero said, adding that the island still needs roughly 800 megawatts of temporary generation to avoid load shedding and that PREB already has the legal authority to adjudicate those contracts without routing them through 3PPO, which is operated under contract by Regulatory Compliance Services Corp.
Whether that shift happens before Puerto Rico’s next generation shortfall arrives may determine how the island’s utility procures emergency power for years to come.
What the complaint alleges
PREPA has been in bankruptcy since 2017 to restructure some $9 billion in debt, and it is unclear whether a suspension against lawsuits applies in this case. Neither PREPA nor the Public-Private Partnership Authority answered requests for comment.
The complaint offers a detailed account of Power Expectations’ 15-month partnership with Enchanted Rock, a Texas-based natural-gas microgrid company whose role in the procurement later became the focal point of controversy after it claimed its signature in the contract was illegal and unauthorized. Power Expectations argues that PREPA’s termination, issued on August 18, 2026, just eighty-one days before the first generation units were scheduled to be deployed, was not based on any legitimate contractual default but instead on a politically charged accusation that misrepresented the nature of the partnership and the authority under which the contract was signed.
According to the lawsuit, the relationship between Power Expectations and Enchanted Rock began in February 2025, when both companies started collaborating on emergency generation concepts for Puerto Rico. Their work quickly evolved into a joint effort to design an 800-megawatt generation program, complete with priced equipment plans and deployment strategies. On March 5, 2025, they signed a Referral Agreement establishing commission structures. Two weeks later, they formalized their commercial relationship through a March 19, 2025 Memorandum of Understanding (MOU) that Power Expectations now describes as the backbone of its authority to act on Enchanted Rock’s behalf.
The MOU appointed Power Expectations as Enchanted Rock’s exclusive agent and representative in Puerto Rico for the marketing, promotion, distribution, and sale of Enchanted Rock’s products and services. It prohibited Enchanted Rock from appointing any other representative or establishing its own sales presence on the island. Most importantly, the MOU authorized Power Expectations to solicit and negotiate contracts and to represent Enchanted Rock in bidding processes, tenders, and commercial opportunities. Enchanted Rock agreed to honor commitments made by Power Expectations within the scope of that authority. The MOU had a two-year term, subject to automatic renewal, and was in full force on June 10, 2026, the day the contract with PREPA was signed.
Power Expectations argues that its authority was not only contractual but repeatedly ratified by Enchanted Rock’s own actions throughout the procurement. The complaint recounts how Enchanted Rock’s founder and CEO, W. Thomas McAndrew, signed a written letter of support for the bid and executed a financial commitment backing a $57 million bid bond required for the procurement. Representatives from both companies conducted a joint site visit to PREPA’s Costa Sur plant in April 2025, walking access roads, shoreline perimeters, and tank farm areas to assess construction needs. In May 2025, Power Expectations traveled to Enchanted Rock’s Houston headquarters, where Enchanted Rock staff presented a customized program titled “Natural Gas Microgrid Delivery,” prepared specifically for Puerto Rico. Executives from both companies communicated about execution logistics for the contract in early June 2026.
The complaint also references two executed instruments, a Broker Representation Agreement and a corporate resolution, that describe a Consortium Operating Agreement governing the Seller Consortium. These documents identify Power Expectations as the Managing Member and Principal Contractor, responsible for overall management, coordination, compliance, and execution of obligations under the PPOA. Throughout the procurement, the Seller Consortium, Power Expectations, Enchanted Rock, and Reyes Contractor Group, was held out as a unified bidding group to the Third-Party Procurement Office (3PPO), PREPA, the Puerto Rico Energy Bureau (PREB), and the Financial Oversight and Management Board (FOMB). The consortium was deemed qualified by 3PPO and selected as the conditional awardee of 400 megawatts of temporary generation at Aguirre.
Yet days before the June 10 signing, Enchanted Rock, now known as ERock, allegedly became unwilling to proceed. Power Expectations attributes the shift to ERock Inc.’s pending initial public offering, which was scheduled to begin trading on the New York Stock Exchange on the same day the PPOA was executed. Facing the project’s collapse, Power Expectations says it exercised its authority under the MOU and proceeded with execution.
To formalize the signature, Power Expectations’ board adopted a corporate resolution designating Jobadiah “Jhoby” Weeks as the authorized signatory on behalf of Enchanted Rock. The resolution was provided to 3PPO, though Power Expectations says it does not know whether it ever reached PREPA. PREPA later claimed that Enchanted Rock’s parent company accused Power Expectations of improperly signing the contract on its behalf, an allegation the FOMB cited when it revoked its approval and referred the matter to law enforcement. Power Expectations calls the accusation baseless, pointing to the MOU, the documented partnership, and Enchanted Rock’s repeated ratification of its authority.
The lawsuit also challenges PREPA’s stated reasons for termination. The PPOA was intentionally one-sided, Power Expectations says, placing nearly every cost and risk on the Seller: equipment acquisition, construction, permitting, fuel logistics, interconnection, insurance, indemnities, and regulatory compliance. PREPA’s only obligation was to pay for metered and accepted kilowatt-hours, with no minimum-take or make-whole provisions. Power Expectations says it invested millions preparing for deployment and was ready to mobilize the first forty megawatts.
A collapse the oversight board saw coming
PREPA terminated the contract effective immediately on August 18, citing failure to provide a performance bond and concerns over an assignment of Enchanted Rock’s contractual role to Flotek Industries. Power Expectations argues both reasons were pretextual and caused by PREPA itself. The company says PREPA repeatedly failed to provide essential bond language required by the surety, despite written requests on July 9, July 21, August 6, and August 13, and a joint meeting on August 14 where PREPA agreed to continue working toward a solution. The assignment issue, the complaint notes, had already been approved by PREPA on July 31 under Article XVI of the PPOA.
Power Expectations alleges that the true catalyst for termination was an August 14 press release from the FOMB revoking its approval of the contract and referring the matter to law enforcement. The lawsuit argues that PREPA acted on the press release, not on any contractual default, and did so with only one day’s notice, despite a ninety-day notice requirement for terminations not based on seller default.
Power Expectations is seeking declaratory relief, damages, and an injunction preventing PREPA from awarding the Aguirre project to another provider. The company says it remains ready to deliver the 400 megawatts of temporary generation and wants only to return to the position it held on August 17, 2026, the day before termination. Amid the lawsuit’s filing, PREPA Executive Director Mary Zapata left the position.
The FOMB’s own record shows the financial concerns behind this week’s lawsuit were not a late discovery. As Caribbean Business has reported in its ongoing coverage of the island’s generation shortfall, 3PPO had flagged Power Expectations’ capacity as early as August 2025, roughly a year before termination, writing that the company “did not provide adequate evidence of organizational or financial capacity to sustain performance over a ten-year contract term.” The oversight board granted conditional approval anyway in May 2026, citing the urgency of a system facing an anticipated 700-to-850-megawatt shortfall, and required revisions that were incorporated before the June 10 execution. Fifty-seven days after signing, PREPA had reported no installation work at Aguirre, no completed milestones, and no delivery of the required performance bond, a separate instrument from the $57 million bid bond posted earlier in the process.
