The contract followed the direction of the Puerto Rico Energy Bureau, Puerto Rico’s independent energy regulator, in March 2025 to address the emergency related to an anticipated generation shortfall of approximately 700 MW to 850 MW, and to stabilize the system reliability.

PREPA submitted the contract for the Oversight Board’s review on January 16, 2026, as required under Section 204(b)(2) of the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (PROMESA). The Oversight Board then issued several Requests for Information (RFI), requiring clarification on issues including the procurement process itself, financing and pricing, and capacity to execute the project.

The Oversight Board was keenly aware of the emergency and the need to add much-needed capacity to generate electricity fast. On May 8, 2026, the Oversight Board conditionally approved the contract to enable the project to move forward ahead of Puerto Rico’s peak demand season. The Oversight Board’s conditions addressed outstanding risks and required the parties to add important contractual safeguards to protect the people of Puerto Rico in case the contract partners failed to deliver the capacity to create the required electricity. These safeguards included:

• Develop milestones for project schedule, including permitting, interconnection, and infrastructure deployment, to achieve full commercial operation within 90 days to 150 days.
• Establish liquidated damages, allowable delays, and termination provisions tied to failure to achieve commercial operation by the contractual deadline.
• Establish a performance bond as financial guarantee should the seller parties not achieve commercial operation within 90 days to 150 days.
• Establish liquified natural gas (LNG) as the primary fuel and limit diesel operation to defined contingency scenarios and ensure that PREPA and ratepayers are not unduly exposed to higher costs of diesel.

The contract was revised to include each of these safeguards, and the Oversight Board gave its final approval on June 2. On June 10, the contract was executed. On June 16, Enchanted Rock/ERock informs the Government that it is not a party to the contract and that the signature on the contract was not authorized. The Oversight Board was not informed at that time. On August 5, 2026, the Third-Party Procurement Office (3PPO) informed the Oversight Board that Enchanted Rock/ERock was substituted with Flotek Industries Inc., an entirely new party; and on August 7, 2026, the Oversight Board became aware through media inquiries that Enchanted Rock/ERock said it was never part of the procurement. Enchanted Rock/ERock then confirmed to the Oversight Board that its name and signature were used without authorization. Since then, the Oversight Board has been informed of more allegations of fraudulent conduct.

Enchanted Rock/ERock participation had been a fundamental basis for the Oversight Board’s approval because 3PPO had established that Power Expectations lacked financial capacity and technical expertise to perform the contract on its own. Without Enchanted Rock/ERock, the contract no longer complied with the determination reached following the Oversight Board’s review. In addition, Power Expectations failed to satisfy the contract’s performance-security requirements.

The Oversight Board also learned that Power Expectations had purportedly transferred the interest of Enchanted Rock/ERock (which Power Expectations did not own) to Flotek on June 12 2026, two days after the contract was signed. It remains unclear how or when Flotek was selected. Proposed amendments or modifications to a contract, including the replacement of a material counterparty, are subject to the Oversight Board’s review and approval. However, such approval from the Oversight Board was never sought or provided. In addition, Flotek announced that it would provide only 40 MW power generation capacity of the contract’s contemplated 400 MW temporary generation.

Under PROMESA, the Oversight Board reviews and approves certain government contracts to assure that they “promote market competition” and “are not inconsistent with the approved fiscal plan.” PROMESA mandates that the Contract Review Policy is designed, in part, “to increase the public’s faith” in the public procurement process.

The Oversight Board’s process to review and approve contracts relies largely on the government parties entering into the agreement to vet the counterparties. The Oversight Board takes no position on the dispute between Power Expectations and Enchanted Rock/ERock.

Deployment of this temporary electricity generation capacity was scheduled to conclude on November 7. As recently as August 5, 3PPO reported to the Oversight Board that since the execution of the contract no progress had occurred. Nothing was built, shipped, or delivered. Without the Oversight Board’s involvement, review process, and persistent questions, the people of Puerto Rico may never know the facts about a deeply flawed procurement.