ARPA Wins Jury Trial Against Boiler Manufacturer

ARPA, Arkansas River Power Authority, won a $4.2 million verdict against boiler manufacturer Babcock and Wilcox in U.S. District Court in Denver on Monday, November 21^st.  Rick Rigel, ARPA General Manager said, “The eight person jury verdict confirms what we have maintained all along about the boiler; it was not efficient with regard to EPA standards or power output.”  The plant ceased operations in 2011 and several years later, it was decided to sell off the remaining portions of the power plant which did not belong to the City of Lamar, site of the Repowering Project.  ARPA and Lamar are still engaged in a legal dispute over the cost of performance bonds which financed the power plant’s construction.  Rigel told The Prowers Journal that now that the discovery of that part of the trial is wrapping up, a court hearing has been set for March of next year.

The verdict is one piece of good news in a costly and long-running scenario that has plagued the operation for a number of years for the ARPA organization, Lamar Light Plant and ARPA member municipalities. Once it was determined that the boiler would not work and any agreement between ARPA and the boiler manufacturer was at an impasse, ARPA sued Babcock and Wilcox, claiming the $23M boiler was not operational in switching from natural gas to coal for electric power production for the ARPA members.

Babcock and Wilcox claimed and countersued ARPA, alleging that mismanagement on the part of the power broker was the reason why the unit failed to perform. Rigel said B & W does have the opportunity to make an appeal on the ruling, “But we’re going to hold to a ‘wait and see’ approach on that.”  Rigel said he believed the manufacturer would have little to gain on that score.  He added that the $4.2M award won’t impact the organization in terms of legal costs, “We had already budgeted for a lengthy legal process,” he said.  ARPA was represented in court by lead attorney Craig Johnson of Fairfield and Woods.

Rigel said the boiler, which is still on site at the plant, is on an open, world-wide market. “The people who have shown an interest in the boiler are from out of country.  In some of these countries, the emissions standards are not as stringent as ours, so they could purchase the boiler, break it down and ship it to their location to manufacture electricity,” he said.  The ARPA board recently extended the contract with International Process Plants to assist it with the sale of the Lamar Repowering Project as a complete unit.  The extension will run through November 2017.

Since the plant has been off line, ARPA has purchased power from various generation companies to feed to its member cities.  The main drawback here is that along with those power costs, ARPA customers are still paying for the construction of a failed plant.

By Russ Baldwin