New Development in City of Lamar/ARPA Trial

A March 6, 2017 court date was vacated due to an agreement between both parties, the City of Lamar as plaintiff and Arkansas River Power Authority as defendant. A joint motion in Case 31 was issued in District Court to vacate the trial date of March 6-31 and to stay deadlines at the request of attorneys for both parties.

The lawsuit titled Case 31 is all that’s left in the on-going litigation between ARPA, Arkansas River Power Authority and the City of Lamar. The lawsuit was brought by the city last year to dismiss the bonds issued to pay for the cost of the Lamar Repowering Project, approximately $170 million at the outset.

The City of Lamar is suing to have the bond payments dismissed, to be removed from membership in ARPA and to be free to broker electric rates with an outside provider. The city’s prime contention is that utility customers, for the past several years, have had to pay an estimated five to six cents for each kilowatt of power they consume to pay down the bonds used to construct the failed power plant.  There were four issuances of bonds, in 2006, 2007, 2008 and 2010 mostly to deal with cost over-runs during the construction period other than the initial bonds for construction.

In most recent developments, both parties met in mediation on February 22, 2017 just prior to the March 6^th court date and reached a ‘settlement in principle’.  Court documents show that the settlement is contingent upon the unanimous approval of the municipalities comprising ARPA and the approval, if necessary, of bondholders and bond insurers.  It’s estimated that this will take approximately two months or 60 days to gain the needed approvals and a status report is required to be filed by both parties within that time frame.

Lamar City Administrator, John Sutherland, downplayed this change as being significant in that it was, in his view, largely, ‘procedural’. Sutherland said both parties saw some advantages to sitting down and negotiating before the case went to trial, but there are some hurdles that have to be crossed.  “The case can go back  to full court action if the discussions fall apart and we’d have a new court date to begin again,” he explained, adding that would be sometime in October.  Sutherland said the sixty day extension will allow ARPA’s member cities to attempt to come to a unanimous agreement on the settlement.  That means the La Junta, Trinidad, Holly, Springfield and Las Animas will all have to agree on the settlement before it can be resolved and meet with approval with the City of Lamar.

By Russ Baldwin