(NEWPORT, WA) – Pend Oreille PUD has formally resolved all outstanding issues with Andritz Hydro relating to the Turbine Upgrade Project at Box Canyon Dam. For more than three years, Andritz has claimed over $23 million in additional monies from the PUD on the Project. The PUD contested the claims. The resolution allows the PUD to pay Andritz the remaining contract balance and officially conclude the project—avoiding almost $13 million in additional debt on the project.
“With any project of this magnitude and extended duration there are going to be disagreements,” said PUD General Manager, Colin Willenbrock. “I am pleased with the dedication our team showed to protect our customers and save the PUD a significant amount of money.”
The dispute arose from a contract for the refurbishment of four turbine generator units at Box Canyon Dam in Ione. The contract called for the replacement of the original 5-blade Kaplan style turbines with a more fish-friendly, 4-blade Kaplan style. The nameplate capacity of the generating units was also increased from 72 megawatts to 90 megawatts.
The work was to be performed in four phases—one for each unit—and specified that time was of the essence. Andritz presented a bid price of $68,944,200.00 and guaranteed completions within 2,255 days of the notice to proceed, with separate guaranteed completion dates for substantial completion of each unit. The project ended up being 588 days behind schedule. There were also 55 different approved change orders on the project totaling $13,609,615.45.
The primary issues in dispute were 41 claims for additional work Andritz had submitted at the very end of the project and the PUD’s assessment of liquidated damages for time delays. Andritz submitted its separate claims to the PUD for additional time and money without following the contract process or providing appropriate supporting documentation. The PUD withheld roughly $5.88 million under the contract for Andritz’s failure to meet project completion dates. Andritz argued its delays were excusable due to the additional work required, and demanded interest on all retained funds.
The parties attempted negotiations, including formal mediation, and ultimately ended up in binding arbitration under the terms of the contract. The nine-day arbitration in Spokane was cut short after the parties came to agreement. The PUD will pay Andritz the remaining contract balance of roughly $10.9 million, which includes statutory retainage and interest, as well as approved cost-plus change orders. The PUD will receive credit for 160 days of project delay. The final contract price totaled $88 million.
“After over 50 years of Box Canyon operations, the Commission made the difficult but prudent decision to invest in the future and modernize the plant,” said PUD Board President, Dan Peterson. “It’s finally done after ten-plus years thanks to the hard work and dedication of our PUD management team and staff. We are extremely proud of their courage and dedication in defending the interests of our customer-owners." We are extremely proud of their courage and dedication in defending the interests of our customer-owners."
The PUD commissioned the fourth and final unit in January 2015 and completed some minor warranty work on one of the units in 2016. Final project close-out was all that remained. Total plant upgrades, including the new turbines, step-up transformers, governors, plant wiring, cool water piping, and other components were funded through $143.8 million in revenue bond issuances. The PUD is anticipating one final bond issuance in the fall of 2018 to fund the upstream fish passage facility required as mitigation under its 50-year FERC license. The license expires in 2055.