(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.
