Gypsum biomass trial nears conclusion in U.S. District Court in Denver
What’s being debated?
• Wellons, an Oregon company, built a biomass plant in Gypsum that started generating electricity in December 2013.
• Wellons says it’s owed $17.5 million by Eagle Valley Clean Energy, the plant’s owner-operator, for construction work on the plant.
• Wellons also asserts that instead of using some of the $18.5 million in federal funding Eagle Valley Clean Energy received from the U.S. Department of Agriculture Rural Development Service to pay that balance, Eagle Valley Clean Energy and others allegedly conspired to commit “fraudulent transfers” and “civil conspiracy” and divvied up the money amongst themselves.
• Wellons says Eagle Valley Clean Energy also prohibited Wellons from completing the items on its final punch list.
• Eagle Valley Clean Energy, a Provo, Utah-based consortium, claims it is owed $19.6 million by Wellons because of alleged construction defects in the plant.
• Eagle Valley Clean Energy says some of Wellons’ construction defects caused a conveyor-belt fire on Dec. 13, 2014, which led to the plant sitting idle for a year.
• GCube, the insurance company that covers the biomass plant, says Wellons owes it $3.5 million for the December 2014 conveyor belt fire.
• Wellons countered that the fire started because Eagle Valley Clean Energy didn’t clean the conveyor.
DENVER — No one from Wellons, the company that built Gypsum’s biomass plant, would respond to repeat requests for help with alleged construction defects, plant owners from Eagle Valley Clean Energy said during testimony in federal court on Thursday.
Kendrick Wait, one of the proprietors of Eagle Valley Clean Energy, the company that owns and operates the plant, testified Thursday that the company started asking Wellons for help in September 2014. As many as 20 punch lists were exchanged between Eagle Valley Clean Energy and Wellons about items that still needed to be completed, around 90 items per list, Wait said.
“They fixed some of the items, but not the ones that cost money to fix,” Wait said.
Wait said if Wellons does not fix the problems, then the contract between the two companies allows Eagle Valley Clean Energy to make the fixes itself and reduce, accordingly, the final amount of money it pays Wellons for construction of the plant. Wait said Eagle Valley Clean Energy expects to spend $16 million to make the remaining repairs.
Fighting about the fire
In addition to the money spent on repairs, Eagle Valley Clean Energy is seeking compensation for lost production time when the plant caught fire a few years ago. That same contract assigned a numerical value to daily damages for production loss.
“This is close to a $70 million contract and Wellons was entrusted with the core of that contract,” Wait said.
The Gypsum biomass plant is supposed to burn wood damaged by pine beetles. The fuel burns and creates heat and steam. The steam rises and turns turbines that generate electricity. At 4:20 a.m., Dec. 13, 2014, a bearing failed on a conveyor belt carrying wood chips to the burner. A slow, smoldering fire soon spread.
There was no fire-suppression sprinkler system on that conveyor belt when the plant was new. A sprinkler system was not required at the time, testified Charlie Sullivan, a senior forensics consultant for AEI, a Littleton fire-protection firm. Sullivan examined the evidence and reports after the fire.
“I believe a fully functioning system would have extinguished or contained the fire,” Sullivan said.
Sullivan testified that it would have been “practical” to install a fire-suppression sprinkler system on the conveyor belt.
Holy Cross, a utility co-op serving Western Colorado, contracted to buy that biomass-generated electricity from Eagle Valley Clean Energy. Both Holy Cross and Colorado’s Public Utilities Commission said the amount of money Eagle Valley Clean Energy charges for that energy is “confidential.”
Wait testified that after the fire, Holy Cross canceled the contract to sell power because Eagle Valley Clean Energy could not deliver electricity for two years: The first year because of issues with the plant, Wait said, and the second year because of the fire.
On Thanksgiving Day 2015, Eagle Valley Clean Energy restarted the plant.
After that fire, GCube, the insurance company that covered the biomass plant, canceled its policy. Eagle Valley Clean Energy found another insurer, Wait said, but it cost them three times as much.
The trial is headed into its home stretch in Judge R. Brooke Jackson’s U.S. District courtroom in Denver. Closing arguments are expected today, followed by jury deliberation.