R&R Lumber Co. seeks co-gen cost recovery
From our weekly issue dated March 18, 2009
A half-million dollar dispute may result in PacificCorp and Illinois Valley’s Rough & Ready Lumber Co. facing off in court.
Rough & Ready President Link Phillippi said that the company’s lawyer, Malinda Davison of Portland, filed the $515,000 lawsuit in Josephine County Circuit Court on March 2. PacificCorp, of which Pacific Power is one of three subsidiaries, has until April 1 to respond, Phillippi said.
The lawsuit stems from cost overruns associated with the company’s co-generation plant, which opened in November 2007.
Phillippi said that the company began talking to PacificCorp engineers in September 2005 about the plant project. But the utility was sold to Mid-America Energy the following year, which Phillippi said complicated the process.
“Basically, we had a different company at the start of the job,” he said. “The people we initially started talking to were no longer the people we ended up talking to.”
The interconnection process began on Aug. 4, 2006, Phillippi said. Rough & Ready had to finish constructing the plant by the end of 2007 to take advantage of federal energy tax credits. But, said Phillippi, PacificCorp was unable to accommodate them in time.
“We couldn’t get hooked up to generating until the end of February 2008,” he said. “We met our deadline. It was completed on Nov. 1 and waiting for the hook-up. PacificCorp delayed us.”
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The lawsuit claims three different sets of damages, Phillippi said. The largest is $234,000 of interconnection overcharges. There is another $203,000 in lost power revenue and $78,000 in lost Business Energy Tax Credit revenues.
“We couldn’t connect, and it ended up costing us a bundle of money,” Phillippi said. “We’re disappointed to be in this position, where we have to go to court. We have no other way to recoup these overcharges and lost revenues. We tried to negotiate with PacificCorp, but they haven’t been very favorable in dealing with us.”
Phillippi said that with the current condition of the timber industry and overall economy, the cost overruns were simply too much for Rough & Ready to swallow.
“It was a difficult project to build, finance and get paid back off,” he said. “It was a half a million dollar cost that was unanticipated, and that really hurts,” he said. “It’s too much to let go. We had to pursue litigation. I’m disappointed that we have to be here, but we can’t just let it go.”
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