Gypsum Biomass plant is legally back in business
Biomass and Biomess: Our story so far
Wellons, an Oregon company, says they built a perfectly good biomass plant which started operating Dec. 2013.
Wellons says Eagle Valley Clean Energy, a Provo, Utah-based consortium, stiffed them for $14 million Wellons says they’re still owed, including interest.
Wellons says Eagle Valley Clean Energy received and $18 million federal tax credit award from the USDA Rural Development Service, the same agency that awarded Eagle Valley Clean Energy a $40 million federal loan guarantee.
Wellons says that instead of using some of that $18 million to finish paying them for building the plant, Eagle Valley Clean Energy and others conspired to commit “fraudulent transfers” and “civil conspiracy” and divvied up the money among themselves.
Eagle Valley Clean Energy says the plant is nothing like perfectly good, and says some of Wellons’ construction defects caused last a conveyor belt fire on Dec. 13, 2014, a year after the plant began generating electricity.
Eagle Valley Clean Energy claims that conveyor belt fire is why the plant has been idle for a year.
In its counter claim, Eagle Valley Clean Energy says Wellons owes them $19 million for shoddy construction.
Wellons says Eagle Valley Clean Energy prohibited Wellons from completing the items on its final punchlist.
Their eight-day civil trial is scheduled to begin Jan. 23, 2017, in federal court.
GYPSUM — The taxpayer-backed biomass plant fired up last Thanksgiving, and it is finally operating legally, at least as far at the town of Gypsum is concerned.
Eagle Valley Clean Energy, the Provo, Utah-based firm that owns and operates the plant, finally met the terms of the annexation agreement it signed before the plant was built, all part of its deal to join the town of Gypsum.
In response, Gypsum issued the firm a temporary certificate of occupancy, which the plant did not have. Gypsum’s town council was prepared to join the list of lawsuits against Eagle Valley Clean Energy in federal court.
“As far as the town is concerned, they’re good to go,” said Jeff Shroll, Gypsum’s town manager.
Eagle Valley Clean Energy agreed to:
• Convey water line main and hydrants along with easements to the town.
• Provide a fishing easement.
• Provide cash ($50,000) instead of building a bike path through the property.
• Provide cash ($105,000) instead of land for public purposes, in this case 4.6 acres. It is required in all town subdivisions.
• Pay fees owed the town.
“(Eagle Valley Clean Energy) is pleased to have been issued its temporary certificate of occupancy and looks forward to working with the town of Gypsum on plans for the remainder of the property,” said Sarah Baker, spokesperson for Eagle Valley Clean Energy.
Federal lawsuits still rolling
That’s one hurdle cleared, but Eagle Valley Clean Energy still faces a federal court battle with the Oregon company that built the $56 million biomass plant.
Wellons Inc. said in a lawsuit that Eagle Valley Clean Energy still owes them more than $14 million.
Wellons is also accusing insiders with Eagle Valley Clean Energy of pocketing $18.5 million in federal tax credit subsidies, calling it “fraudulent transfers” and “civil conspiracy.” In its lawsuit, Wellons said the $18.5 million went to “insider” parties, and alleges that Eagle Valley Clean Energy was trying to hide the money.
Eagle Valley Clean Energy returned fire with a $19.3 million countersuit against Wellons, claiming shoddy construction caused the Dec. 13, 2014, conveyor belt fire that had idled the plant for a year.
There were no construction defects and the company is not responsible for that fire, said Stephen Leatham, Wellons attorney.
Wellons is also “troubled” that Eagle Valley Clean Energy got its federal money before Wellons was paid, Leatham said.
The two sides of the dispute made their first appearance last month in United States District Court in Denver before Judge R. Brooke Jackson.
They both say they want a jury trial. The trial is scheduled to being in January 2017.
About that fire
The biomass plant fire was discovered and reported at 4:20 a.m., Dec. 13, 2014.
When firefighters arrived four minutes later, they found that the fire hydrants, owned by Eagle Valley Clean Energy, were delivering only 15 percent of the water they were supposed to — 350 gallons per minute, instead of 2,250 gallons per minute the 12-inch pipes were designed to carry.
The valves of the fire hydrants had been deliberately closed to a trickle, an investigation found.
More than 11 months later, on Thanksgiving Day 2015, Eagle Valley Clean Energy began testing and cleaning the biomass plant’s boiler.
The biomass plant is supposed to generate 11.5-megawatts of electricity per hour — enough to power 10,000 homes. Holy Cross Energy buys some of that power, as part of the utility’s goal to generate 30 percent of its electric power from renewable sources by 2030.
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