ARPA and LUB Are Settling Lawsuit

LPR Coal Domes

The lawsuit between Lamar Light and Power and ARPA, Arkansas River Power Authority is drawing to a close and is expected to conclude following ARPA’s monthly meeting set for Thursday, February 25^th.  Utility Board members voted to approve a proposed settlement with ARPA, Case Number 14CV30045, during their meeting Tuesday, February 23^rd.  Following an executive session, board members voted unanimously to settle the case from LUB’s side, pending similar approval expected from their ARPA counterparts.  The lawsuit also included the City of Lamar, designated as the landlord of the property in the case.

Customers of Lamar Light and Power won’t see any changes in their electric rates with this settlement, however, as this case essentially allows for a separation, contractual and physical between the Light Plant and the Lamar Repowering Project. The case between the City of Lamar, a group of ratepayers and ARPA known as Case # 31 is still being negotiated and not connected to the LUB settlement.  Brian Magoon, special counsel to the Utility Board from Robinson Waters & O’Dorisio, P.C., in Denver, outlined the summary of provisions in the agreement and recommended its approval to the board.  He said this is the culmination of just over a year of negotiations with his involvement.

The Effective Date will be 10 days after the last entity approves and signs the settlement agreement. The Joint Operating Agreement will terminate 10 days after the Effective Date and the settlement agreement takes over.  The Turnover Date is referred to as the time of completion of disconnection work separating the LRP facilities from the Light Plant.  The lawsuit case, #45, will be dismissed with prejudice 10 days following the Turnover date.

In general Light Plant employees will perform the mechanical disconnection work between the Plant and the Repowering Project, perhaps by early April. ARPA will apply to the City of Lamar for a demolition permit prior to any demolition or removal of the coal plant’s facilities or related equipment.  A provision allows for at least 50 days of study and review of the demolition plans by Burns and McDonnell, the LUB’s consultants in the area of decommissioning the plant.  ARPA and the LUB will each assume responsibility for their respective facilities and maintain $10 million in general liability insurance.

For 180 days following the Turnover date, the Light Plant will provide its plant supervisor to assist with the sale of the LRP facilities. Within ten days of the Effective Date, ARPA will pay the LUB $319,817.15for unpaid 2014 personnel costs.  ARPA will waive any claim for recovery of approximately $348,938 in personnel costs paid by ARPA in 2015 to LUB.  ARPA will provide a corporate surety bond of $2 million to secure performance of ARPA’s obligation to restore the Dedicated Property with LUB as the beneficiary.

Some of the basic concerns of the negotiations focused on a safe and orderly decommissioning of the power plant. Magoon said the LUB had concerns over environmental and safety issues, as well as damages with monies not paid in 2014, mostly because ARPA and the LUB had established separate budgets.  ARPA had filed a counterclaim to recover monies paid in excess of their 2015 budget.  He said the essential point was that LUB would separate from the Lamar Repowering Project over the planned dismantling and decommissioning of the coal fired plant.

Light Plant Superintendent, Houssin Hourieh explained some differences between both entities in the lawsuit, “Our issues were over the budget and how we (LUB) maintained the plant and ARPA was not happy with that. The other issue was the manner of the future dismantling of the plant,” he explained.  He added there will be no changes in power costs or fees to electric customers, from a legal standpoint, there will be a separation between the two entities.  Asked if this will have any impact on current employment at the plant, Hourieh replied that will be reviewed, “We had to lay off quite a few employees the last time, so we want to look at this.”  It was noted that the separate budgets call for 11.5 employees with LUB and 9 with ARPA.

The next step will be actions taken by the ARPA board during their monthly meeting on February 25^th.  Their agenda calls for an executive session to discuss several issues including receiving legal advice on the Lamar Repowering Project Litigation; City of Lamar Litigation/Rate Payers; City of Lamar/LUB Litigation and Babcock and Wilcox Litigation.  Babcock and Wilcox is the design/manufacturing company for the coal plant boiler.

By Russ Baldwin