GVEA seeks mediation in Healy plant dispute

Golden Valley Electric Association hopes to get help from a mediator to resolve its long-running dispute with the Alaska Industrial Development and Export Authority regarding the Healy Clean Coal Project.

The electric cooperative, which serves Interior customers from Healy to Fairbanks and east to Delta Junction, filed a motion in Alaska Superior Court in Fairbanks, requesting mediation in the case, saying it has the best chance of a lasting resolution.

"Golden Valley believes mediation will allow both parties to come to the table and resolve complex issues," the co-op said Jan. 9.

The move came in response to a lawsuit AIDEA filed Nov. 7, claiming Golden Valley breached its contract with the state-owned authority and demonstrated lack of good faith and fair dealing and unjust enrichment in its actions related to the Healy plant.

"They've asked the court for an order staying the litigation and to enter an order requiring both parties to resolve the dispute in mediation," Fairbanks attorney Charlie Cole said Jan. 19. Cole, who represents AIDEA in the case, said he was talking with Golden Valley's attorneys about their proposal.

"We have not rejected the proposal, but we want to learn from them the issues they want to mediate, and we're talking toward that end," Cole said.

AIDEA wants right to re-start Healy

AIDEA is seeking more than $167 million in damages from Golden Valley in the suit and has asked the court to enforce its rights to re-start and operate the Healy plant to produce electric power for the Railbelt.

The Healy project began in 1988. Golden Valley was the plant operator and had contracted to buy power from the 50-megawatt coal-fired plant. The facility was completed in 1997 and operated for a year and a half testing new coal-burning and emissions-control technologies for the U.S. Department of Energy, which contributed $117 million toward the $297 million cost of the plant.

The authority claims Golden Valley is in breach of an agreement it entered with AIDEA in 2000 to settle 1998 litigation regarding the coal-fired power plant.

Aside from the brief test run, the mothballed clean-coal facility has never actually generated electricity. Over the years, both parties made several agreements that resulted in disputes over the plant's operation.

"In my view, tens of millions of public funds have been put into that plant, and AIDEA has a responsibility to put the plant into operation. That's the reason they filed the lawsuit. They want to get the plant up and running and generating electric power," Cole said.

Homer Electric would operate

AIDEA Executive Director Ron Miller said the authority must protect nearly $300 million of federal tax dollars and state funds invested in the Healy project. "It's unfortunate that GVEA's board and management have exposed their rate-payers to the claims in this lawsuit," he said. "Our fight is not with the GVEA members but with their board and management. AIDEA is, in fact, a member of the co-op, since we pay GVEA nearly $40,000 per month for electricity."

Having given up on Golden Valley, AIDEA spent much 2005 looking for another operator for the Healy plant. In October, Homer Electric Association expressed interest in not only managing the facility but also purchasing power it would generate. The Kenai Peninsula utility is currently studying ways to restart the plant.

Golden Valley also filed a 20-page chronological narrative "Statement of Fact" with its Jan. 9 motion. The co-op listed 122 points, defending its position. Golden Valley said it repeatedly expressed concerns about the commercial feasibility of the Healy project from its inception and received numerous assurances from AIDEA over the years.

"Had AIDEA followed GVEA's advice, operation of (the Healy plant) would have begun to generate a significant stream of payments - millions of dollars per year - to AIDEA … in 1999 or 2000," the co-op observed.