On the cusp of the expiration of its cooperative agreement with the Department of Energy, Summit Power was able to find a way to buy itself a little more time. The cooperative agreement, for Summit’s Texas Clean Energy Project, was due to expire July 15 when Summit requested an informal dispute resolution, extending the agreement at no cost for an indeterminate amount of time. “The ‘informal dispute resolution’ request was simply needed to be able to continue our discussions with DOE. We are working with DOE and are committed to coming to agreement on a path forward for the project,” a Summit spokesman told GHG Daily.
Summit has been struggling to reach financial close, a milestone that must be met for the cooperative agreement to stay in effect. DOE in mid-May pushed back the deadline for the project to meet financial close. As their new deadline approached, Summit cited a regulation setting a system for informal dispute resolutions.
“Whenever practicable, DOE shall attempt to resolve informally any dispute over the award or administration of financial assistance. Informal resolution, including resolution through an alternative dispute resolution mechanism, shall be preferred over formal procedures, to the extent practicable,” the regulation says.
During the informal dispute resolution, the agreement will technically still be in place, though no federal money will be spent on the project unless the company is able to reach financial close during that resolution, potentially keeping the project alive. How likely that outcome is, however, remains to be seen.
“We are governed by the laws that exist, and that includes the right of a company to seek an informal dispute resolution. We will continue to work with the company to figure out the best next steps,” a DOE spokesman said.
The project, should it survive, will be a 400-megawatt coal integrated gasification combined cycle power generation facility that will incorporate carbon capture and storage. Being built outside the city of Odessa, TCEP was initially billed at $1.9 billion but is now expected to cost $3.9 billion. The original forecast completion date of June 2014 has been pushed back to after June 2018.
The department awarded Summit a total of $450 million for TCEP. As of February 2016, when DOE suspended funding for the project, the department had reimbursed Summit approximately $116 million in project costs, or roughly one-third of its total commitment.
In the last several months the project has been the target of an environmental federal spending watchdog group, Green Scissors. “Extending the project’s cooperative agreement and leaving open the possibility to provide further support only increases the department’s financial exposure. The $116 million already lost cannot be recovered, but itis not too late to protect taxpayers from further waste by withdrawing the remaining $220 million earmarked for the facility,” the group wrote in a May 25 letter to Energy Secretary Ernest Moniz.
