Bechtel wins dismissal of two of three claims in AMP lawsuit

A federal judge in Ohio on May 8 eliminated two of three claims that American Municipal Power Inc. has made in a lawsuit against Bechtel Power Corp. where AMP said that Bechtel improperly low-balled its cost estimate for a coal-fired power plant.

The case was filed in February 2011 by AMP at the U.S. District Court for the Southern District of Ohio. In 2007 and 2008, AMP commissioned feasibility studies for a supercritical coal plant and compared those costs against buying off-system power. Based on the studies it decided to pursue the development of the 1,000-MW AMP Generating Station.

In 2008, after a bidding process, AMP chose Bechtel as the project contractor. On or about Jan. 1, 2009, AMP entered into an engineering, procurement and construction (EPC) contract with Bechtel. In May 2009, due to falling costs of energy, AMP told Bechtel it was reconsidering the coal plant project, but Bechtel came back with a lower price and AMP decided to keep the project going, said the May 8 court ruling. AMP then signed various project contracts with power plant systems suppliers, including Hitachi and Powerspan.

Then in October 2009, Bechtel advised AMP that the EPC cost for the project would be more than $1bn greater that Bechtel’s August 2008 and May 2009 estimates. Bechtel then proposed various cost reductions that brought the overage down to $846m. Based on those numbers, AMP cancelled the project.

AMP is claiming damages from Bechtel for alleged breach of the EPC contract, for gross negligence and for breach of fiduciary duty. All three claims seek damages of not less than $97m. Bechtel said that count one should be limited to $500,000, based on the stage of the contract at the time it was cancelled. It said the other two counts should be dismissed because they don’t state a tort claim separate from the breach of contract claim in count one.

Judge Michael Watson ruled on May 8 that AMP had indeed failed to identify actual damages separate from the breach of contract claim, and also in counts two and three failed to state a proper claim. So he dismissed counts two and three, but kept count one intact and in play for future court action.

American Municipal Power is a nonprofit corporation that owns and operates electric facilities with the purpose of providing generation, transmission and distribution of electric power and energy to its members.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.