JEA intends to defend the lawsuit over Northside power station filed by Foster Wheeler subsidiary FWEC, which alleges that FWEC was prevented from completing the project, and will ‘vigorously pursue its counterclaim’. Its defence is based on an alleged breach of contract by FWEC, to the effect that it failed to deliver certain letters of credit (ie proof of its creditworthiness) to JEA as required by the circulating fluid bed contract. Therefore in April 2002 the contract was amended, JEA determining that it would make no further payments to FWEC until the letters of credit were tendered. To date, FWEC has not produced them. Foster Wheeler’s complaint confirms part of this – it says that JEA has refused to pay outstanding invoices of at least $30 million.
This version of the story conceals more significant events. The contract called for both units of Northside to be capable of running reliably and continuously on 100 per cent pet coke. They were grid synchronised in February and May 2002 while running on 75 per cent pet coke and 25 per cent coal, a situation that has persisted ever since. JEA says that to date neither unit has been capable of running reliably on pet coke alone, although it is working to achieve that condition.
The legal story started in November 2002 when FWEC filed a lawsuit against JEA in a US District Court in Florida seeking damages for an alleged breach by JEA of the CFB contract, and related claims. In answer, on December 3 JEA filed a Motion to Dismiss and a Motion to Strike the complaint. FWEC then filed an amended complaint, still maintaining its breach of contract action. On January 7 JEA filed Motions to Dismiss and to Strike Foster Wheeler’s amended complaint. If the District Court decides that Foster Wheeler has filed a legally sufficient complaint, JEA will serve its answer and counterclaim based upon the alleged breach of contract.
FWEC bases its claim on an allegation that after it successfully completed the design, procurement and initial construction phases of the contract, JEA comandeered the plant prematurely, when it was fully operational but for commissioning; and further that JEA failed to provide services, equipment and plant access to FWEC within agreed-upon timeframes, which delayed final construction and performance testing.
Then, says FWEC, JEA began commercial operation in order to supply ‘sufficient and lower-cost electricity’ to its customers during the peak summer months of 2002. It has therefore been denied the opportunity to complete the work and fairly demonstrate its CFB technology, while JEA derives revenue from operating it. However JEA says that FWEC removed all its personnel from the site in September and completely stopped work on the CFB contract.
