USC Reaches $24 million Settlement with Developer of Closed Biomass Facility

USC Reach­es $24 mil­lion Set­tle­ment with Devel­op­er of Closed Bio­mass Facility

- by Andrew Shain, Octo­ber 4, 2013. Source: Rock Hill Herald

The Uni­ver­si­ty of South Car­oli­na has reached a $24 mil­lion set­tle­ment with Wis­con­sin-based John­son Con­trols over a failed bio­mass pow­er plant.

The agree­ment calls for John­son to pay the remain­ing $14.4 mil­lion owed on the $19.1 mil­lion plant at Wha­ley and Sumter streets, USC chief finan­cial offi­cer Ed Wal­ton said after meet­ing with school trustees.

John­son will remove bio­mass equip­ment in the build­ing and give USC the emp­ty struc­ture, val­ued at $1.6 mil­lion. The com­pa­ny already has paid the school near­ly $8 mil­lion to cov­er loss­es from the plant, which has stood idle since 2011.

USC and John­son dis­cussed the pos­si­bil­i­ty of hav­ing the com­pa­ny con­vert the plant to use anoth­er source of pow­er, such as nat­ur­al gas-fired tur­bines. But after more than a year of talks, the sides agreed to a cash set­tle­ment, Wal­ton said.

“The plant nev­er worked,” Wal­ton said. “The con­tract allowed us to recap­ture our costs.”

In its ini­tial con­tract with USC, John­son agreed it would repay any dif­fer­ence to USC if the plant failed to save the school $2.1 mil­lion a year in ener­gy costs.

“This project was not as suc­cess­ful as John­son Con­trols had hoped,” the com­pa­ny said in a state­ment. “We have, how­ev­er, stood behind all our com­mit­ments to the uni­ver­si­ty. … The eco­nom­ic attrac­tive­ness of the bio­mass ener­gy plant for the uni­ver­si­ty has changed since this project was first devel­oped. The uni­ver­si­ty deter­mined it was not in its best inter­ests to com­plete con­struc­tion of the plant. As the university’s part­ner, we have sup­port­ed its decision.”

USC will research how to use the build­ing next, Wal­ton said.

The school now gets pow­er from four nat­ur­al gas plants.

The bio­mass plant was sup­posed to pro­vide elec­tric­i­ty from steam gen­er­at­ed by heat­ing wood chips in a way that would pro­vide clean energy.

The plant closed after more than three dozen break­downs and a 2009 explo­sion that sent a met­al pan­el 60 feet in the air.

The plant’s woes have led USC to con­duct more rig­or­ous analy­sis of the poten­tial ben­e­fits and risks of new big-tick­et projects, school offi­cials said.

An audit of the orig­i­nal plant con­tract, released a year ago, said USC should have checked John­son Con­trols’ reports on sav­ings when the facil­i­ty was oper­at­ing, and the university’s trustees should have dis­cussed the risks of the new tech­nol­o­gy before approv­ing the deal.