New England roots. International reach. It's no wonder Bernstein Shur is trusted around the world for its experience and savvy in the energy field.
The owner of an overseas power plant asked Bernstein Shur to
help resolve an emergency situation that was keeping the plant
from operating – and threatening to cause significant financial
losses.
Just after completion of the contractor’s acceptance tests – and
minutes before completion of the utility’s acceptance tests – a
leak had been discovered in one of the plant’s boiler tubes.
The contractor claimed it stemmed from a minor defect in the tube
and was not a serious problem, and as a result the owner signed
documents accepting the plant from the contractor.
Once the plant was re-started, however, additional leaks showed
up. Testing revealed thinned tubes in both the boilers and the
heat recovery steam generator, and blades in the steam turbine
were found to have been damaged as well. It was discovered that
the source of the problem was hydrogen corrosion due to highly
acidic water having entered the system. Repairs would cost many
millions and take many months.
Who's responsible?
The contractor maintained that water quality had been the responsibility
of the owner at all times – including start up and testing – and
that the project had been accepted. It refused to make repairs
without advance compensation. As the project had not yet been accepted
by the utility, penalties for late delivery loomed. Insurance claims
needed to be filed, and there was a dispute as to which policy
applied. The plant needed to be fixed – and fixed fast – but
the project had no spare cash.
Our experts hit the ground running
Bernstein Shur’s Energy Practice Group was called to represent
the plant owner in the crisis. We flew to the site, assessed the
situation, and put together a comprehensive plan to move forward
rapidly with repairs and claims. We have been representing plant
owners throughout the world for more than 20 years, and we understand
that when a plant isn’t running, its owners are losing money.
Our team first fashioned a constructive-change notice from language
in the construction contract, obliging the contractor to begin
plant repairs immediately. This broke the logjam without the owner
having to pay millions of dollars for repairs up front. We then
turned to the insurers and determined that both the builder’s
risk and operational policies applied to the complex set of facts.
A solution in the nick of time.
We retained experts on boiler tubes, boiler operation, water quality
control, and distributive control systems to determine how and
when the water problem arose and who was responsible. Armed with
this evidence, a settlement was reached with the contractor over
payment for the damage. By triggering the contractor’s
insurance policy, we were ultimately able to obtain more than $15
million toward the repairs, with contractor warranties covered
the balance. We also recovered additional compensation for the
interruption in the owner’s business. The plant ultimately
made its deadline with the utility.
When experience counts
Bernstein Shur has more experience
with power plants than most other U.S. law firms, even the mega-firms,
because of our location in Maine. During the 1980s, the state implemented
federal laws that led to a significant increase in non-utility
power generation. Maine quickly found itself at the forefront of
innovative power plant construction including hydroelectric, biomass,
waste-to-energy, and even a peat-powered plant. Later, many new
combined-cycle gas turbines were installed to take advantage of
new natural gas pipelines running through the state. The firm’s
Energy Practice Group was involved with the majority of these projects
and continues to represent many of them today. Because of our reputation
in the field, we are often called on to create innovative solutions
at troubled power plant projects worldwide.
Energy Practice Group