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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.
