Southern California Edison Co., Eagle Energy LLC, GIJ LLC, Real estate developer Kent Hoggan, Jeffrey Hoggan, businessman David Pitcher and his wife, Heather Kann are being sued for their alleged roles in a failed multimillion-dollar wind turbine project near Tehachapi. The suit filed on March 28 in Los Angeles Superior Court alleges intentional deceit, negligent misrepresentation and breach of contract.
The suit was filed by Helo Energy LLC , based in San Diego, and Saugatuck Energy LLC, located in Southport, Conn. Helo Energy LLC and Saugatuck bought 300 acres and agricultural parcels in the Sand Canyon area on which they planned to build, instead of leasing the land, as most wind companies do. They reached a deal with SCE before securing approval from the county and later withdrew their application following protests from neighboring land owners.
The suit states, “Collectively, the defendants, through fraud or false pretexts, denied the plaintiffs the benefit of their bargain, including over $60 million in future profits and induced plaintiffs to spend some $9 million in efforts to acquire the Sand Canyon property to develop the Sand Canyon Project.”
According to the complaint, Pitcher and Hoggan told representatives of the plaintiffs in 2010 that wind turbines in the area could produce at least 20 megawatts of renewable energy, using a wind report prepared by Pitcher. However, the data was false and was taken from a report produced for another energy project elsewhere, the suit contends. The actual wind speeds in the area would have produced much less profit, according to the suit.
The suit also states that in August 2011, California ISO, which operates the state’s power grid and wholesale markets, estimated it would cost SCE $2.8 million to build facilities that would connect with the Sand Canyon wind turbines and SCE executives decided to terminate their agreement with Helo Energy. A CAISO consultant later told Helo representatives the report was, “deliberately exaggerated both as to the cost and timing of interconnection.”
Paul Klein,Project Manager, Media Relations, Corporate Communications for SCE responded to the suit saying, “the California Public Utilities Commission (CPUC) approved this wind contract on Sept. 23, 2010. The CPUC receives regular status updates from SCE related to its contracts. As such, the CPUC is aware of the status of power purchase agreements (PPAs). Also, the CPUC does not receive a filing seeking approval of a termination.
“Without divulging confidential information with the particular contract in question, it is true that SCE’s PPA with Sand Canyon has been terminated. Due to the nature of renewable energy development, SCE sometimes enters into PPAs at a point in time when the full costs of transmission or distribution upgrades that customers will ultimately bear are unknown. Under those conditions, and in an effort to limit the risks to SCE’s customers, SCE includes a clause in the purchase power contract that allows either the buyer or the seller to terminate the contract if the estimated transmission/distribution costs exceed a certain threshold.
“The estimates of transmission/distribution costs are handled via interconnection studies and are administered by the California Independent System Operator with the assistance of SCE and conducted under the Federal Energy Regulatory Commission’s (FERC) tariffs. It’s important for you to know that due to nondisclosure rules, we can’t comment on the status and terms of a contract, including why it has been terminated.”
Sand Canyon residents, who were against the project, formed a group, Friends of Sand Canyon, that fought to keep the turbines out of the canyon. In December 2011, Helo Energy representatives told Kern County planners they were withdrawing their application for wind energy zoning. At the time, Zack Scrivner, Kern County Second District Supervisor, opposed the project, saying the turbines would have fundamentally changed the existing community and environment.
|Wind Watch relies entirely
on User Funding