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Cancelled power generator contract winds up costing N.W.T. Power Corporation $500K

A cancelled contract for power generators for the Northwest Territories Power Corporation is going to cost taxpayers an extra $500,000, the minister responsible for the power corporation says.

Only way to get that money back is to take Virdi Power to court in California, minister says

Alex Brockman · CBC News ·
One of three power generators delivered by Virdi Power is shown in its California facility. The project's budget has gone up by $500,000 after the Northwest Territories Power Corporation cancelled the contract with Virdi. (Submitted by Scott Spencer)

A cancelled contract for new power generators for the Northwest Territories Power Corporation is going to cost taxpayers an extra $500,000, the minister responsible for the power corporation says.  

The power corporation ordered five generators from Ventura, Calif.-based Virdi Power Inc. in mid-2015 to replace aging infrastructure at the Jackfish Lake power plant.

That contract was cancelled in January after the first three arrived more than a year behind schedule, and officials with the corporation determined the other two likely wouldn't arrive at all.

Louis Sebert, the minister responsible for the power corporation, made the admission on the extra costs in the Legislative Assembly on Wednesday, saying the total budget for the project grew to $8.5 million, up from the original $8 million.  

"There are some costs that have been incurred as a result of the late delivery — in fact non-delivery — of the last two generators," Sebert said. "It is expected overall, however that the $8-million budget that was anticipated for this will be exceeded by $500,000."  

Though Sebert had said throughout the process that all the money spent by the power corporation as a result of delays would be recouped, he said Wednesday that's not realistic.

"I think the only way of collecting the extra money would be to commence litigation against Virdi," he said. "There was a set-off on some of the payments to Virdi but I don't know whether it would be worthwhile to litigate this in California."   

Final generators expected to cost $1.8M  

The original contract pegged the cost of the generators at $3.4 million, with the remaining $4.6 million going to engineering, installation and commissioning costs.  

Some money was recouped to the power corporation over the last two years, but ultimately it paid Virdi Power $2.2 million of the original $3.4 million contract signed in 2015, Doug Prendergast, the communications manager for the power corporation wrote in an email. 

The new contract the power corporation signed with Collicutt Energy Services in Red Deer, Alta., pegs the cost of the remaining two generators at $1.8 million, bringing the total cost of the generators to $4 million.

The cost of new engineering, installing the generators, and $100,000 to pay for rental generators until the fall brings the total cost of the project to $8.5 million, Prendergast said.

Collicutt Energy Services won the contract through a request for proposals bidding process issued by the power corporation, Prendergast said. 

The final two generators are expected to be delivered by October.

ABOUT THE AUTHOR

Alex Brockman

Alex Brockman is the executive producer with CBC Thunder Bay. He's worked across Canada in a number of roles for CBC News.

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