Towns not liable for loan default

By Christian Giggenbach
Register-Herald Reporter

September 06, 2008 12:11 am

— A state economic development official said Friday the three Greenbrier County municipalities associated with the now-defunct Western Greenbrier Co-Generation power plant project will not be held liable for more than $6 million from loans in default and money owed to an engineering firm.
Also on Friday, an official statement was issued by Co-Gen officials blaming environmental groups and federal approval delays as “major contributing factors” in the project’s cancellation.
David Warner, executive director of the West Virginia Economic Development Authority, said Co-Gen officials defaulted on a $3 million loan last November that his office guaranteed with First National Bank of Ronceverte. The WVEDA repaid the money last December, Warner said.
“There was no collateral for the loan, so technically we would have the right to all the studies and whatever the engineering designs that were completed, but my agency had to take the $3 million loss,” Warner said Friday. “The towns will not be held liable for any of that because they were just limited partners. The liability never flowed back to the individual cities.”
The now-defunct project was officially owned by the municipalities of Rainelle, Quinwood and Rupert, and was designed to burn coal waste, known as gob, primarily from a four-million-ton site on top of Anjean Mountain.
Warner said the project also defaulted on a $500,000 federal loan from a Pittsburgh bank and failed to repay $1.3 million in money owed to Australian-based engineering firm Worley Parsons. The firm deferred the $1.3 million in payments so Co-Gen officials could use the money to match $5 million in federal funds, Warner said.
Co-Gen officials previously said another $1.2 million loan was defaulted on through the West Virginia Development Office.
“There’s no way anyone can recover that $6 million unless the project is restarted and brought to completion,” Warner said. “That’s not likely based on the current situation.”
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Co-Gen officials issued a news release Friday stating the U.S. Department of Energy had canceled its funding on June 14 and elected “not to extend its expiration date.”
The $100 million previously awarded by DOE was no longer available, the release said, and the project had been “canceled ... with great regret.”
Without the DOE commitment, WGC cannot finance construction of the project, the release said.
“Repeated legal challenges to the project by West Virginia-based environmental groups, as well as delays in the publication and approval of an environmental impact statement, caused years of delay in the project’s development and were the major contributing factors in the project’s ultimate cancellation.”
The release directed all media questions to Co-Gen co-manager Wayne Brown. However, Brown refused to answer any questions Friday about salaries, defaulted loans or other issues.
“I have no comment,” Brown said when reached by phone Friday.
Gary Skidmore, the other Co-Gen manager, also refused comment Friday.
The release also said the power plant’s design, necessary construction permits and real estate had been completed at the time DOE pulled the plug on its funding.
“Work to finalize contractual and financing arrangements was under way as well,” the release said. “With so much progress having been made, the DOE’s decision at this stage is particularly disappointing.”
DOE officials said the project was not likely able to secure the proper funding needed for its construction.
An e-mail sent to The Register-Herald from Sen. Robert C. Byrd’s office said federal funds could not be earmarked for the project because of “cost-sharing requirements.”
Co-Gen officials earlier in the year made a public plea for help to Byrd’s office.
Byrd’s press secretary, Jenny Thalheimer, said Byrd was instrumental in hosting several meetings between Co-Gen officials and National Energy Laboratory officials in March and April.
“(Sen. Byrd) was successful in securing a 45-day extension of the agreement between NETL and WGC,” she said. “When the cooperative agreement expired in June, Sen. Byrd wrote again to WGC officials and enclosed a copy of the Department of Energy notification.”