Earlier this week, The Sun reported that the city of Gainesville was taking a look at the possibility of intervening in a breach of contract lawsuit that Wood Resource Recovery has filed against the Gainesville Renewable Energy Center.
City Attorney Nicolle Shalley had sent an email to the city commissioners Wednesday informing them that her office had met with Gainesville Regional Utilities staff to review the intervention idea. She wrote that Edward Bielarski Jr. — GRU’s new general manager — and the utility’s contract manager for the city’s power purchase agreement with GREC “were unable to articulate how the City has a direct and immediate interest in this dispute between GREC and WRR and how the City would be harmed by a money judgment that the court awards to either GREC or WRR.”
Bielarski has since sent the commissioners his own response to Shalley’s opinion in which he respectfully disagrees his position “failed to demonstrate a direct and immediate interest in the dispute.”
He questioned how GRU could not have a direct, immediate interest in this particular dispute considering, among other things, that GRU is the sole purchaser of power from GREC and that fuel costs comprise a significant portion of the biomass plant’s variable cost, which in turn “sets the buy or take signal as to whether GRU purchases power off the grid…”
He also pointed out that it seems that fuel specifications are linked to this legal dispute.
“Issues surrounding fuel specifications are not a trivial matter and can have dramatic and far-reaching market impacts,” Bielarski wrote. “I respectfully request that the Mayor and Commissioners instruct the City Attorney to use the aforementioned facts in a filing to intervene.”
Commissioner Craig Carter sent an email to Bielarski Thursday in response in which he said he plans to talk with outside counsel regarding the intervention issue and will tell him what he finds out.
Here’s Bielarski’s full response to Shalley’s opinion:
Mayor and Commissioners,
I am in receipt of Attorney Shalley’s response to your inquiry regarding intervening in the litigation between GREC and WRR. I respectfully disagree that my position failed to demonstrate a direct and immediate interest in the dispute. For me its quite simple: My question for Attorney Shalley, the Mayor and Commissioners is whereas GRU is GREC’s sole purchaser of power and whereas GRU has an option within the Power Purchase Agreement to procure non-contracted fuel and whereas fuel costs are a significant portion of GREC’s variable cost, which are billed to GRU, when the plant is available and whereas GREC’s variable cost sets the buy or take signal as to whether GRU purchases power off the grid, how could GRU NOT have a direct and immediate interest in the dispute?
Furthermore, it appears that the dispute is also linked to fuel specifications, which based on my experience are extremely important in a small, localized market, such as currently exists for the wood products burned by GREC. This dispute could take millions of btu’s of energy off the market at a time when GRU is evaluating its options in regard to the GREC contract. Issues surrounding fuel specifications are not a trivial matter and can have dramatic and far-reaching market impacts.
I respectfully request that the Mayor and Commissioners instruct the City Attorney to use the aforementioned facts in a filing to intervene.
Edward Bielarski Jr.
General Manager
Gainesville Regional Utilities