The owner of Puna Geothermal Venture has two weeks remaining to file an answer to a complaint alleging it defrauded the federal government of $13.8 million in stimulus funds to cover an expansion at the plant.
Ormat Industries, the parent company of Hawaii Island’s only geothermal power plant, “engaged in a scheme to obtain federal grant money under (the American Recovery and Reinvestment Act of 2009) for geothermal energy projects which did not qualify for payment, and have misused and abused the federal funds they have received in order to falsely support geothermal energy projects that the government never intended, or would allow,” according to an amended complaint filed in May 2014.
The civil suit, which was filed in Nevada District Court, alleges PGV’s original 30-megawatt capacity plant was advertised as generating 30 MW of electricity, but in actuality was producing “no more than 17 MW and that this inhibited production was causing Ormat’s revenues to decline by $1 million per month.”
In an effort to staunch those losses, the complaint reads, Ormat undertook an 8 MW expansion of the geothermal plant, which it then misrepresented as a standalone plant in order to qualify for the federal stimulus funds.
The $787 billion stimulus package was designed to spur economic growth while creating new jobs and saving existing ones.
The suit also claims Ormat has sought to “artificially inflate” the value of its energy assets in order to “maintain the appearance of viability” of its geothermal ventures, creating the appearance, “on paper,” of profit.
The two complainants, Tina Calilung and Jamie Kell, are both former employees of Ormat. Calilung served as the company’s asset manager, and Kell was an administrator in the Business Development Department.
In the complaint, Calilung says she participated in drafting the grant application for the Puna plant’s expansion.
“As part of that process she spoke with a Paul Spielman, Ormat’s Manager of Operations Support for Resources, who confirmed that the Expansion was designed to generate electricity by utilizing the 30-MW plant’s byproduct and that the Expansion depended upon the original plant’s byproduct to operate. (The complainants) allege that Ormat misrepresented the Expansion’s true status in its … application because it claimed that the Expansion was a stand-alone new Geothermal Property.”
John Yanchunis, an attorney representing the plaintiffs, said Friday that his clients were taking on the company in an effort to return money that rightfully belongs to the government.
“We are committed to returning to the taxpayers dollars that should not have been given to the defendants,” he said. “Often, the government is perceived to have unlimited resources and that’s just not true. It relies on taxpayer dollars, and we believe it (the money) should be returned to the treasury.”
He added that while the U.S. Department of Justice has yet to intervene in the case, that does not necessarily mean it thinks the case has no merit.
“The government, on many occasions, relies on private counsel because of limited resources,” he said.
In addition to the Puna plant, the civil suit also names Ormat’s North Brawley plant, located in Imperial Valley, Calif., as a recipient of improperly obtained federal funds. That plant received about $122 million.
The complaint was filed under the False Claims Act as a “qui tam” suit, which allows whistleblowers to receive rewards of up to 35 percent of the funds recovered by the government.
Lawyers for Ormat did not return phone calls seeking comment by this story’s deadline.
Email Colin M. Stewart at cstewart@hawaiitribune-herald.com.