The cost of prep work on a new power plant that Municipal Light and Power is building is now double what it was budgeted at.
Anchorage Assembly grilled the power company’s manager the about increased cost at Tuesday’s meeting of the Anchorage Assembly.
The project, which is part of an overhaul of the city’s power system, was originally supposed to cost around $5 million. It’s now slated to cost nearly $11 million.
Assembly member Amy Demboski gave this overview of the situation to Assembly member Paul Honeman.
“Essentially ML&P had a contract to do dirt work on a site that’s a the pre-curser to a power plant. The initial contract was about 5.2 million. And six weeks into the project, Mr. Honeman, the contractor notified ML&P that there was going to be at least a $3 million overrun. ML&P knew that and did not tell the assembly,” Demboski said.
A memo from Mayor Dan Sullivan dated Nov. 5 asks the assembly for the additional funds.
The contractor is Roger Hickel Contracting. The job was to prepare about five acres of land in the Muldoon area for construction and development of the new power plant. The memo says the cost doubled for several reasons – from removal of excess unusable soils to delays due to migratory birds being in the area.
Assembly members considered suing the contractor, but were advised that could cost between $250,000 – $400,000.
The Assembly wanted to know how the cost for prep work for a new power station in Muldoon ended up doubling and whose fault it was, the contractor’s or ML&P’s?
When questioned ML&P General Manager, Jim Posey, had few specific answers.
“This contractor took absolutely every day of that hundred and some days – whatever the number of days it was allowed under title seven provisions to do that. So, was that an accounting problem for them in coming up with a number? I can’t tell you. But as soon as we had numbers we started negotiating and coming toward you guys with the problem,” Posey said.
Roger Hickel Contracting was contacted for this story. President Michael Shaw sent an email saying that his company has, “acted in good faith with ML&P in constructing the necessary improvements to accommodate the ML&P Power Plant Project in 2014.”
In addition to being over budget the contractor needed a 45-day time extension.
Posey is set to retire at the end of the year. He says the full cost of the new plant will be more than $250 million.
He says the extra cost for the prep work is already figured into the total budget for the project and added that he’s confident the Assembly will go ahead and pay the bill.