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

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."

"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 thegenerators at $3.4 million, with the remaining $4.6 million going to engineering, installation and commissioning costs.

Some money was recouped to thepower corporation over the last two years, butultimately 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.

CollicuttEnergy Services won the contract through arequest for proposals bidding process issued by the power corporation,Prendergastsaid.

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