By Steven Oberbeck
The Salt Lake Tribune
Only a few years ago, Provo’s Raser Technologies Inc. proudly boasted that its new Thermo 1 geothermal power plant near Beaver was poised to usher in a new era of energy production.
The plant, built in less than six months, used innovative technology that Raser said would allow it to profitably generate electricity from the geothermal industry’s Holy Grail — water wells that weren’t typically viewed as hot enough to produce commercial power.
"Our low-temperature technology can make geothermal a mainstream source of energy for the nation," Raser’s now former CEO, Brent Cook, said at a November 2008 ribbon-cutting ceremony for the flagship plant.
Since then, though, Raser hasn’t exactly turned the energy world upside down.
Burdened with an unmanageable debt load, Raser filed for Chapter 11 reorganization in bankruptcy courtearlier this year. And its Thermo 1 plant turned out to be a bust.
Today, the company that once portrayed itself as leading a geothermal revolution describes itself as the stooge in a cruel and costly joke, one centered around the very technology that it once proudly hailed.
Raser’s Thermo 1 plant — the company said it would be the first of many such facilities it intended to construct — was built using 50 small "PureCycle" generating units developed by UTC Power Corp., a subsidiary of Pratt & Whitney.
The units were described as operating similar to air conditioners, only in reverse. Hot water from the ground flowed into each unit and heated a fluid that vaporized and turned a turbine that generated electricity. The cooled water would then be pumped back underground for reheating.
Yet Raser now contends that the Thermo 1 plant from the beginning was plagued by reliability and maintenance problems and never was able to generate commercial amounts of electricity.
The revelations are contained in a fraud lawsuit filed in federal court in Delaware against UTCP and Pratt & Whitney. Raser launched the lawsuit shortly after its Chapter 11 reorganization plan was approved Aug. 30 by the U.S. Bankruptcy Court in that state.
Raser’s Chapter 11 plan didn’t provide for any direct payment to the company’s unsecured creditors, who combined are still owed some $60 million.
However, the plan did call for the creditors to get a share of any money that Raser might recover from UTCP and Pratt & Whitney, said Douglas E. Spelfogel, a New York-based attorney who served as counsel for the Official Committee of Unsecured Creditors in the Raser reorganization.
And that could be a substantial amount if Raser is successful.
Raser claims that UTCP misrepresented the capabilities of the PureCycle units when it said they could be combined into a plant operation that could produce 10 megawatts of electricity.
Those UTCP misrepresentations, according to Raser, included assurances that such a generating plant could be operated remotely and that no personnel would be required on site. "In fact, a staff of over 10 persons has been unable to make the plant operate as it was supposed to operate," Raser said.
And that "joke," as Raser terms it, may have cost the Utah company and its shareholders more than $100 million.
"The multiple PureCycle units installed at the Thermo 1 plant were never able to generate the 10 megawatts of net output that the plant was intended to produce, and have had constant maintenance and reliability issues," Raser said in the suit. "As a result, the costs of generating even a reduced output have been so extraordinarily high as to make the plant not commercially viable."
Raser said it spent more than $100 million trying to make the plant function as UTCP represented it would.
And to make matters worse, Raser said Pratt & Whitney President Peter Christman toured the troubled plant after it was opened and stated that the idea of using PureCycle technology at Thermo 1 was "nuts."Next Page >
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