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Powerhouse Failure - OID Board Eyes Recouping Losses

POSTED August 18, 2010 3:55 a.m.

The Oakdale Irrigation District’s Board of Directors participated in discussion about recovering insurance funds for a Tri-Dam Project powerhouse failure at the Aug. 17 regular meeting.

The Donnells Dam powerhouse failed last September, which is a large generator of power for Tri-Dam. Tri-Dam partners (OID and South San Joaquin Irrigation District) have insurance coverage for repair costs and business loss for such instances. Tri-Dam General Manager Dan Pope, Jr. reported to the board that Tri-Dam is working with Zurich insurance company to recover the costs and losses.

Pope said that the portion of the insurance pertaining to repairs allows for improvements and upgrades. He reported that those costs are in the neighborhood of a little over $5 million.

The insurance portion that pertains to business interruption loss is much more complex because the power arena is complex, he said, and they are in the process now of trying to work out an agreement for the payout. Pope noted that this is a very large claim for Zurich, as it is in the neighborhood of $15 million. The process includes establishing the market price for power at the time of the failure and the amount of water that was available in Donnells when it was down.

Tri-Dam supplies energy to the energy pool for Shell Energy North America. Therefore, due to the complex nature of the hydro-energy business, both Shell and Tri-Dam representatives met earlier this month with Zurich representatives to educate Zurich as to why Tri-Dam operates the way it does and how Shell operates in its role.

Pope said the repair costs payout from the insurance company will be recovered first. He also said that now, “Donnells is performing very, very well.”

Also at the Tuesday session, the board unanimously approved a Memo of Understanding (MOU) with various water agencies to pay for services related to the Long Term Irrigated Lands Program being implemented by the Regional Water Quality Control Board. The cost is not to exceed $1,100 per agency involved.

In other business, the board unanimously certified the vote of Improvement District (ID) 41, which is the Crane/Tioga area, to approve funds to perform an engineering study. The ID 41 membership is having turbidity issues with its water system and they wish to look at what the costs will be to tie into the city’s water system and dissolving the ID versus drilling a new well.

The next regular meeting of the OID Board of Directors is at 9 a.m. on Tuesday, Sept. 7 at the OID boardroom, 1205 East F.

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