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Grimsby Energy questions answered, sort of…

(Editor’s Note: The following is a review of answer provided by James Detenbeck in an interview Friday, Nov. 6. The questions were drafted based on input gathered from a variety of Grimsby residents and aldermen on Grimsby Town Council. Not all questions were answered.)

Grimsby Energy Biodigester
Q&A
James Detenbeck – Nov. 6/15

James, thanks very much to for taking time out of your day to speak with me.

I would like to address some of the concerns brought up to me over many months and since Wednesday’s Mayor’s Breakfast by Mr. Hattin, residents and large and members of Grimsby Town Council.

FYI, I plan to publish as much as possible in a Q&A format so as to limit editing and any possibility of picking and choosing what gets published. In my opinion, the more raw the better, so readers can digest (pun intended) this material and draw their own conclusions.
Fair?

I have attempted to categorize much of this, but at the end you will have an opportunity to address any or all aspects of what we cover, as well as to add anything you think needs to be addressed.
Sound good?…off we go…

Consultation

After Wednesday’s breakfast more questions materialized than were answered. When you addressed consultation you listed contractors, businesses GE had purchased from right down to NRB and their used trailer being installed for an office. These are not consultants.
Why was an independent, third-party construction and/or engineering consultant not hired for this large project?

Detenbeck said the decision was made to contract himself and Grimsby Energy board chairman Joe Panetta in an attempt to save money on the project. Looking further down the page to see the question which noted a 15-20 per cent contract fee is not out or the norm, he said, “that would be great”, before noting he was receiving “a lot less”.

It is clear you stressed at the breakfast that you HAVE declared your conflict of interest as being president of GE but you are also now serving as a“project manager – if you could clarify your title and role as it pertains to the biodigester – but do you think that would pass anyone’s smell test. Should the president of any company turn around and hire themselves as an additionally paid contractor on that company’s own project?

This question was not answered.

Is your pay structure built into the construction contract?

No, he said.

Are the management fees for yourself and Joe Panetta built into the construction contract. That is fairly common in the construction industry, as is a fee of 15-20 per cent of the contract. Is it in that range?

No, he said.

Why do you believe it is better or smarter to hire you and Joe as opposed to experienced professionals?

Detenbeck said a biodigester project of this scale is a first for Canada, adding there are no people experienced in overseeing the building such units. Therefore, the hiring of himself and Panetta was essentially warranted, he said, adding his own professional work experience gave him a suitable background.

Loan Payment

Where did funds come from to be able to order the unit from Germany in the first place as it arrived very shortly after Town Council agreed to co-sign financing in May and the unit arrived very shortly after?

This question was not answered, but Detenbeck did say there were several issues with funding and timing which all had a hand in project delays this fall.

There was some confusion on Mr. Hattin’s part at the breakfast regarding the loan payment structure on the project. He used an eight-year term, which you had initially used, and you adjusted yours to 20 years. A concern there is the the unit purchased from Germany has shown a life-expectancy of 12-15 years, so should a loan not be paid back within that span? Why 20 years?

Detenbeck said their business plan accounts for setting aside funds annually which will accumulate and allow for any significant repairs to the biodigester unit as required. With that in plan in place, creating a 20-year term made economic sense.

General Administration

Who much has been spent to date? I believe you said $2.1 million at the breakfast, but could you confirm that?

Yes, as of Nov. 6, 2015 $2.1 million has been spent, Detenbeck confirmed.

What is the projected date the unit will go online and generate revenue generating power?

No date has been set.

Joe told me Tuesday a one-month reprieve was extended by the Province to avoid penalty fees for not be up and producing power as stipulated in the FIT agreement. The fines I have been told are $19,000 per week. Is that correct and, how would they impact your budget and how will they be accounted for?

Detenbeck said $19,000 was at the extreme end of the scale and would not apply. He said he was confident Grimsby Energy would not face any fines at all, noting the provincial government is looking for “intent” when assessing if fines are to be levied and if, if so, how much.

Virtually everyone I have spoken to about this project, including members of council, believe the significant amount of time the project will be overdue is directly a result of not having an experienced consultant overseeing the project. What are your thoughts on that?

Again, Detenbeck noted an experienced pool of possible consults to oversee the project does not exist, so he sees this issue as a non-starter.

Communication

Why has GE opted to keep such secrecy on the project while other utilities such as Horizon to the west and NOTL to the east have very open policies?

Detenbeck said he believes GE has been as open as possible, and, off the record, noted an example of why some aspects of the project need to be in camera. He believes the conduct of the board to be appropriate.

Now that the Town has cosigned for the whole project, will the reporting to council be enhanced both in detail and frequency? Council members are hoping for regularly planned, monthly updates.

Detenbeck said he believes any question which has come his way from council has been answered. He does not see any issues with the current communication flow between the GE board and Town Council. There was no commitment to enhance reporting.

Does Council get a breakdown of sub-contractors and project details, so they understand what the components are of the build and what the financial impact is of each. Case in point: the tar and chip had a cost. Now it will need to be removed, and the pomous before that, then the area will have to be redone. Will council see a report of the financial impact and time setback on that aspect? If no, why not?

First, Detenbeck said the surface in place was not tar and chip, rather a mix of essentially leftovers from other paving projects. Basically as cheap a material as could be found that would still provide a base. While Panetta said during a visit to the site on Tuesday, Nov. 3 that the surface currently in place would need to be removed, grading done and drainage put in place, Detenbeck said no work needed to be done except to cap the area with asphalt. Because of this, he did not see this work as onerous either in terms of expense or time which could set the project back overall.

Do you think GE is still a private when the Town of Grimsby has now cosigned the operation and faces a full and direct financial obligation?

Detenbeck said the Town of Grimsby has always been financially responsible for the project as council is the shareholders and the biodigester is a project of the Town’s own company, Grimsby Energy. Because of this, co-signing really does not change anything.

Would you agree to the Chair of Finance being an observer to board meetings?

He said Grimsby Chair of Finance (Ald. Carolyn Mullins) has been invited to attend hydro meetings already.
Editor’s Note: Ald. Dave Kadwell confirmed Tuesday non-hydro board members of council have had this invitation extended but they have to give two weeks notice if they plan to attend a meeting).

When is the first dividend expect to be received and what is the dividend policy for paying the Town?

Detenbeck said it depends on what payment structure is adopted once at that stage but said if it was up to him a monthly payment would be suitable.

Why did the Hydro reduce its dividend to the Town? One councillor told me it was to pay for the land on Sobie Road. Is that accurate?

This was a matter for formal process in that the maximum amount which could allowably be paid out was reduced by the provincial government. It was not a decision of anyone locally and it was not reduced to pay for the Sobie Road land acquisition. He said the hydro utility has money within its own operation to pay for such things.

Oh, and why not resign if the project under his directorship and management fails?

Stemming from his emphatic “no” when asked if he would resign at the Mayor’s Breakfast, Detenbeck said he works for the shareholders (Town Council) and “they can terminate me at any time.” When pressed and asked why he would want to stay if the project tanks and lost millions, he said, “They can fire me.”

Since about last November, but certainly through early 2015 the media, the public and council were told GE was in a holding pattern waiting to hear a decision from the province about a possible capital grant. I have been told GE was informed last fall by provincial officials NO grant would be forthcoming because the Province already believed it supported the project with the FIT agreement. If that is the case, why was it perpetuated that a grant may be forthcoming?

Detenbeck said he had heard similar comments but really could not account for any of it, adding the best information that he and Mayor Bob Bentley had from provincial officials was the Grimsby Energy project “was a top priority” and that local officials should keep pressing. He acknowledged the opinion offered, that since the Province supported the project with a 20-year FIT contract guaranteeing revenue was enough and it would not also support capital expenses – made some sense, he reaffirmed they kept lobbying and pushing for the capital grant on advice they were given directly.

Until recently, GE’s mailing address was a building on Ontario Street. Now, as far as I have been able to discern, it has been changed to 341 Roberts Road, which is a residence by the lake as far as I could tell. Whose residence is that and why would that address be used?

Can you clarify what will happen with the grape pomous which is there now. There is still confusion on that after your comment about having thousands of acres in GE’s control on which to spread the material?

Detenbeck first said that address was Grimsby Power’s address – which is 231 Roberts Road. When informed 341 Roberts Road was a house by the lake on the opposite side of the QEW from Grimsby Power, he said the mailing address was Grimsby Power must have been used in error. Detenbeck was informed 341 Roberts Road was used on government application documents and pops up if searching the provincial government’s website.

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