More than $5.3 million in public funds, meant to pass through a private developer to Southern California Edison to cover the costs of connecting a proposed solar farm to the grid, never made it to the utility company, according to court records and a notice of cancellation filed by Edison.
The City of Industry gave the millions to its partner on the project, San Gabriel Valley Water and Power LLC, as an advance to cover the first half of a June 2017 agreement for Edison to handle the design, engineering and construction of a new substation and other additions needed to integrate the potential solar farm into the larger system.
That agreement was canceled in April 2018 after SGVWP fell behind on payments, according to a May 2018 letter from Edison to the Federal Energy Regulatory Commission. SGVWP received notices about the late payments in October, November and December 2017, the letter stated. The LLC never provided the financial security required by Edison and the project was removed from a schedule of pending interconnection work.
“As such, by letter dated April 25, 2018, the Distribution Provider provided notice to the Interconnection Customer regarding the termination of the Letter Agreements due to such failure to make payments,” the letter states.
Bills persist after project canceled
Despite this, SGVWP continued to request more money from Industry under the agreement even though, unbeknownst to city officials, it had been canceled months earlier.
A bill submitted to Industry by SGVWP nearly six months later in October 2018 listed an $11 million balance owed to Edison, records showed. Industry had stopped funding SGVWP in January 2018 after giving the company roughly $20 million total, but the city continued to receive bills for the rest of the year because the company argued it had the right to continue the project under the terms of a contested lease.
In a lawsuit, Industry alleges SGVWP converted the “payments to their own use and benefit,” and violated state law by failing to deliver the money to Edison.
“There was money that was due and they didn’t make those payments,” said Jamie Casso, Industry’s city attorney. “That’s why in the lawsuit we allege that the money didn’t go to studies or analysis for the project, or to the feasibility of the solar farm, but instead went to lining pockets.”
Peter Sunukjian, SVGWP’s attorney, did not return requests for comment.
Refund not returned to city
The solar developer allegedly made only the first three payments, totaling about $761,000, to Edison before defaulting on its agreement, according to Industry’s court filings. After the agreement was terminated, Edison returned all but about $25,000. Industry didn’t learn about the termination, or the refund, until after it sued SGVWP, officials said.
“When Edison refunded the money, it went back to them (SGVWP), and obviously, they didn’t refund us anything,” said Troy Helling, Industry’s city manager.
Industry’s administration and the City Council have pledged to go after SGVWP legally until “there is no fight left to fight,” Helling said.
Filings from Edison confirm the agreement with SGVWP was canceled due to a lack of payments. Edison notified FERC in May 2018 that it had backed out of the arrangement, according to public records.
Edison spokesman Reggie Kumar declined to answer questions about the termination due to the confidentiality of interconnection requests. It’s unclear how the agreements, which are publicly accessible on the websites of Edison and FERC, are confidential.
“The information that is already public is what we can provide at this time,” Kumar wrote in a follow-up email.
Once cozy relationship
Industry and SGVWP had a cozy relationship for nearly two years as they jointly developed plans to build a 450-megawatt solar farm on a slice of near pristine land in Chino Hills and Diamond Bar commonly known as Tres Hermanos Ranch. However, the City Council soured on the project after city officials began asking questions about how the money was being spent and the two neighboring cities launched campaigns to stop the project.
By early 2018, Industry cut ties with SGVWP and fired the city administrators who backed the project. The city launched a lawsuit accusing the developer of fraud in 2019 in an attempt to recover the $20 million.
Other bill padding?
Besides the Edison payments, Industry also alleges the purported owners of SGVWP, Bill Barkett and disgraced former state Sen. Frank Hill, siphoned off funds for personal use and altered invoices from subcontractors to overcharge Industry by at least $1 million. One subcontractor, HELIX Environmental Planning, demanded an explanation from SGVWP after seeing copies of altered invoices on its letterhead in a Southern California News Group story.
Industry paid $1.7 million to SGVWP to cover invoices submitted on HELIX’s letterhead, but, in reality, HELIX had only charged SGVWP approximately $600,000, according to court filings. Subsequently, another subcontractor, Ambient Communities, said it was charging SGVWP a $50,000-a-month retainer, yet when the same invoices reached Industry, the retainer’s price tag allegedly jumped to $110,000 per month.
“There have been two or three cases where contractors have stated SGVWP billed for ‘this amount,’ and somehow, we got billed for another amount on their invoices,” Helling said.
The Los Angeles County District Attorney’s Office raided the homes and offices of SGVWP, Barkett, Hill, former Industry City Manager Paul Philips and the Cordoba Corp. in August.
No arrests have been made.
Source: Orange County Register