City to Hold Special Meeting to Discuss Biomass Arbitration


By Caitlyn Finnegan

Gainesville City Commissioners are ready to tackle another controversial topic on the agenda this week: ordering the sale of the Gainesville Renewable Energy Center biomass plant to the city.

The special session is scheduled to begin at 5 p.m. at City Hall, 200 E. University Ave., and will focus solely on public updates regarding arbitration proceedings involving the GREC biomass contract.

Mayor Ed Braddy called the meeting last week, saying that the public deserves an update on the contract and commissioners need a chance to publicly discuss their options moving forward.

The city is currently seeking a “cure” for GREC’s contract breach after Gainesville Regional Utilities was not offered its right to first offer as specified in the Power Purchase Agreement. Since GREC did not give GRU proper notice of the sale and an opportunity to prepare an offer to purchase the facility — as is laid out clearly in the agreement — the city now has the right to take the matter to court.

The city commission approved a motion on Dec. 20, 2012, by a 7-0 vote to act on the GRU staff recommendation to submit a claim to arbitration and authorize the GRU general manager to negotiate with GREC on a potential commercial resolution that would then go before the commission for approval.

The city’s outside counsel filed a demand for arbitration on Dec. 21, 2012, citing that the contract between the city and GREC has been breached and mediation must be reached.

GRU obtained more information on the sales and transfer of ownership on April 15, 2013, which prompted the outside counsel to file a supplemental and amended demand for arbitration that would order GREC to sell the facility to GRU for a price to be determined based on the price paid by Starwood Energy.

GREC, on the other hand, claims that the city is suffering from “buyers remorse,” and that the true motives behind the city’s actions is to renegotiate the PPA. The center claims it has suffered damages of more than $50 million as a result of the city’s “bad faith filing,” and it is now seeking a reward of damages, attorney fees and costs.

The general manager for utilities will still participate in a voluntary mediation scheduled with GREC on June 4. If the two organizations can not reach an agreement, the dispute will proceed to arbitration.


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