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HOMER - Veco Corp. will receive an extra $4 million to settle a disagreement over the cost of moving an electric generator to the Agrium fertilizer plant in Nikiski.
Veco and Homer Electric Association Inc. used mediation to help settle a lawsuit filed by Veco over the dispute. Veco had claimed it was due $15 million extra because of cost overruns on the project, completed in 2001. Agrium and HEA will each pay part of the settlement, said HEA spokesman Joe Gallagher.
The Nikiski Cogeneration Facility was a project for Alaska Electric Generation and Transmission Cooperative Inc., an HEA affiliate. Veco won the $23.2 million contract in 1999 to move an AEG&T turbine from Soldotna to the Agrium plant.
The project called for Veco to install a heat recovery steam generator on the natural gas powered turbine, and a digital control system, HEA said. The steam is used by Agrium to make its nitrogen-based products.
"It was a complicated project. There were some changes to the scope," Veco executive vice president Roger Chan said Friday. "I think everybody's satisfied with how it worked out."
Gallagher said HEA expects the co-generation facility will mean a 6 percent reduction in area electric bills because it brought Agrium, a major consumer of electricity, back into the HEA grid.