Ormat: Geothermal Service Dates and Treasury Grant Eligibility

Ormat agreed to a $5.5 million settlement over allegedly false geothermal grant applications under section 1603 of the American Recovery and Reinvestment Act, including a disputed North Brawley service date. The whistleblowers alleged that the plant was already operating and generating revenue before the date claimed for its grant. If you know the operating history, power sales or application file, you may recognize the gap they described.

This case follows North Brawley and Puna, where the allegations concerned which property qualified for a Treasury cash grant and when it entered service. Our broader program page distinguishes those historical grants from energy elective pay. Here, we follow the geothermal projects’ records into the applications seeking government money.

The Ormat Settlement Covered Plants in California and Hawaii

The Justice Department announced the settlement on October 28, 2016, following a False Claims Act case brought by two former Ormat Technologies employees. Its announcement identified North Brawley in Imperial County, California, and the Puna power plant and KS-14 well on the island of Hawaii. The defendant companies were based in Reno, and the U.S. Attorney’s Office for the District of Nevada handled the resolution for the United States.

The former employees alleged that Ormat submitted false applications and received federal clean-energy grants to which it was not entitled. Their allegations connected the operating history to the representations made for public money, bringing power sales, financing and project descriptions into the grant dispute. We see a comfortable ending for Ormat in the announced settlement: pay to close the case, admit nothing.

Why a Geothermal Service Date Mattered to a Treasury Grant

A geothermal service date could determine whether property fell inside the Treasury grant program’s eligibility window. The Recovery Act’s cash-grant provision reimbursed part of the expense of qualifying energy property through payments in place of specified tax credits. The amount depended on the property’s eligible basis, the value on which the grant was calculated. Treasury’s revised April 2011 guidance covered property placed in service during 2009 through 2011, or property whose construction began during that period and entered service before the applicable later deadline.

The whistleblowers put the plant’s operation in December 2008, before the grant window. A date on the application could decide whether Treasury would fund the property at all, before anyone reached the question of how much of its cost qualified.

North Brawley Allegedly Operated Before Its Claimed Service Date

North Brawley’s claimed placed-in-service date was January 15, 2010, according to the complaint allegations recounted in the Nevada court’s April 2016 order. The whistleblowers alleged earlier operation and revenue, and a Treasury grant of $108,285,626 on August 17, 2010. Ormat’s $5.5 million settlement covered this plant and the Hawaii projects. In the whistleblowers’ account, the plant started again on paper.

First synchronization, revenue, tax depreciation and nameplate output each tell a different part of the plant’s operating history. North Brawley’s allegations also concerned eligible basis and a later expansion. Those issues require their own asset and cost records alongside the operating history. The date bears on when the property qualified, while basis determines the value used to calculate the grant.

Treasury’s basis requirements called for eligible asset identification and valuation support. For someone who worked on the project’s financing, the cost allocation could be as revealing as the operating calendar.

Treasury’s grant terms and conditions required recipients to report materially inaccurate application information and provide annual performance reports covering actual production and nameplate capacity. They also required repayment after specified findings of ineligibility or overpayment.

Puna Added an Expansion and a Well

The Puna allegations concerned an expansion and the KS-14 well, separately from North Brawley’s claimed service date. The Justice Department’s announcement identified the Puna power plant and the well as Hawaii projects covered by the grant allegations.

For someone who worked on an expansion or a well, the useful knowledge is what work and equipment the application actually described and which costs it included. We would connect that account to the application for that property.

The Employees Who Could Connect the Files

The court described one whistleblower as an Ormat Technologies asset manager whose work included long-term power purchase agreements, financing and regulatory matters. The other worked as an administrator in the business-development department.

Those roles explain why this story reaches beyond the person operating the equipment. A power purchase agreement, an account of project revenue and a grant application describe different parts of the same project’s history. Someone who understands how those files fit together may be able to explain a discrepancy that is hard to see from the application alone.

Our work on evidence connecting project records to public payment follows that relationship. We look at what the employee actually knows, which representation it bears on and why the information mattered to the grant.

SolarCity Also Faced an Inflated-Basis Allegation

SolarCity’s case concerned the value claimed for eligible property. The Justice Department alleged that SolarCity inflated the cost bases of solar systems in its Treasury grant applications. That comparison brings North Brawley’s separate basis allegation into focus: the operating date and the amount assigned to eligible property affect different parts of the payment decision.

What Your Geothermal Records Can Show

If you know the service records, the power-sale history or the costs assigned to an expansion, your knowledge may connect those facts to a particular request for public money. Our whistleblower experts build the case with you, connecting the project records to the claim and to what the people making it knew.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our work on energy whistleblower rewards connects that opportunity to the payment involved and the information you hold. Bring us the discrepancy you can explain from inside the project.

You Know When the Plant Started

If the plant’s history and the grant application tell different stories, speak with our whistleblower experts about the difference. We build the case with you and bring in energy-grant whistleblower lawyers who understand the link between project operations and Treasury eligibility. We stay beside you as your knowledge of the plant becomes the foundation of the case.