News Summary

DTE Energy and Consumers Energy have filed a lawsuit against Toshiba America Energy Systems Corp. over an $800 million upgrade at the Ludington Pumped Storage Plant. Allegations include mishandling of key components and operational delays, threatening the plant’s integrity and functionality. Toshiba, facing claims exceeding $690 million, has counter-sued, asserting that the utilities owe them money and that their claims are inflated. The legal proceedings spark concerns over potential impacts on Michigan residents’ power bills and the plant’s capability to function efficiently.

Lansing, Michigan – DTE Energy and Consumers Energy, the state’s two largest utilities, are embroiled in a legal dispute with Toshiba America Energy Systems Corp. over an $800 million upgrade at the Ludington Pumped Storage Plant. The utilities allege that numerous issues stemming from Toshiba’s work have compromised the integrity of this crucial facility, which plays an integral role in Michigan’s shift towards clean energy.

The lawsuit comes as DTE and Consumers enter the fourth year of litigation against Toshiba, claiming the contractor mishandled vital upgrades at the plant, initially established in the 1970s and recognized as a remarkable engineering feat visible from space. Specifically, the utilities report that key components, notably the turbines, are exhibiting cracks and signs of deterioration, while leaks have also been identified. This leads the utilities to believe that the generating turbines will not meet the projected 30-year lifespan outlined in Toshiba’s contract.

The damages sought by DTE and Consumers amount to over $690 million, alongside an additional $130 million for prejudgment interest. Each utility has already invested approximately $30 million to address the issues resulting from the alleged faulty work. Despite these expenditures, Toshiba has failed to rectify the problems, despite being repeatedly instructed to do so, according to the claims from DTE and Consumers.

In response to the allegations, Toshiba and its subsidiary have counter-sued, maintaining that the claims are unfounded and asserting that they have faced obstruction and improper withholding of payments. Toshiba has indicated that it is owed over $15 million and contests the utilities’ damage assessments, labeling them “wildly inflated.”

The Ludington Pumped Storage Plant functions as a large-scale battery, capable of pumping water uphill to store potential energy during periods of low electricity demand, and generating power when needed. The upgrade, which was planned in the mid-2000s, initially aimed to modernize the plant’s six generating units and turned out to be substantially more complex than anticipated, resulting in a contract that expanded to nearly $560 million.

DTE and Consumers allege that Toshiba’s work has been fraught with operational delays. Both utilities report a staggering 1,361 days where generating units were rendered unavailable, alongside significant defects such as cracked discharge ring extensions and unreliable seals and switches. Due to these ongoing issues, two of the plant’s six units are currently limited to only about 50 hours of operational use per year, seriously affecting the plant’s reliability and functionality.

The utilities, aiming to extend the plant’s lifespan by an additional 30 years through the upgrades, continue to face repeated failures and delays. As the legal battle continues, the outcome of this lawsuit is likely to have substantial implications for Michigan residents, potentially impacting power bills depending on who the court finds liable for the mounting repair costs.

As the situation unfolds, DTE and Consumers have received authorization from the Michigan Public Service Commission to postpone the recovery of costs via customer power bills. A hearing concerning Toshiba’s motion for summary judgment is scheduled for June 11, providing the next step in this ongoing legal confrontation.