The developers of a cutting-edge but troubled biogas power plant south of Junction City are engaged in a bitter financial dispute that could lead to the shutting of the facility later this month.
Urban Energy LLC, an entity owned by Lane County business executives Oren and Sharon Posner, is suing the company that runs the Highway 99 plant, JC-Biomethane LLC.
The Posners own Lane Forest Products, a landscaping materials company.
In the lawsuit, Urban Energy said JC Biomethane has failed for two years to make lease payments to Urban Energy for a key piece of equipment at the facility.
The equipment is a $1.5 million German-made power plant that burns the facility’s biogas and converts it to electricity, according to the lawsuit filed in January in Lane County Circuit Court. The power plant was leased in 2013 by Urban Energy to JC-Biomethane for seven years, the lawsuit said.
JC-Biomethane hasn’t made the monthly $24,910 lease payments since November 2015, Urban Energy claims.
Urban Energy says that under the equipment lease, JC-Biomethane now must pay the entire lease amount due — $1.1 million — or Urban Energy will shut down the power plant, in effect halting the entire operation.
“In the interest of public safety and for the sole purpose of a safe and orderly shutdown of the (power plant) and facility,” Urban Energy will let the power plant operate until at the latest the end of February, Urban Energy said in a Jan. 26 warning letter to JC-Biomethane that was included in the lawsuit.
Phone calls and emails from The Register-Guard to JC-Biomethane were not returned. The company has not yet filed a response in court.
Urban Energy’s attorney, Kelly Beckley, declined to answer questions from The Register-Guard about the lawsuit, adding, “We are hoping for a speedy resolution.”
JC-Biomethane, which started operating the Highway 99 plant in late 2013, produces and collects methane through a fermentation process using food scraps and similar refuse — mostly from Portland area grocery stores, restaurants and schools — and liquid food waste. The rotting material emits methane that is burned on-site to produce electricity, which the company sells to Portland General Electric.
According to Urban Energy’s lawsuit, the majority owner of JC-Biomethane is a “European money fund.” Filings with the Oregon Secretary of State’s Office show that one manager of JC-Biomethane is based in Zurich, Switzerland.
The lawsuit and shutdown threat are the latest woes for the facility, which has been dogged by trouble from the start.
Various entities involved in the developing the plant have sued each other in Lane County Circuit Court in recent years over alleged cost overruns, construction deficiencies, disputed ownership stakes and other problems.
Promoted by sustainablity advocates, biogas plants are common in Europe but remain rare in the United States. Lane County appears to have only one other similar plant, a small set-up at Junction City’s Lochmead Farms.
The JC-Biomethane plant cost $17.5 million to build, of which at least $9.4 million came from government agencies or utilities as incentives because of the project’s environmental benefits.
In addition to those subsidies, the facility receives an estimated $1 million a year from electricity sales to PGE, and a total of $1 million from its food waste suppliers and from Lane Forest Products, which buys the mulch produced by the biogas plant’s food waste, according to records filed in various lawsuits.
Urban Energy says the majority owner of JC-Biomethane is a “European money fund,” but provides no further identification. It’s unclear who owns the rest of the plant.
Several entities played a role in developing the facility. The Posner family has a substantial stake in the overall operation, due to leasing the electric power plant to JC-Biomethane, and also owning the land on which the entire facility was built. The family leases the land to JC-Biomethane.
In addition to a large building that houses the power plant, the facility has massive above-ground storage tanks where food waste is kept and the resulting methane gas is stored before burning.