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Investigators in Rowland probe scrutinize fuel cell project

Publication date: 15-April-2004
Source: Associated Press

HARTFORD, Conn. -- A $19 million project billed as the largest fuel-cell energy center in the country has come under scrutiny by federal authorities investigating corruption within Gov. John G. Rowland's administration.

Federal investigators have subpoenaed records from the state Bond Commission on several projects, including documents related to a fuel cell power plant built at the state detention center for juveniles in Middletown, which also is being looked at as part of the probe.

It is unclear what has made investigators zero in on the six 200-kilowatt fuel cells that supply electricity to the Juvenile Training School. However, the construction manager at the reform school was the Tomasso Group, the New Britain contractor at the center of the Rowland administration investigation.

And state officials familiar with the project, who declined to be identified, said it was Peter Ellef, Rowland's former co-chief of staff and a subject of the probe, who stepped in and changed the project from a traditional power system to a fuel cell plant.

Originally considered a money-saving concept, the fuel cell is costing Connecticut taxpayers anywhere from hundreds of thousands of dollars to $2 million more a year than a traditional heating and cooling system, said Marc Ryan, secretary of the state's Office of Policy and Management.

"It turned out to be much more expensive than traditional forms of energy," Ryan said. "Ultimately it doesn't mean it was the wrong thing to do. Sometimes governments have to be on the cutting edge."

Ellef was one of many state officials who championed fuel cells as an industry in Connecticut. President Bush has praised the technology, which produces electricity with virtually no pollution, as a future energy source.

"So today, with this new complex, we are on the leading edge in providing an environment where delinquent youths can be rehabilitated and successfully returned to society," DPW Commissioner Theordore Anson said at a dedication ceremony. "And at the same time we are leading the way in building an environmentally sound power plant with no burning fuel and virtually no emissions."

Anson has testified before a grand jury in the probe. He was forced to resign last year after accepting free architectural plans from a contractor in 2000.

Select Energy, a subsidiary of Northeast Utilities, won the contract in 2001 to build and run the power plant.

Select Energy was ranked second among four bidders, according to the state Department of Public Works, which oversaw the project and is also a focus of the federal investigation. Keyspan Energy Management of New York was ranked first, officials said.

Keyspan initially had the most attractive price, said Allen Herring, chief engineer with DPW and chairman of the selection committee.

The state's total yearly expenses for the plant would have been about $3 million under Keyspan's initial proposal, while under Select Energy it would be $3.9 million, Herring said. But records indicate Keyspan raised issues with the potential risks involved in the technology and wanted the state to share in those risks.

Herring said Keyspan's price rose during negotiations, while the total annual costs for the state under Select Energy wound up at $3.1 million. Company officials said the price this year is expected to be about $3.7 million, including its operating costs, adjustments for rising fuel costs and a payment for the construction loan.

"I was very comfortable with both of them," Herring said. "I think it was a fair aboveboard negotiation."

Keyspan officials said they did not have concerns about not being selected.

Tomasso officials said the company had nothing to do with the fuel cell project, other than laying pipe leading to the center.

The fuel cell project was the second one built around the same time to come under scrutiny in Connecticut, which has played a leading role in the emergence of the technology.

In 2001, state regulators rejected a proposal by now bankrupt Enron Corp. and Connecticut Resources Recovery Authority, the state's trash authority, for a fuel cell project. The deal fell through after the state denied a request to use conservation funds.

Ellef reportedly tried to get Tomasso involved in that project.

U.S. Rep. John Larson, D-Conn., said the probes should not deter investor and government confidence in fuel cells.

"The two projects happen to involve fuel cells, but the controversies don't revolve around the fuel cells," spokesman Michael Kirk said. "The tremendous economic or environmental benefits far outweigh any negative issues surrounding some of the individual projects."

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Associated Press writers Susan Haigh and Matt Apuzzo contributed to this report. 

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