I'm waiting for someone to put up a sign saying, "Thank you PUD Commissioners for standing up to outrageous profiteering!" But, I won't hold my breath.


From the PUD Website:

The Spradlin Rock Case

Why Grays Harbor PUD is Appealing and What The PUD has Already Paid Spradlin Rock

The signs on the Spradlin Rock trucks call for Grays Harbor PUD to “Pay Spradlin.” The signs have prompted many of our customers to ask about the billing dispute between Grays Harbor PUD and Spradlin Rock. Grays Harbor PUD is providing the following information to better inform our customers about the PUD’s position regarding this legal matter.


Background

Spradlin Rock Products Inc. is a contractor that provided road repair and rock hauling services in response to the December 2007 storm. Grays Harbor PUD received invoices related to the work and paid a portion of the charges ($1.5 million was paid in early 2008). In all, Spradlin Rock submitted invoices totaling about $5.9 million.

The PUD discontinued payment on additional invoices when a number of irregularities were found that indicated Spradlin Rock’s charges were excessive for the work conducted. The charges identified as excessive include a “fuel surcharge” that turned a $152,705 fuel bill into a $519,894 charge, or about $12 per gallon, and administrative office work billed at $98.55 per hour regular time, $142.83 for overtime and double-time at $179.36 per hour, for a total of a little over $200,000 over a 20 week period. When the District was unable to convince Spradlin Rock that the billings were dramatically inflated and needed to be more reasonable, the District terminated our working relationship.

After payments were discontinued, Spradlin Rock filed a lawsuit seeking about $6.3 million dollars from the PUD (that would be in addition to the $1.5 million already paid resulting in Spradlin Rock potentially receiving $7.8 million), the case went to trial. During the trial the PUD was restricted by the court from presenting arguments related to the rates charged by Spradlin Rock, which was critical to the PUD’s argument. The court ruled that because the utility had paid for some of the work, it created a contract authorizing the rates. The trial ended with a verdict awarding Spradlin Rock about $4.2 million, $2 million less than the $6.3 million Spradlin Rock was seeking.

The Grays Harbor PUD Board of Commissioners decided to appeal this decision to the Washington State Court of Appeals, believing the District has a good case for appeal. The basis of the appeal is the court’s decision to restrict arguments related to the rates charged by Spradlin Rock. The PUD disputed the charges in a timely manner and believes a successful appeal will provide the opportunity for a jury to hear the whole story. If successful, the verdicts will be overturned and the case will go back to court for a new trial. The appeals process is expected to take about 15 months.


Payments made to date for Spradlin Rock’s Work

The PUD Board of Commissioners had District personnel determine what would be a fair and reasonable amount to pay Spradlin Rock for work performed. The PUD determined that a fair and reasonable amount would be an additional $1.06 million. To date, the PUD has paid approximately $2.56 million for the work Spradlin Rock conducted in the wake of the 2007 storm. This is an amount the PUD Board of Commissioners believes is fair and reasonable based on past dealings with Spradlin Rock and industry standards. It does not include payment for charges found to be clearly excessive. The PUD Board of Commissioners has a fiduciary responsibility to ratepayers and recognized that, as a not-for-profit public utility, any payments made are at the expense of ratepayers.


Payments to other contractors who assisted in the 2007 storm.
Some customers have asked if the PUD simply didn’t pay contractors after the storm. That is not the case. In the wake of the December 2007 storm, more than 30 crews from a number of different contractors worked to make repairs. With the exception of Spradlin Rock, every contractor who performed work in the aftermath of the storm has been paid in full.

"The court ruled that because the utility had paid for some of the work, it created a contract authorizing the rates."


It seems to me that this statement is the critical part of this whole case which was initially ruled in Spradlin's favor. If I understand correctly, there was no firm agreement between the parties as to rates for the work to be performed. Spradlin did some work and submitted three or four invoices for payment for that work. Those invoices were approved for payment by someone within the PUD, thus establishing the rates according to the court findings.

If those initial invoices were improper or included excessive rates for whatever reason, they should never have been approved for payment. Thus, since they were approved, they established the rates for continued work by Spradlin. If the initial invoices should not have been approved, then the person or persons who approved them should be on the chopping block if not already terminated. If handled properly and with due diligence, the PUD would not be in this mess, and the PUD Commissioners would not have to stand up to protect it's ratepayers from "outrageous profiteering."

"The court ruled that because the utility had paid for some of the work, it created a contract authorizing the rates."

This, of course is the main basis for the appeal. It is the position of the PUD that the judge erred in that ruling. If the higher court agrees, rates will be discussed.

I think, in hindsight, a mistake was made in paying that first invoice. Being that it was not detailed out, it is not unreasonable to assume the rates were the same as they were one month prior when the contractor did storm work for the PUD. But, we all know what they say about assuming.

$12 deisel and $50,000 a month bookkeepers were not on the first invoice... only a dollar amount. The PUD protested early on and requested more information. Foolishly, they made a payment to a contractor that had done a lot of work for them in the past including one month prior. That was a mistake, but not an egregeous one. The contractor was a local who had done a lot of work before. Why would they think there was a possibility all prices would triple or more?

After the storm there wasn't any gas services open in the Ab area. I remember my oldest daughter having to drive to Elma before she could get gas and then it was a limited amount.

I'm assuming Spradlins trucks/equipment use diesel and if there was none available locally wouldn't the diesel have to be trucked in? And if that occurred wouldn't that lead to extra fuel charges?

We have to remember our area was on it's own for several days. How many of us couldn't even get out of our homes? My youngest daughter was in the process of moving from Oregon. I can't remember how many days she had to wait before roads opened. But even then they had to come up via 101 and it took over 8 hrs to get here from McMinville.

I can't help but think the conditions after is what raised the charges.

Nice guess. Not the case in this instance, but nice guess. How about ratepayers being billed $50,000 a month for his bookkeeper?

This was my big issue. I agree with above post that the price of fuel may be justifiable. I had to drive to Olympia to fill up my vehicle and some gas tanks for the generator.

And I can even believe that since the conditions were much worse to work in with down trees, etc. that this would have made their work much more difficult/dangerous/time consuming which would, in turn, make it more costly.

But 50K a month for a bookkeeper?

I just wish that the PUD would have been more aggressive on researching what they were being billed for. Not only at this instance, but at times prior.

If Spradlin was trying to push these charges to individuals during the crisis that ensued after the storm, or at anytime of the year, there would be an enormous outrage. A 50K a month bookkeeper, millions of additional dollars of charges, and they might win because someone in a time of crisis paid a bill? They should be embarrassed.

This is the win that they want? If this was a gas station that charged $12 a gallon after the storm, they should be looking over their shoulder for the feathers. But since it is just the PUD, wait, us, who will have to pay for this . . . . I have a bag of feathers.

This is probably explainable. Diesel is $3/gallon. A fuel truck delivering the diesel to the equipment is probably in the neighborhood of $100 per hour at straight time for the driver and truck. Overtime and double time for that driver would add much more to that cost. Not just anyone can drive a fuel truck since there are special endorsements for them.

I think we all realize that there is a giant probability that on an honor system for hours honor does not always win out. I don't know enough about this to guess if this happened but I can understand the suspicions. That is a lot of money for the time frame they worked.

"The court ruled that because the utility had paid for some of the work, it created a contract authorizing the rates."

As WC Fields put it, in You Can't Cheat an Honest Man, "never give a sucker an even break, or smarten up a chump."

If a crisis or disaster occurs, and the price of gas (or other supplies) rises, that is called price gouging, and it is illegal, and prosecuted with vigor. Unless it happens to the taxpayers, apparently. I must admit curiosity, however, why you already have a bag of feathers. I noticed last week that one of his trucks parked in Central Park already seemed to have been tarred...