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Ludington Pumped Hydro Plant along Lake Michigan Ludington Pumped Hydro Plant along Lake Michigan COURTESY PHOTO

Consumers, DTE sue contractor over ‘defective work,’ project delays in $500M Ludington pumped storage plant upgrade

BY Friday, April 22, 2022 10:04am

Michigan’s two major electric utilities that jointly own the Ludington Pumped Hydro Storage power plant along Lake Michigan claim the contractor hired for a $500 million upgrade of the facility has “delivered defective work” and is failing to meet contractual deadlines.

Consumers Energy and DTE Energy, which jointly own the facility that began operating in 1973, filed suit in U.S. District Court in Michigan’s Eastern District this week against Toshiba America Energy Systems (TAES) Corp. and its parent corporation.

The suit includes three breach of contract claims against Wisconsin-based TAES and a fourth count against its Japan-based parent Toshiba Corp.

The pumped hydro storage facility — widely regarded as a key component of the utilities’ and state’s clean energy portfolio that acts as a giant battery by pumping water up from Lake Michigan and releasing it downhill to produce electricity — is in the middle of a $500 million upgrade and overhaul. The utilities hope to extend the project’s life by 30 years.

That includes installing a series of new turbines and other components that the utilities hired Toshiba to complete roughly a decade ago.

However, the utilities claim TAES has had “material and ongoing failures to execute a major overhaul and upgrade of the Ludington Pumped Storage Plant.” Claims involve using defective and faulty equipment and an unwillingness by TAES to remedy the situation, which is causing project delays.

“Toshiba has failed to comply with its contractual commitments in multiple ways, including failing to meet contractual deadlines and providing faulty and defective work,” Consumers Spokesperson Terry DeDoes said in a statement to MiBiz. “Though Consumers Energy and DTE have made many efforts to work with Toshiba to ensure it lived up to its commitments, Toshiba has failed to do so. Consumers Energy and DTE had no choice but to take legal action to hold Toshiba accountable and protect the Companies’ customers.”

A TAES spokesperson could not immediately be reached for comment.

The massive, nearly 2,000 megawatt facility along the Lake Michigan shoreline in Mason County is one of the largest pumped storage plants in the world and can supply power to 1.4 million people. A reservoir above the shoreline holds 27 billion gallons of water and has a surface area of more than a square mile. During periods of high power demand, the water is released downhill through turbines and other components that produce electricity.

In replacing the aging components, Consumers claims Toshiba has “repeatedly delivered defective work and services affecting key components of the hydroelectric turbines, including the discharge ring extensions, main shaft seals, and motor-operated disconnect switches. Those defects violate multiple contractual provisions and warranties. The defects also make the promised 30-year service life impossible for the Plant and will require more frequent (rather than reduced) maintenance. Toshiba has also failed to meet numerous contractual deadlines.”

“Despite numerous requests, Toshiba has refused to rectify its defective work,” the companies said in the lawsuit.

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