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Hydro faces $1-M suit for biomass project blast

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Hydro wants to replace coal with biomass fuel.

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Manitoba's move to ban coal-fired heat is exploding, and not in a good way.

A Finnish company is suing Manitoba Hydro for $1 million for accidentally blowing up biomass equipment on a Hutterite colony earlier this year.

Preseco Oy, a Finnish manufacturer of equipment that turns waste into energy, claims Hydro made unauthorized modifications to the equipment, failed to follow Preseco's instructions and caused the small blast at the Rock Lake colony in Grosse Isle last February.

The Hutterite colony is where Hydro and Preseco partnered on the pilot project designed to char wood chips and turn them into carbonized fuel that could replace dirty coal as the colony's fuel source.

Following the explosion, Preseco alleges Hydro refused to fix the equipment or continue paying to rent it, despite repeated entreaties.

"Such high-handed conduct by Hydro, in deliberate, wilful breach of its duty and obligations, and callous disregard for the rights and interests of Preseco, warrant an award of punitive damages," reads the company's statement of claim, filed late last month.

Proseco Oy's allegations are unproven and Manitoba Hydro has not filed a statement of defence. But Hydro spokesman Glenn Schneider says Hydro disputes the allegations.

The Preseco project was one of five experimental ones that got $2.4 million in federal funding three years ago as part of the province's effort to boost the use of biomass such as wood chips and crop residue for fuel. The five pilot projects were touted to shrink greenhouse-gas emissions by about 12,800 tons a year.

The Preseco situation is a setback for the province's climate-change plan that calls for a ban on coal-fired heat by 2017. It's mostly Hutterite colonies that still use coal for heating, and the province is pushing them to convert to biomass.

The explosion happened in the wood-chip supply bin and may have been caused by dust build-up or excess gas, said Ben Hofer, manager of the Rock Lake colony. It caused no injuries, but blew the cover off the bin and left it "with a little bit of a belly," said Hofer. The colony managed to get a small amount of fuel from the process, though it was often problematic. Now, it's in limbo.

Preseco claims Hydro staff installed manual control valves to bypass the equipment's automation, used the wrong feed-in materials and fiddled with the equipment's settings, causing the blast.

The damage made it impossible for Preseco to demonstrate its technology to other would-be buyers. A call to Preseco's Winnipeg lawyers was not returned Wednesday.

maryagnes.welch@freepress.mb.ca

Republished from the Winnipeg Free Press print edition September 19, 2013 A7

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Updated on Thursday, September 19, 2013 at 8:29 AM CDT: Adds map, adds link to statement of claim

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