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Hartwick's hydro: the $155-million NLR hydroelectric plant struggled with cost overruns, press bashing: was it worth the trouble?

Hartwick's Hydro The $155-million NLR Hydroelectric Plant Struggled With Cost Overruns, Press Bashing: Was It Worth The Trouble?

On a good day Terry Hartwick, peddler of furniture, may sell a couple of sofa ensembles to some honeymooners. Five years ago he was pushing an $80-million hydroelectric plant to the people of North Little Rock.

"You would not believe what I had to sell," says Hartwick, 41, former North Little Rock mayor and now local manager of Haverty's furniture company. His pitch was for residents to invest millions in concrete, steel and water to produce power already available in a plan that wouldn't bring a payback for more than 30 years.

They bought it.

Five years, a stack of newspaper headlines and a load of problems later, the Murray Hydro Electric Plant churns away. Most days. In 1989, its first full year, it produced more revenue than projected but didn't cover the debt service on the bond issue.

This year it's already behind because of flooding. Whether it will be a boon to the city or a boondoggle on the river won't be known for years. Some city officials, though, and an ex-member of that group say it will be a wise investment.

"Think about how much revenue it's going to produce when it pays itself off in 30 years," says Hartwick. "People are going to say, `I don't know who that son of a bitch was, but this was a hell of an idea.'"

Hartwick's Hydro

Hartwick's association comes from one fiery four-year term that saw the hydro plant go from idea to operation. "Everybody still calls it Hartwick's Hydro," the ex-mayor says. "I worked my ass off on it. I lived with it, slept with it every day." Now, only his name is on a plaque at the plant, which is on the Arkansas River's north side at Murray Lock & Dam.

From the river's edge, the plant isn't as imposing as its million-dollar credentials might indicate. However, if you take it out of the water and plop it on the dirt, it would stand as tall as the downtown Holiday Inn on the river bank. Inside the 110-foot tall plant are two huge propellers, each with three 28,000-pound blades each. The theory is simple: River water flowing into the plant rotates the propellers, which turn a generator. And, eureka, we got power.

The plant can pump more than 40 megawatts in particularly productive conditions, or enough electricity to power 20 percent of the North Little Rock's homes and businesses. People talked about turning the water into power for decades but it wasn't until 1984 that city leaders became serious about the notion.

Controversial Proposal

In 1985 the city council approved an offer - $79.8 million with Southern Electric International/Daniel Construction Co. It wasn't long before controversy arose.

A petition drive forced the matter to a vote and delayed construction. Hartwick, a 35-year-old newly elected mayoral bundle of enthusiasm, campaigned like a banshee for the plant. "I bet I spoke to four or five different organizations a week," he says.

With 70 percent of the voters, the plant was approved and site preparation began November 1985. The bond issue had risen to $155 million by this time, including costs to pay a loan taken to make the interest payments on the bond issue while the plant wasn't producing.

Big money led to big allegations. The Arkansas Democrat and Arkansas Gazette reported several times that SEI/Daniel and other companies had taken Hartwick on trips. Finally, Hartwick says, "I got pissed at (Democrat managing editor) John Robert Starr and asked for an investigation."

Prosecuting Attorney Chris Piazza's investigation said he was appalled that in 35 incidences companies paid for trips, meals or other accommodations but there were "insufficient grounds to successfully prosecute."

Hartwick's quick comeback: "Daniel took me to the World Series. I still say I'd go again."

Cost Overruns, Power Lines

More controversies, delays and cost overruns cropped up. A citizens' group unsuccessfully tried to stop the plant's power lines being run through Burns Park. Fishermen demanded access to their casting spots. Additional reinforcement and stability measures were needed.

Hartwick personally approved three change orders that raised construction costs from $79.8 million to $83.35 million. A fourth overrun came in at $10 million, of which the city eventually paid about $4 million.

The plant began operation in October 1988, four months late barely generating because of low water. Two months later at the dedication, the plant was only 50 percent operational because of mechanical problems. The whole thing broke down a few days later.

Hartwick wasn't re-elected in 1988. He looks back at the hydro plant and sees it as his best achievement and mostly what ran him out of office. The delays and additional costs are inevitable of any project its size, he contends, noting the plant was complete by the October deadline and within the $89 million cap.

"There's not many things that don't run over and get delayed," Hartwick says. However, the cost overruns became an issue and "the constant barrage of the papers was one of the reasons I got beat."

He says the plant will bring North Little Rock revenue in the future. But it will be a long road.

Flow, River, Flow

The plant is at the river's mercy; too little water won't power it and too much overwhelms it. In 1989 the water was kind and problems were few. The plant exceeded projections in six of 12 months, generating $9.25 million - $300,000 more than projected. However, bond payments are about $12 million a year, leaving a $3 million shortfall.

Last year, the municipally-owned electric department covered the multimillion-dollar shortfall with profits it made by reselling at a markup electricity purchased from Arkansas Power & Light Co to North Little Rock power users.

This spring's floodwaters - 6 1/2 feet over the plant's entrance - basically shut it down in April, May and part of June. Through April 30 the city had bought $8,220,416 of electricity from AP&L, compared with $6,843,426 in the first four months of 1989. "It's definitely impacted our bottom line," says Leland Zimmerman, the electric department finance officer. "We'll probably have to do some belt-tightening."

The belt is likely to be tight in other years; the bond issue hits a high note of almost $14 million in 1995. Nevertheless, if the plant makes its 50-year projected life, it will be a huge revenue producer when the city can purchase electricity from itself.

The electric department's markup on AP&L electricity now generates about $5 million to the city's budget yearly (almost a third of revenues). Hartwick says that once the plant is paid for, the plant will drop an additional $9 million or so into the kitty. And he expects the plant to last - the state's first two hydro plants, built in 1924 and 1932, are still operating.

"It's going to take a while - $155 million is a helluva lot of money," Zimmerman says. "I think it's a wise investment by the people of North Little Rock. In 25 or 30 years folks are going to be thanking us for doing it."

PHOTO : BOONDOGGLE OR BRAINSTORM?: Terry Hartwick's hydroelectric plant is chugging along after early breakdowns, but will it ever pay its way?

Clay Hathorn is a freelance writer living in Little Rock.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
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Title Annotation:North Little Rock; Terry Hartwick
Author:Hathorn, Clay
Publication:Arkansas Business
Date:Jul 2, 1990
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