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SSE in £30m dispute over Glendoe tunnel collapse

Scottish and Southern Energy is in a dispute with the contractor it hired to build the £150 million Glendoe hydroelectric power station at Loch Ness.

The row is over who is responsible for a tunnel collapse that forced the site to close last year after only eight months in operation.

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According to market speculation that neither SSE nor contractor Hochtief would confirm or deny, the row is heading for the courts and will involve damages claims of between £20m and £30m.

The cost of lost power production on the plant, Scotland’s first major hydroelectric scheme since the 1950s, has been estimated by analysts at around £15m, while the repair bill has been estimated at £10m.

The plant closed last August and is not expected to reopen until next summer. The repair job, which involves boring two new tunnels, was awarded to BAM Nuttall, and Hochtief has played no further part in the project.

The Sunday Herald can also reveal that Hochtief, a German construction company with its UK headquarters in Swindon, is the subject of four personal injury lawsuits filed in Edinburgh in recent months.

Glendoe was the site of one fatal fork-lift truck accident and at least one serious accident on Hochtief’s watch, and the company was served with a notice by the Health and Safety Executive shortly afterwards in 2008 banning it from operating all vehicles until they were certified safe.

Over two years, the company received four enforcement notices from the HSE relating to 10 breaches. All four cases are due to be heard in the Court of Session in Edinburgh next year.

These cases will be hugely embarrassing for Perth-based SSE, which takes health and safety more seriously than almost any other company. It is renowned for having strict policies such as requiring staff to hold the bannister on stairways and reverse into company parking spaces as opposed to driving into them forwards.

Staff are encouraged to point out errors to colleagues who breach the code, who are in turn expected to accept the criticism with good grace and ensure that it doesn’t happen again.

These incidents will still have been overshadowed by the tunnel collapse, however. SSE chief executive Ian Marchant is on record as saying that he “loved” the project and that it was like a “punch to the stomach” when he discovered what had happened. He blamed a failure by “experts” to line the tunnel, but stressed at the time that there had not been any negligence.

SSE, which owns the Scottish Hydro and Southern Electric brands, has a strong reputation as a green energy champion. The 100MW plant, which lies near Fort Augustus at the southern tip of Loch Ness, was opened by the Queen.

A spokeswoman at SSE confirmed that the two companies were in dispute on the terms of the contract, which stipulates that Hochtief would fix any faults arising in the first two years. It appears to have been SSE’s decision that the contractor did not do any such work following the tunnel collapse.

The spokeswoman said: “[The closure] was a huge disappointment for us but BAM Nuttall is going to get it sorted. We will sort out the contractual issues [with Hochtief] once it is up and running.”

She said that there was no court hearing scheduled, and did not know whether there was any mediation taking place between the parties.

A spokesman for Hochtief said: “In August 2009, eight months after operations started, unforeseeable rockfall occurred. Our client has started an investigation programme and is still examining the problem at the moment to find a suitable and sustainable solution.

“We have made suggestions for rehabilitation measures considering different scenarios. As long as investigations are in progress we unfortunately cannot talk about further details.”

SSE’s annual results document, published earlier this month, said: “In August 2009, SSE identified a blockage caused by a fall of rock near the top of the tunnel carrying water from the reservoir to the power station at the 100MW Glendoe hydro electric scheme, thus stopping operations at the station.

“The repair will require the construction of two new tunnels: one around 900 metres, to divert water around the blockage; and a second, shorter, access tunnel. The tunnelling work will be carried out using the drill and blast method. BAM Nuttall has been retained as the contractor for this work, which is under way.

“Nevertheless, the extent of the repair work is such that electricity generation is unlikely to resume before the summer of 2011.”

None of the lawyers representing the individuals against Hochtief returned calls in time for publication.

 

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