Inspection of the Heber binary-cycle geothermal project

We concluded that DOE had effective management control procedures to monitor project costs and the design, construction and demonstration activities. Lessons learned from previous DOE geothermal projects were applied and technical information generated from the Heber plant will be transferred to the public and private sectors by the project participants. We also identified the following issues that concerned us: Revenue Sharing: under existing revenue sharing provisions in the Cooperative Agreement, we estimate that reimbursable revenues to DOE will range between $30.5 million and $51.6 million. DOE and the public should be reimbursed for the total contribution of $61 million because the plant, if commercialized, will primarily benefit ratepayers and stockholders of San Diego Gas and Electric Company (SDG and E); Project Office Support Contracts: Our analyses of a number of project office support contracts suggest that some of this work should be cost shared with SDG and E; in other cases, the value of the work is questionable and appears to be an unnecessary expenditure of DOE funds; and Questionable Contractor Procurement: the noncompetitive procurement of a private firm to develop an economic study of a second Heber plant appears to be unjustified and duplicates work already planned by project participants. Comments on a draft of this report were received from the Acting Assistant Secretary for Conservation and Renewable Energy and from Heber program and project managers.