Wind-energy leader accused of inflating bills

  • Article by: NEAL ST. ANTHONY , Star Tribune
  • Updated: September 21, 2007 - 11:40 PM

An indictment says the man's firm overbilled Xcel and the state for wind-generated power.

Greg Jaunich, a pioneer of the Minnesota wind-energy industry, has been charged by federal authorities with defrauding Xcel Energy and the state of Minnesota by overstating the amount of power being produced by wind generators he operated in southwestern Minnesota.

The overstatements in 2003 and 2004 translate to about $388,000 in overcharges to Xcel, according to an affidavit filed in the case.

Jon Hopeman, Jaunich's attorney and a former federal prosecutor, said Friday his client denies the charges vehemently and is going to fight long and hard to defend himself and to restore his good name.

Hopeman said, "The last thing Jaunich would want to do is defraud Xcel or the state or anyone else, and he is very disappointed that what he thought should be an administrative and business issue between the power company and him three years ago should somehow morph into a federal indictment."

Burst of wind-power activity

Jaunich, 45, a businessman who left the commodities-trading business in 1991, founded Northern Alternative Energy in 1992.

It was a time when the costs of generating electricity from wind had dropped significantly because of advanced technology, and utilities were looking for additional power.

In Minnesota, the Legislature virtually jump-started development of wind farms in 1994 by requiring that Xcel Energy -- then Northern States Power Co. -- build or purchase several hundred megawatts of wind-generated power as part of a compromise that allowed additional storage of radioactive waste at the Prairie Island nuclear plant in Red Wing.

More wind power was installed in Minnesota during the years 1994 to 1998 than in any other state, according to John Dunlop, a regional representative of the American Wind Energy Association.

The amount of wind power generated in the state grew from 25 megawatts in 1994 to nearly 900 megawatts in mid-2007, according to the association, making Minnesota the fourth-largest producer in the country after Texas, California and Iowa.

Jaunich's family-owned company has been an active developer of some of those wind farms for utilities and other interests that own or buy power from what are now hundreds of investor- and community-owned turbines in blustery southwestern Minnesota.

In 2001 he built the Midwest Center for Wind Energy in that area near Hendricks, Minn., designed to be a corporate headquarters, maintenance center and a general hub for wind development in the region. Jaunich, a graduate of St. John's University, also served as treasurer in 2002 for the American Wind Energy Association.

Shaokatan billing questioned

According to a 2005 search warrant and affidavit filed in connection with this week's grand jury indictment, Jaunich inflated the electricity generated by a project he developed and managed in Shaokatan Township in Lincoln County called NAE Shaokatan Power Partners.

Jaunich started to produce power from Gamesa wind turbines on the site and allegedly billed the Minnesota Commerce Department, which pays a per-kilowatt-hour incentive payment, for $176,136 in 2003 and 2004, even though NAE Shaokatan only was owed about $35,000, according to the affidavit.

NAE Shaokatan similarly overbilled Xcel during the same period by 10,153,444 kilowatts of energy, or $388,369, according to the affidavit.

The Commerce Department was alerted to the power-production disparity by a wind turbine investor in the area, according to the charges. And a former service technician of Jaunich's company, Northern Alternative, told state regulators that the Shaokatan Power production monthly figures had been inflated.

Jaunich has an initial hearing in federal court on Oct. 3.

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Greg Jaunich