Lawsuit: APS Failed to Pay Maintenance Company Nearly $900,000 | Phoenix New Times

Lawsuit: APS Refused to Pay Texas Maintenance Company Nearly $900,000

An APS audit of the situation "unsurprisingly confirmed its own flawed premise," according to the complaint.
Arizona Public Service Company is the largest utility in Arizona.
Arizona Public Service Company is the largest utility in Arizona. YouTube
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A Texas engineering and construction company is suing Arizona Public Service, alleging that the utility refuses to pay nearly $900,000 owed for close to $4 million in maintenance at its gas- and coal-powered plants.

Saulsbury Industries, based in Odessa, filed its complaint in Arizona U.S District Court on December 7. The company seeks $893,866, plus attorneys' fees and interest.

In March 2018, according to the complaint, Saulsbury signed an agreement with APS, the largest electricity provider in the state, to be the maintenance and modification contractor at eight coal and natural gas plants across Arizona and New Mexico: Cholla, Four Corners, Red Hawk, Ocotillo, Saguaro, Sundance, West Phoenix, and Yucca.

Saulsbury was responsible for retaining and managing labor for any work that had to do with modifications, outages, or maintenance at those facilities.

Its work started on March 20, 2018, and lasted until January 22, 2019. Saulsbury notified APS in November 2018 that it would step down, because it decided to “[exit] the business of providing maintenance at [APS] plants,” according to the complaint. Saulsbury said that it continued doing work for APS even as it helped the utility find a replacement.

In a statement emailed to Phoenix New Times through a spokesperson, Saulsbury explained the decision to stop work for APS as a strategic and economic one, saying that in late 2018, the company "decided to scale back its operations and focus its services on its core markets."

Saulsbury continued its work for APS until mid-January, and the utility allegedly refused to pay a total of 81 invoices sent from November 9, 2018, to April 4 of this year. Instead, on February 8, APS objected to several of the payments it had already made to Saulsbury, saying that its logs from security gates and other tracking records “did not reconcile with the hours billed by Saulsbury,” the complaint says.

The company declined to share the agreement itself, citing confidentiality restrictions, but confirmed several details. It described the contract as an open-ended, master framework agreement, in which APS would request specific services from Saulsbury and issue separate purchase orders for each. It also said that the agreement required APS to pay Saulsbury within 45 days of receiving the contractor's invoice.

"APS was not obligated to provide work to Saulsbury, nor was Saulsbury obligated to accept work from APS," Saulsbury's statement said. "While the contract was open-ended, Saulsbury anticipated being a maintenance and modification contractor to APS for many years." 

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The Cholla Power Plant near Joseph City, Arizona.
Those differences, APS claimed, meant the utility had been overbilled, and therefore was owed offsets totaling $913,000, according to the complaint. Saulsbury claimed that APS’s objections were well over the 45-day limit for filing such objections, per the March 2018 agreement.

After this, APS did pay Saulsbury nearly $3 million for its services. It just stiffed the company on the remaining $900,000, the complaint states.

“APSC decided to ignore the Agreement and concoct an extra contractual basis for not paying Saulsbury,” it alleges.

The complaint states that Saulsbury demanded APS explain how the utility’s logs, which it implied were imprecise, were more accurate than Saulsbury's “daily-audited and supervised time system" of its workers’ labor.

Eventually, APS produced an “audit” — Saulsbury's lawyers mocked the word, framing it with quotes — “from its own finance department that unsurprisingly confirmed its own flawed premise,” the complaint said.

When Saulsbury asked for more explanation, APS repeated the claim that its own records were accurate “and suggested that Saulsbury’s employees are dishonest,” the complaint states. “As a result, this lawsuit became necessary.”

In its statement to New Times, Saulsbury said that the logs on which APS based its claim about overbilling were not recognized in the contract as a formal method for tracking time.

"Nor were APS's security gate logs accurate and Saulsbury has evidence to prove so," the statement added.

Two spokespeople for APS did not respond to detailed questions from New Times about its contract with Saulsbury. In the past, the company has declined to comment on active litigation.

APS has come under fire in recent years amid formal complaints about exorbitant rate hikes, power shutoffs leading to customer deaths, and broader accusations of corporate callousness and greed.

Saulsbury is an engineering and construction firm with branches in six states. It does work for clients in heavy industries including gas processing and treatment, fossil fuel and nuclear power, and manufacturing, and it has built petroleum pipelines, compressor stations, and other energy infrastructure.

In its statement, Saulsbury said it had done construction and electrical work for various APS facilities "without notable dispute" prior to the 2018 contract.
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