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Electric chargers put on hold: Provider files bankruptcy, under investigation by FTC

COVINGTON — The company that the city of Covington was planning to partner with to install electric vehicle chargers downtown has filed for bankruptcy and is under investigation by the Federal Trade Commission.

The city of Covington is no longer pursuing a partnership with ECOtality Inc., said Financial Coordinator Randy Conner.

“We are still pursuing the installation of charging stations in Covington, but we will not be using ECOtality as originally planned,” Conner said in a memo to the Covington City Council dated Aug. 22. “Financial problems with the company, who received the grant funds from the Department of Energy, have made that proposal very unattractive. We currently have other avenues that we are pursuing and should have new information for the council next month.”

ECOtality, which won more than $100 million in grant money from the U.S. Department of Energy, has filed for bankruptcy protection and said it plans to auction its assets next month, according to Reuters. ECOtality and five affiliates filed for Chapter 11 protection on Monday night with the U.S. bankruptcy court in Phoenix.

Citing “significant liquidity constraints and the difficulty of obtaining long-term financing,” ECOtality said an auction is necessary to maximize value for creditors and avoid a “fire-sale liquidation.”

ECOtality is also under investigation for insider trading.

“Due to time constraints, our approval was made before we had time to do our due-diligence research on ECOtality as a potential business partner,” Conner said in his memo. “After conducting our research and talking with Ace Electrical, the Marietta-based electrical firm who would be installing the systems for ECOtality, we became uncomfortable with the proposal. For this reason, we delayed sending in our response and request to have the charging ports installed.”

Conner said Ace Electrical informed the city that ECOtality is under investigation by the Federal Trade Commision “and allegedly, some very unscrupulous business practices have taken place” to allow ECOtality to receive the federal funding.

ECOtality was awarded federal grant money to help develop the EV Project, a network of charging stations for vehicles such as the Chevrolet Volt and Nissan Leaf in major U.S. metropolitan areas, according to Reuters.

The company said Nissan North America Inc. agreed to provide up to $1.25 million of financing to keep it operating during the bankruptcy. Court approval is required for that loan.

According to a court filing, the Energy Department is owed $6.5 million as the largest unsecured creditor of ECOtality affiliate Electric Transportation Engineering Corp.

City officials are hoping to install chargers in downtown Covington and at the city’s Planning and Zoning Department, and had initially planned for those to be installed in October, with ECOtality to maintain the charger stations for two years and retain a small portion of revenues. Those plans are now on hold until another partner can be found. Conner said he has contacted a representative with Clean Cities Atlanta to investigate other options.