LITTLE ROCK — When the old Dillard's Department Store headquarters in downtown Little Rock was being retrofitted to house the State Library, Arkansas Energy Office and other state agencies, one of the selling points was that it would meet state-of the-art environmental standards and save taxpayers money.

LITTLE ROCK — When the old Dillard’s Department Store headquarters in downtown Little Rock was being retrofitted to house the State Library, Arkansas Energy Office and other state agencies, one of the selling points was that it would meet state-of the-art environmental standards and save taxpayers money.

In operation for nearly two years, a key component of the building’s environment-friendly character — a solar array expected to generate about 20 percent of the building’s energy needs — has yet to be switched on because of an unrelated contract dispute between Arkansas Tech University and Entergy Arkansas.

“At some point we’ll have an agreement of some sort and get these babies hooked up,” said Joe Holmes, spokesman for the Arkansas Economic Development Commission, of which the energy office is a division.

In early 2010, workers completed a $12 million project to refurbish the old Dillard’s headquarters at 900 W. Capitol Avenue. The State Library, Arkansas Development Finance Authority, AEDC and the state Science and Technology Authority moved in within six months.

The state later purchased the building for $18.5 million.

The building received a gold award for its Leadership in Energy and Environmental Design (LEED), an internationally-recognized building certification system.

Holmes and Anne Laidlaw, director of the Arkansas Building Authority, said last week that after work on the building began in 2008, and the application for LEED certification had been made, the state received $550,000 in federal stimulus money to purchase the solar panels.

“It was an add on later,” Laidlaw said. “The design of the building was not related to whether the solar array was there or not.”

The solar panels were added later to the LEED certification application, she said.

But as workers completed installation of the panels in the summer of 2010, state officials learned of a contract dispute between Arkansas Tech University and Entergy Arkansas, which is also the energy provider for the State Library project.

In 2009, Arkansas Tech was renovating a dormitory and Entergy, which owns and maintains electrical equipment on the university campus, insisted the university either sign an agreement making Tech liable for any injuries related to the equipment, or purchase the electrical equipment on the campus.

The university signed the agreement but later filed a complaint with the state Public Service Commission, arguing that the state constitution prohibits the state, including higher education institutions, from entering into an indemnification agreement with a corporation.

Because the “net metering” agreement between Entergy and the agencies housed in the renovated State Library building also includes an indemnification clause, officials decided not to turn on the solar array until the contract dispute between Arkansas Tech and the utility is settled.

The PSC decided in Arkansas Tech’s favor, ruling the state university could not be indemnified. The Arkansas Court of Appeals upheld the PSC, ruling it was unconstitutional to require a state entity to sign such an agreement.

The state Supreme Court declined Entergy Arkansas’s petition to review the case.

The issue is now back before the PSC, and until a final decision is made, the solar panels will remain unplugged, said Susan Wilson, deputy director of the Arkansas Building Authority.

Entergy spokeswoman Julie Munsell said the utility has asked the PSC to void the indemnification clause in its contract with Arkansas Tech.

“Essentially what it does is removes the indemnification clause and replaces it with insurance to address the same liability issue,” Munsell said.

Because the State Library building has an indemnification clause in its “net metering” agreement with Entergy, Munsell said utility attorneys are not sure whether to ask the PSC to exempt the state facility or to pass a rule regarding all Entergy Arkansas clients with similar agreements.

“That is the kind of broader issue that has to be addressed across the board,” she said.

Holmes said the solar panels, which “look kind of like covered parking when you drive by … have been tested and they operate beautifully, but they have not actually been connected and are waiting resolution of this” dispute.