Saturday, April 19, 2014

FERC'r John Norris - Advocate for Consumers? Doubtful

CLEP (Clean Line Energy Partners) probably didn't take the opposition to their business plans too seriously.  Looking in to the past opposition to Horizon Wind and Zilkha Renewable Energy, there was some opposition to their projects, but Zilkha and Skelly didn't lose to local opposition.  The guys at CLEP probably weren't expecting the massive multi-state opposition from ratepayers they are now facing.  For CLEP, the poop is getting closer to the fan (or wind turbine) these days with increased opposition in Iowa, Missouri, Kansas, Arkansas, and Illinois.  When CLEP finally does fall apart and self-destruct the shrapnel will is going to fall on many of CLEP’s supporters. 

One of CLEP’s supporters is Federal Energy Regulatory Commissioner (FERC) John Norris.  A year and a half ago John Norris gave a nod and wink of support to Clean Line at a conference in Memphis.  The next day Norris wrote a statement supporting the need for helping the wind energy industry with more transmission projects in the name of advocating Public Policy Statements.  Since that time, Norris has been on the radar as a player in these RICL, GBE and PECL dramas. Statements like the two listed bellow were found to be distrubing.

“It is clear that going forward, we will place a great deal of emphasis on the available ratemaking incentives that reduce risk for a project."

"Projects that provide access to location-constrained resources, such as our nation’s wealth of renewable resources, that previously had no or limited access to markets"

Those statements just kind of rubbed me wrong with being so close ot Jimmy Glotfelty it sure appeared to be winks and nods to Clean Line Energy Puttineers.  

FERC’r John Norris surfaced again this week.  Platts reported FERC’s Advances Efforts to integrate Renewables into the Grid.  The end of this article is most interesting.
Commissioner John Norris, meanwhile, noted a March study put forward by the American Wind Energy Association challenging the view that the PTC and negative prices for electricity are distorting markets for nuclear units and other baseload plants.

While he said he wanted more information on how the PTC impacts nuclear facilities, Norris also said that options should be considered to keep nuclear plants operational, including long-term power purchase agreements, and that he had spoken with state regulators on the issue. He expressed concern that the grid could lose what he called a clean-burning baseload generation source if there is not action at the state level, in Congress or elsewhere.

John Norris probably really doesn’t needs more information about the problems created by wind energy’s Production Tax Credit.  Heck, a simple farmboy from Illinois can see the Production Tax Credit is creating a false economy for wind energy.  Following RICL and GBE ratepayers can see the problems as wind companies are practicing a form of predatory pricing to produce energy when it would normally not be economical.  If FERC’r John Norris needs more information, Exelon’s report about negative pricing is an excellent read.  As a FERC commissioned  and an advocate for wind energy, John Norris really doesn’t need more information.  He’ll just take what is spoon feed to him by the wind industry. 

It would appear Norris is being an arbitrator between his friends the wind industry and the nuclear industry.  The compromise Norris is leaning towards, Power Purchasing Agreements for the nuclear industry above market pricing is also interesting as such Power purchasing Agreements is a state issue and not a FERC issue.  More long-term Power Purchasing Agreements will lead to higher prices for consumers.   So, John Norris, FERC and the federal government create the problem by giving the wind industry such favorable incentives.  When the rest of the industry suffers, Norris doesn’t lean towards reducing the gifts towards the wind industry, but proposes more lucrative terms for those in the energy industry being hurt by wind energy’s sweetheart deals. 

Who is representing the ratepayers in all this?   Consumers and ratepayers have no advocates at FERC and this is a classic example of FERC seeing its role as the arbitrator between energy companies or between RTO’s having turf wars in their little fiefdoms.  As commissioners, like John Norris, look for “fair” and “equitable” solutions, like recommending nuclear baseload receive their own 20 year Power Purchasing Agreements, the ratepayers are the ones who lose in these compromises.    

The problem with giving the nuclear industry 20 year Power Purchasing Agreements is this does nothing to eliminate the problem.  The Production Tax Credit for the wind industry creates a bubble economy for wind within the energy industry.  With the wind industry having 20 year Power Purchasing Agreements plus the Production Tax Credit, government bureacrats and regulators are telling the generate more wind energy when the market price is telling the energy indutry there is an over production.  With Norris advocating additional long term pricing contracts for others in the energy industry, the Commissioner is only making the problem worse and not better.

John Norris is a classic example of the theories of free markets being forgotten as regulators become meddlers picking winners and losers when the marketplace should chose. 

Winners and losers should be determined by who can produce the energy at the most economical price and still make a satisfactory profit.   Give a sweetheart deal to the wind industry, others suffer.  Give a similar deal to nuclear baseload will only place natural gas energy producers at a further disadvantage.  Then again maybe FERC’r John Norris is just punting here and saying “FERC only creates the problems.  The solution is a problem for state regulators to fix.”  Regardless, this is poor regulating by Norris.

It will also be interesting if John Norris chooses to keep his head stuck in the sand with the Missouri Landowner Alliance complaint to FERC that Clean Line Energy is still being prejudicial and marketing these transmission projects to wind energy companies in spite of FERC stating Rick Island Clean Line LLC (RICL) and Plains & Eastern Clean Line (PECL) cannot discriminate.

This brings us back to FERC'r John Norris's support for RICL, GBE, and PECL.  When these transmission projects for massive wind farms finally self-destruct as the poop hits the fan, how much of the ca-ca will land on wind advocacy regulators like Norris?  Regulators who are advocates for the industry are not friends of ratepayers and the ratepayers clearly need at least one advocate at FERC.  Maybe the commissioner to replace John Norris when his term is up will have experience advocating for consumers.  When the ca-ca does hit the fan and Clean Line implodes, some of that stuff is going to those bureaucrats supporting CLEP's plans.  This is bigger than one powerline.

Sunday, April 13, 2014

Building Champions to Build Projects

Hey, The American Wind Energy Assocciation annual meeting is coming up in May!

Guess who is Doing a session about "siting".
Nope, not Michael Skelly,  Jimmy Glotfelty, or even RICL's "Director of Development" Hans Detweiler.  RICL's "manager" Amy Kurt is doing a session.  Go figure.  Here's a discription from the AWEA wibsite.  DO a search for "CLEAN LINE" and you will see this session .

Project Development Track
3B – Shape or Be Shaped: Rebuilding the Foundational Support for Wind Energy
Building Champions to Build Projects
clock2:45 PM - 4:15 PM
clockRoom:         Mandalay Bay F
Manager, Clean Line Energy Partners
Industry sector(s): Siting
As wind energy development continues to grow, the industry faces increasing challenges. It’s easy to get wrapped up in reacting to criticism or responding to detractors. But is it worth it? This presentation will provide an alternative solution, focusing on identifying supporters, developing them into champions, and working with them to build our projects.
Learning Objectives:
  • Change the way you think about community relations in project development.
  • Identify and build a network of supporters for your projects.
  • Activate your supporters to help develop your project. 


Wow.  That's interesting.  Clean Line Energy Partners spokesman to the AWEA is telling the industry an interesting strategy.  It sounds like Clean Line Energy is telling the industry;

"Look, we know wind energy is about as popular as... well transmission for wind energy.  Here's what you do.  Ignore the public’s concerns.  Don't respond to them and for heaven's sake, don't acknowledge their concerns no matter how legitimate they may be."

Is it wise for the wind industry to listen to the advice from a speculation project company who has three of their four main projects in a terminal flush down the spec project toliet?  The Rock Island Clean Line is about to get rejected by the Illinois Commerce Commission. The Grain Belt Express will likely be rejected by the Missouri Public Service Commission, and the TVA is moving towards new generation from natural gas.  High priced wind energy form Oklahoma is no longer in the TVA’s long term planning.  

Is it now wise for the AWEA to listen to the advice of Clean Line Energy Partners?  How many ratepayer opposition organizations are there to this company's proposed projects?  Here’s a list of some social media sources.

Let's take a moment to speculate on Clean Line Energy's motivation for holding this session at the AWEA convention.  Maybe Clean Line Energy, under Amy Kurt's advisement, has learned how to curtail and mitigate the damages done by concerned ratepayers who question the legitimacy of this company's projects.  

Maybe Clean Line Energy is making inroads by not acknowledging and ignoring the concerns of residents who believe it's simply wrong to give eminent domain power to a privately owned speculation project.   

Maybe Clean Line Energy has gleaned some prophetic wisdom by their extensive lobbying campaigns to politicians and wishes to share their knowledge and experiences with the wind energy industry.

Maybe it's wise for those in attendance at the AWEA convention to question the wisdom of taking advice from such a company.  If Clean Line Energy or any company in this industry has learned how to handle a disgruntle public, wouldn't that company keep their mouths shut and keep their secrets to themselves?

Yes, Clean Line Energy Partners LLC is an "acclaimed" award winner for their use of social media.  That award is on their resume, in spite of shutting down the companies five Facebook pages shortly after receiving the award.   Nevertheless, it's easy to guess the wind energy industry will be snickering as Amy Kurt gives the presentation.  Clean Line's been colossal failure at preventing ratepayers from raising their voices and concerns.  Clean Line Energy has clearly lost the battle with social media.

Maybe Clean Line has learned how to handle ratepayer opposition.  Then again, maybe this session at the AWEA convention is Clean Line's attempt to stop the bleeding with their main supporters in the wind energy industry.  Clean Line is facing so much opposition from Kansas, Missouri, Illinois, and Iowa, the opposition is surely bleed over to the wind energy companies.

It is possible Amy Kurt is attempting to tell the wind energy companies "Hey we're in this with you.  We're facing the same public opposition you all are facing." when Clean Line is  really attempting to convince wind companies they are not the root cause of wind energy opposition by consumers.  Clean Line has exposed the inefficiencies and failures of the Production Tax Credit and Renewable Portfolio Standards, plus the wind industries extensive lobbying efforts.  While these are all needed for the wind industry's success and also Clean Line Energy's success, this has created a bit of bad PR for the wind energy in Illinois, Kansas, Iowa, Missouri, and Arkansas.  

It is possible this session at the AWEA convention is Clean Line's attempt to mitigate the damage to the company's image within the industry and sway the image of the company within the industry.  Clean Line Energy still has not had one wind energy company sign up and commit to building a wind farm if RICL, GBE or P&ECL is built.   Maybe wind energy companies do not want to be associated with the transmission projects proposed by Clean Line Energy.  Rather than watch and listen to Amy Kurt's Clean Line presentation, it might be more interesting to watch the reaction of the audience.  

Snickers, raised eye brows, and a laughs out loud might be the response to this presentation.  

Then again, the description of this presentation by Amy Kurt is reminiscent the public relations propaganda used by the tobacco industry to deny the health concerns of cigarettes.     Perhaps wind energy companies should be asking a different question; 


Thursday, April 3, 2014

The Story of Big Sky WInd Farm and Lee County

Sometimes this circus of wind, energy and RICL reminds me of a big connect the dots conspiracy theory.  A garage full of articles, some Post-It notes and string would be helpful tracking this stuff and keeping it straight. Occasionally, if one connects the dots, the story is much bigger and has only been reported in pieces.

When you have privately owned projects like wind farms on farmland owned by someone other than the wind company, the question arises “What happens if the wind farm goes out of business?”  This is the same concern a lot of people have asked about the Rock Island Clean Line if public domain is used for a privately owned powerline cross crossing farmland to deliver wind energy to urban centers in eastern states.  If the project goes out of business, what happens? Who will be left to remove the towers?

RICL says this is not a concern and the price of scrap steel could cover the cost of removal and besides these projects won’t fail.  Wind energy is a winner.

Now enters Big Sky Wind Farm from Lee County in Northern Illinois.  Marci Jacobs at the Medill Reports (Northwestern University) did an interesting story about this subject last summer.  Louis Vassen, a Sublette, Illinois farmer was quoted;

“I think they’re pushing them too fast and we’re going to have a lot of obsolete equipment down the road,” said Louis Vaessen, a resident of Sublette, a town of 500 in Lee County. Vaessen has lived in Sublette for over 42 years.

Another land owner was quoted;

“The concern is that if the windmill itself or the company operating the windmill is not a profitable entity without government subsidies, if they go bankrupt you could get left with a big windmill on your land that they’re not paying you for and that they’re not going to dismantle,” said Brad Faber, a Chicago-based lawyer whose family operates a farm in Sublette. “If the companies continue to be supported by state or federal grants or a combo, and continue to be kept alive, then great. Nobody’s going to go to war about it.”

Big Sky was the wind farm used in this story to represent the industry’s position. 

Lee and surrounding county ordinances require that wind farm companies have decommissioning plans in place to hedge against such an event. Edison Mission Energy, owner of Big Sky Wind, a wind farm located in Lee and Bureau counties, has a permit that requires a $5 million bond for decommissioning.

Susan Olavarria, the director of communications and government affairs for Edison Mission, explained in an email that this amount “should be enough to cover the cost of decommissioning.”

How ironic.  While Big Sky Wind Farm was built in 2009, Edison Mission Energy and its subsidiaries, including Big Sky and Midwest Generation went bankrupt about a year and a half ago.   As Steve Daniels of Crain’s Chicago Business reported last February, Suzlon, the fifth largest wind turbine manufacturer from India was about to repose the (wind) farm.   Daniels reported;

At issue is an unusual loan Suzlon made to Big Sky to finance the project that comes due in October. With a $228 million balance, the loan won't be paid in full at that time. Suzlon has been in discussions with Edison Mission for months on restructuring the debt, according to Securities and Exchange Commission filings, but there's been no resolution.

Suzlon agreed in 2009 to finance the project's debt despite the fact that Big Sky didn't have a long-term contract to sell its power at a price that would have ensured its costs would be covered. Project loans by turbine manufacturers aren't unheard of, but they typically are made when there's a long-term power purchase contract in place.

Suzlon opted to take the risk at the time because it wanted to demonstrate the quality of its turbines following questions regarding the functionality of earlier versions, according to people familiar with the background of the deal.

Looks like that deal has been finalized.  The Hindu Business Line now reports Suzlon has “acquired” Big Sky.  Like the article linked at Energy Central, no mention is made about the bankruptcy or as Crain’s Chicago reported, Suzlon’s willingness to finance Big Sky.  Reading these articles, a person would think Suzlon bought Big Sky when it’s more like a creditor reposing a car, or a bank foreclosing on a house. 

The acquisition was made through Suzlon's US subsidiary Suzlon Wind Energy Corp. (SWECO), set up to cater to the growing needs of the wind power market in North America.

While the financial details of the transaction have not been disclosed, two people close to transaction said that the deal has been struck at $220 million.

"Big Sky, however, is now completely debt-free and cash generating asset.

So what happens when these wind farms get decommissioned?  While Edison Mission Energy bonded $5 million for the inevitable decommission, was that money really there at or after bankruptcy?   Will the new owner of Big Sky maintain a $5 million bond? 

Is money ever there when a corporate bankruptcy is involved?

The story of Big Sky isn’t over yet.  The same day it was being reported that Suzlon has “acquired” Big Sky (April 2), Bloomberg reports Suzlon is selling Big Sky to EverPower, a British private equity firm.  Amazing.  Big Sky goes from bankrupt to “acquired” and sold all in the same day.  In the end, Big Sky is owned by foreign interests. 

Looks like the most jobs Big Sky created were to the multiple law firms in these deals.  It will be interesting if Big Sky honors their contracts with the farmers and landowners or if these deals were absolved and “renegotiated” in the bankruptcy.  It would also be interesting if the tax revenue to Lee County will remain the same or if it will be renegotiated with the new foreign owners.

The question remains, what happens when these projects like these wind farms and the Rock Island Clean Line reach the end of their useful life and are decommissioned?  Does anyone really believe there will be monies leftover beyond steel scrap values to remove the towers?  Farmers and landowners are asking a legitimate questions and have real concerns when private equity speculation projects like Rock Island Clean Line (the powerline for wind farms) desire eminent domain to cross their land.

Is there really a "benefit" when these projects are turned over to private equity companies?
To connect the last dot in this circular story, Louis Vassen, the farmer who questioned the wisdom of wind farms with communities facing Wind Farm Fatigue has chosen a different route than corporate wind for his farm.  Today's issue of Illinois AgriNews has an article by Jeannine Otto covering Louis Vassen.  He has chosen to go the route of Distributed Generation and control his own renewable energy needs.  He’s install 10,000 watts of solar panels on his barn roof. 

The future of the energy industry is not grandiose transmission projects for wind farms that will eventually be ran into the ground.  The future of energy is more and more going to be farmers like Mr. Vassen in Sublette, Illinois who decide to generate their own energy and be true stewards of their land.

 “There’s enough room up on the barn roof that I can put up another 10,000 watts’ worth of panels after I see how this works out,” he said.

Carol Vaessen has plans for the homegrown electricity come summertime.

“We’re using more than they produce now, but in the summertime, it pretty much should all go back to the grid,” she said. “We don’t use the air conditioning.”

“We will this year if we have those,” she added.

I hope they enjoy the air conditioning this summer.