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CASHING IN ON A CASH COW

Posted by on 15 Jan 2016 | Tagged as: American shad, climate change, Connecticut River, Connecticut River shortnose sturgeon, Daily Hampshire Gazette, endangerd shortnose sturgeon, Endangered Species Act, Energy Capital Partners, Federal Energy Regulatory Commission, federally-endangered shortnose sturgeon, FERC, FirstLight, fossil plant, GDF-Suez FirstLight, ISO, ISO New England, MA Division of Fish and Wildlife, National Marine Fisheries Service, New Hampshire, NMFS, NOAA, non-renewable, Northfield Mountain, Northfield Mountain Pumped Storage Station, Rock Dam, shortnose sturgeon, The Greenfield Recorder, The Pioneer, The Recorder, Turners Falls dam, Uncategorized, US Fish & Wildlife Service, USFWS, Vermont

The following piece appeared in the Daily Hampshire Gazette(www.gazettenet.com) and the Recorder(www.recorder.com) in the first week of January 2016.

CASHING IN ON A CASH COW

Copyright © 2015 by Karl Meyer

Ever dreamed of owning your own bank? I got a deal for you! Northfield Mountain Pumped Storage Project is for sale again, along with the Turners Falls canal and dam—and a string of little assets down in Connecticut. But Northfield’s the cash cow. Fourth time in a decade they’re unloading this golden calf–always at a tidy chunk of change. A quickie corporate win-win! It’s really like an A.T.M., run at the expense of the Connecticut River ecosystem.

Place works like a giant toilet–suck huge amounts of the river backward and uphill, then flush it all back and—viola, money spews out the other end. Could be ours! They’re holding bidder tours as we speak. I just need a few partners with ready credit. We go in on short-money and cash-in on the no-brainer electricity “spot market” for a few years. Then, with inflated power-price futures in play, we offload this puppy for a final cash-out of 30%–maybe 50%!

Here’s how it goes down. With the cheerleading of Northfield’s not-so-silent partner, ISO New England–the “independent” system operator (created by the Federal Energy Regulatory Commission), we simply slow dance this darlin’ past the banks, the FTC and FERC. Then, in 2016, its sweet business-as-usual—maybe with new shirts for employees.

Trust me, this works every time. Everyone walks away with full pockets—without the public knowing what hit them. Northfield got wholesaled in 2006 by Northeast Generations Services(formerly WMECO—formerly of Northeast Utilities, now Eversource—you follow?) They grabbed a quick $1.34 billion for the package, slipping it to a trio of Jersey venture capitalists, Energy Capital Partners. ECP renamed their little project FirstLight Energy. Those smartest-guys-in-the-room hung-in and grabbed Northfield’s peaking spot-market profits for two years, before off-loading it for a nifty $1.89 billion in that crazy year, 2008.

With that, GDF-Suez, third owner in four years, swept in–the world’s largest private energy corporation, based in France. They’ve been gobbling up contracts to run water systems across the US under the name Suez United Water. But GDF-Suez recently did a clever name-change to Engie, keeping the public totally confused. They got game! The true costs of these premium-priced plant sales get buried in the list of acronyms on electric bills. It’s like owning a 25-mile stretch the Connecticut River to dip into for cash any time you please.

This is a turn-key operation–with us, the new guys, pushing the buttons. The joke is that the public thinks Northfield is a hydropower operation, while this baby has never produced a single watt of its own energy. It’s imported!–huge swatches of bulk electricity now run-in from outside the region to suck a mountain’s worth of flow from the Connecticut up to a reservoir. Then, dump it out on the power lines when prices peak. It’s hugely inefficient, now largely carbon-based—and massively damaging to the river. But amazingly profitable!

That’s where we come in. Sure it was built as a sister to the region’s nukes to gobble up their monstrous stream of unused electricity–because nukes can’t shut down their feverish output at night. That’s how you get to put in a giant straw and suck the Connecticut uphill at a rate of 15,000 cubic feet per second–more than enough to pull the river backward for a mile downstream under low flow conditions. But who’s watching? When the region’s last nuke shut down, nobody said ‘boo!’ with Northfield going fossil. What climate change?

And when it became clear years back that Northfield operations were imperiling spawning success for the federally-endangered shortnose sturgeon at the Rock Dam in Turners Falls–their singular natural spawning site going back into pre-history, again, nobody came forward. Not the US Fish & Wildlife Service, the National Marine Fisheries Service or the MA Division of Fish & Wildlife—or any river protection group. No bureaucrats, no suits–nobody. At Turners Falls—instead of 70% of migratory fish heading upstream toward Vermont and New Hampshire, they squeeze out 4%. We have it made!

Still skeptical? ISO and FERC are addicted to Northfield—even though its power-flush characteristics might come into play maybe a handful of times a year, if at all. For this they let owners cash in on the river whenever y they want. In 2012, the owners of this “asset” collection of 1500 megawatts(of which over 1100 MW derived from Northfield alone) told investors a full 40% of their profits were realized from “Capacity Fees.” What that means is you get paid for holding back the Connecticut! They’re not required to use it at all if they don’t want to—just flush when prices are high. Paid for being you! Of course another 50% of profit comes from generating, though the public doesn’t know it only operates a few hours a day when prices are highest.

Here’s the kicker: in 2014, after a cry-wolf energy deficit winter that never materialized, FERC–with ISO as cheerleader, sanctioned the doubling of those “capacity fees”. Plants are now collecting 2X the amount they were two years back, for having the potential to dump some power on the lines—not for actually generating. Paid for being you! With 1100 potential megawatts at Northfield, how quick can you say “windfall at the public’s expense?” Lastly, Northfield petitioned FERC the last two winters to increase its reservoir storage by a full 25%, with ISO their biggest cheerleader. FERC agreed, twice. Double-dip with a cherry, anyone?

This thing’s a cinch! Even with all the nukes shut—when this should have been moth-balled to emergency use as more climate-warming, spent nuclear junk, it soldiers on as a virtual river monopoly with the blessings of FERC and ISO. Trust me, no one goes to court. Ecosystem damage, costs to the public? Fuggetaboutit!

Got credit? Give a call!

Enron Redux in New England

Posted by on 14 Oct 2014 | Tagged as: Brayton Point coal plant, Cheryl Lafleur, Energy Capital Partners, Enron, Federal Energy Regulatory Commission, GDF-Suez FirstLight, Greenfield Recorder, Mt. Tom Coal Plant, Northfield Mountain Pumped Storage Project, Public Citizen, Rutland Herald, Times Argus

Note: the following piece appeared in September 2014 in the Sunday edition of the Rutland Herald(www.rutlandherald.com); the Times-Argus in Montpelier, VT(www.times-argus.com),  and The Recorder in Greenfield, MA(www.recorder.com).

Copyright © 2014 by Karl Meyer

ENRON REDUX

Kids: go to your parent’s bedroom and find mommy’s purse and take $110 out of it. Then go out and have some fun. Why? Because the Federal Energy Regulatory Commission and its own creation–the Holyoke, MA-based Independent System Operator of New England (ISO-NE), just confirmed that it’s ok to steal. The theft took place in June at a rigged ISO-NE “forward market” energy auction. There, Hartford-based Energy Capital Partners made off with the public’s loot to the tune of $110 from every New England ratepayer, according to consumer watchdog Public Citizen.

In a pre-dawn, September 17th press release, FERC Chair Cheryl LaFleur argued that it was legitimate for corporate-citizen ECP to manipulate the market and pick the pockets of ratepayers from Hartford to Springfield, and Boston and Montpelier—three years in advance. That panicked missive arrived directly on the heels of two FERC Commissioners, Norman Bay and Tony Clark, issuing their own September 16th press release terming the summer ISO-NE ratepayer swindle a “non-competitive auction.” It was a tiny crack in the curtain surrounding FERC decisions. In a split vote, LaFleur and one other Commissioner voted against intervening in the bogus outcome—thus tabling it, and letting the theft stand as legitimate commerce.

Given that, I’m figuring parents would prefer their kids got the cash, rather than a clique of market manipulators. Give your child a head start.

According to Public Citizen, FERC’s failure to intervene will have New Englanders forking out and additional $1.4 billion for the inflated BTU prices ECP manipulated into place for energy to be delivered three winters hence. That, Public Citizen says, will cost each of us over a hundred bucks.

With LaFleur providing the leadership, FERC, our public watchdog on energy projects, rates, regulation and reliability, gave the nod to its puppet-cousin ISO-NE–signaling that its “independent” actions letting ECP game the auction system were acceptable business as usual.

Just like stealing from your parents, Energy Capital Partners was pretty brazen in their market rigging. What they did was purchase an old New England dinosaur, the Brayton Point coal plant in Somerset, MA in 2013. Then, just weeks later, they announced they would be closing Brayton Point–citing environmental and economic constraints. That closure was timed perfectly to influence “forward” market prices. It would take place in May 2017—creating an energy “deficit” timed to show up on the books precisely as the 2017 energy auction was to take place. That staged BTU shortfall caused the spike in prices and accepted forward market bids at ISO-NE’s auction—all to be born at the public’s expense.

ECP will profit handily from their own paper tiger—silent proceeds flowing like electric current to investors, steered directly through ECP’s five other New England venture capital energy plants. That’s how you spike an energy market. It’s the stuff investors gush over.

FERC is charged with ensuring fair pricing for the public, as well as energy reliability in a deregulated market. In its own words its core responsibility is to “guard the consumer from exploitation by non-competitive electric power companies.” It was FERC that created ISO-NE, the regional grid’s independent system operator charged with keeping the lights on in the public’s interest. It’s now clear ISO also referees sham auctions.

Maybe New Englanders won’t mind getting their pockets picked; utility bills are clever at never revealing what you’re actually paying for. But I mind–$110 isn’t chump change to me. I’m worried too that today it’s FERC that’s also overseeing virtually all the controversial energy proposals now swamping the New England region: from mega Northern Pass power lines entering from Canada, to the Tennessee Gas Pipeline, to the relicensing of five large-scale hydro projects on the Connecticut River including the Northfield Mountain Pumped Storage Project.

Curiously, Energy Capital Partners sold the Northfield Mountain Pumped Storage Plant to GDF-Suez FirstLight Energy over half a decade back. Now it looks like FirstLight may be taking a page out of ECP’s market playbook. They just requested an open-ended and unprecedented “emergency” power uprate and a 20% increase in storage capacity for NMPS, due to a perceived–but as yet undocumented, energy shortfall for the coming winter. What FirstLight withheld in its lengthy application arguments to FERC, was that it is closing down its own 135 megawatt Mt. Tom coal plant in Holyoke this October. Create your own energy deficit. It is also an end-run around environmental relicensing studies set to take place next year. We’ll all pay.

So if you thought “no-bid” government contracts were a thing of the past and that energy market manipulation and wash-through trades were a distant echo of the Enron and Arthur Anderson scandals, think again. Given the pressing concerns of climate change and the dismal record of market manipulation, the time has arrived to re-regulate energy.

Karl Meyer of Greenfield, MA is a member of the Society of Environmental Journalists.