Sunday, April 21, 2013

Rural Economic Discrimination & Clean Line Energy

Recently, I exchanged tweets with a person from the American Wind Energy Association (AWEA).   He was boasting about the great strides being made with onshore wind generation.   I made some comment about the lack of gains with off shore wind.   His final comment was something like “it would be great to have more offshore wind but offshore is just not economical compared to onshore.”  

That’s not a direct quote but basically what he said and it’s true.   As long as new transmission for onshore wind is cheap, off shore wind will never develop.   This leads to another question. Why is onshore transmission for wind so economical?   The answer lies within Rural Economic Discrimination.

Clean Line Energy is proposing several high voltage DC transmission lines across the Midwest to wheel wind energy from the western side of Iowa, Kansas and Oklahoma to the eastern coastal states.   They’ve hired companies like HDR Engineering to make up some fancy reports explaining the most economical corridor for these powerlines is through the center of agriculture farm ground.   The company desires a Right of Way from 500 to 750 miles long for these three projects, taking up anywhere from 12,000 to 16,000 acres of right of way.  

The company’s southern project, Plains & Eastern Lean Line (P&ECL) runs through Oklahoma and Arkansas, stopping somewhere just across the Mississippi River just inside Tennessee.   This is one of Clean Line’s longer proposed projects running about 750 miles.   Clean Line Energy is proposing a price of $2,300 for this Right of Way.   In contrast, Clean Line Energy’s proposed Rock Island Clean Line’s initial offer for a Right of Way purchase is $8,400 per acre for an identical 3,500MW   HVDC powerline.  Why the vast difference in price for a Right of Way from Arkansas to Illinois?

Clean Line Energy is attempting to take advantage of local economics for land.   Put simply, land sells less in Arkansas than northern Illinois and Iowa.   Therefore the company is attempting make a significant savings and purchase the Right of Way for as little as possible.   With no regard to the economic value of a 750 mile long Right of Way or potential return on equity (ROE), the company is committing a form of Rural Economic Discrimination.  

The value of the land as a 750 mile contiguous right of way is ignored.   The potential Return on Equity is ignored and not disclosed.   Transparency is kept to a minimum as the company attempts to distort and hide the true potential value of the Right of Way.   Consequently, the land owner’s property is forever diminished as the company attempts to buy the Right of Way by only considering current market prices for the land.   Even still, using the company’s numbers, why should a Right of Way be worth almost a quarter of the value in Arkansas than in Illinois?  The land is just as valuable to the company and will offer the same ROE in both states.  This is clearly an open bias and discrimination to the residents affected in Arkansas.

In Illinois, Clean Line Energy used a company called HDR Engineering to create a study explaining why the primary route selected is the best route.   Countless hours are claimed to be spent developing this route.   Major cities and small towns are avoided as much as possible to limit the affected exposure to as few people as possible.   Unfortunately, this form of rural economic discrimination has been a constant problem.   Major opposition is avoided with the cities who benefit the most as Right of Ways go around them as far as possible, but those living within the path are told they need to sacrifice for the benefit of the community at large.

As projects grow larger, the community supposedly benefiting from the project becomes even larger to justify the project.  For projects such as the Rock Island Clean Line and Clean Line’s two other projects, the “community” who receives the benefit becomes the entire eastern half of the United States, or everything east of the Mississippi River.   Again, the ones being told to sacrifice are those living in rural areas.  

No premium for the Right of Way is considered to these residents and landowners because they are forced to live and work around a project its creators even admit to intentionally avoid larger more economically developed areas.    Unfortunately, the cost of the Right of Way is discounted when it passes through less populated areas because the total number people affected is less and the fair market value of the land is less.

Clean Line Energy freely admits this, but the company spins this form of Rural Economic Discrimination as a good thing…by avoiding those living in larger urban areas.   They explain the company is being sensitive to those living near Interstate 80, the Quad Cities, and other towns avoided.  The truth is, Clean Line is being biased towards the path of least opposition and lower cost to purchase the Right of Way.   Again, to counteract this form of Rural Economic Discrimination, there should be a premium paid to those who must live, work, and own land under and around proposed utility Right of Ways like Clean Line’s proposals.  

Are there alternate routes that affect less people than running Right of Ways through rural farmland?   Yes.  The public has requested Clean Line Energy consider burying the powerline, placing the powerline along federal property, such as along the Interstate 80 corridor, or even burying the line along the I-80 Corridor.   Again, all of these options are considered nonviable by the company as being too costly.   Having alternatives become “too costly” is always the argument for making Rural Economic Discrimination acceptable.

Projects will never consider alternatives until the companies are forced to pay for this discrimination.   Once companies are forced to confront Environmental Justice and pay a fair market value that includes compensates for discrimination, the companies will then look at more costly alternatives more costly.   Should the price for a Right of Way be any less through rural land than along an interstate corridor?

No.  The price of a Right of Way through rural lands should be based on the economic value to the company plus damages to those affected regardless of living in lightly populated rural areas or more densely populated cities.  Discrimination and biased towards rural communities is a loss companies should be required to compensate.  Those affected on “Route A” through agriculture land should receive the higher potential price as those affected on proposed “Route B” passing through a higher population to reduce the effects of Rural Economic Discrimination.  

Finally, in cases of wind energy, alternate projects need to be considered.   As mentioned in the beginning of this commentary, there are always alternatives.   Clean Line Energy has positioned themselves as providing value-added wind energy by wheeling it from western Iowa to the urban centers in the eastern states.   To move the wind energy from western Iowa, massive transmission lines must be built through Iowa and Illinois.   While the off shore wind energy is right there next to the consumers who need it along eastern states, the cost of off shore projects are considered higher.   Onshore wind projects with hundreds of miles of transmission are only considered viable because of Rural Economic Discrimination with low cost of Right of Ways through agricultural lands.   When farm land owners are paid a proper fair compensation for their Right of Ways, offshore wind projects will become viable.  

What is the value of a Right of Way?  

Its value is not the market value of the land.   Any Right of Way value should take proper considerations for the companies potential Return on Equity, damages to the land, loss of economic use, plus the damages created by Economic Discrimination, whether it is discrimination by avoiding urban centers.   Alternatives that are more costly but do not discriminate should be seriously considered when determining a fair value for a Right of Way.  

Having a Right of Way follow an interstate corridor is more arbitrary and does not discriminate based on economics.   Offshore wind does not discriminate economically, but placing a powerline Right of Way through rural lands strictly because the Right of Way is cheaper and it affects less people is discrimination to those who live and work around it and compensation should be made accordingly.   If this makes interstate corridors more attractive or other options like offshore wind more economically attractive, then good.   No one should suffer economically from proposed utility Right of Ways because they chose to live in rural areas and a company desires to place a utility line through the path of least coast and least resistance.   The value of a powerline through Arkansas should be the same as the value of a powerline through Illinois.   The value of a powerline through rural Illinois should not be at a discount to the value along the I-80 corridor where more cities are affected.  

What is the value of a Right of Way being bought by a privately owned venture capital company?  It’s worth a lot more than $8,400 per acre.   When one considers Rural Economic Discrimination, $50,000 per acre is a good figure for the company to start negotiations and go up from there.

Friday, April 19, 2013

Monopoles, Rock Island Clean Line Energy, and Right of Ways

This is not the property Clean Line Energy wants to put up a powerline.  This is the farm I live on.  My grandfather bought this 239 acres during the depression.  I think he paid $25 an acre.  The next right of way through here will have to pay 2000 times this amount per acre for their right of way. That's not a joke or bluff.  The next right of way through this pasture will pay at least $50,000 per acre.

Story has it, when my grandfather brought this farm, he drove the banker out from town to see the farm he just bought, and they got lost.  Grandpa didn't want to admit he didn't know where the farm he just bought was so he just drove around a little bit until he found the place.  

This farm has 89 acres of corn fields and the rest is pasture or hay fields.  It is some of the best pasture in the county, some of the worst corn fields, and a powerline runs through it.

These are the monopoles the "power company" put  through our pasture about 2 years ago. There about 80 feet tall.   The picture above was taken as the powerline leaves our property leaves our pasture and crosses the Fox River.  Due to recent rains, the river is overflowing.  The river is actually after the third pole.

The power company had to cut down several trees.  This is the largest pile.  There were two more piles.  At least 12 oaks were cut down for this powerline.  The wood should be dry enough.  Should have seen the pile from between our pasture and the river.  That pile was about 4 times this size.  I probably should get a wood burning furnace for the house.

These monopoles are about 80 feet tall and something like 100KV or 133kv AC, nothing compared to what Clean Line envisions.  These last two pictures are taken at the front end of the pasture, by the road.  The power company runs north of the several pipeline right of ways until it reaches our property.  As the powerline crosses, the road it moves to the south side of the existing pipeline right of ways.  There is a hill, creek and cliff on the south side of this powerline.

When another utility company wants to come through here, there is no more room for another right of way a the west end by the road.  There's an open pit mine to the north of this pasture and this hill, cliff, and houses to the south.  The hills farther east get much worse.  The future utility companies and these existing utilities companies are going to have to start sharing these right of ways and pile up on top of each other.

Yes, the next company that wants to put a powerline through here will probably do like the last one and survey the right of way from satellite  photos.  They will just draw it out on paper.  No one will come out and see this isn't flat land.  It will be fun trying to explain to them you just can't draw a right of way out on paper and expect the land to cooperate.

Yes, there is a powerline in my backyard.  We've seen our share of Right of Ways and suffered our share of Rural Economic Discrimination.  No, my family didn't dispute the last 2 pipelines, this powerline, or the Northern Border pipeline through the field my great grandfather bought.  My great grandfather didn't even disagree with the now abandoned pipeline through the field RICL now wants to pass through.

I expect to see another two or three right of ways come through in my lifetime.  The Rock Island Clean Line is the only proposed right of way we've ever opposed and argued its worthiness.  This is not because we don't want the RICL powerline through our farm.

Like Arkansas, we don't even want Clean Line Energy and their overpriced unneeded wind energy in our state!

Thursday, April 18, 2013

Tips to Rock Island County when Negotiating with Rock Island "Clean" Line

OK I’m shocked, flabbergasted, but not quite flatulent (long-winded).  

Again, Rock Island “Clean” Line has been less than honest and about as transparent as a compacted septic tank in need of high colonic or maybe a super sucker. 

I’m not much of a Facebooker.  I just don’t navigate it well.  If I went to go to someone’s Facebook page, I’ll Google it first.  Googling “Facebook BlockRICL” gets me to where I want to go much faster than navigating inside Facebook.  There’s probably a psychological term to describe people who despise Facebook, besides “antisocial”.

Speaking of Facebook and “antisocial”, it should be noted I’ve been banned from leaving a comment on RICL’s Facebook page that was deemed improper by CLE.  Yes, I made a comment that violated Clean Line Energy’s social media rules, and right now is probably the best opportunity to apologize to Mr. Skelly.  I was bad and probably deserved to be banned from the RICL Facebook page.  Then again, even Skelly and Jimmy Glotfelty have made some inappropriate comments on line. 

So anyway there are some fascinating information at the BlockRICL facebook page.  I’ve also learned from past errors and haven’t violated anyone’s “social media rules” again.

While reading BockRICL’s Facebook page, it looks like Rock Island County has chosen to table RICL’s offer of $7,000 per mile for the powerline instead of paying property taxes.  It’s interesting how there is such a lack of transparency where Clean Line Energy fails to mention the $7,000/mile is for life of the project in Iowa, but in Illinois CLE only offers the payment for 20 years.

Incidentally, our friends in Iowa calls this $7,000 per mile a "Replacement Tax".  This means the utility company is replacing the lost income from decreased property taxes.  The powerline decreases the land's value in perpetuity and the counties want their money from from the company responsible.. 

Perhaps Whiteside and Henry Counties were a bit foolish to prematurely sign this agreement without discussing it with the counties residents.   Somebody in Whiteside and Henry Counties should learn how to NEGOTIATE.  $7,000/mile for 20 years was the company’s initial offer.

Rule #1: When negotiating with a utility company wannabe is “Never take the company’s initial offer.”

BLOCKRICL Facebook also points out the Clean Line Energy is using a signed agreement as “support” from counties at the Illinois Commerce Commission.    This “support” kind of reminds me of the James Carville quote;

“Drag a 100 dollar bill through a trailer court and you never know what you’ll find.” 

What RICL is offering isn’t a direct bribe to the counties, but it is a little hinky . 

RICL will give the counties a pocket full of money for twenty years in return for the county’s’ support and force this powerline through the townships and township road commissioners.  It’s a three page agreement written by some high dollar Houston or Chicago lawyer where the county has all the obligations and Clean Line Energy’s only responsibility is to write a check once a year.  Again, everything is up for negotiation, including the counties expectations of the company.

Do you really think a county board will distribute the money to the townships, road commissioners, and those directly affected by the powerline like Clean Line recommends?  HA!  That’s about as likely as finding ham inside the fridge of a Clean Line billionaire's estate.  It’s not going to happen.  Any county board beer-goggling over this money and eager to sign an agreement as soon as possible  will try their best to keep the money inside the county’s budget.  If this money was actually going to the townships affected, the county boards would be consulting the townships before signing an agreement with Clean Line Energy.

Should Clean Line succeed, it wouldn’t surprise me if townships sue the counties for damages.

Then there are the property taxes to Grundy County.  BLOCKRICL’s Facebook page makes another interesting comment.

Did you know that after all of "Clean" Line's posturing about local tax benefits that they asked Grundy County for 100% tax abatement on the convertor station?

When Clean Line wants to make a good image to local papers, they talk about the property taxes and of course…the schools….Clean Line’s “transparency” neglects to mention the company starts with 100% tax abatement (no tax payment). 

Note to County Boards: Don’t accept a vulture capital company’s first offer!

Rock Island County made a wise move.  Table this issue until the Illinois Commerce Commission (ICC) decision.  If the ICC does approve this piece of ham, the county will have a much better position to negotiate.  Actually Rock Island County will be in a position to dictate to Rock Island Clean Line what will be charged for taxes.   Where should the county start? $10,000 per mile?  14,000 per mile?

Rule #2 when negotiating with a make believe utility wannabe is;

Start high and aim to settle for a minimum three times the company’s initial offer.

It’s not wise to let the company eager to hand out money dictate the terms.  A wise person stops, asks questions, and learns just how badly the billionaires want this land.  Then negotiate on your terms, not theirs.  Then again, my terms for Clean Line is somewhere closer to;

 Clean Line doesn’t belong in Illinois.

 Finally, what reward does a county receive for signing on board early with Clean Line Energy?  Seriously, no money was shown that I know of.  It all depends on ICC approval.  Did I miss something?  Is there an early signing bonus? 

This agreement is worthless should the RICL fail at the ICC.  For counties like Henry, it only shows just how easily the county board members will sell out the residents and giddy to receive “free” money.

Thursday, April 11, 2013

Arkansas Legislature tells Clean Line to "Suck It" with House Res 1031

How else do explain it.  When has a legislature told a wanna-be utility company we don't want you in our state period? 

...and Clean Line says everyone loves them.  Looks more like the entire state hates them.

I don't recall a state going to this extreme to tell a company we don't want you in our state and we find the manner you conduct business offensive..

Well I guess Arkansas won't be sending out the Nation Guard to protect this powerline while being built like Minnesota had to do with the HVDC CUPowerline in the late 1970's.

Wednesday, April 10, 2013

Key drivers for growth of Midwest Wind.

Talking points for  "Key Drivers for Growth of Midwest Wind"

1.  Powerlines
2.  Powerlines
3.  Powerlines
4.  Stop the growth of off shore winds.
5.  Obtain "FEDERAL SITING AUTHORITY" by any means necessary for more powerlines.
5a. Play nice with states utility commissions, but focus on the DOE for support to obtain eminent domain.
6.  Adopt an "All-of-the-above; except everything but wind" energy strategy
7.  Oppose Coal
8.  Oppose Natural Gas
9.  Oppose Fracking
10.Oppose nuclear
11.Use laws federal laws to benefit hydroelectric for wind energy.
12.Lobby for Multistate Transmission Siting Compacts
13.Lobby for more Renewable Portfolio Standards
14.Lobby for more 20 year power purchase agreements at generous pricing from the states.
15.Promote the myth that the public is willing to pay more for "clean" wind energy
16.Lobby for more regulations to discourage consumer choice away from high priced wind energy through Alternate Retail Energy Suppliers

Monday, April 8, 2013

Picking Winners and Losers with the Dept of Energy & Clean Line Energy

Fisker Auto is going bankrupt.  Yet another “winner” picked by this administration’s the Department of Energy is turning out to be a loser.  Dept of Energy doesn’t have a good record picking winners and losers.  Makes me wonder how the Department of Energy’s pick of Clean Line Energy’s Plains & Eastern Clean Line.

Lou Dobbs make a great point about this administration’s ability to pick winners and losers.  He can’t name one “winner” chosen by this administration’s Department of Energy.  That includes Plains & Eastern.  Mr. Skelly, you might want to go tell FOX NEWS just exactly how much a “winner” Plains & Eastern Clean Line really is….good luck with that one.

Not everyone thinks Plains & Eastern is such a great idea.  The Southwestern Power Resource Association thinks it’s a bad idea for the DOE to pick Plains and Eastern Clean Line as a winner with Section 1222.