Thursday, January 30, 2014

And who the $@*! is David Berry? (Rock Island Clean Line Energy Financial & Strategy GURU)


While going through the ICC testimonies looking for key statements, it became apparent just how often answers where avoided and deferred to David Berry, the company's finance guru.  Here are just some of the answers given in order to avoid answering a difficult question that  wasn't in Clean Line's scripted answers.  These responses were given by both Michael Skelly (Clean Line Energy Partners President) and Hans Detweiler (RICL's Director of Development), and engineer Wayne Galli. Far and away the most referals to David Berry was from the company's President, Michael Skelly


It's a bit comical.  Why not say "I don't want to answer this question so I will say say "Ask David Berry" and hope by the time he comes around the list will be so large no one asks these pertinent questions again,"  Now I know the best response to a no-response when asked by the press is "I am not qualified to answer that question because I am not ...a doctor...lawyer...insurance adjuster..." but the "Ask David Berry" approach was an interesting variation on avoidance. 

 Here's a montage of testimonies referring to David Berry.


Q. Okay. And Mr. Berry is who?
1.  A. Dave Berry, who is also here with us today, is the EVP for finance and strategy at Clean Line Energy.



2.  I am not a hundred percent sure; so I will defer to my colleague Dave Berry.

3.  I think it's probably confidential, and David Berry, who will appear later, could give the exact mechanics of that.

4.  Again, Dave Berry can walk you through the exact details and the timing and so on, but are they going to walk in this afternoon and buy it? No.   

5.  Well, let me -- there's a bunch of rules around capacity and energy and so on, and if it's okay with you, Dr. Galli or Dave Berry can give you a complete rundown on how all of those things work.

6.  I'm going to defer to David Berry the exact mechanics of this because I don't – I don't recall exactly the -- that particular piece of it.

7.  These would have been prepared either directly by or supervised by Dave Berry.

 
8. Mr. Berry will know the answer to that question?

9. I also know the answer to the question, but apparently we're going to wait till another date, but Mr. Berry will know it to a  fine level of detail.

10.  I got to think how it works. I know Dave Berry knows this one too.

11.  Questions of finance are better directed to Mr. Skelly as they already were or to witness Dave Berry.

12.   I think it's probably confidential and David Berry, who will appear later, could give the exact mechanics of that.

13   -- though, as Mr. Berry discusses, it is hard to imagine that there would be sufficient non-wind resources in the project's resource area seeking to transport their output to Northern Illinois to justify building the project -- whatever the resource use" -- "whatever resources use the line will be lower cost resources than current or future resources in PJM or those resources will not use the line."

14.   I'm not intimate with our easement documents and guarantees on those documents, I'm  not a bankruptcy attorney so I think I would defer  to Mr. Berry to answer that question.

15.   I would actually refer to Mr. Berry to talk about how those contractual relationships  would work in general but that could be one possibility.

What is RICL's Iowa Land Acquisition Comany


What is the purpose of a subsidiary of RICL called the Iowa Land Acquisition Company?

The attorney for the Illinois Landowners Alliance did a good number on Skelly at his testimony before the ICC.  After reading it, I can image Michael Skelly smirking and thinking “Is this all you got”.   The Illinois Landowners Alliance attorney, Bill Shay started questioning Skelly about Exhibit 1.1 of his original testimony back in October 2012.  Exhibit 1.1 is an organizational chart, a flow chart basically.  Unlike other organizational charts, that list people, titles, and position, this organizational chart lists shell companies under Clean Line Energy Partners LLC.



What threw Skelly off his game was questions about the word “confidential” in the upper corner. It was an apparent trivial misprint of sorts, as this organizational chart has nothing to do with the company’s lack of finances.  Like I said, I image Skelly was thinking “Is this all you got?  A misprint of the word “confidential”…Your making a big deal of that?” 

From there the questioning became more difficult for Skelly.  As it was discussed who is actually the investors, National Grid, Does Skelly and company own a piece of CLE, does National Grid have an option to buy RICL, and as mentioned in the previous post, what the heck is the Rock Island Wind Line LLC.  From reading the transcript, it looked brutal for Skelly. 

BTW Mike, if your reading this, when “Exhibit 1.1 was mentioned, I knew where he was going immediately.  “LMAO” is the correct term for how I felt as I began reading the testimony.  It’s probably best I wasn’t there.  I’d be bursting out laughing, doing the church pew laugh, attempting to hold it in, or doing like Clean Line's Executive Vice President  Dave Barry, mouth open and swinging my neck to every question and every response.  Wow, that guy was doing some intense listening.

So anyway, as mentioned in a previous post, the ComEd attorney questioned Skelly about the company Rock Island Wind Line LLC.  Michael Skelly wasn’t sure the purpose of that company and the lawyer needed to ask Dave Barry.  It wouldn’t be for a possible wind energy company would it?

In the Clean Line Energy Partners LLC organizational chart, there is another two companies of interest, the Iowa Land Acquisition Company LLC and the Oklahoma Land Acquisition Company LLC.  I know what the purpose of the Oklahoma Company, a subsidiary of Plains & Eastern Clean Line, but I don’t know what the purpose of the Iowa Land Acquisition Company is.  The best way to explain what the purpose of the Iowa Land Acquisition Company LLC is to explain the purpose of the Oklahoma company.

Clean Line desires to build Plains & Eastern Clean Line under Section 1222 of the 2005 Energy Powers Act.  Section 1222 allows for federal siting authority (eminent domain to trump Arkansas rulings) for projects in the SPP region.  SPP is a Regional Transmission Organization, like MISO and PJM.  Clean Line failed to obtained public utility status in Arkansas, but they got it in Oklahoma.  So Clean Line is using Sec 1222 to obtain federal eminent domain in Arkansas. 

Unfortunately for Clean Line, there  are some strings attached to SEC 1222.  There is a money cap.  Officially, Clean Line won’t be acquiring the land in Arkansas, the Department of Energy will be acquiring the Right of Way Easement for Clean Line.  To stay under the DoE cap, Clean Line will pay for everything but the ROW through Arkansas.  If the DoE were to pay for the ROW through both Arkansas and Oklahoma at a fair market value (not the pittance offered by CLE) for a ROW, Clean Line would likely  be over the limit.  So Clean Line will acquire the easement in Oklahoma through is subsidiary/shell company Oklahoma Land Acquisition Company LLC and let the DoE acquire the land through Arkansas. 

So what’s the purpose of the Iowa Land Acquisition Company? 

One more question.  If there is a pre-constructional sale of RICL to National Grid, does the use of the Iowa Land Acquisition Company enhance Michael Skelly's profit from the sale?  Let's not forget Michael Skelly finally conceded under cross examination that he will personally profit from the sale of projects, like the Rock Island Clean Line.

ILA Attorney Q. Okay. And just to finish up this line, you are an owner of limited liability company units in Clean Line Energy?
Michael Skelly A. Right.


OK, this is really my final question.  Looking at the Clean Line Energy Partners organizational chart, if RICL were to be sold to National Grid (assuming they recieve public utility status in Iowa and Illinois)  will the sale be at the Rock Island Clean Line LLC or will the sale be at the Rock Island Wind Line LLC (RIWL)?  

When asked at the ICC, Michael Skelly could not remember the purpose of the Rock Island Wind Line LLC division of Clean Line Energy.  If RICL is sold to National Grid, does Clean Line Energy still have a purpose of RIWL?




ComEd Atty Q. Okay. And Rock Island Wind Line LLC -- is that an -- does that entity have any operating role?
Michael Skelly A. No.
ComEd Atty Q.  What is the function of that entity,if you could describe it?
Michael Skelly A. Just give me -- if you don't mind directing me to the --
ComEd Atty Q.  Oh, sure. It's the attachment to your direct testimony or Rock Island Exhibit 1.1. It's that flow chart of the entities or  organizational structure. Do you need me to repeat the question?
Michael Skelly A. No. No. I understand the question. I am not a hundred percent sure; so I will defer to my colleague Dave Berry.
ComEd Atty Q.  Okay. As far as you know, it has no active role in management or operation of Rock Island?
Michael Skelly A. I'll defer to my colleague, if that's okay.

I'd suggest Mr. Skelly come up with some better answers than "ASK DAVE BERRY" before the Iowa Utility Board asks the same question.

Wednesday, January 29, 2014

Comments from the ICC Public Forum concerning Rock Island Clean Line Energy



Maybe we'll start posting a series of statements made at the wo ICC Public Forums held at the Mendota High School last fall.  These were some of the best speeches I've heard.  I applaud the Illinois Commerce Commission These forums were as close to true and actual public forums I've seen regarding Clean Line Energy.  It was good of the ICC to allow us to speak out our concerns.

Below are two speeches, or perhaps comments and opinions given at the Second public forum held at the Mendota High School.  But first, let's see the words of Jimmy Glotfelty, the CLean Line Energy Vice President, as he denies the claims made about the East Coast Governor’s letter that night in Mendota.  It’s very fortunate an individual had the governors' letter that night and chose to read from it.  

I think Jimmy’s wrong on this point, bending the truthiness a bit,but you be the judge.  While Clean Line like to portray Ratepayer Opposition as NIMBY’s, neither of these submitted comments sound like a backyard concern.  Here’s Jimmy’s comment in red then a comment by Mr. Simpson and another comment by Mr. Doughty, both concerned Illinois residents. 

Jimmy Glotfelty;
One final issue is a letter by many eastern governors that has been misconstrued in documents such as this. It's been characterized that the eastern governors do not support this project. It simply is not accurate.

In 2009, 10 eastern governors did write a letter to congress supporting renewable energy development. The governors expressed their support for renewable energy but opposed subsidies. Our project does not want or need subsidies. The governors' letter was written and sent prior to the development of our project. The governors' letter very specifically says, "We support the development of wind resource for the United States whereever they exist." We have copies of that letter here tonight if you all would like to see it at our table.

And now the Comments of Mr. Simpson later that night.

MR. SIMPSON:  I was going to talk about the eastern governors -- I happen to have the paper in front of me -- the 10 eastern governors. I'll read it as they wrote it to congress, second and third paragraphs.


"We write to encourage you to support strong new Federal policies to promote wind resources. In addition to recognizing the potential for wind resources in the Midwest, we believe that wind's resources of the eastern seaboard states, both onshore and offshore wind, represent one of our nation's most promising yet underdeveloped sources of renewable energy.

"At the same time we must express our concern about the significant risks posed by recent proposals regarding transmission that we believe would jeopardize our states' efforts to develop wind resources and inject Federal jurisdiction into an area traditionally handled by states and regions.

"Significant onshore and offshore wind projects have been proposed and planned for almost all of the northeast and mid-Atlantic states. Several of our states already have significant land-based wind projects installed or well underway and have established aggressive wind development goals.

"Moreover, the waters adjacent to the East Coast hold potential for developing some of the most robust wind energy resources in the world. Enough wind potential to meet total U.S. electricity demand, as Interior Secretary Ken Salvador has recently pointed out. Congress should put its full support behind the development of these resources."

 Wind power is intermittent in generation, may fail at any time, in night, winter, summer, and passing weather fronts cause swathes of generators to fizzle all at once for weeks on end. Grid managers dread that kind of catastrophic unreliability, but it is a daily reality for wind-generated power.  To avoid blackouts and overloads, the grid has too much generation with consumption on a moment-to-moment basis, not on a yearly basis.  Windmills generate power when the wind blows, often going dead when electricity is needed and overproducing when it is blowing. The stated output of wind generation is only available if the wind is blowing.

Germany and Spain leave us some very interesting information. They have invested heavily in wind and solar and are finding them to be unreliable and way too expensive. They're way ahead of us on this practice. Now Germany and Spain are going to more reliable sources for their power needs.
Thank you.
HEARING OFFICER BENSKO: Thank you.

 The Comments of Mr. Doughty ;
 
MR. DOUGHTY: Thank you to the Illinois Commerce Commission for holding another public forum. I agree and reinforce the reasons already presented by many of the previous speakers on why Rock Island Clean Line should be denied public utility status. I add a few more disturbing facts.

 According to the electrical engineers that I spoke with at the U.S. Department of Energy's Argon National Laboratories, there is significant energy loss that Rock Island Clean Line does not account for in the conversion to and from direct current.

There would be a 5 to 10 percent loss at the converter station in Iowa, then at least a 10 percent loss of electricity over the 500-mile high-voltage DC line, and then another 5 to 10 percent loss when inverting the DC electricity back to AC.

Add those together and you have about as much wind energy as experts say would be likely to be carried on this line maximum. The 20 to 30 percent gain in clean energy would be lost by the time it reaches Illinois, and none of that energy is left at all when transmitted another 1,000 miles to the East Coast, which is Rock Island Clean Line's target customer.

Rock Island Clean Line likes to claim that they can't bury the lines because the lines would get too hot. Well, that heat comes from the lost electricity. The Federal Energy Regulatory Commission stated in their determination that Rock Island Clean Line wanted renewal energy preference because it would make the project more palatable to the stakeholders was not an adequate reason to restrict the lines to carry wind-generated electricity.

In addition, Rock Island Clean Line states in their ICC application that they would hook into high-voltage lines in Iowa which carry many kinds of generated power, including coal.

I ask the ICC to carefully look at how this massive amount of imported power equivalent a large generation plant would impact instate permanent jobs at local generation plants and in our local renewable energy development. And what will help to our electricity prices when we compete with this power being sent to a higher cost East Coast market?

Rock Island Clean Line has publicly stated this project is not financially feasible unless our electric rates go up about 50 percent. Yet their business plan was conceived before the natural gas boom and the strides in energy efficiency and solar energy.

 I urge the ICC to deny granting Rock Island Clean Line public utility status, and I urge the ICC to call a moratorium on all new proposed transmission lines in Illinois until we can evaluate all the projects collectively to assess the actual need, economic feasibility, environmental impacts, and especially the long-term costs to Illinois workers, consumers, taxpayers, and landowners.

HEARING OFFICER BENSKO: Thank you.
(Applause.)


Really Jimmy?  It doesn't sound like the East Coast Governors were just opposed to ratepayer financed projects. SOunds to me like the Governors opposed just the kind of project Clean Line Energy and Kansas Governor Sam Brownback supports.  I think at one time Illinois Governor Pat Quinn even supported RICL.  He really should think about changing his position now that it is very apparent Illinois residents largely oppose Grain Belt Express and the Rock Island "Clean" Line.

Person after person stating their comments before Hearing Officer Bensko, and none of them had "nimby" issues.  The residents of this state are very educated and well informed on this issue.  The message was clear.  We don't want Clean Line Energy in this state.