Thursday, May 29, 2014

Decommissioning the Rock Island Clean Line and Big Sky Dreams

Decommissioning sucks.  It what happens when a dream fails, prospects don’t materialize market changes, technology advances, and the public moves on.  Consumer preferences changes.  So what happens when technology becomes irrelevant? 

While we were planting corn I heard about this on the radio.  The local radio station was running commercials by concerned residents.  Bureau County did a smart thing before they approved construction of Big Sky Wind Farm was built in Illinois.   When Big Sky Wind Farm was built, $1.8 million went escrow to cover the costs of decommissioning should the wind farm become obsolete and unprofitable.  Big Sky has gone bankrupt and in a matter of a couple days, changed hands twice.  Now a British company owns Big Sky and they are asking for the decommission monies held in escrow be released.  They claim a letter of credit would suffice. 

That really doesn’t make much sense.  Banks give a letter of credit when times are good and borrowing money is easy.  When the profits run out and the wind turbines are depreciated into the ground, a letter of credit is worthless. 

The former Franklin Grove Village President says it well;

“Cash escrow means you have the money on hand,” Logan said. “If the [wind] companies go bankrupt, as many of them do, the letters of credit are worthless. Cash escrow is definitely better than a line of credit.”

Am I missing something here?  If the money is in escrow and setting in the bank, what incentive is there for the county to give it away?  The money is secured.  The wind turbines are planted in the ground and generating tax income.  What is there for Bureau County Board to gain by giving up the money?

And the folks at the Rock Island Clean Line LLC say there is enough money in scrap iron to decommission the powerline.  A private Merchant Transmission Line with no guarantee of a profit for wind energy technology should have to hold decommission money in escrow in every county it passes. 

Too big to fail?  How many rail lines have failed because markets move and technology changes?  There’s even a dead pipeline through the same field RICL wants to pass through.  As I understand it, the pipeline hasn’t been used in years but the easement is still there for perpetuity.   Infrastructure needs change. 

Do you think the boys in Houston know the history of the Rock Island Railroad?  The railroad spent most of its life in and out of bankruptcy.  The hey-day of the company was far shorter than the hard times as the company struggled to survive until it finally went under.   Funny when you sell nostalgia, the hard times are ignored.

The grain industry is another perfect example how markets change.  Look at the empty grain elevators in Minneapolis and Duluth.  Toledo was once a hot grain market.  Grain used to move up the St. Lawrence Seaway.  Now these grain elevators sit as monuments of dead markets as rail terminals are built to move grain to Hereford, Texas, the new hot market.   Technologies change, demands change, and markets change.  Big Sky Wind Farm is a good example. Bureau County would be wise to request RICL place decommission money in escrow for RICL.  Get the ball rolling now and make a precedent.

It would be wise for counties to consider mandating projects such as the Rock Island Clean Line post escrow money for decommissioning. 

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