Monday, February 16, 2015

A Different Kind of Utility

A Different Kind of Utility Company

When the going gets weird, the weird turn professional. The Clean Line Energy story just got a little weirderer.  Calpine Energy Corporation just hired William Whitlock and Caton Fenz from EDP Renewables.  Looks like Bill Whitlock worked under Michael Skelly (Mr. We’re-not-a-wind-company) while at Horizon Wind before it was sold to EDP.  Whitlock was a project developer for the McLean County wind farm outside Bloomington, Illinois.

Coincidentally, it would appear, Michael Skelly’s brother in law is also a Bill Whitlock, and brother to his wife, Anne Whitlock.   Hans Detwieller and Bill Whitlock have also worked together.  While Hans was at the AWEA, he and Whitlock lobbied together for an Ohio wind farm.  In 2009 Hans and Whitlock were also on the Illinois State University Center for Renewable Energy Technology Advisor Board, but Hans and Bill are not brother in laws. Clean Line's Doug Jones has also worked closely with Windbill Bill at Horizon.

Windmill Bill and Doug Jones with 2 other guys on the left

So what is the problem with Whitlock being Skelly’s brother in law and also in the wind business?  This is really surprising change since Calpine’s CEO has been an opponent to wind energy receiving the Production Tax Credit.   A Houston energy company that has never been in the wind business hires the brother in law of the former President of Horizon Wind, and Skelly’s Clean Line Energy is into transmission for wind but denies it is in the wind business any longer. 

Here’s Calpine’s CEO, Thad Hill’s statement to the Senate Energy Oversight Committee on Grid Reliability and Security last year.

My key message here today is that the competitive electric sector - in particular PJM, which covers much of the mid - Atlantic and the Midwest, and which I believe is most of the focus of this panel –is in solid shape to transition over the next several years from one supported by older, less efficient and more costly coal plants to one supported by newer, more efficient, less expensive and cleaner natural gas plants.  At Calpine, we believe that competition yields the best results –that relying on entrepreneurialism and the free market creates more value than central planning or government picking winners and losers.  There is significant new investment occurring in the mid - Atlantic power and gas markets – including our own brand new gas fired power plant under construction in Dover, Delaware.  These investments are being made due to the game - changing discovery of shale natural gas, the existence of a competitive market with a set of rules, and a commitment by the stakeholders to seeing the market function. Although this market is not perfect, changes to address some of the issues are underway, and grid reliability is secure.

Those are pretty strong words and less than a year old testimony.  Doesn’t sound like Calpine's CEO is a big fan for wind energy.  So what’s up here?  Why the change in position and company model?  Of all the gin joints in all the towns in the world, why hire Skelly’s brother in law to create a new wind business unit?  Make one consider if Skelly or Zilkha have invested into Calpine Energy.  When Skelly and Zilkha sold Horizon, did they sign an agreement to stay out of the wind business for several years?  How many years?  Five years no competition maybe? 

Something is hinky here.  Maybe we’re looking through the wrong side of a two-way mirror here.  Maybe Calpine is more interested in siting natural gas generation on the Clean Line proposed transmission lines.   Whatever is going on here, I seriously doubt Calpine is interested in getting into the wind racket at this point when the Production Tax Credit is year to year and Christmas gift from Speaker Boehner for the previous year.  Calpine is not heavily vested into coal generation.  They are known to specialize in natural gas generation.  Calpine doesn’t feel the pressure under the Obama’s EPA attempt to bankrupt coal generation with a need to offset coal generation with “clean” sources.  So is Calpine looking to put natural gas generation on Plains & Eastern, Grain Belt, or Rock Island Clean Line?

Maybe we're connecting dots that are unrelated.  Maybe I am having a John Nash moment and these events are totally unrelated.  It will be interesting if this is explained in the Next Calpine Investor Conference Call.

Heck, wouldn’t surprise me if next week Clean Line announces Calpine is investing $40 million into Clean Line Energy Partners as Clean Line is surely running low on cash after National Grid’s 40 million is probably running low.   This a different kind of utility indeed.

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