Thursday, April 23, 2015

Ziff Brothers Investments and Partners in Energy Infrastucture Beyond CLean Line

It’s been wondered what is the Ziff Brother’s reason for investing in the Clean Line Energy Partners.  E know the management team, formerly from Horizon Wind, is “not” a wind company.  We know National Grid’s true intent is to buy these projects once Clean Line has obtained the easements.  This was hidden until Michael Skelly (Clean Line Energy’s President) was testifying before the Illinois Commerce Commission and an attorney ask a question, perhaps fishing for information. 

What about Ziff?  What do the Ziff Brothers Investments want from this business relationship?

One thing we have all learned Is everyone who supports eminent domain for Clean Line’s projects, supports it because the project will put money in their pockets.  The former Horizon Wind management probably have plans to develop wind farms again once projects are sold to National Grid.  It’s probably not a coincidence Michael Skelly’s brother-in-law didn’t go to Clean Line like the rest of the management team, but stayed at Horizon as a project developer and just recently went to Calpine Energy to start their first wind division. 

But what about the Ziff Brothers?  They turned their family fortune into 12 billion.  That’s not by accident. One investment profits another and Ziff Brothers Investments has several other energy investments that can provide capitalize off the 53% investment in Clean Line. 

The Ziffs have another capital investment company they are a partner called Tiger Infrastructure Partners.   Like Jimmy Glotfelty, the former Bush Administration Department of Energy man at Clean Line Energy Partners, Ziff Brother’s Investments in Tiger is managed by a former Bush Administration employee.  As reported by, “Emil Henry serves as the Managing Director and Managing Partner of Tiger Infrastructure Partners. Henry was the Assistant Secretary of the U.S. Treasury from 2005-2007, reporting to Henry Paulson as his superior.”

Julian Robertson, Ziff’s partner at Tiger Infrastructure  practices environmental mitigation.  Robertson has donated $40 million to the Environmental Defense Fund between 2005 and 2009, funding the EDF’s climate change agenda. 

Tiger Infrastructure Partners is an independent private equity firm focused on middle-market infrastructure investment opportunities and related businesses.

Back in 2012 Tiger developed a partnership with Kiewit Construction.  Yes, the preferred construction company of Clean Line Energy is also a business partner of another investment company that Ziff owns a major interest.  Tiger and Kiewit’s joint venture is called TKT Midstream Partners.  According to IREACH the PRnewswire,  

TKT will design, build, own and operate midstream assets and networks on behalf of North American exploration and production ("E&P") companies. The joint venture will focus on delivering the customized infrastructure design, construction, ownership and operation needed to bring hydrocarbons to market.

So, Ziff Brother’s Investment is a partner in another investment company, Tiger Infrastuctrure Partners, who has partnered with Kiewit (Clean Line Energy Partners “Engineering Procurement, and Construction Alliance Partner”) in TKTMidstream Partners.   TKT Midstream Partners develops pipeline projects to promote shale oil and natural gas production. 

What does this mean?

Clean Line Energy Partners llc likely has a specific purpose to be is so steadfast that the right of way easement are written ambiguously to allow any type of development along the easement.  Perhaps there is a bit of logic to why Clean Line Energy Partners wants to be able to allow pipelines along the right of way.  Perhaps this is the strategic interest for Ziff Brother’s Investments.  Obtain the easement and multipurpose it to develop shale’s natural gas could be a goal to profit ZBI further. 

Tiger Infrastructure Partners is also the majority investor in Hudson Fiber Network.  This Is a data transport provider (fiber optic transmission) company.  Clean Line Energy Partners plans to sublease the easements for fiber optic transmission.  It’s not surprising ZBI has such a company in their family of investments. 

One last sidenote on “environmental mitigation”, Ziff Brothers Investments (a.k.a. Ziff Asset Management) appears to have a Trustee on the Natural Resources Defense Council.  According to Stockwatch, shows ZAM Investments, controlled by Phillip B Korsant as a trustee for the Natural Resources Defense Council.  It’s good to have friends in high environmental places.

So Ziff Brothers have business associates tied to the Environmental Defense Fund and Natural Resource Defense Council.   Ziff is a partner with Keiwit, the contractor for Clean Line, to develop shale infrastructure.  Ziff also is a majority owner in a fiber date transport company.  Finally, Clean Line’s proposed right of way easement contracts would support the development of fiber optic data transmission and potential natural gas sub-easements.  Coincidence?   Maybe there are alternate reasons for Ziff Asset Management to take such a keen interest in partnering in Clean Line.

Sunday, April 19, 2015

National Grid and Speculating with Shareholder's Money

In November 2012 it was announced National Grid was investing 40 million into a speculation project called Clean Line Energy Partners llc.  In 2 years Clean Line went through National Grid’s 40 million dollars.  What a ride that was.  Somewhere in the last half of 2014 National Grid put another 15.7 million dollars into Clean Line.

For all that money, Clean Line has a conditional approval in Kansas.  No eminent domain authority in Oklahoma.   Arkansas doesn’t want Plains & Eastern Clean Line in the state.  Illinois denied the Rock Island Clean Line Public Utility Status with the road to eminent domain.  Things don’t look good for the Grain Belt Express Clean Line in Missouri.  The Tennessee Valley Authority does not want 3,500 megawatts of wind energy from Oklahoma.  After covering unreliable wind with baseload energy, the TVA estimates wind energy is seen to be 14% efficient. 

So what is National Grid getting for its 55.7 million dollar investment into transmission for wind energy to eastern urban centers?  That is an awful lot of money for a corporation to invest into a speculation project where two and a half years of "development" has shown no developed assets, no transmission towers, no cables to be strung, no and no transformers to convert alternating current to direct current. 

Can a project suffer from cost overruns with no physical assets to the project?  $55,700,000 is gone.  It’s all gone with nothing to show for it.  This isn’t cost overruns on a developing project.  For National Grid, Clean Line Energy Partners is a bad speculation with shareholder’s money. 

Corporate executives have been fired for less.  Engineers on projects have been blamed for projects with actual assets costing more than projected.  At least in those instances, there are actual assets.  All National Grid has to show for their investments in Clean Line are a few t-shirts with pictures of windmills on them. 

Rock Island Clean Line doesn’t have eminent domain authority in Illinois.  Plains & Eastern Clean Line has no authority in Arkansas to act as a public utility and no eminent domain authority in Oklahoma.  While no decision has been made, things do not look good for Grain Belt Express Clean Line in Missouri. 

Somewhere in the last half of 2014 National Grid invested another 15.7 million on top of the original 40 million.  At what point does this become a fool’s investment in an attempt to dig one’s way out of a screw up?   

So where does National Grid go from here?   How many more millions will National Grid;s leadership chose to invest into Clean Line before investors begin to question the wisdom of these speculations?  Listening to Steve Holiday, National Grid's CEO speak about investing in regulated and unregulated utilities is something of a dark comedy.  At best it is propaganda and spin.  National Grid's investment is a pure speculation without hedging one's liability.  How does one explain that to shareholders?

Tuesday, April 14, 2015

Grain Belt Express has Finally Applied to the Illinois Commerse Commission

I always struggled understanding the division between responsibility, authority and accountability in the corporate world.  For speculation companies like Clean Line, arguing the separation of duties come easy.  To the farmboy in me with the “The Buck Stops Here” or maybe the “Just Do It” approach this division seems counter intuitive.  Perhaps this is why the division between responsibility, accountability, and authority has become so popular in corporate America.  People who avoid actually doing any real world work know very well how to divide being responsible from accountable and always point the finger in the other direction.  It appears the guys at Clean Line knows very well how to make the classic responsibility, authority, and accountability arguments in their recent application for Grain Belt Express to the Illinois Commerce Commission.     

Yes, the Grain Belt Express has arrived to Illinois…finally.    Page 66 of Clean Line David Berry’s testimony is Clean Line’s attempt to define the terms of GBE’s application to allow the construction of the transmission line. 

Regional Transmission Organizations Will Assure the Reliability of the Project, But
Will Not Determine Whether it is Needed or Fund the Project’s Cost

Under this section, Berry is asked
Q. Will SPP, MISO or PJM study the need for the Project?

A. No. None of the three RTOs perform studies to determine or assess whether a merchant transmission line is needed. The Commission, along with the state commissions of the other states where the Project is located, must determine whether the Project should be built.

Berry’s argument the Regional Transmission Organization’s (PJM and MISO) have the “responsibility” to maintain grid reliability.  The ICC has the “authority” to grant Grain Belt the ability to obtain easements and construct the powerline.  Who has the accountability to make sure this project is necessary and needed?  No one. 

I don’t get it.  How is this system expected to work when the ICC is expected to determine this project is needed without the input of the grid operators? 
Is there a constraint limiting generation?
Are there congestions limiting grid reliability?
Will the grid operate properly without the GBE?
Will this project create congestions and constraints by injecting more energy into the grid than there is demand for consumption?
Is this project needed because there is a lack of generation?
What other projects will likely be necessary in the future should GBE inject 3,500 Megawatts into the grid?

These are questions best determined by the Regional Transmission Organizations.   How can the ICC effectively determine necessity without input of the Regional Transmission Organizations?  PJM is responsible to maintain the grid, the ICC has the authority to Clean Line and no one will be held accountable once Clean Line is given eminent domain. 

Keep all the parties separate without direct communication and Clean Line gets the easement to sell to National Grid.  Clean Line is attempting to argue being a Merchant Transmission Line, they are exempt from proving need and necessity.  Clean Line claims they are accepting the risk and reward for this project and deserve more lenient requirements.  The key is keeping the state regulators and the grid operators separate and not communicating. 

Yes, like in much of corporate America, responsibility, accountability, and authority are all perverted by people to get what they want.  People instinctively do not want to make difficult decisions.  Clean Line attempts to give the ICC an “easy button” option without making hard decisions.  The Kansas Corporation Commission too willingly accepted the easy button option.  Unfortunately for Clean Line, Illinois residents expect the ICC to do their job and protect the interests of the state’s residents. 

Clean Line, you’re not in Kansas anymore. 

In Illinois, the buck stops here.  The Rock Island Clean Line does not have ICC approval under Section 8-503 and no eminent domain option.  While this project is virtually dead, the appeal to the Appellate Court will determine even approving RICL under Section 8-406 while recognizing the project is not needed was a msitake.  When state regulators attempt to define a division between responsibility, accountability, and authority, it is often a King Solomon attempt to “split the baby” in a compromise.   Unfortunately, the word of the law does not leave room for such regulatory compromises and there is no compromising in a crusade.  

We don't want Grain Belt Express, Rock Island Clean Line, or Clean Line Energy Partners llc in the state.  There is no room for speculation capital in the utility industry with eminent domain authority.  There is no room for compromises.  The law was never written to allow it.

This is not going to be any easier for Grain Belt.