Friends of Maine’s Mountains
November 22, 2014
First Wind’s schtick was money, not progress
Hello Friends. Perhaps First Wind should have named itself “Me First.” Because this past week offered the most blatant proof yet that the company’s interest in Maine was never energy independence for our state. It was ALWAYS purely financial. Of course, there are still many starry-eyed believers out there addicted to the PR opium that the industry traffics in Maine. But for sober and pragmatic analysts, this week’s news confirms (yet again) that Maine is a prime target for plunder, and unabashedly picking the pockets of the state’s ratepayers and taxpayers is how Wall Street will accomplish that.
By now you’ve seen the news that our biggest menace is being sold to SunEdison, a major player in solar energy. Lots of people are buzzing about it. Here are our initial thoughts:
We know First Wind was financially under water and headed for bankruptcy unless it found a white knight to bail it out. Nova Scotia utility Emera could have been the white knight, but for three years now their planned merger, called a Joint Venture Holdco, has been hung up in legal challenges. We have seen the JV Holdco as illegal, but also as a way for First Wind to carpet bomb Maine with sprawling wind projects. We strongly opposed the merger.
The hedge fund sharks at Madison Dearborn and DE Shaw, surely tired of taking losses (First Wind has been bleeding at least $10 million per month for the last few years), and worried about the Holdco’s legal chances, probably called their Wall Street bankster buddies and worked out a fix.
The Board at Sun Edison is a gaggle of Wall Street investment bankers. The management and principals at SunEdison are a bunch of former Wall Street investment bankers. Think: Goldman Sachs, KKR, Blackstone. Citi, JP Morgan…the same incestuous crowd that brought us the mortgage-backed securities bubble which, when it burst, splattered all over the world economy.
They are simply pursuing their latest bubble scheme, this one complete with tax credits and government-imposed consumer mandates…but best of all, COVER (the public thinks it’s saving the planet). Their LLCs exist to strip-out cash for as long as it flows. The same cabal has its hands on the political reigns of Washington DC, so watch for the FERC to push ISO-NE transmission upgrades. Watch for continued EPA restrictions on “dirty” generation. All this when Maine is already a clean energy leader.*
— Jon Chesto, Managing Editor, Boston Business Journal
While Emera’s deep pockets paired with First Wind’s ambitious plans might have been a massive threat to Maine, at least Emera is a real business, likely to take a long and sustainable view. Witness their HVDC undersea cable investment connecting them to vast high quality clean energy in Newfoundland (NALCOR). That isn’t a get rich quick scheme; it’s a long term billion dollar + investment that builds value and critical infrastructure for society. SunEdison is in the business of extracting value. Paper. Get rich quick and stay rich. They will not be building critical infrastructure.
The pressing question for us, Friends, is whether they are only interested in First Wind’s current projects, some of which are financed with junk 11% paper (think: sub-prime mortgages) so that they can sell that debt at 5%, therein creating more cash to strip? It’s easy money when Treasuries are yielding so little. Or will they want, possibly without the Production Tax Credit, to develop new Maine wind projects? We know there are LOTS of wind testing towers (known as “met towers”) out there in Maine’s mountains.
Not only could this alliance destroy Maine’s Quality of Place, it could destroy the economy (again, and possibly with bailouts, again). With a quarter of New England’s firm, dispatchable base load and peak load generating plants (capacity) nearing retirement, what is the grid going to replace them with? Two thousand 50 – story monstrosities in Maine that only work 15 minutes of every hour on average, and generally work when unnecessary? How are we going to keep the lights on? How are we going to sustain industry? How are we going to pay our light bills if all this useless and unnecessary infrastructure is built?
In losing Emera we might have just put down a bad dog. In gaining SunEdison we might have just adopted a pack of wolves into our house.
*99 percent of Maine’s electricity generation already comes from clean sources other than coal and oil. Maine has the #1 highest Renewable Portfolio Standard in the nation. Only two states (Vermont and Idaho) produce lower CO2 emissions from electricity generation. Transportation is responsible for about half of Maine’s CO2 emissions, 4 to 5 times more than from electricity. Yet we are being targeted for wind development and its expensive transmission buildup, even as our legislature unanimously approves increasing the speed limit on the highway!