Building five ginormous transmission projects totaling thousands of miles of new merchant lines was a pipe dream. Utility experts said it couldn't be done. They were right, it can't.
Teetering on the brink of failure after spending more than $200M of investor cash on his impossible dream, Clean Line Energy Partners CEO Michael Skelly now suggests that the federal government bail out his investors.
Teetering on the brink of failure after spending more than $200M of investor cash on his impossible dream, Clean Line Energy Partners CEO Michael Skelly now suggests that the federal government bail out his investors.
The Trump administration could help by pushing for an infrastructure package that would see the government “buying down a portion of the capacity” on big transmission projects so they can enter construction more quickly, or perhaps through an investment tax credit, Skelly suggests.
“All the ideas come down to a temporary underwriting of the project so you can get these things over the top, or some sort of tax mechanism.”
Skelly has finally given voice to his frustration in an interview with Recharge News.
Skelly suggests that the federal government should buy capacity on his transmission project in order to get it over some imaginary hump that will allow him to start construction. The federal government isn't in the business of buying unnecessary transmission capacity in order to prop up commercial projects that cannot stand on their own two feet. While federal power marketers do occasionally purchase needed transmission capacity, they are not forced to do so merely to support the building of bridges to nowhere. And if the federal government legislated the purchase of transmission capacity by its federal power marketers, it would be creating captive customers to shoulder the risk of this speculative transmission idea that cannot get off the ground on its own merits. As a merchant transmission project, Clean Line has pledged to the Federal Energy Regulatory Commission that its investors will shoulder all the risk for its projects and that it does not have a captive ratepayer stream of funding. Merchant projects succeed or fail based on their economics. If a merchant project is useful, customers will voluntarily purchase its capacity, and the project will come to fruition. If there are no customers, a merchant project cannot succeed. Suggesting that the federal government pour taxpayer money into Skelly's projects would create an artificial "need" and economic basis for the project. Participation by a government customer would not be voluntary. That's not how merchant transmission works.
Clean Line has no customers. Despite Skelly's claim:
Plains & Eastern is “pretty much fully developed at this point”, Skelly says. “We’re now in the commercialisation phase, matching chippers – that is wind developers – with utilities in the southeast.”
He turns around in his next breath and suggests that the federal government be forced into being a customer through legislation or executive mandate. Obviously, Skelly's efforts to match his chippers with customers isn't working. It's been 18 months since the U.S. DOE got involved in his project in an attempt to usurp state authority and claim federal eminent domain authority to site the Plains & Eastern Clean Line, and Skelly still doesn't have a customer. When the DOE agreed to participate in the project in March, 2016, Skelly claimed that he would have his customer agreements sewn up in a matter of weeks, but that has not panned out.
Skelly's other taxpayer bailout idea is federal investment tax credits. This would give a direct tax credit to project investors, which they could use as cash to pay down their own corporate tax debt. Let's see... ultra rich 1% Democrats who invested in a renewable energy scheme supported by a Democratic White House want the current Congress to bail them out with tax credits.
Skelly's other taxpayer bailout idea is federal investment tax credits. This would give a direct tax credit to project investors, which they could use as cash to pay down their own corporate tax debt. Let's see... ultra rich 1% Democrats who invested in a renewable energy scheme supported by a Democratic White House want the current Congress to bail them out with tax credits.
A tax credit is taxpayer-funded cash for its owner. By eliminating its own corporate tax debt, the investor would have more cash to invest in Clean Line Energy Partners. Essentially, it's free government money for Clean Line that the investors wouldn't spend otherwise. It's a way to prop up Clean Line's failing business model with taxpayer funds. Clean Line's investors pay less taxes? You pay more to make up the difference.
Where does the federal government get its money? Out of your pocket. Every.last.dollar. There's no such thing as "free" government money.
So Clean Line has been posturing to the Trump Administration for months now, suggesting it is a prime candidate for the President's great, great Infrastructure Plan. Trump has posited that private investors can belly up to the bar and fund billions in new infrastructure projects in exchange for ownership that creates a revenue stream, or tax credits that allow publicly-owned projects to be built.
Where does the federal government get its money? Out of your pocket. Every.last.dollar. There's no such thing as "free" government money.
So Clean Line has been posturing to the Trump Administration for months now, suggesting it is a prime candidate for the President's great, great Infrastructure Plan. Trump has posited that private investors can belly up to the bar and fund billions in new infrastructure projects in exchange for ownership that creates a revenue stream, or tax credits that allow publicly-owned projects to be built.
Except Clean Line isn't a publicly-owned project. Clean Line's rich investors will own the project and the revenue stream, and charge the public a fee to use it. There's no benefit for the public. It's nothing short of taxpayer-financed private industry, and it cannot be included in an infrastructure package designed to get infrastructure like roads and public works projects built. And furthermore, Skelly wants the federal government to be the "private sector investor" who gets his project over the finish line! I'm pretty certain that's not what Trump had in mind.
Once certain that his transmission projects would be marketable under a Democratic administration, Skelly now fantasizes about a Republican-led taxpayer bailout to prop up his failing company.
Once certain that his transmission projects would be marketable under a Democratic administration, Skelly now fantasizes about a Republican-led taxpayer bailout to prop up his failing company.
“It’s still a bit early to tell exactly what the administration will do to stimulate more infrastructure investment,” Skelly says. “But in terms of the things they’re talking about, with private-sector-led projects, it forms a pretty nice Venn diagram with transmission.”
What kind of a guy uses the words "Venn diagram" to prop up his unsuccessful ideas in the media?
Is Skelly's dream even logical, or is the stress getting to him? Why would the federal government fund an infrastructure project that's supposed to be "led by private investors?"
The idea that our current Congress will pour buckets of taxpayer dollars into a wind energy transmission project that has no customers in order to bail it out of its current financial crisis is insane.
The idea that our current Congress will pour buckets of taxpayer dollars into a wind energy transmission project that has no customers in order to bail it out of its current financial crisis is insane.
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