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Clean Line Wants Taxpayer Bailout for its Transmission Projects

6/30/2017

14 Comments

 
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.
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.
Picture
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.
Picture
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.
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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.
Picture
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.
“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?
Picture
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.
14 Comments
Taxpaying Tim
6/30/2017 11:09:22 am

These guys just don't quit, do they.
Shocking.
Unbelievable.
Revolting.

Reply
Kim
6/30/2017 11:16:48 am

Taxpaying Tim, I agree. In all my 50 years (some spent in corporate America, some self-employed, and some day trading on Wallstreet), I have NEVER witnessed the things these power companies dream up and bill to the rate payers.

Reply
Afternoon Joe
6/30/2017 02:54:16 pm

Now we know why Clean Line has been spending a boat load of money on lobbying in Washington.

I've always been puzzled about Clean Line's business plan. It was obvious from the very start that there wasn't a demand for their transmission lines. Captive customers was probably their fall back plan all along.

This creation of artificial demand invalidates everything Clean Line and the DOE have said about the need for the Plains and Eastern line. The Arkansas congressional delegation should use this request for a bailout as leverage to stop the DOE in its tracks. Will they? No. Why? Read my first sentence again.

Reply
Aunt Bee link
6/30/2017 03:03:36 pm

We knew this was coming from day one. In ICC testimony, Smelly tried to say they'd only be asking for ratepayer/taxpayer dollars if they were DESPERATE. Well, they're desperate now……...

Reply
Zelma link
6/30/2017 03:07:11 pm

The only surprise is that they've started begging for taxpayer dollars way sooner than they intended. I believe that they intended to wait until they had at least stuck a shovel in the ground.

Reply
Barney
7/1/2017 05:50:43 am

Only in America would a corporation pretend to be "market based" while simultaneously sticking its hand in the government till to draw subsidies.

Reply
Robin No Last Name
7/1/2017 05:52:30 am

Holy Solyndra, Batman! We must get to Washington immediately and prevent this taxpayer disaster! To the Batmobile!!

Reply
Michael Ven Skelly
7/1/2017 05:55:48 am

Curses, Batman and Robin! You'll never foil my plan! I've been educated at Harvard, you know. That makes me better than everyone else. Have you heard about how smart I am? I'm so slick and so smooth that I can make you give The Joker a hug and act as his accomplices for his next dastardly scheme! Muh-hahahahahahahahah! Ah-hahahahahahahahahah! You do gooders are no match for my mighty venn diagram!

Reply
Batman
7/1/2017 05:24:29 pm

*^*POW*^* ****KABLAM***

^^^BIFF^^^ *^^*ZOWIE*^^*

Take that, arrogant Harvard man. Your dastardly plans are ruined.

***BLAM***

One last punch. Because punching you is fun, pathetic little taxpayer parasite.

Barney link
7/1/2017 07:17:34 am

Here in Mayberry, we have them Harvard grads, too, and they say Smelly's business plan s#*#*.

Reply
Opie link
7/1/2017 11:56:26 am

They've been trying to create fake "need" from day one. Is anyone surprised that they're still trying to make up "need" for their projects?

Reply
Bill
7/3/2017 03:26:54 am

Did you see Trump's energy speech last week? It was the most beautiful thing that I've ever seen. Finally, FINALLY, somebody that gets it. His speech in Iowa was beautiful, too. Somebody that gets it.

Reply
KAF link
7/5/2017 05:32:15 am

https://www.theet.com/news/free/ferc-tells-firstenergy-to-submit-more-information-on-proposed-pleasants/article_84f65f2c-9c98-556a-a809-5488677d76c7.html

Reply
Jack noonan
7/7/2017 02:28:25 pm

DC current has many damaging effects, both to
Man, animals , and the environment
If they must have their power the bury it
Like the European s do, when u go to Europe
U don't see power lines above ground
Why? Because they been there done that

Reply



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    About the Author

    Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
    In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.

    About
    StopPATH Blog

    StopPATH Blog began as a forum for information and opinion about the PATH transmission project.  The PATH project was abandoned in 2012, however, this blog was not.

    StopPATH Blog continues to bring you energy policy news and opinion from a consumer's point of view.  If it's sometimes snarky and oftentimes irreverent, just remember that the truth isn't pretty.  People come here because they want the truth, instead of the usual dreadful lies this industry continues to tell itself.  If you keep reading, I'll keep writing.


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