Great article in the Webster County Citizen! Legislators discuss the problems with using eminent domain for Grain Belt Express, and the possibility that it will again become a legislative hot-topic this year. In the wake of last year's proposed legislation, legislators are educated, aware, and ready to take action.
“The problem originates with it being a privately-developed line. To acquire the right-of-ways across the state, the developer would use eminent domain.
And this is the crux of the problem. A privately-developed line... what does that mean? Aren't all transmission lines not owned by a municipal or consumer owned utility "privately developed?" No, they're not. Most transmission development is proposed in response to orders from independent federally-designated regional transmission organizations. These projects are ordered for purposes like electric reliability, or to lower regional market prices, or in some instances, in response to state public policy requirements. Grain Belt Express is none of these. It wasn't ordered by a RTO. No RTO has ordered this project for any reason that serves the general public. Instead, GBE was proposed by a private company as a profit center. Invenergy, GBE's current owner, plans to make revenue by selling capacity on its line to generators or end users on the east coast. It's all about the Benjamins! It's not about serving the public. It's about profit.
And in order to ensure its profit, GBE offered service on its proposed transmission line to municipal utilities in Missouri at a cost below market. GBE offered the municipalities service at a loss leader price that didn't even cover its own costs to simply serve as a way to create an artificial "need" for the project in Missouri. Being offered a free lunch was something the municipal utilities simply couldn't pass up. So now they support the project, claiming that it would save their residents money on their electric bills. How much? A couple bucks, maybe.
In exchange for some residents of Missouri possibly saving a couple bucks on their electric bills, Missouri would toss another group of residents under the bus, subjecting them to eminent domain takings of their property. These takings will occur on property that is in use as productive farm land, taking profit from the property owners.
When do the needs of one group become superior to the needs of another group, in the name of "public good?" This is a tough issue to struggle with. However, there's one group missing from this kind of equation... the owner of GBE, who stands to pocket billions if it can use state-granted eminent domain to acquire land for its for- profit transmission line. This issue is only being debated in Missouri because GBE wants to use eminent domain for its own profit (but under the guise of "public service" to municipal utilities). While the municipal utilities serve all their customers equally without a profit motive, the same can't be said for GBE. Invenergy only wants to build the project for the purpose of its own profit.
And in order to ensure its profit, GBE offered service on its proposed transmission line to municipal utilities in Missouri at a cost below market. GBE offered the municipalities service at a loss leader price that didn't even cover its own costs to simply serve as a way to create an artificial "need" for the project in Missouri. Being offered a free lunch was something the municipal utilities simply couldn't pass up. So now they support the project, claiming that it would save their residents money on their electric bills. How much? A couple bucks, maybe.
In exchange for some residents of Missouri possibly saving a couple bucks on their electric bills, Missouri would toss another group of residents under the bus, subjecting them to eminent domain takings of their property. These takings will occur on property that is in use as productive farm land, taking profit from the property owners.
When do the needs of one group become superior to the needs of another group, in the name of "public good?" This is a tough issue to struggle with. However, there's one group missing from this kind of equation... the owner of GBE, who stands to pocket billions if it can use state-granted eminent domain to acquire land for its for- profit transmission line. This issue is only being debated in Missouri because GBE wants to use eminent domain for its own profit (but under the guise of "public service" to municipal utilities). While the municipal utilities serve all their customers equally without a profit motive, the same can't be said for GBE. Invenergy only wants to build the project for the purpose of its own profit.
“These wind farms that are not in our state, they are in Kansas, and that power, most of it is going to Boston or Philadelphia, they are going to drop it off to about 30 municipalities in Missouri. I want Farmington to get cheaper power, I want them to be able to take advantage of that, but I see this company dropping off a few municipalities for the purpose of trying to get by in Missouri.”
Just to get by... just to get over... just to take advantage of Missourians for Invenergy's own profit. If big companies from out-of-state (or even out of the country) can manipulate Missouri law, and its regulators, for corporate profit, where does it end? How many other companies will see Missouri as a smorgasboard of company riches, where eminent domain is routinely granted for corporate initiatives? When are the rights of Missourians going to matter as much (or more!) than out-of-state corporate profit?
“My opposition to it, the way they got approval was going to create an environment where eminent domain was going to take on a new level and take away people’s property up in northern Missouri.
"The point was that a private entity was going to benefit from eminent domain more than the general public was. You use eminent domain because it will benefit the community as a whole.”
Eminent domain is a solemn power that should be reserved for only the most necessary situations, not handed out willy-nilly to ensure maximum profit for out-of-state corporations.
Here's the thing... removing eminent domain authority from GBE will not necessarily end the project. The company could still build its project, however it would have to negotiate with each landowner in a free market without the ability to simply take property when negotiations get too expensive. Eminent domain allows Invenergy to keep its land acquisition costs low by using the threat of eminent domain taking to force the landowner to sell cheap. This benefits only Invenergy. The municipalities have their price locked in. It won't change if the project costs Invenergy more to build. Lower land acquisition costs translates into lower project construction costs. The cheaper GBE is to build, the more profit is in it for Invenergy.
Unlike those RTO-ordered transmission projects that are paid for by all electric users at the cost of the project, GBE is a merchant transmission project that sells capacity on its project at auction. GBE will hold the same auction for its service whether its costs to acquire land are small or large. The prices negotiated will reflect the value of the service to the customer, not the actual cost of the project. Invenergy's profit margin on this project comes from the difference between its actual costs to build and operate the project and the price negotiated with its customers. If Invenergy's cost to build is lower because it uses eminent domain, its eventual profit margin will be higher.
Grain Belt Express' use of eminent domain to bolster its own profit must be stopped for the good of Missourians.
Here's the thing... removing eminent domain authority from GBE will not necessarily end the project. The company could still build its project, however it would have to negotiate with each landowner in a free market without the ability to simply take property when negotiations get too expensive. Eminent domain allows Invenergy to keep its land acquisition costs low by using the threat of eminent domain taking to force the landowner to sell cheap. This benefits only Invenergy. The municipalities have their price locked in. It won't change if the project costs Invenergy more to build. Lower land acquisition costs translates into lower project construction costs. The cheaper GBE is to build, the more profit is in it for Invenergy.
Unlike those RTO-ordered transmission projects that are paid for by all electric users at the cost of the project, GBE is a merchant transmission project that sells capacity on its project at auction. GBE will hold the same auction for its service whether its costs to acquire land are small or large. The prices negotiated will reflect the value of the service to the customer, not the actual cost of the project. Invenergy's profit margin on this project comes from the difference between its actual costs to build and operate the project and the price negotiated with its customers. If Invenergy's cost to build is lower because it uses eminent domain, its eventual profit margin will be higher.
Grain Belt Express' use of eminent domain to bolster its own profit must be stopped for the good of Missourians.
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