I was one of the attendees at NYSERDA’s Environmental Groups meeting in Albany on 11/10/08. I wanted to take this opportunity to thank you, and all the involved NYSERDA representatives, for the very informative meeting on the many energy issues we are facing today. I am looking forward to receiving the links to the Power Point presentations that were presented that day, and as were promised.

I also wanted to thank you very much for providing us a venue where NYS citizens can voice their concerns regarding intelligent energy choices for our state. I look forward to the meeting specific to the industrial wind issue that was discussed again this year. …

My background as a NYS certified professional Health Educator, life-long organic gardener, Cornell-certified Master Gardener, Silver Lake Association Water Quality Chair serving as representative to Wyoming County Soil & Water & Silver Lake Watershed Commission, long-time National Wildlife Federation member/NWF-designated “Backyard Wildlife Habitat”, and mother who raised her twenty-something-year-old children in cloth diapers, is evidence of my life-long commitment to the environment.

My concerns, as I voiced at the meeting that day, are in regard to the headlong rush to spend millions and millions of dollars on industrial wind — an unreliable, non-dispatchable, supposedly “green” technology. Unbelievably, Mr. St. Croix declared in his replies to our queries about wind, “You can’t judge something because it has a couple bad months to start. We’ll see how it does in 15-20 years.” In my humble opinion, this is not the kind of rationalization that should be the basis of determining intelligent energy choices in New York State. [And the fact is, we have seen how it's done in the past 15-20 years --Ed.]

Mr. St. Croix’s willingness to give this kind of blind support to wind seems to be lacking the common sense that NYSERDA’s mission statement directs. NYSERDA’s mission, as stated on your website, is as a “public benefit corporation … who strives to improve the state’s environmental well-being … placing a premium on independent, objective analysis.”

Currently however, much of the information on wind provided on NYSERDA’s website is nothing more than an AWEA promotion piece, repeating word for word many typical wind company claims. This is the furthest thing from independent objective scientific analysis I’ve ever seen. This needs to be immediately corrected. I would think that NYSERDA representatives who are still lead by principles of what’s right and wrong, rather than by preference of what’s the most profitable, would be appalled by this.

There was a gentleman representing NYSERDA who was sitting behind you near the door taking notes, who asked those with specific suggestions on improving NYSERDA’s Toolkit and website to send them to him. Unfortunately, he did not give out his contact information. If you could let us know who he was, and his contact information, we would be glad to oblige his request for suggestions.

At the end of the discussion specific to wind energy on Nov. 10, I was further dismayed as you noted what you had been previously hearing regarding the wind issue was that it was a “bird and bat issue”, and now you are hearing that it is “more of an aesthetics issue”.

Apparently, we have not been doing a good job of getting our message across clearly. While these are certainly important secondary issues, the main problem with wind is that it is simply not a scientifically, economically, nor environmentally sound energy policy.

What we are seeing in the case of wind energy is the very businessmen and investors who stand to make obscene profits at NYS taxpayers’ and ratepayers’ expense proposing wind as a solution to reduce CO2 emissions and thereby reduce global warming. To date, we have seen no independently reviewed scientific studies verifying their financially motivated claims. With some 60,000 industrial wind turbines in the world today, this should be very easy to do.

It seems there is fear among many that genuinely challenging this “green” energy movement — which is backed by the same investment banks, big corporations, and politicians that backed the housing fiasco that took us all to the cleaners, means risking the loss of political funding. It is very unfortunate if this is, in fact, how our energy decisions are being determined today.

While many may be well intentioned in this mad rush for all things “green”, sadly, most are completely misinformed about the realities of the goings-on of Big Wind in rural NYS. As I, and many others, cited the day of the 11/10/08 meeting, the blatant corruption and division in our communities that we are witnessing as a result of Big Wind LLC’s running amok is unbelievable! (Example: The former supervisor of my small town ushered wind in the back door before anyone knew what was going on, got an accommodating zoning law on the books before she left office, and then started her new position as Horizon Wind Energy’s Project Manager only 8 months after leaving office.) The job of good government is to foresee and prevent this kind of divisiveness, not promote it.

So, PLEASE — we are looking to you folks, those we are trusting to responsibly serve their mission as a “public benefit corporation … placing a premium on objective analysis” — please give careful attention to our concerns and questions as you work to best serve the taxpayers and ratepayers of New York State.

These are the questions I had at last year’s meeting, and am still waiting for answers to:

1.) What independent, transparent measurement has been done anywhere in the world demonstrating that wind projects have actually offset significant levels of CO2 throughout an electricity grid system?

2.) Considering the relatively small amount of highly variable energy actually produced per square mile of permanently disfigured landscapes, how many industrial wind turbines, scattered over how large an area, would it take to collectively deliver a capacity value equivalent to any conventional generating system — defining capacity value as the ability to produce specified amounts of energy at a specified rate at any time?

3.) How can wind’s variable “flutter”, which provides virtually no effective capacity, replace any generation that does provide effective capacity or be used to shore up an aging power plant infrastructure in the face of increased demand?

4.) NYSERDA’s reliance on a 20% capacity credit for wind (which assumes adequate forecasting techniques) would have significant implications for increasing the use of “spot market generation” if that 20% figure proved far too optimistic. This cost would most assuredly be passed on to the NYS ratepayers. How would NY electricity consumers know about the way NYISO would handle such a situation?

5.) Since NYS already gets nearly 50% of its electricity from the emissions-free sources of hydro @ 19%, and nuclear @ 29%, and since emissions-free is the goal — is it not ?!? — why waste millions of taxpayers’ and ratepayers’ dollars on the unreliable, non-dispatchable, inimical source of wind?

Thank you for your time, and attention to our concerns in your work to facilitate intelligent energy choices in New York State.

Sincerely,

Mary Kay Barton, life-long NYS resident
P.O. Box 69
Silver Lake, NY 14549
585-813-8173

I have also included a small sampling of information and videos I have collected on industrial wind over the past couple of years that if you aren’t aware of, you definitely should be. Setbacks as close as 500′ from the foundations of peoples’ homes are being pushed through in communities that are being exploited by Big Wind LLCs.

According to the U.S. Energy Information Administration (EIA), our government’s source for energy statistics, in 2007 total nationwide electric generation from oil was only 1.2%, and most of that usage came from a tarry residual oil, or coal-like petroleum coke — both otherwise almost useless byproducts of refining.

According to the EIA’s 2007 Annual Energy Outlook Report, wind provided 4/10 of 1% total nation-wide generation in 2005, and due to “considerable uncertainties”, “might provide 9/10 of 1% total nationwide generation by 2030″. We could devastate every inch of our beautiful New York countryside with industrial wind turbines, and it’s not going to do a thing to alleviate foreign oil dependence.

Despite all of corporate wind’s propaganda claims, the basic facts regarding industrial wind remain the same — wind can’t dent a grape in the scheme of things. Plain and simple:

1.) While it’s true that all energy sources receive subsidies, wind is outrageously over-subsidized and can never be economically viable on its own. According to the EIA, on a dollar per MWh basis, wind receives $23.34 — compared to coal at $0.44; natural gas at $0.25; hydro at $0.67; and nuclear at $1.59. Together, coal, natural gas, hydro, and nuclear produce 95% of our nation’s electricity supply, and for each of these mainline conventional generators, we as ratepayers get extremely high reliability and performance — each with an effective capacity exceeding 99.99%.

2.) The subsidies for wind go for a power source that can not replace any conventional generation sources, because wind provides virtually no capacity value (can be relied on to be there when called upon) — which wind reps would have us believe is no big deal. Wind also requires constant “shadow capacity” — that is, conventional power sources to back up the inimical power offered by wind, highlighting the fact that wind can not replace our reliable, dispatchable power sources.

3.) Our taxes in the form of federal subsidies cover wind developments to the tune of 65%, while state incentives cover an additional 10%. No wonder wind garners the attention of the greedy!

4.) All conventional generation sources are controllable and dispatchable — wind is neither.

5.) The very reason for the existence of the industrial wind industry is their claim of CO2 savings. With some 60,000 industrial wind turbines encumbering the world today, NO coal plants have been shut down, many new ones continue to be built (one every four days in China), and NO proof of CO2 savings has been shown anywhere in the world.

6.) The thermal implications of trying to balance destabilizing “wind flutter” on the grid are enormous. Wind’s volatility forces conventional generators to have to work harder, thus, more inefficiently — increasing their CO2 emissions, in order to balance things out.

7.) The Production Tax Credit (PTC) extension for wind for just one year (2009) will cost American taxpayers $7 billion dollars — on top of the PTCs already being paid from previous years. Massachusetts Secretary of Energy Ian Bowles recently said, “Renewable plants have an enormous subsidy under the Renewable [Energy] Portfolio Standards law. If they still can’t compete, they probably shouldn’t be built.”

And what do we get, besides the above list, for continuing to foot the bill for this poster child of corporate welfare at American taxpayers’ expense?

• A resource typically built hundreds of miles away from load centers where the electricity is needed, which will require at least another trillion dollars of taxpayer money to build the additional transmission lines that will be needed through undeveloped, rich habitat;
• The requirement that up to 90% of the electricity from wind be matched with redundant generation to ensure reliability when the winds die down — ensuring taxpayers will have to pay twice as additional generation is needed.

As Robert Bryce states in his recent book Gusher of Lies, limited liability wind companies are “the electricity sector’s equivalent of ethanol”, which he documents as one of the worst energy “scams”. He continues, “The hype [for wind] has lost all connection with reality.”

Watch as a wind turbine explodes, which the Discovery Channel documented as hurling debris for at least a 1/2 mile, and then tell us you would want these industrial installations placed only 500-800′ from your house: www.wind-watch.org/video-turbinecollapses.php

Here’s a recent ABC news clip in which Charlie Gibson reported the truth about the intense sound associated with these immense machines. You should also note that this “little” wind farm is composed of only 4 turbines, far removed from people’s homes (a far cry from what’s going on in WNY): www.wind-watch.org/news/?p=18885

Here’s a news clip on the effects turbine noise has had on those living too close: watch.ctv.ca/news/clip99973#clip99973 (click here to download 7.6-MB MP4 file)

EVA completed an independent estimate of the salvage value of the Beech Ridge Wind turbines. The applicant’s consultant estimated that its salvage value credit would reach $12.64 million ($101,900/turbine) in their decommissioning fund study based upon application of general scrap factors and prices. This scrap value credit would more than offset their estimated demo costs ($8.68 million: $70,000/turbine).

EVA contacted the major regional scrap yards directly and got current scrap prices for steel, copper and transport. From these data, EVA developed a Beech Ridge project–specific salvage credit estimate of only $2.63 million, i.e., $10.01 million less than the original applicant study. We uncovered several major flaws in the applicant study methodology and pricing. They not only used old scrap prices but failed to take into account that they would have to transport the scrap to a yard. In addition, to obtain the posted scrap price, they would need to break down the tower into 3-4 ft long pieces or else the quoted price would be significantly less. In addition, the copper materials must also have their insulation stripped and/or copper pieces separated to obtain their posted copper price. If not, their scrap value would be far less than the common posted price. Given the large drop in scrap prices this year (>40%), scrap value can no longer cover decommissioning costs.

EVA also compared the estimated demolition costs to another decommissioning report for another wind project developer that had contained detailed cost breakdowns. The other study estimated demo costs of $97K/turbine vs. $70K/turbine by Beech Ridge. The bottom line is that using the demolition costs from the other wind turbine project decommissioning study would translate to a Beech Ridge demo cost of $12.03 million, i.e., $3.35 million more the applicant’s $8.68 million estimate. (Note: In another very recent project I have just reviewed, the decommissioning costs were again severely underestimated by more than 50% by not taking into account recent crane rental rates, extremely low earth moving costs, and assuming high productivity rates (6 turbines/wk).)

The bottom line is that even if the permitting agency allows the salvage credit, the total net cost of decommissioning this project today would be $10.4 million ($83,900/turbine). Our analysis quantified the large scrap price and demo cost escalation risk being assumed by the local community. To protect the community, the permitting agency should require a bond of a minimum $100/K per turbine ($12.4 million) to capture demolition cost escalation risk. If the wind developer can convince the bonding company of the high salvage value, then they should be able to negotiate a lower rate for the bond. If they were right, there would be very little price difference for a larger $12+ million bond. Shift the risk to the bonding company. Let the developer and bonding company assume the price risk — not the community.

Tom Hewson
Principal
Energy Ventures Analysis
Arlington , VA
Hewson@evainc.com

Social Science Research Network, October 25, 2008

Download “Capacity Factor of Wind Power: Realized Values vs. Estimates”

The greatest impediment to wind’s large-scale contribution to our energy supply is its intermittent nature. The wind must blow in order for wind turbines to produce power. In Texas, however, wind blows the least during the summer months when we need power the most. The Electric Reliability Council of Texas (ERCOT) relies on just 8.7 percent of wind power’s installed capacity when determining available power during peak summer hours.

Due to wind’s intermittency, wind turbines have much lower capacity factors — measures of generating units’ actual energy output divided by the energy output if the units operated at its rated power output 100 percent of the time — than conventional (thermal) power sources. As such, wind is not a baseload resource and cannot deliver a large portion of the demand for energy.

Second, electricity cannot currently be stored on a commercial scale. This lack of adequate large-scale electricity storage amplifies the effects of wind’s variability and lack of correlation with peak demand. Without adequate wind-power storage, wind-generating units must be backed up by units that generate electricity from conventional sources. In Texas’ case, that means natural gas, a fuel source with extreme price volatility. Thus, wind energy is an inherently less valuable resource than fuel sources requiring no backup.

Another major issue surrounding wind-energy development is electric transmission capacity. The infrastructure does not exist to move electricity from the areas of Texas most suitable for wind energy generation — West Texas and the Panhandle — to the state’s metropolitan centers, so new transmission capacity is needed. Texas’ electric customers should be particularly concerned, as they will foot the bill for new transmission lines.

The distinction between wind and wind energy is critical. The wind itself is free, but wind energy is anything but. Cost estimates for wind-energy generation typically include only turbine construction and maintenance. Left out are many of wind energy’s costs — transmission, grid connection and management, and backup generation — that ultimately will be borne by Texas’ electric ratepayers. Direct subsidies, tax breaks, and increased production and ancillary costs associated with wind energy could cost Texas more than $4 billion per year and at least $60 billion through 2025. …

Download “Texas Wind Energy: Past, Present, and Future”

Also see “The True Cost of [Texas] Wind Energy”, by Bill Peacock

You are a fine writer but your October 20, 2008, EnergyBiz Insider story, “Growing Green Jobs,” demonstrates that you need to refresh your discernment and investigative reporting skills.

Unfortunately, you apparently have “bought” exaggerated claims of economic and job benefit put forth by a variety of renewable energy advocates that are based on flawed analyses. I urge you to look more closely at the claims and the underlying analyses and “economic models” for unjustifiable assumptions and other flaws.

Among the flaws and faulty assumptions — leading to gross overstatements of job creation and other economic benefits — that I believe you will find are the following:

1. Ignoring the fact that much of the capital spending is for equipment purchased elsewhere, often imported from other countries. (This is a common error in the case of “wind farms”, where as much as 75% of the capital costs are often for turbines, towers and blades — much of which is imported.)

2. Assuming that employment during construction results in new jobs for local workers — when many of the construction jobs (particularly in the case of wind energy) are short terms (6 months or less) and filled by skilled workers who are brought in temporarily. Similarly, assuming that “permanent” jobs are all new jobs and filled by local workers — when they may be filled by people brought in for short periods for maintenance work.

3. Assuming that temporary workers who are brought in for short periods spend their pay checks and pay taxes locally. In many cases, these workers spend most of their money in the areas where they and their families have permanent residences and where the workers spend most of their weekends and pay taxes.

4. Assuming that the full purchase price of the goods and services purchased locally (which often are minimal anyway) has a local economic benefit. In fact, only the local value added may have a local economic benefit. This can be illustrated by the purchase of a gallon of gasoline — let’s say for $2.50. Only the wages of the service station employees, the dealer’s margin and the taxes paid locally or to the state will have a local or state economic benefit. The economic benefit of the share of the $2.50 that pays for the crude oil (much of it imported), refining, wholesaler, and transportation almost certainly will flow elsewhere.

5. Assuming that land rental payments in the case of “wind farms” all have local economic benefit. In fact, these payments will have little or no local economic benefit when the payments are to absentee landowners or if the money is spent or invested elsewhere or if it is used to pay taxes that flow to Washington DC or state capitals.

6. Using “input-output” models that spit out “indirect” job and other economic benefits but which are based on untested or flawed underlying data and assumptions and unproven “multiplier” effects.

7. Ignoring the COSTS imposed by the development. In the case of wind energy, these would include but not be limited to (a) the environmental and ecological costs associated with the production of the equipment, (b) constructing and operating the “wind farm” (e.g., site and road clearing, habitat destruction, noise, bird and bat kills and migration interference), (c) scenic impairment, (d) neighboring property value impairment, and (e) local infrastructure costs.

8. Ignoring the fact that the electricity produced from renewable sources such as wind, has less real value because it is intermittent, volatile and unreliable and most likely to be produced at night in colder months, not on hot weekday late afternoons in July and August when demand is high and the economic value of electricity is high.

9. Ignoring the “backup power” costs; i.e., the added cost resulting from having to keep reliable generating units immediately available (often running at less than peak efficiency) to keep electric grids in balance when those grids have to accept intermittent, volatile and unreliable output from “wind farms.

10. Ignoring the fact that electricity produced from renewable sources located in remote areas results in higher transmission costs, e.g., (a) sometime requiring construction of additional transmission capacity, the costs of which are passed on to electric customers and which imposes other environmental, scenic and property value costs, (b) involving “line loss” of electricity so that part of the electricity that is produced never reaches customers or serves a useful purpose, and (c) resulting in inefficient use of transmission capacity because the output is intermittent and generally unpredictable.

11. Ignoring the true higher cost of the electricity (or other energy form) resulting from the renewable energy source — and the associated fact that electric customers then have less money to spend on other needs (food, clothing, shelter, education, medical care — or hundreds of other things normally purchased in local stores) or even to save.

12. Perhaps most important, ignoring the very important fact that the investment dollars going to “renewable” energy sources would be available for investment for other purposes that will often produce greater economic benefits.

Ken, it is well past the time that you and other writers, reporters, and editors stop misleading your readers by relying on press releases and glib claims from individuals and organizations (including government agencies and contractors) that crank out excessive claims based on flawed analyses.

Respectfully,

Glenn R. Schleede
18220 Turnberry Drive
Round Hill, VA 20141-2574
540-338-9958

Download the above adapted to a standalone essay: “False Renewable Energy Job & Economic Benefits Claims”

January 16, 2001

EXECUTIVE SUMMARY

This report, which was prepared at the request of Rep. Henry A. Waxman, examines the White House energy plan prepared by the White House energy task force under the direction of Vice President Cheney and compares the policies in the White House energy plan to those advocated by Enron. The analysis in the report is based on testimony of Enron officials before Congress, other public statements by Enron officials, Enron lobbying materials distributed to Congress, lobbying disclosure reports filed by Enron lobbyists, and news accounts of Enron positions.

The White House energy task force was formed on January 29, 2001, under the name the White House National Energy Policy Development Group (NEPD Group). The President released the White House energy plan that the task force developed on May 17, 2001. According to the Office of the Vice President, the task force met six times with Enron executives. The first meeting took place on February 22, 2001, about three weeks after the formation of the task force. On April 17, 2001, the Vice President met personally with Enron CEO Kenneth Lay to discuss the energy policy. The last meeting between task force officials and Enron executives apparently took place on October 10, 2001, less than one week before Enron announced the $1.2 billion reduction in shareholder value that precipitated Enron’s collapse.

The analysis in this report reveals that numerous policies in the White House energy plan are virtually identical to the positions Enron advocated. In total, there are at least 17 policies in the White House energy plan that were advocated by Enron or that benefitted Enron financially. These policies fall into four general categories: (1) policies that promote the deregulation of the electricity market; (2) policies that promote energy derivatives and commodities markets; (3) policies that expand natural gas and oil production; and (4) other policies that benefitted Enron.

In the area of electricity deregulation, the White House energy plan supports an expansive form of the controversial policy of “open access,” which guarantees energy traders like Enron access to the transmission lines of electric utilities. In 1999, Enron told members of Congress that this policy was Enron’s “single most important initiative.” The White House plan also supports the repeal of the Public Utility Holding Company Act (PUHCA), an action that would have enabled Enron to increase its ownership of electric utility companies. In February 2000, Enron lobbied Congress for “a provision granting FERC-certified transmission projects the power of eminent domain” so that power lines could be constructed more expeditiously. The White House energy plan endorses this policy, even though it conflicts with traditional state authority over transmission siting decisions. In addition, the plan includes several other deregulation initiatives supported by Enron, including one provision that would help energy traders like Enron gain new rights of access to the power lines maintained by the Bonneville Power Administration. …

Even in areas where Enron did not get every policy it advocated, the White House energy plan is helpful to the company. In the area of global warming, for example, the plan does not support the mandatory controls on carbon dioxide emissions sought by Enron. But the plan does direct federal agencies to identify “market mechanisms” to address global warming, which would help develop the type of market in carbon credits sought by Enron.

The policies in the White House energy plan did not benefit Enron exclusively. And some of the policies may have independent merit. Nevertheless, it is unlikely that any other corporation in America stood to gain as much from the White House energy plan as Enron.

II. RECOMMENDATIONS RELATING TO ENERGY DERIVATIVES AND COMMODITIES MARKETS

B. Emissions Credits

Enron Position. Enron has promoted commodities trading markets in a wide number of areas, from weather derivatives to forest products and from electricity to metals. In particular, Enron has lobbied extensively for government policies that would support new or expanded markets in areas such as carbon and air emissions credits, which are bought and sold by Enron Global Markets. For example, Enron supported development of an international market in carbon dioxide emissions under a climate change agreement.

White House Energy Plan. The White House energy plan recommended policies that would expand and develop several new markets for emissions credits. The White House energy plan does not endorse the Kyoto Protocol on climate change or mandatory controls on carbon dioxide, but it does recommend use of market mechanisms to address climate change. The plan states:

The NEPD Group recommends that the President direct federal agencies … to identify environmentally and cost-effective ways to use market mechanisms and incentives … and cooperate with allies, including through international processes, to develop technologies, market-based incentives, and other innovative approaches to address the issue of global climate change.”

As part of a proposal supporting legislation to reduce emissions from electric power generators, the energy plan recommended establishing “mandatory reduction targets for emissions of three main pollutants: sulfur dioxide, nitrogen oxides, and mercury,” and measures to “[p]rovide market-based incentives, such as emissions trading credits to help achieve the required reductions.”

The recommendation for emission trading credits is one of only three recommendations in the White House energy plan chapter on the environment, and it is the only one of the three that pertains to pollution from energy production.

IV. OTHER RECOMMENDATIONS THAT BENEFITTED ENRON

C. Promotion of Wind Power

Enron Position. Enron Wind designs and manufactures wind turbines, and Enron owns six wind power generation plants. Enron has lobbied aggressively for extension of the wind and biomass tax credit. For example, in the first six months of 2001, Enron paid outside lobbyists over $200,000 for work on wind power issues, in addition to conducting its own lobbying on these issues.

White House Energy Plan. Consistent with Enron’s position, the White House energy plan recommended extending the wind and biomass tax credit and taking other actions that would promote the wind turbine business. The plan states:

• The NEPD Group recommends that the President direct the Secretary of the Treasury to work with Congress on legislation to extend and expand tax credits for electricity produced using renewable technology, such as wind and biomass. The President’s budget request extends the present 1.7 cents per kilowatt hour tax credit for electricity produced from wind and biomass.
• The NEPD Group recommends that the President direct the Secretaries of the Interior and Energy to work with Congress on legislation to use an estimated $1.2 billion of bid bonuses from the environmentally responsible leasing of ANWR for funding research into alternative and renewable energy resources, including wind, solar, geothermal, and biomass.

Download “How the White House Energy Plan Benefitted Enron”

Also see:  “Enron’s Ken Lay asks for Texas Gov. Bush’s help in securing tax credits for wind”

Interview with Arlin Montfils, Supervisor, Lincoln Township, Wisconsin. See transcript below (again, thanks to Better Plan).

[ Click here to view or download the entire "Wisconsin Wind" video (1 hr 49 min) ]

Arlin Montfils: We knew nothing, really, about them. The company said, well– they imposed an 800 foot set-back from the nearest resident.

Q: Not from their property line, but from their home.

The nearest resident. I believe that’s what it was. I haven’t looked back for sometime, but in my opinion that was way too close, we had people that complained: noise, noise, and noise.

And it wasn’t at high wind speeds. It was at low wind speeds like lets say ten to fifteen miles an hour, something like that, that’s where the most noise was coming in.

The decibel level [limit] was 50 decibels, we knew nothing about it. In my opinion it should have been 45. They threw out that number and they said you and I talking is 50 decibels and that’s probably true. I don’t dispute that. And they probably haven’t exceeded this 50 decibel level, but it’s constant it can go on for– well, you know the wind– it can go on for 24 hours or more and that’s when you start getting complaints because it never goes away and that’s when it gets irritating.

With this noise complaint, they set up a toll-free number you could call that day or night, twenty-four hours a day and file a complaint. Stating that there’s noise and it sounded like this or it sounded like that and what time of the day and approximate wind speeds, and that went on for about a year, I would say, that they had this toll free number up. Then at the end of the year what they did was contact these residential home-owners and offer to buy their property. Offer to buy their homes.

Q: They did offer to buy them?

Oh yeah. They bought two homes. There were five basic complaints all the time. So they bought two of the homes, tore them down. One party got a divorce so another person lived there, didn’t bother her, what ever. The two other places, they brought a lawsuit against WPS, they settled, I think they settled out of court, because if they had settled in court it would have been public record and we were not able to find out what they settled for.

Q: Are they still living there?

They are still living there. Yes.

Q: Now you mentioned, the public utility– two of [the houses] they bought and they tore them down. Why do you think they tore them down rather than try to resell them?

If they sold them they might have sold them to someone who would still complain. And they didn’t want complaints, I guess. One of those situations where the person got a divorce, and he came out on top by selling it to them, and the other party just sold the house.

Q: Being a public official you hear a lot of things. Do you feel that the complaints from the property owners were valid?

Oh yeah. Sure.

Q: They were valid.

Yeah. They’ll say you only got one home complaining or two well the turbines are right here, there are eight of them, there’s only two homes close by. So you had two complaints. So they say, “You only had two complaints,” but if there was more homes– if there was ten homes, you’d have ten complaints.

Q Do you expect to have anymore development for wind turbines in this area?

No. They companies that put them– the utilities– won put them up anymore. But if they were to do it, they would have private companies do it and then buy the electricity back from them.

Q: Why do you think they are getting away from the development themselves and having a company do it–

They want to be good neighbors, so if they don’t do anything about a complaint they are not good neighbors. So if they deal with a private company, the private company would have to deal with all the complaints or issues or what have you, they would have no problem. That’s what they told us. It’s a lot easier to have a private company put them up rather than themselves.

Q: Getting back to the economic side of this did this development, other than bringing revenue in to the local township and county and the landowners, did it bring any jobs here?

When they were first building, a private contractor dug the base and I’m sure they got the concrete for the bases from a local supplier.

Q: Other than construction were there any jobs created?

No. No. They do have– they found their own personnel for maintenance, you know. And if there is a problem with that they come in with their own companies or who ever they have

Q: Specialized?

Basically, they come in with a high crane you know. And we don’t have that. Nobody around here has that. So they have to come in with it. Private company from someplace. I don’t know where.

Q: Have there been any maintenance issues with the turbines?

I believe there is. We get a report every year as to what was replaced. Basically it’s the generators and the oil sometimes a bearing goes out, they have to replace that. It’s all them. We have nothing to do with that, you know.

Q: Can you tell us a little bit about the benefits to the community or pros and cons that you can see on both sides of this for your community?

Financially it’s the biggest benefit there was for the township.

Q: For the township?

Yes.

Q: Was it a needed revenue stream?

No. We could have done without it.

Q: But it was nice having extra–

Oh, absolutely.

Q: It’s always nice to have extra money.

Right. Yeah.

Q: So the money, the financial aspect of it is a benefit. What about cons? Is there any negative impact?

We had a person that complained a lot about stray voltage. The party himself spent a lot of money trying to control the stray voltage on his place.

Q: Did he have livestock?

Oh yeah. He’s a dairy farmer.

Q: Big dairy farmer?

Oh yeah. A hundred and fifty cows he might milk plus other animals, you know. He spent a lot of money, you know. He couldn’t alleviate it, but could control it.

Q: Did the development company, did the public utility do anything to assist him with that?

No. We did have the Public Service Commission of Wisconsin come in and do testing, and their tests came back saying the towers are within guidelines– I don’t know what the guidelines are– that they did not exceed the guide lines toward stray voltage. [The farmer's] concern was they did.

Q. Have you heard of any health concerns people had because they are living next to them.

Well this party that put their home up for sale– they thought their kid was getting too many headaches.

So they did have Madison Gas and Electric, the owners of those utilities, they did come in and do a study, and what ever their findings were, they said they did not exceed guidelines for homes, for residential homes for as far as stray voltage went. That’s as far as it went.

Q: My other question here is information made available on the internet. There’s a lot of information about Lincoln township that’s available on the internet now for people to view and consider. What are your thoughts about that information, is it factual information? An accurate representation of what’s taken place here?

I have not seen it. I don’t have internet access right here, you know. But I know about it. Basically what I’m telling you now, if you want to compare what I’ve said to you to what’s on the internet? Work from there. I think it’s pretty factual, I think they exaggerated on some things, I don’t know which ones it would have been, but, yeah. It’s reasonably accurate I think.

Kenneth L. Lay
Chairman and Chief Executive Officer
Enron Corp.
P.O. Box 2288
Houston, TX 77251-2288

August 10, 1998

The Honorable George W. Bush
The State of Texas
State Capitol, Room 2S.1
Austin, Texas 78701

Dear Governor Bush: George

I am writing to bring to your attention a federal tax bill that will benefit Texas and to ask you to write a letter to House Ways and Means Committee Chairman, Bill Archer, expressing your support for the measure.

The bill, H.R. 1401 (Thomas R-CA), extends for five years the existing wind production tax credit (PTC), which was passed by the Bush Administration in the Energy Policy Act of 1992. Wind is the fastest growing new electrical generation technology in the world today and has rapidly decreased its production costs until it is close to being competitive with conventional generation technologies.

Texas has great wind potential which is already being developed. Among the projects are a 35 MW project operating near Van Horn (LCRA), a 40 MW project under construction near Big Spring (Texas Utilities), a 6 MW project near Fort Davis (Central and Southwest), and a 75 MW project being bid near McCarney (Central and Southwest). These projects represent a $156 million investment in Texas.

In addition to the actual projects, our subsidiary company, Enron Wind Corp., as one of the largest wind turbine manufacturers in the world, is spending approximately $80 million for wind turbine components in Texas. A new blade manufacturing plant is operating in Gainesville and the towers are being fabricated in El Paso.

The PTC bill and its Senate version S. 1459 have broad-based support. Twenty-three out of thirty-nine Ways and Means Committee members and ten out of twenty Senate Finance Committee members are co-sponsors. I would like to make several points concerning the PTC:

1. The PTC is an existing credit in the tax code scheduled to expire June 30, 1999. The proposed extension will sunset in five years.

2. Fossil technologies (coal, oil, gas) will receive approximately $12.6 billion in tax benefits in the five year period 1998-2002. In comparison the PTC extension will cost the treasury $134 million.

3. The PTC is production based, not investment based, thus encouraging design and cost improvements to increase production.

5. Wind energy is creating many new jobs around the country and particularly in Texas. These new jobs create significant tax income on the federal, state, and local levels and the tax multiplier effect creates more tax revenues than the cost of the PTC over the five year period.

6. The export potential of wind energy equipment is also large and growing with a potential market of $2 billion per year. U.S. manufacturers such as Enron can capitalize on those foreign markets to the benefit of our economy.

The outlook for wind projects and wind-related manufacturing in Texas is very good. I would greatly appreciate your help in sending a letter to Chairman Archer supporting the PTC for wind because it is a technology that will offer long-term economic and environmental benefits not only to Texas and our country, but to the world as a whole.

Sincerely,
Ken

 

Apparently the Senator did not know that the two foreign based of his target oil companies — UK-based BP and Netherlands-based Shell — are investing heavily in “wind energy” in the US, but perhaps not for the reasons the Senator had in mind.

Undoubtedly, Shell and BP hope their investments in “wind energy” will enhance their “green” image. In fact, these investments are also permitting the two companies to avoid tens or hundreds of millions in federal and state income tax on their profits, including oil profits.

Why are there any tax breaks and subsidies for wind energy?

Wind industry lobbyists have been extraordinarily successful in securing very generous federal and state government tax breaks and subsidies for wind energy. The cost of these tax breaks and subsidies are, of course, borne by ordinary taxpayers and electric customers.

These tax breaks and subsidies were adopted initially based on the rationale that newly emerging energy technologies deserved “incentives” to help them compete economically with established technologies that can produce electricity at less cost. However, tax breaks and subsidies, once started, have long lives, in part because the money they churn out can be used by the recipients to finance lobbyists and make generous campaign contributions to members of Congress and state legislatures.

Even now, the wind industry is clamoring for an extension beyond 2008 of the lucrative “Production Tax Credit” (PTC) that was first enacted in 1992 during the Administration of George H. W. Bush. (The wind PTC idea can be traced to Ken Lay of Enron fame. [ii]) The US EIA recently estimated that in 2007 alone the wind PTC alone permitted “wind farm” owners to avoid nearly $700 million in federal taxes, thus shifting that tax burden to ordinary taxpayers who can’t escape their tax liabilities.

A flourishing wind energy industry is now in place and the costs of competing energy sources have increased dramatically but industry lobbyists continue to press for an extension in the wind PTC. Their accomplices in Congress will probably comply now that it has returned from its “recess.”

How can BP and Shell use “wind farms” to shelter oil profits from income taxes?

Senator Domenici’s April 2008 letter suggests that Congress may not understand how wind energy tax breaks permit a few large organizations to escape hundreds of millions in tax liability — and shift that tax burden to others. Tax breaks for “wind farms” apparently have helped at least one large corporation avoid paying any federal income tax for at least two years on over two billion dollars in profit. [iii]

This brief paper:

• Summarizes BP and Shell’s publicly disclosed “wind farm” investments and plans.

• Describes several of the most lucrative tax breaks available to BP and Shell.

• Estimates the amount of tax liability BP and Shell can escape — and shift to ordinary taxpayers.

What are BP and Shell’s “wind farm” investments and plans?

Both Shell and BP have “wind farms” in operation in the US and more under construction. Both have aggressive plans to add thousands of megawatts of wind generating capacity in the US in the years ahead.

1. Shell. According to information available from Shell’s web site, the company owns 5 existing “wind farms” in the US totaling 392.42 megawatts (MW) of capacity and owns half of an additional 162 MW “wind farm” ( in partnership with Spain-based Iberdrola) for a net ownership of 473.42 MW of existing capacity. In addition, Shell in October 2003 announced plans to build a 50-70 MW project (Bear River) in California.

On July 27, 2007, Shell and Luminant (subsidiary of EFHoldings, formerly TXU) announced plans for a 3,000 MW “wind farm” in Texas. [iv] Further, a May 30, 2008, story in the Financial Times reported that Shell pulled out of a huge offshore wind project in the UK because of its high cost and quotes Shell official, Dick Williams, as saying that Shell plans to focus its wind energy activities on North America where it already has ” … over a half a million acres optioned for wind projects.” [v]

Assuming that Shell will own half the planned 3,000 MW project in Texas, Shell already plans to own over 2,000 MW of wind generating capacity in the US — with the possibility of much more.

2. BP. According to BP press releases posted on its web site, BP moved aggressively in 2006 with investments in wind energy companies in the US. In July 2006, BP entered into an agreement with Clipper Windpower that includes acquiring a 50% interest in Clipper’s wind development portfolio and a long-term supply agreement to purchase 2,250 MW of Clipper turbines. In August 2006, BP acquired wind energy developer, Greenlight Energy, and in December 2006 acquired wind energy developer Orion Energy LLC.

At present, BP apparently owns about 670 megawatts (MW) of wind generating capacity that is in operation or under construction, with projects located in Colorado, Texas, Indiana, Kansas, and California. A May 29, 2008, BP press release indicates the company’s US wind portfolio “includes the opportunity to develop almost 100 projects and a potential total generating capacity of 15,000 MW. The company expects to have over 1,000 MW of capacity in operation by the end of 2008.

Lucrative tax breaks for “wind energy” permit BP and Shell to avoid paying hundreds of millions in federal and state taxes.

BP and Shell are able to take advantage of at least five very generous federal and state tax breaks and subsidies for wind energy and be able to use those tax breaks to avoid paying federal and state corporate income tax on hundreds of millions in profit, including profit from their oil.

Detailed information on the two companies’ financial situation would be needed to make precise estimates of the amount of income that each company will be able to shelter from federal and state corporate income taxes. However, rough estimates of taxes that the companies would be able to avoid can be made by making a few conservative assumptions.

To simplify the calculations, the numbers below ignore BP and Shell’s existing projects and instead merely assume that (a) each company will in 2009 bring into operation “wind farms” with a capacity of 1,000 MW, (b) that the capital cost of the projects will be $2,000 per kilowatt (kW) of capacity, (c) that they will operate with an annual capacity factor [vi] of 30%, and (d) that Congress will accede to wind industry lobbyists and extend the existing renewable energy “Production Tax Credit” beyond its current December 31, 2008, expiration date (at an estimated cost of several billion dollars). If either company builds twice as much wind capacity (i.e., 2,000 MW), the tax breaks and subsidies would be twice those estimated below.

1. Federal Production Tax Credit for electricity from wind (PTC). First, BP and Shell would each receive the federal wind PTC, currently $0.02 per kilowatt-hour (kWh) for electricity produced during the 1st 10 years of operation. Congress is expected to extend this tax shelter beyond its current December 31, 2008, expiration date. By itself, this tax credit would reduce each company’s federal income tax liability over 10 years by $526,100,000, [vii] effectively shifting that amount of tax burden to taxpayers who don’t enjoy such tax shelters.

2. Accelerated Depreciation. Second, each oil company’s (i.e., BP and Shell) $2 billion [viii] in “wind farm” capital investments would qualify for the exceedingly generous 5-year, double declining balance accelerated depreciation for federal income tax purposes. [ix] Assuming that $2 billion is the full cost of each company’s “wind farms” in 2009, the following amounts could be deducted from each company’s otherwise taxable income and further reduce each company’s federal income tax liability; specifically:

Note that these deductions from otherwise taxable income and from federal income tax liability could be taken regardless of whether the “wind farm” investment is financed with debt or equity. [x] So, if each company were to put up only $1 billion of equity and finance the other $1 billion with borrowing (to hold down the cost of their capital investment), the deductions from income and reduced tax liability would still be based on the full $2 billion shown in the table above.

Note also that, in addition to the further reduction in tax liability, this generous accelerated depreciation deduction for federal income tax purposes has two other huge benefits; specifically:

a. Prompt recovery of each company’s equity investment. The example above, conservatively assumes that the entire “wind farm” capital investment would be equity, rather than debt. If the equity investment was only half the capital cost and the remainder borrowed, (i.e., $1 billion), the table above shows that BP and Shell would each recover through depreciation deductions all of its equity investment in less than 2 years and in just over 1 year if the project(s) begin operation late in the first tax year. With no remaining equity investment, each company’s return on equity would be infinite.

b. A large interest free loan. The depreciation deduction continues even though all equity has been recovered. Thus, each company would, in effect, be receiving an interest free loan, courtesy of US taxpayers for an amount equal to the debt financing.

In the unlike case that either company was unable to use all the tax deductions in 2009, part of the allowable deduction could be deferred or, alternatively, schemes are available to “sell” tax credits to other firms that have tax liabilities that they wish to avoid.

3. Avoiding State Corporate Taxes. Tax breaks for “wind farms” are not limited to those provided by the federal government. Most states also allow a corporation to take advantage of 5-year double declining balance accelerated depreciation deductions from otherwise taxable corporate income. Therefore, each company could be able to take deductions like those shown above when calculating their state corporate tax liability. Assuming a 6.5% state corporate tax rate, each company’s $2 billion “wind farm” capital investment would permit the following deductions from state level taxable income and reductions in each oil company’s tax liability:

4. State Production Tax Credits or Subsidies for “Wind Farm” Owners. Several states have adopted their own “production tax credits,” and other states provide a direct subsidy. If BP or Shell were to build their “wind farms” in states with such subsidies they would enjoy still another tax break or income stream. State programs vary widely. If the tax break or subsidy were worth $15 per megawatt-hour (MWh) of electricity produced — which is equal to $0.015 cents per kWh, the tax break or subsidy would be $39,420,000 per year and $394,420,000 over 10 years. [xi]

5. State Renewable Portfolio Standard (RPS). In addition to the above tax breaks and subsidies, several states have virtually assured big profits for “wind farm” owners by requiring that a growing percentage of the electricity sold in their state must come from “renewable” energy, which, in most states is now expected to be mostly from wind. By dictating that a large portion of electricity must be produced from “renewable” energy, owners of facilities that produce electricity from wind and other “renewables” are likely to be able to demand higher prices for their electricity than would be paid under normal market conditions. The higher costs of electricity from renewables that electric distribution companies are forced to pay are passed along to electric customers in their monthly bills.

6. Other Tax Breaks and Subsidies. “Wind Farms” enjoy a variety of other federal and state financial, market and regulatory subsidies. For example, in some states, “wind farms” are eligible for exemption from all or a part of their property taxes or sales taxes on wind farm equipment. In some regions “wind farm” owners receive a variety of regulatory subsidies; e.g., being awarded an artificially high “capacity credit” by an Independent System Operator (ISO), or being excused from penalties for not delivering electricity to an electric grid at the time called for in contracts. In some states (e.g., Texas), state utility commissions are counting on the construction of transmission lines to serve “wind farms” that will cost billions of dollars, with the costs passed along to electric customers in their monthly bills.

Conclusions

Ordinary taxpayers are justifiably repulsed by having to bear the tax burden escaped by corporations that can take advantage of the extremely generous tax breaks and subsidies provided to them by the Congress and state legislatures. However, it is certainly not illegal for corporations to take advantage of those breaks. The blame for bad government policies — including the huge tax breaks and subsidies described in this paper — rests primarily with our elected representatives who seem unable to understand the full implications of the measures they adopt and/or unable to resist demands from lobbyists.

The huge tax breaks and subsidies for wind energy are especially repulsive to many citizens, electric customers and taxpayers because it has become increasingly clear during the past 3 years that the wind industry and other wind advocates have, for more than a decade, greatly overstated environmental, energy and economic benefits of wind energy and greatly understated or ignored its adverse environmental, ecological, economic, scenic, and property value impacts.

In fact, the huge machines (many 400 ft or 40 stories) produce very little electricity. That electricity is intermittent, volatile, and unreliable. Further, because their output is dependent on wind speed, wind turbines cannot be counted on to be available at the time of peak electricity demand. This means that areas experiencing increases in peak demand or needing to replace older generators will have to add reliable (”dispatchable”) generating capacity whether or not “wind farms” are built. Electric customers could be paying twice: once for wind turbines and again for reliable generating units.

September 9, 2008

Glenn R. Schleede
18220 Turnberry Drive
Round Hill, VA 20141-2574
540-338-9958

Notes

[i] http://domenici.senate.gov/news/record.cfm?ref=1&id=297009

[ii] Page 1 of Ken Lay letter to Gov. G.W. Bush: http://www.thesmokinggun.com/archive/bushlayb11.html; Page 2 of Ken Lay letter to Gov. G.W. Bush: http://www.thesmokinggun.com/archive/bushlayb12.html

[iii] See, for example, “Big Money” Discovers the Huge Tax Breaks and Subsidies for “Wind Energy” While Taxpayers and Electric Customers Pick up the Tab, April 14, 2005, p. 2. http://www.aweo.org/Schleede.html

[iv] http://www.luminant.com/news/newsrel/detail.aspx?prid=1087

[v] http://www.ft.com/cms/s/0/2c2d99fa-2e7d-11dd-ab55-000077b07658.html

[vi] Annual “capacity factor” is a simple calculation of a percentage obtained by dividing the actual production of electricity (in kilowatt-hours — kWh) from a “wind farm” or other electric generating facility by 8760 hours (in a year) times the rated capacity of the facility (in kilowatts — kW).

[vii] Assuming a 30% capacity factor, 1,000 MW of wind capacity would produce about 2,628,000,000 kWh of electricity per year or 26,280,000,000 kWh during the first 10 years of operation. At $0.02 per kWh, the tax credit over 10 years would be $525,600,000.

[viii] 1,000 megawatts (MW) or 1,000,000 kilowatts (kW) of capacity at $2,000 per kW would cost $2 Billion.

[ix] Referred to by the IRS as Modified Accelerated Cost Recovery System (MACRS). See IRS Publication 946.

[x] Note also that the US Congress, in the Economic Stimulus Act of 2008, added a 50% 1st year “bonus” deduction from federal taxable income for 2008 investments. The effect of this additional “bonus” would permit “wind farm” owners to deduct 60% in the 1st, 16% in the 2nd, 9.6% in the 3rd, 5.76% in the 4th and 5th and 2.88% in the 6th tax years for federal corporate income tax purposes.

[xi] As in previous calculations, this assumes that the capacity of the wind farms” would be 1,000 MW and that they would produce electricity at an annual capacity factor of 30%; i.e., 2,628,000,000 kWh per year or 26,280,000,000 kWh over 10 years.

Download “Two Oil Companies use ‘wind farm’ tax breaks to shelter profits from income tax”

The following analysis outlines the system, and notes that while the RO is complicated, it is in some ways very simple. The issuing and trading of certificates involves numerous stages and parties, but the end result is that, at present, it offers equal rewards to technologies regardless of their intrinsic merits, where merit is understood in the context of the peculiar characteristics of the electricity supply industry. As a result, investors have tended to select technologies on the principle of “least capital cost first”. Initially this resulted in a bias towards Landfill Gas generation, which was, quite incidentally, a high merit technology. Opportunities for LFG are now all but exhausted, and developers are currently concentrating on the next most attractive qualifying ticket to the subsidy stream. This happens to be onshore wind, which is a low merit generator, as will be explained later.

It is important to emphasise, therefore, that those responsible for taking decisions within the planning system should not assume that incentivisation within the RO is an indicator of quality, or, though this may seem paradoxical, of the technology’s suitability for the purpose of meeting the aims of the UK’s renewable energy and climate change policy.

On the contrary, in our view, it is the planning system which bears the full burden of responsibility for determining the quality of the proposal, its suitability to realise the aims of policy, and balancing this in relation to local impact. …

Courtesy of the Renewable Energy Foundation

“UK Renewables Subsidies: A Simple Description and Commentary”