HOW THE PRESS SOLD CAPE WIND

Irresponsible, Unreliable and Wrong

Since it was first unveiled in 2001 the Cape Wind project has been the darling of most media. Why? How did this happen? Is there a body of fact to prove the many press claims made for Cape Wind? Do those who have so ardently supported this offshore wind project know what they are talking about? Well, let's look at the Cape Wind record, the facts, the true costs.

I first heard the Cape Wind story in two different settings. One was a basement conference room at a hotel in Hyannis, Massachusetts, where Cape Wind's CEO and major financial backer, Jim Gordon, described the project. Gordon has a college degree in communications and he puts it to good use. That night he appeared almost in tears as he told how a friend had died in the World Trade Center attacks and, having properly impressed those of us listening to him continued to declare that if Cape Wind had been in operation his friend would still be alive. Jim Gordon is the sort of man who gives snake oil salesmen and other scam artists a bad name.

The second event was a much larger presentation in the auditorium of a middle school here in Yarmouth. Gordon and one his then partners (coincidentally my ex brother-in-law) strode dramatically from one side of the stage to the other, displayed a model of a three-bladed turbine and gave a Power Point presentation of the project's size location, technology and economics. Gordon told the hundreds of people who had come to hear his bold new idea that he had done very well as a merchant power generator but that he had sold all of his other energy interests and was devoting all his efforts to the development of clean, renewable energy; offshore wind.

Had the press bothered to check, they would have discovered that when Gordon sold two of his six gas-fired power plants, two of them for stock in a company that owned 15% of the nuclear power plant at Seabrook, New Hampshire. That company was BayCorp Holdings. They also would have known, had they remained vigilant, that Gordon remained on BayCorp's board of directors until late in 2005. So much for the clean energy crusader. But why should small things such as facts muddy all the great stories the press could write about Jim Gordon, the energy visionary?

Here is the issue on which the press and media have been the most at fault, the cost of wind power. Gordon hosted a second public session in the school auditorium. This time enough people demanded to know what Cape Wind's power would cost retail electric customers that he finally gave a number. He said that New England rate payers would save between 10 cents and 12 cents per month at the residential rate. And, while he admitted that this did not seem a great savings, wind power would "....exert a downward pressure on New England electric rates." So, the press could now say that Gordon had finally proven that Cape Wind would both save electric customers money and stabilize regional electric rates. And they did so, and continued to do so with gusto. Such deceit and arrogance are almost admirable in their boldness.

When Gordon first unveiled Cape Wind he said the project would cost $650 million. It would be 170 wind turbines with a total capacity of 420 megawatts (MW). In 2003 the project specifications were changed to 130 turbines, much larger turbines with a total capacity of 468 MW, and a newer cost of perhaps $900 million. As recently as the last week of April in no less a publication than the New York Times the estimated cost of the Cape Wind project could rise to more than $1 billion. In fact, Cape Wind, based on actual cost for offshore projects being built in Europe today, will need as much as $2.5 billion in capital, real money. 30% of that will come from a government rebate, $750 million.

Worst of all, the Power Purchase Agreement announced between Cape Wind and National Grid on Friday, May 7 of this year calls for a wholesale residential rate of 20.7 cents per kilowatt (KW). Where I live, on Cape Cod, the present retail electric rate is 8.9 cents/KW. there are various rates available depending on whether one selects a so-called green energy option, but the bottom rate is less than 9 cents. Cape Wind's proposed wholesale rate is more than double our current retail rate, and the wholesale price Cape Wind and National Grid have agreed on may not include other costs for transmission, grid upgrades and other transmission related costs. Who knows what is buried in the PPA's fine print? Still, not one single newspaper, television or radio news organization, magazine or on-line news service has asked how we have progressed from a monthly savings of 10 - 12 cents to a whopping 20.7 cents at wholesale. Not one.

And now, the whole truth about 20.7 cents: it is only a wholesale value, and by Massachusetts state law it is allowed to increase by 3.5% (compounded) annually. Also, under a rule made by the Massachusetts Department of Public Utilities the Green Communities Act (a new state law supposedly intended to promote green energy projects and use) power transmission companies are allowed to ad a 4% premium to the wholesale cost of renewables such as wind. Finally, power companies transmitting electricity in Massachusetts are allowed a gross profit of 10%. Do the math:

First year retail cost: 20.7 cents + 4% + 10% + 23.808 cents

Fifth year retail cost: 27.174261 cents (all factors included)

Tenth year retail cost: 32.274495 cents

Fifteenth year retail cost: 38.331972 cents

These costs, by the way, represent the direct retail cost to consumers and in no way account for the taxes that will be needed to pay for what could be one and a half trillion dollars in cash subsidies to developers of offshore wind energy, just offshore wind energy. And they are based on the representation by Gordon that he will be able to produce nearly twice as much energy as offshore wind farms now operating in Northern Europe; his claims for reliability and capacity far exceed what experience has shown to be reasonable. Once again, however, we hear and read nothing of these facts anywhere in the press or media. One simple question comes to mind: how did Cape Wind go from a project that will save consumers money to one that will increase their electric bills? Is anyone in the press asking this question?

Does this remind us of how the press failed to see and report on the disaster of subprime lending throughout the early years of this century?


Copyright 2010 By Peter A. Kenney

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Comments 1 comment

Frankhaggerty 6 years ago

MMS and Massachusetts

Interior Secretary Ken Salazar is due to appear May 18 , 2010, for several Senate hearings this Tuesday. Many lawmakers are looking forward to examine the leadership of the Minerals Management Service. The Interior Department is charged with enforcing environmental and safety rules for energy exploration.

On April 28.2010 Ken Salazar announced his decision at a joint Massachusetts State House news conference with Gov. Deval Patrick voting to go forward with the Nantucket, Massachusetts wind turbine project. The same day of this decision more than 5000 barrels of oil had poured into the Gulf of Mexico. (one barrel equals 42 gallons ) .

In 2008 an internal investigation it was found many at Minerals Management Services were involved with substance abuse. It was stated that workers accepted gifts and trips.

Interior Secretary Ken Salazar has decided to make a decision on the Nantucket ocean wind project himself. The decision was to go forward with the first ocean wind project the very day of the Gulf oil spill!

Secretary Salazar has now decided to split the MMS into two agencies on the heels of going forward with the wind turbine project. We have to all question the regulatory breakdowns happening at the Minerals Management.

Every resident of Massachusetts should question the judgment of the Mineral Management Service ocean wind turbine decision before any more projects approved by MMS go forward! Did the MMS since 2009 put to much emphasis on wind and other renewable energy sources?

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