THE LAW ACCORDING TO JIM GORDON

Ponzi was A Piker

Cape Wind's recently approved power purchase agreement with NationalGrid is in clear violation of Massachusetts law. The scale of the fraud crafted against Massachusetts citizens by the Commonwealth in behalf of an already wealthy energy developer dwarfs the famous Ponzi Scheme.

Massachusetts Governor Deval Patrick signed Chapter 169 of the Acts of 2007 on July 2, 2008. This new law, called the Green Communities Act stated several goals relating to energy conservation and the promotion of renewable or green energy. It calls for the Commonwealth to receive 25% of its total energy from renewable sources by the year 2030. it also mandates reductions in energy use in state buildings, the assembling of a fleet of motior vehicles powered by green fuels, etc. On its surface the Green Communities Act is a noble law.

In fact, it appears to be merely another tool for the ever ambitious Jim Gordon, CEO of Cape Wind Associates. And, when the economic realities of the Cape Wind project could no longer be concealed or made to comply with the law's provisions Massachusetts officials simply wrote a PPA that violates the law.

Section 83 of the Green Communities Act states in part, (in order to promote renewable energy, utility companies shall "...enter into cost-effective long-term contracts to facilitate the financing of renewable energy generation within the boundaries of the commonwealth, including state waters, or in adjacent federal waters." 

The preceding post in this series, JIM GORDON WINS AGAIN, delves into the mysteries of a retail electric bill as it appears after energy deregulation in Massachusetts. Each bill shows charges for energy and delivery charges separately. Those of us who have been aware that Cape Wind's energy will be substantially more expensive than the ordinary mix of energy available to Massachusetts retail electric customers have wondered what black magic the commonwelath would find to pay for Jim Gordon's scheme. Now we know: the DPU and the attorney general would simply violate current law.

NationalGrid and Cape Wind hatched a plot to cover Jim Gordon's costs and satisfy his greed for profit by sliding his PPA onto the delivery side of retail electric bills where these costs could more easily avoid challenge. This, of course, shows exactly why many were appalled that the Green Communities act called for renewable energy that is "cost effective" but failed to provide guidance as to how cost effectiveness could be measured or enforced. To Jim Gordon the term cost effective obviously means a price that pays his costs and makes him many more millions than he already has.

Still, Massachusetts law is very clear about how a utility (delivery) company can account for the costs of the renewable energy it buys on the wholesale market and delivers to retail customers. There are two, only two ways to accomplish this accounting for costs:

1. The utility company may purchase renewable energy at a wholelsale price, add its allowed margin and simply include it with other enrgy in its standard offer, the total energy mix it offeres to retail customers. This means that the reneable energy in question may appear only on the energy side of the retail bill.

2. Or, the utility company may sell its renewable energy at auction into the wholesale market.

The first method appears simple. It means that the charge for renewable energy is to be carried on the energy side of the retail electric bill. The second method offers the possibility that the utility company purchasing, say....electricity from Cape Wind could pay 18.7 cents/KW but sell it for more. In this way there would be no delivery costs and an immediate profit. Let someone else figure out how to manage the costs of delivery. Either way, these are the two ways, the only two ways for a utility company to deal in renewable energy. Of course, Massachusetts found a third way so that Jim Gordon and NationalGrid benefit. By burying Cape Wind's costs on the delivery side of the bill we avoid the ugly and very real possibility that an auction of Cape Wind's energy would bring a lower price than its costs. But, Martha Coakley and ian Bowles, secretary of the department which operates the DPU, have found a way tyo cover even such a disatrous possibility...simply craft an illegal PPA.

Although the PPA between Cape Wind and National Grid allows the utility to cover its renewable energy costs automatically by hiding these costs on the delivery side of the retail bill, thereby facilitating the development of renewable energy in Massachusetts, the chosen method is simply not legal, not allowed by law, the very law that addresses the issues raised by renewable energy. Worse yet, the Massachusetts attorney general, Martha Coakley was personally involved in closed-door negotiations which resulted in this fraud. Unlike the public hearings held by the DPU on the Cape Wind/National grid PPA, the attorney general's plotting and scheming are not subject to disclosure in a public record, if any record in fact exists.

Normally and according to Massachusetts law, deliberations such as those conducted by the DPU are subject to a complete record keeping and said record is publicly available. Various parties were allowed intervenor status at the DPU hearings and they spent tens of thousands of dollars to be represented by attorneys, but the fix was already in. Their money was wasted. Although the attorney general is  supposed to stand as the final level of administrative review in such matters as a DPU rate-making or PPA decision, this case finds the attorney general involved where she should not have been...in the actual crafting of the greement she is supposed to review it after it is sealed by an independent body. The chief consumer advocate for the Comnmonwealth of Massachusetts has become a co-conspirator in the Cape Wind/National grid case.

Consider the following hypotheical exchange:

Alliance To Protect Nantucket Sound: Madame Attorney General, the DPU has approved a PPA that violates both the Green Communities Act and the energy deregulation law.

Martha Coakley: Yes, I know.

Alliance To Protect Nantucket Sound: What do you intend to do about this?

Martha Coakley: Nothing.

Other intervenors: But Madame Attorney General, this is highway robbery. You are the Commonwealth's chief law enforcement officer. We though you were a consumer protection supporter.

Martha Coakley: Look, I would love to tell you how we designed this little deal really, I would, but the guys would get mad if I did. You know...discretion, proprietary information...you understand. Anyway, I was part of the conferences when the deal was designed, so I really can't review it now, can I? I mean, there is such a thing as conflict of interest. Anyway, Salazar got away with lying about Cape Wind so why can't I have a little fun?

Chorus: BUT!

Martha Coakely: We're done here. Merry Christmas.

Coakley was all aglow as she and the DPU announced that their efforts had caused National Grid to reduce the price they would pay Gordon, a new price he would accept, by nearly ten percent. Obviously Gordon and National Grid agreed to this reduction in return for something, some concession by the commonwealth. This may be it...a way to recover costs without the messy process of consumer participation, as required by Massachusetts utilities law. While some may claim that the DPU saw Cape Wind's original price as a wind fall and sought to prevent such largesse falling on retail ratepayers, what theyb have actually done is to ensure that wind falls are now legal and nearly unpreventable.

What is Jim Gordon's magic? How does he work his will at every level of government? Does he tell people the story of Bill Segal? Does he ask if they might crack under the pressure of opposing him? What do we do about an attorney general who actually participates in a conspiracy to violate the very law she is supposed to enforce? What other renewable energy frauds lie in our future in Massachusetts?

We're not done here, yet.

COPYRIGHT 2010 By Peter A. Kenney

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