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THE REST OF THE CAPE WIND SCAM

Updated on November 11, 2010

Will Massachusetts Bail Out Cape Wind?

My guess is that the fix is in for Cape Wind in Massachusetts. Jim Gordon, Cape Wind's CEO, is waiting for Massachusetts DPU approval of his power purchase agreement (PPA) with National Grid. The announcement could be made anytime now. However, this PPA accounts for only half of the project's total production. Gordon cannot possibly finance the entire $2.5 billion project while selling only half its output.

So, who will come to his aid? Poor Jim Gordon.

My bet is the recently re-elected Massachusetts Democrat governor, Deval Patrick. In fact, it would not surprise me at all if the deal is already done in principle. Remember, National Grid intitially applied to the DPU for approval of a plan whereby they would buy 100% of Cape Wind's electricity. 50% they would then resell at retail to their own customers. But, the remaining 50% they vaguely said they would broker for bulk resale to someone, presumably anyone else. And, being the philanthropists that they are the good folks at National Grid would not make any money on this purchase-and-resale; no commission, no kick-back, no override, no fees, no profit. They would spend millions of dollars of their stock holders' and ratepayers' money to help Jim Gordon and advance renewable energy.

Perhaps pigs do fly. The Boston press, predictably, saw nothing strange in this arrangement. If they did they said nothing about it. Eventually Massachusetts Attorney General and vocal Cape Wind supporter Martha Coakley told NatGrid and Cape Wind that any PPA would be only for power intended for resale by NatGrid to its own customers. This left 50% of Jim Gordon's $2.5 billion project's power needing a buyer. All this happened through the summer and pre-election months of 2010, with Deval Patrick facing the prospect of becoming a one-term governor as Republicans savaged Democrat strongholds nationwide.

It would have been political suicide for the governor to announce any kind of sweetheart deal for Cape Wind during the campaign. So, he did not. Two Harvard degrees are not wasted on Deval Patrick. But, does this mean there is no deal on the back burner, waiting for an opportune (safe) time to be brought into the light? Perhaps a Christmas present for Jim Gordon to be unwrapped after the governor is safely re-elected to his second term, his last term. Deval Patrick is now literally a lame duck governor. He can take risks; he can do truly generous, or stupid or deceptive things without threatening his political future.

My prediction: the governor will announce that somehow the Commonwealth of Massachusetts will come to Jim Gordon's rescue. A major user of electricity, a state agency or authority will agree to buy the remaining 50% of Cape Wind's electricity at enormous cost to the public. My suspects are the Massachusetts Port Authority (MASSPORT) which operates the port of Boston and Logan International Airport or the University of Massachusetts (UMASS). But, I may have missed some other suspect such as the Massachusetts Water Resources Authority (MWRA). UMASS could bury the additional costs in their fees and tuition. MASSPORT could easily hide the extra costs in their airport and port fees while MWRA would simply raise their water and sewer rates. Simple....and all without the spectre of new taxes. Deval patrick - hero to the new age.

Clever fellow that Deval Patrick; devious and entirely too willing to help the not-so-poor Jim Gordon, but very clever. As for Gordon, the only thing green about his energy is the color of his greed and his cash. Gordon is due to appear at a major bash on green energy in New York City on December 1, the twelfth annual Platts Global Energy Awards. Care to bet he will have this deal or something like it in his pocket by then? Let's bet...oh, say.......$2.5 billion?

COPYRIGHT 2010 By Peter A. Kenney

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