Stars, not often seen in the cloudy weather of late, were out, and a thin gold wedge of moon cupping a dark whole that seemed smaller than the crescent, when the dogs and I ventured into the damp cool of 5 a.m. The waning moon was encircled by a halo and straggling well behind the determined bright glow of Jupiter, whereas yesterday they had been companionably aligned.
I've been wondering just how companionably KIUC and FFP are aligned, and after spending time yesterday looking at documents on the Federal Energy Regulatory Commission (FERC) website and following some other leads, I wanted to share some niggling concerns about their union, starting with the way the two companies got together.
KIUC keeps saying it has to use the FERC process to keep a for-profit developer from jumping in front and building the hydro projects before it does. But actually, FFP had already done the “poaching” by filing its applications for hydro projects on Kauai waterways prior to entering into a contract with KIUC.
As I reported in ”Kauai’s Hydro Battle” for the current issue of Honolulu Weekly:
Thus began KIUC’s clumsy foray into hydroelectric development under a federal process that allows investors to stake a claim, gold rush-style, on rivers and irrigation ditches. The utility actually followed the lead of Free Flow Power (FFP), a Massachusetts-based consortium of consultants and investors that filed the [FERC] permit applications that created a community uproar.
To stake its own claim, KIUC purchased the shell companies that FFP formed to file six applications on waterways from Hanalei to Kekaha. FERC has already approved three, giving KIUC preliminary permits that carry the exclusive right to study hydroelectric development for three years. [KIUC CEO] Bissell said no specific price was placed on the applications, which were purchased as part of a larger consulting contract. The utility has refused to disclose the full value of the contract, which includes an incentive for delivering completed projects, but KIUC attorney David Proudfoot said FFP will be paid “several million dollars if none go past the first stage.”
FERC-issued preliminary permits are non-transferable, so to gain control over them, KIUC purchased the companies (see comments section for names that hold them. What’s odd is that KIUC apparently negotiated a contract that requires it to relinquish the permits if the contract is pulled. This is spelled out under “your no vote means” in the “KIUC guide for hydropower voters:
The contracts with FFP will be terminated, and all preliminary permits will revert back to FFP. This will make progress on hydro in the near term very difficult and more expensive, and more than $325,000 in contractual obligations will be due to FFP.
In other words, since FFP has those waterways locked up for the next three years, KIUC either has to play ball with FFP, or sit on its hands until the permits expire. FFP also could seek an extension of its permits.
So even though KIUC goes on and on about the stellar qualifications of the firm, it appears the circumstances that led to their union were more akin to a shotgun wedding than a love match. What’s more, it seems that “grab 'em with both hands” is FFP’s standard MO.
I noticed, as I was looking through pending applications on the FERC website, that FFP and its competitor, Northland Power Mississippi River LLC, had filed an inordinate number of hydro applications in the southern states. That prompted some Google searching, which led me to this report on Hydroworld.com:
The Federal Energy Regulatory Commission announced proposed plans to refuse to issue additional preliminary permits for hydrokinetic projects on the lower Mississippi River between Cairo, Ill., and the Gulf of Mexico.
Director Jeff Wright of FERC's Office of Energy Projects announced the proposal in an April 1 show cause letter to Free Flow Power Corp. and Northland Power Mississippi River LLC. Between them the two developers hold, or have applied for, preliminary permits for 141 project sites covering all but a few miles of the 850-mile reach of the river.
"Given the number and scope of these permit applications, and the fact that it appears unlikely, as a pragmatic matter, that either applicant will be able to develop and file license applications for more than a small percentage of these sites during the preliminary permit term, commission staff is concerned that the Federal Power Act's goal of promoting competition in the comprehensive development of the nation's waterways would not be furthered by issuing to two applicants such a large number of permits covering such an expansive portion of a single river," Wright wrote.
"Therefore, the commission staff intends to decline to issue additional permits on this stretch of river, and instead allow potential developers to advance their projects through the commission's licensing process."
FERC noted Free Flow Power or its subsidiaries recently applied for permits at 105 sites on the Mississippi, in addition to 24 active permits they already hold on the Mississippi. Meanwhile, it said, Northland Power has applied for 40 permits on the reach, 28 competing with Free Flow applications, plus another 12 new sites.
It also seems to be SOP for FFP to file for permits without doing any community outreach, just as happened here. One such situation occurred in Ohio, where residents objected to the “secretive approach” that Julian Griggs Dam Water Power Project LLC (JGDWPP), a subsidiary of FFP, used to apply for a preliminary permit to study the feasibility of hydro at Griggs Dam.
According to a report on the Friends of the Scioto River website (hat tip to Ken Taylor):
Griggs Dam is owned by the City of Columbus, and operated by the Department of Public Utilities, Division of Water and Power. An inquiry sent to Maintenance Manager Larry Krall brought this response:
"Reply from my administration
'City is aware of this application and of other applications for this site and another City owned dam, and it is our understanding that there are several, mostly newly formed, companies mining state dam inventories and filing permit applications for any dam they think might be capable of supporting a hydroelectric facility. Although these companies can file for permits without the owner's knowledge or consent no facilities can be built without the owner's consent, and at this time the City has no plans to develop or allow the development of hydroelectric plants at any more of its dams.'
Which all seems to add more credence to the comment that FERC opponent Adam Asquith made when I interviewed him in May:
“Free Flow Power (FFP) has never done any hydro development. They came from a big bank, looking for an investment. They sailed their pirate ship to treasure island, where we have all these nice rivers and the highest utility rates in the nation, and ran into David Bissell, who said, ‘we were gonna do that. We’ll pay the ransom. Can we hire you to dig up the rest of the treasure?’
I’ll have more on some of my concerns about FFP and its contract with KIUC in other posts this week.