Chastised by Jerry Mchale for Not Covering the Tenaska Scam, We Repost Our Recent Story

From the editor:  Celebrated blogger Jerry Mchale, the editor of the Brownsville Blues blog, an amalgamation of breaking stories, political commentary, autobiography and erotica, recently couched gentle criticism of this blog, for not covering the P.U.B./City of Brownsville/Tenaska deal, a huge financial albatross that will hang around the necks of Brownsville taxpayers and their children for the next two decades. Mchale used the format of a fictional town hall forum, during which "Citizen #4" laments the lack of coverage of the Tenaska scam by three bloggers and the Brownsville Herald.  

We agree with Mchale and others that this deal has been orchestrated by a mayor with no interest in protecting the assets of the City of Brownsville, its ratepayers and taxpayers, but most likely a common profiteer, like so many of our region's politicos and players.  

To refresh Jerry's recollection and to coincide with his breaking stories on the Tenaska scam, we reprint our recent article, prefaced by a paragraph cut and pasted from the Brownsville Blues:

Citizen #4: Why are El Rrun Rrun's Juan Montoya, Mean Mister

Brownsville Blues editor,
Jerry Mchale

Brownsville's Jim Barton and Brownsville Voice's Bobby Wightmen-Cervantes following the Brownsville Herald's lead and allowing Martinez to consummate this pact without a word of protest? Why is Barton wasting his breath on Martinez raised parking rates from 25 cents to 75 cents while the mayor is selling PUB down the Mississippi?

If It is Such A Good Deal, Why Is the Tenaska Brownsville Generating Station Funded by Ratepayers?

Tenaska 885 MW Power Plant, Fluvanna County, VA

Tenaska is legit, operating,  along with its affiliates, 14 power companies producing 11,000 MW of power.  Tenaska Capital Management controls $3.8 billion in assets.  The company is capable of arranging for funding, as it did for its Imperial Valley, CA Solar Plant, funded by nine banks, including the Bank of Tokyo-Mitsubishi, UFJ, Ltd.  In August 2008, Tenaska simply paid $368 million in cash for theRolling Hills Power Generation Facility in Wilkesville, Ohio.

Although well-connected politically, not all communities buy Tenaska's sales pitch.  Tenaska fought for five years to build the Taylorville Energy Center in Illinois, telling locals that their energy needs were underserved and needed Tenaska's coal-burning operation.  When opposition mounted, Tenaska changed their plans to a natural gas-powered plant, but that proposal didn't sell either.

On January 28, 2013, Brownsville's Public Utilities Board signed an agreement with Tenaska for the construction of an 800 MW, gas-powered power plant to be built on 270 acres along the so-called industrial corridor near FM 511.  This is the same industrial corridor the Greater Brownsville Incentives Corporation agreed to pay McCaffrey & Associates $454,000 for a development plan. Payment for the plan was split between theGBIC, Port of Brownsville and P.U.B.  In December 2013 United Brownsville sponsored a BiNed 2014 Conference at UTB's Gran Salon where UB operatives networked with officials from Matamoros, Harlingen and the port.  

The signed agreement between Tenaska and BPUB calls for PUB to control one fourth of the power produced, 200 MW, at a cost of $327 million, financed by city-issued revenue bonds.  Those bonds will be repayed over 20 years by the ratepayers paying increased rates for electricity.  Of course, the power plant still has another 600 MW of power to sell to surrounding communities.  The City of Brownsville will be responsible for piping the natural gas into the plant.  

How does the deal sound so far?  According to Brownsville Herald reporter Steve Clark,Fitch, a highly respected bond rating company, is not impressed.  Clark reported in a March 11, 2014 article that Fitch's bond rating for P.U.B., now an A+, would likely plummet to "negative," based on projected impact of the Tenaska deal:
"In its report, Fitch said it “recognizes BPUB’s proactive strategy to ensure an adequate power supply to meet projected (electricity) load growth,” though the power plant project would boost total available power resources to “well in excess of projected total requirements,” or 459 megawatts.

BPUB’s planned purchase of the 25 percent ownership interest in the plant, if the deal goes through, would more than double current leverage (how much the utility is borrowing) and as a result “diminish future financial metrics according to the board’s latest financial projects,” Fitch reported.

The ratings firm said BPUB’s pending decision to buy 25 percent ownership in the proposed power plant would add an estimated $362 million to the overall size of the utility’s multi-year capital improvement program, which in 2012 had been estimated at a little under $200 million a year.

Fitch noted that the additional capital expense would be funded entirely with long-term debt, which the agency believes would weaken BPUB’s financial situation enough to lower its bond rating."

IBC Bank President &
United Brownsville
Tri-Chair Fred Rusteberg

It's downright scary when a neutral, well-respected entity like Fitch declares a deal unsound, even predicting "rate fatigue," a fancy phrase for the country's most impoverished city not being able to keep up with skyrocketing utility rates.  Fitch is also strongly suggesting that Brownsville doesn't need this much power or this much debt.  Those are common sense conclusions that Mayor Martinez and the rest of the P.U.B. Board will simply ignore.

Whether dealing with SpaceX or Tenaska, Brownsville's civic leaders have not shown themselves to be good negotiators with desperation replacing sound judgement.  Who pays for their miscalculations?  Brownsville's hardworking, but generally  impoverished, ratepayers and taxpayers.  

Carlos Marin, Ambiotec
Engineering & United Brownsville

As for the United Brownsville operatives, higher utility rates for the public or wasted tax dollars are not a concern as long as they can cash in on the lucrative development of the industrial corridor.