Friday, March 14, 2014

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 the Rolling 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 the GBIC, 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.



11 comments:

  1. There seems to be no "common sense" in Brownsville when it comes to use of funds, investments, and manipulating the public. Tony Martinez and his supporters (United Brownsville) have no respect for the public and for being poor. This is a good deal because the fiscal burden in the future will fall on the backs of the poor....most of Brownsville. Tony and his "budz" see this as progress by P.U.B., the Port, and Tenaska to increase the power output and expand the transportation corridor. A recent article points out that the route from Corpus to Hidalgo County is very strong commercially. It looks like Brownsville is about to be bypassed in favor of the Port of Corpus Christi. Business, Coca Cola Beach for spring break and even biker fest have shifted to Corpus Christi. The management here in Brownsville reminds me of the song "One step forward and two steps back." Or has been also said, Brownsville is swirling down the toilet.

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  2. Years ago there was a plan to establish a "wind farm" on BND property and other property along 511 near the Port. That "wind farm" would have cost P.U.B. nothing.....but the P.U.B. and BND under Eduardo Campriano "scuttled" the plan....probably because talks were already underway with Tenaska for the natural gas plant that will cost a lot of public money and see service costs increased for citizens. Already we have heard talk that Brusciak, the P.U.B. Ex. Dir. "might" be headed for a job with Tenaska. Then we hear rumors that Juliet's son might be P.U.B. Ex Dir or even city manager. All the players are part of United Brownsville and it seems to me that they are taking care of themselves and each other far more than acting as public servants. They are, as a group, like James Jones.....just passing out the cool aid to us local stupid and poor people.....who refuse to wake up and learn what is going on. While the logo for Brownsville should be a plastic bag hanging on a mesquite bush, the motto for the city should be "Ignorance is bliss."

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  3. This ass holes are millionaires themselves, it is out of vanity and ego, that they want to play with the very big leaguers like Tenaska at the cost of other peoples money (ours) they greediness and desperation for grandiosity will never let them accept all the stupid thing they are doing, as the pheasants of their kingdom we only can bend over and let them screw us as long as the want.

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  4. Great Article Mr. Barton.

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  5. Man what the funk call it Higher taxes stick it to the tax payer again.didnt we buy something a few years ago that promised lower rates what the duck happened to that ;people call your commissioner

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  6. Currently, with PUB the average charge per KWH is around 12 cents including the "fuel charge". In the Woodlands, Tx, you can pay as little as 6.6 cents, just about half of PUB. What the hell do you think the per capita income of the Woodlands is? Well, it is $45,000, Brownsville, $13,000!!!

    Why do you idiots let these people rob you blind over and over again? And, this is the CURRENT rate.

    And, most importantly, as mentioned above, the port of Corpus Christi will take all the business from Brownsville, just like the Pharr Bridge has taken just about ALL of the border truck traffic from Brownsville.

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  7. Seems that P.U.B. is managed a lot like UTB-TSC....the poorest pay the most seems to be a theme in activities run by Julieta and her budz. And, when Tenaska is joined into the equation, we will have even higher utility charges....compliments of the same people....our own good citizens. We are being raped by our own local officials....and they are getting rich at our expense. Tony Martinez, Julieta Garcia, Eduardo Campriano and United Brownsville have done more damage to this city than we can afford.

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  8. I apologize profusely for my oversight. You were off and running so much earlier than me that you had already turned the corner before I left the starting gate. Of all the stories, the Tenaska deal is the whopper. Led by the mayor, the usual subjects are up to no good. Tenaska is corruption like we've never seen before spearheaded by a mayor who operates in absolute secrecy and tolerates zero criticism.

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    1. No apology necessary. It's a way of resuscitating the article. If Fitch says its a bad business deal for more energy than Brownsville needs and projects dropping P.U.B.'s bond rating from A+ to negative, it doesn't say much about our mayor's interest in protecting city assets or business acumen. Certainly, there is more at work here. I look forward to your future disclosures and insights.

      Jim

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  9. I don't care what you say, I look good in my damn suit.

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  10. Check out this article about what a great deal Tenaska got in Brownsville:
    http://www.omaha.com/money/tenaska-clears-last-hurdle-on-million-texas-power-plant/article_0ffaa511-1012-52d9-ac1a-98f061bebba5.html

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