It is disappointing, but not unexpected that Mayor Tony Martinez and the Public Utilities Board have not responded to Public Information Requests by the former mayor. Martinez' modus operandi is to make deals behind closed doors, never informing the taxpayers or rate payers.
We recall how the undemocratic, dishonest mayor purchased $3.5 million in downtown buildings and has never offered a single word in explanation to the taxpayers.
The Tenaska Power Plant deal was brokered in a similar shady way, with ratepayers now on the hook for millions of dollars in rate increases for a plant that will not be built.
The Tenaska Power Plant Back Door Deal by Tony Martinez and Cronies Looks BAD, BAD, BAD!
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From the Editor: We've been asked to pursue more closely details related to the Tenaska Generating Station, the 800 MW plant Brownsville is purchasing a quarter interest or 200 MW for approximately $340,000,000.
First of all: Is $340,000,000 for 200 megawatts of power a good price? Not according to charts on what a typical natural gas powered plant should cost. While Brownsville's cost averages out to $1.7 million per megawatt, the national average is $917,000 per megawatt. That would be the equivalent of paying $6.09 per gallon for gas when H.E.B. has it for $3.29 per gallon. That's the deal Tony Martinez and his cronies are cooking up for you.(They are likely other hidden costs that will drive our actual cost even higher.)
Does Brownsville need that much power? Not according to Fitch, a highly respected bond rating company. Fitch sees Brownsville's power needs at 459 MW. (Incidentally, Fitch sees this as a very bad financial deal, lowering P.U.B.'s bond rating from A+ to Poor on the basis of this deal going through.) Keep in mind that Brownsville already has an interest in two other power plants, Edinburg and Okla-Union.
One thing to remember is that these power plants have a finite shelf life, likely not over 30 years.
We are preparing a detailed Public Information Request for the City of Brownsville. I will post the actual request on the blog.
Below is one of our earlier articles on the Tenaska deal.
If It is Such A Good Deal, Why Is the Tenaska Brownsville Generating Station Funded by Ratepayers?
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| Tenaska 885 MW Power Plant, Fluvanna County, VA |
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."
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.
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.
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ReplyDeleteFirst of all the city of Brownsville is a none profit entity and should never get into speculation in real estate or energy. The free market somehow takes care of the demand and does not need the city speculating. Second of all, the economic life of a power plant is 30 years, Magic Valley cost per megawatt was $893,00 to build and Brownsville already has enough electrical generation to meet customers demands and has other options besides going into a joint venture with a company that has a different mission than a none profit entity like the city. To add another 200 megawatts is an over kill for generation we cannot use based on the current and projected growth. The LNG and Space X projects are still speculation, just as was the Tenaska project, which I said from the onset was not feasible, just based on cost and market demand. We, the city needs to focus on operating PUB efficiently, which it is not and need to be able to offer lower rates than Magic Valley and other utility providers, otherwise we have failed the citizens of Brownsville who own the utility company and have the right to expect lower rates as a none profit entity. If Magic Valley can provide lower rates, how can we honestly force our citizens to pay higher rates. We lowered them while I was mayor and they were much higher than Magic Valley. We also reduced the late fee from 10% to 6% to help the poor. Tenaska was a project rammed down our throats by the mayor and Eddie Trevino. Now that the project is declared as not feasible, the rate increases should be rescinded or rolled back immediately. I urge people to write the AG demanding disclosure on the Tenaska project, perhaps then citizens will care enough to get out and vote, but hopefully we get some good candidates to run that want to serve. As it is, I feel this entire commission has failed our city.
ReplyDeleteThank you for educating us Pat Ahumada.
ReplyDeleteJIM, keep it going, important to keep it as front page news.
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