Record Hill looking for federal guarantee on its loan

ROXBURY — The developers of the Record Hill LLC wind project are looking to take advantage of a federal loan guarantee program that would make funding easier.

Former Gov. Angus King, one of the two principals in the project, said Monday afternoon that the U.S. Department of Energy loan guarantee program was expanded to renewable energy projects, such wind and solar, when the nation's banking difficulties began several years ago.

Although he declined to say the amount he and Rob Gardiner, the other principal in the project, are asking to be federally guaranteed, he did say that the company must have a “significant amount of equity and cash.”

The project has been announced as valued at $120 million, and would produce about 130 million kilowatts per year.

The 22-turbine project planned for the ridgeline that connects Partridge Peak, Record Hill and Flathead Mountain, was approved by the Maine Department of Environmental Protection in August 2009. Opponents of the project, Concerned Citizens of Roxbury, then appealed to the Board of Environmental Protection, which upheld the DEP approval.

Now, however, the Concerned Citizens of Roxbury and other appellants have taken the case to the Maine Supreme Judicial Court. King said he is hopeful that a decision will be made within a month.

The request for a federal loan guarantee requires an environmental assessment, as well as comments on the assessment by interested citizens,  Joseph Marhamati of the Department of Energy said.

He said the department is looking for any concerns or comments on the project.

The draft environmental assessment document is available on the Loan Programs Office, Environmental Compliance website at http://www.lgprogram.energy.gov/NEPA_EA.html or by calling Joe Marhamati at 202-586-8198. Comments may be submitted to Marhamati via e-mail at Jospeh.Marhamati@hq.doe.gov, or to him at U.S. Department of energy, 1000 Independence Ave. SW (LP-10), Washingtom, D.C. 20585.

All comments must be made by March 18.

The analysis of the environmental assessment and comments generally takes several months to complete, Marhamati said.

Preparatory work had begun in August 2009 and continued until winter. It has not restarted because of the court case and request for the federal loan guarantee.

If all goes as King expects, work would resume later this year.

eadams@sunjournal.com

What do you think of this story?

Login to post comments

In order to make comments, you must create a subscription.

In order to comment on SunJournal.com, you must hold a valid subscription allowing access to this website. You must use your real name and include the town in which you live in your SunJournal.com profile. To subscribe or link your existing subscription click here.

Login or create an account here.

Our policy prohibits comments that are:

  • Defamatory, abusive, obscene, racist, or otherwise hateful
  • Excessively foul and/or vulgar
  • Inappropriately sexual
  • Baseless personal attacks or otherwise threatening
  • Contain illegal material, or material that infringes on the rights of others
  • Commercial postings attempting to sell a product/item
If you violate this policy, your comment will be removed and your account may be banned from posting comments.

Advertisement

Comments

Brad Blake's picture

Let Wind Make it on its Own

I am tired, as a taxpayer, of seeing the wind lobby successfully pillage money from the government at a time of the National Debt reaching $14 Trillion. We can't continue throwing taxpayer money at projects that cannot compete honestly in the energy market. Banks weigh risk. They know expectations and projections for wind projects are inflated to make them look far better in proposal form than actual production, which is a miserable failure. The banks don't want to rely on a project paying for itself with an unpredictable, unreliable source like wind and limitations of the turbine technology.

So why should the US Taxpayer shell out 30% of the contruction cost as a free gift to King & Gardiner? Why should the US Taxpayer give King & Gardiner 2.1 cents per kilowatt hour Production Tax Credit? Why should US Taxpayers guarantee a loan so that after King & Gardiner have depreciated everything in 5 years, sold off all the Renewable Energy Certificates, pocketed Obama's construction gift, they can just walk away from the LLC and the US Taxpayers are left holding the bag?

This absurdity would be laughable except that it is real. The US Taxpayer and the citizens of Maine would be best served if King & Gardiner would just curb their lust for a quick hit off the taxpayers, at the expense of destroying the ridges around gorgeous Roxbury Pond, and go away. Far away. Never to be heard from again.

Penny Gray's picture

Does the taxpayer have to pay the insurance company, too?

I have a question regarding these industrial turbine installations on Maine's mountain tops. Are they required to have insurance? And if so, what happens when the insurance company pulls the rug out from under them after multiple lightning strikes, which happened in Germany recently. These Maine installations will be the first in the world being placed on mountain tops, predominately composed of granite, which means grounding them will be virtually impossible. Lightning strikes will cause all sorts of damage to the nacelles and blades unless they can be effectively grounded. In Germany, when the insurance company backed out, all the industrial turbines had to be removed. What's the story in Maine? Does anyone know how Kibby's insurance is set up with TransCanada?

Alice Barnett's picture

Now John Q. Taxpayer is stuck

Now John Q. Taxpayer is stuck working longer hours to repay K&G's bank loan. John Q. will also see a significant increase on his electricity bill and his local taxes will probably go up to pay for the removal of the rusting eyesores that now desecrate the mountains.

Local taxes go up as a result of 40% devaluation 2 miles around turbines and trying to work within TIF authorities.

The senery will never be the same. Even if I do not own the mountain tops I do love to look at them.

Dan McKay's picture

Now it is becoming more and

Now it is becoming more and more obvious how risky it is for any town to attach itself to this type of investment. The front end people, the investors, are steering clear of wind power. The back end of these projects are sending electric bills sky high, as is happening in Denmark and Spain. This doesn't seem to be a practical solution to righting an economy.

Steve Thurston's picture

Tip of the iceberg

This is very troubling on a number of counts. DEP rules require that evidence of financing must be demonstrated in the application. The evidence submitted, and relied upon by the DEP in granting the permit, has been shown by King and Gardiner's statements and actions to be apparently inaccurate. This is a serious matter, because by signing the DEP application the applicant swears that the information submitted is true.

Furthermore, the draft permit issued by the DEP contained a standard condition stating that evidence of financing must be demonstrated prior to the commencement of construction. When the final permit was issued 5 days later, someone had changed the word "construction" to "operation", meaning the project could be constructed without satisfying the clear requirements of the law.

This improper condition gave King and Gardiner the ability to begin construction in 2009, making them eligible for a 30% rebate on the entire cost of the project under the federal stimulus program, a no-strings attached gift to King and Gardiner from the US taxpayer that would be worth $40 million. When this conflict in the language of the permit was pointed out to DEP, no one admitted responsibility for this language change, other than an admission of a "drafting error".

There is nothing in the record to indicate who requested this change or why this change was agreed to. When the DEP was forced to admit that an improper condition was included in the permit, they asked King and Gardiner to submit evidence of financing. In response, King and Gardiner submitted a letter from a Chicago bank called Northern Trust, indicating that Bayroot, the majority partner in the Record Hill Wind project, had sufficient funds on deposit to build the project, but that the money was not committed to the project and could be withdrawn at any time.

When appellants challenged this letter, King and Gardiner agreed to shut down construction, and to provide additional evidence of financial capacity prior to resuming - which has not occurred .

With the news that King and Gardiner have now applied for a federal loan guarantee, it is clear that no committment to finance this project has ever existed. One of the conditions of the loan guarantee program is that without the guarantee the project could not be built.

Monique Aniel's picture

Now we need to secure their loans ?

So lets get this straight : first the Concerned Citizens of Roxbury spent thousand of dollars trying to prove that King and Gardiner do not meet the necessary requirements of financial capacity to the DEP , BEP and Law court and to the PUC who had to deliver a permit for the transmission Interconnect that King and Gardiner had to finance by law as well .

All those regulatory agencies are satisfied with King and Gardiner so called proof of financial capacity !( except for the Law Court whose decision we are still waiting for )

And now it is again the taxpayers who have to guarantee a project that is obviously impossible to finance privately !

First we fight to demonstrate they they do NOT have financial capacity, then we loose ,then obviously we were right and now they have the gumption to ask for our miserable tax dollars to secure their loans , for a project that is neither necessary , neither convenient , neither reliable and profoundly despised by many local residents ,

If having a conscience is what separates men from beasts , I will trust my dog Charlie more than the principals of Record Hill LLC and the members of the agencies who gave them their permit on the basis of acceptable financial capacity .
Misters King and Gardiner, stop your charade , bow gracefully or history will judge your very harshly .

monique Aniel
co chair of the Citizens Task Force on Wind Power

Alan Woods's picture

Title should read "TAXPAYER guarantee"

Let's see if I've got this right:

King & Gardiner want to build an industrial wind complex but don't have the money. They apply to a flock of banks for a construction loan but they all say that there's a good chance the project's income won't support the loan payments. In other words, the project is too risky for them so they deny the loan.

So King & Gardiner go to the government and ask them to guarantee the project loan. The feds agree that this will be a very risky loan but decide that John Q. Taxpayer can afford to take on the risk and they issue the loan guarantee. With the feds, excuse me, John Q. Taxpayer assuming all the risk, the bank then funds the loan and King & Gardiner excitedly build their industrial wind complex.

Before long it becomes obvious that the bank was right. (King & Gardiner act totally surprised... after all, who would think that banks would know anything about risk?) For one reason or another the project can't make its payments. Maybe one of the many taxpayer subsidies expires, maybe King & Gardiner aren't the brilliant scientists they thought they were, maybe the wind doesn't blow 100% of the time, maybe the market figures out how expensive wind is. Whatever the cause, the bottom line is that the project can't make its loan payments. What do King & Gardiner do? Do they reach into their own wallets to make the payments?

Don't be ridiculous! They didn't guarantee the loan, John Q. Taxpayer did! If it were you or me and this was a home loan, failing to make payments would scar to our credit rating and reputation for years to come. But not King & Gardiner. You see, they built their industrial wind complex using a Limited Liability Corporation (LLC). That means they can legally turn off the light, shut the door and walk away. No one can do anything to them.

Now John Q. Taxpayer is stuck working longer hours to repay K&G's bank loan. John Q. will also see a significant increase on his electricity bill and his local taxes will probably go up to pay for the removal of the rusting eyesores that now desecrate the mountains.

Meanwhile King & Gardiner will have made fat salaries by selling little slips of paper called 'renewable credits', assumed little if any risk, and jetted to a warm beach somewhere where they sip pina coladas while discussing how they helped make America "Green'.

Dan McKay's picture

FOLLOW THE MONEY!

AFS record hill looking for loan guarantee.whos making out on this .angus king and rob. gardiner?FOLLOW THE MONEY!

Dan McKay's picture

It Ain't Gonna Work, Mr. King

I just received information pertaining to a request for a loan guarantee for the developers undertaking a wind project in Roxbury, Maine. I live close to Roxbury and have many friends and acquaintances there.
May I point out a couple observations. First, the access roads to mountaintop turbines are extremely costly compared to low land development. Compared to sites across the nation, mountaintop sites are far more expensive and our mountains add even further costs as they are predominantly ledge and the overburden soil tends to collect and perch water. Because of steepness and redirection of surface water, the velocities of run-off frequently create erosion requiring almost continuing maintenance.
The mountains in the area support view sheds which have spurred homestead development. The richer folks love their mountainside homes for the views and the enticement of recreation. The poorer Maine folks love the remoteness and the rugged challenge of living beyond expensive town services.
What you may end up guaranteeing is the development of subdivision roads if the wind projects fail to pan out. As an assistant in developing sites for mountainside homesteads, the aspect of the 30% construction grant to wind developers by ITC gives them quite an advantage in staking out home sites beyond the wind mills.Unintended consequences, but a real possibility.
I would recommend forsaking this loan guarantee to Independence Wind as a better bang for the buck can be achieved with other projects elsewhere and it may turn out to be unfair to mountainside developers who can't get federal subsidies.
BTW, on the subject of reducing oil dependency, the transitional fuel of choice here in Maine is wood, which is of abundant quantity. Check out the recent biomass and bio-boilers being installed here, at schools, at hospitals,.at businesses and homes. Now that's a one to one replacement of oil.
Maine is not the right place for wind, too expensive and we have a better fuel source to replace oil.

Advertisement

Stay informed — Get the news delivered for free in your inbox.

I'm interested in ...