Gainesville Police Chief Tony Jones is currently looking into GRU’s efforts to turn GPD into a private force to arrest citizens if they set foot on GRU property to protest the coming GRU biomass rate hike. I have been told that in the coming week one way or the other there will be a resolution of the recent arrest threats issued by GPD officers, at the request of GRU officials, aimed at preventing three Gainesvillle senior citizens from setting foot on GRU downtown headquarters property to discuss the coming GRU biomass rate hikes with GRU customers.
While this drama plays out — will GPD support GRU’s commandeering of scare police resources to prevent Gainesville citizens from exercising their free speech and assembly rights or will GPD repudiate GRU’s improper attempts to use scarce city police resources in order to prevent the expression of views contrary to those of GRU officials who themselves use GRU’s downtown property to promote the GRU-GREC biomass deal? — it is useful to revisit, once again, the extended history of GRU and the Gainesville City Commission to keep information about the GRU-GREC biomass deal and the accompanying GRU electric rate hikes hidden from the public.
It has been more than 30 months since the Gainesville City Commission, in violation of the Florida Sunshine Law, on May 7, 2009 approved a largely secret more than $3 billion contract to require Gainesville area users to purchase over-priced electric power for three decades from an out of state limited liability corporation known as GREC, details of which contract were to be withheld from the public until nearly 2050, with the express support and approval of the city commission.
It has been more than eight months since attempted-to-be-kept secret provisions of the GRU-GREC contract were made public as a result of the settlement of three legal challenges by invididual Gainesville citizens who, though opposed by most city commissioners, agreed in the public interest to settle their legal challenges to the GREC biomass deal in return for, among other things, the unblackening of the 30-year GRU GREC contract.
It has been nearly seven months since I requested that the city commission — in light of the now revealed terms of the GRU-GREC contract, and in light of GRU’s rosy predictions having not come about — to authorize an independent evaluation of the GRU-GREC contract to determine whether the community’s best interests would be served to continuing with the GRU-GREC contract, or whether the community’s best interests would be better served by renegotiating or canceling the contract prior to GREC issuing it’s notice to proceed with construction, which was still weeks away from occuring.
It has been more than six months since GRU’s Assistant General Manager (and co-lead negotiator on the GRU-GREC deal) ordered professional engineer and Gainesville Energy Advisory Committee member Joe Wills to abandon his efforts to have GEAC perform its legally mandated duty to encourage and facilitate dialogue between the city commission and the public on energy policy matters such as the GRU-GREC biomass deal.
It has been more than five months since GREC issued its notice to proceed with construction, on the same day on which Gainesville City Commissioner Thomas Hawkins advised engineer and GEAC member Wills to further GRU official Stanton’s efforts to stop public dialogue about the GRU-GREC deal, adding his own advice that Wills should “politely” ignore members of the public whose views conflicted with those of GRU officials.
It has been more than five months since the Gainesville City Commission referred all discussion of the GRU-GREC rate impacts to the city’s Regional Utilities Committee, an act that Mayor Craig Lowe and allies on the commission interpret as prohibiting the city commissioners from engaging in any furhter public discussions of the GRU-GREC biomass deal, and its rate impacts, until the RUC completes its “deliberations.”
It has been two months since the RUC, headed by City Commissioner Susan Bottcher, began its “deliberations” — the first city commission sanctioned discussion of any aspect of the GRU-GREC deal in nearly two and a half years.
Which brings us to the present — sort of.
What happened at the RUC meeting?
Those who attended the meeting are aware that the vast majority of the citizens who attended the meeting — held at the very GRU building from which GRU officials would call out police to threaten senior citizens who wished to discuss the GRU-GREC biomass deal and its attendant rate hike — were adamantly opposed to the deal, demanding answers to questions the city commission had dodged for two and a half years. They are aslo aware that many of the quesions asked by citizens were not answered by the RUC meeting emcee, GRU General Manager Robert Hunzinger, who announced before answering quesitons that he intended to allocate about fifteen minutes to address those questions he deemed to be “pertinent.”
But those who were unable to attend the meeting — held at 4 p.m. in the afternoon on October 10 — likely know little or nothing of what transpired.
For two months I have been trying to ensure the vidoe of the meeting gets out to the public.
Below you will find a letter letters I wrote to Mayor Craig Lowe and the commission on November 16 — two days before I decided to run for District 1 of the Gainesville City Commission — weeking to ensure that the RUC meeting video is put on the website where members of the public can find it, and that GRU cease using ratepayer money to fund propganda designed to mislead the public.
Neither Mayor Lowe (nor any member of the City Commission except for Commissioner Todd Chase) has responded to this letter, nor even acknowledged having read it.
In addition to the November 16 letter, I also wrote three ealier letters to RUC Chair Susan Bottcher asking that she answer important questions that arose at the RUC meeting, which answers Gainesville citizens and GRU ratepayer deserve to have answered, particularly inasmuchas Commissioner Bottcher’s RUC has taken jurisdiction of all discussion of the GRU-GREC biomass deal, which, in the mind of Bottcher and most other city commissioners, has thereby immunized the city commisison from having to discuss the deal with the public until some unspecified time after the city commission elections.
I did receive a response to these letters from Ms. Bottcher — an email informing me that the only way she would address any of the questions raised would be in a private meeting with legal counsel present. I responded that the questions raised in my letters were questions of public interest and should be discussed in a public form, where the public could have access to the answers. It has been more than a month, and Commissioner Bottcher has not further responded to my questions. Commisisoner Chase, to his credit, attempted to discuss these questions in a public meeting of the commission, only to be told by the Mayor that because the RUC had assumed jurisdiction of biomass rate hike related information, his attempt to foster a discussion in a regular city commission meeting was “inappropriate.”
Here are the four letters. Read them and draw your own conclusions:
November 16, 2011
The Honorable Craig Lowe, Mayor
Members of the Gainesville City Commission
200 East University Avenue
Gainesville, FL 32601
Dear Mayor and Commissioners:
As you know, a community dialogue finally has begun after 2 ½ years of a commission-sanctioned wall of silence about previously secret financial details of the so-called GREC biomass deal. As this process plays out, it is important that the commission take a proactive stance in assuring that members of the public have access to accurate, easily accessible information relating to the most costly private contract ever approved by the commission.
An important step in the community dialogue process occurred when the city’s Regional Utility Committee held a public meeting at Gainesville Regional Utilities’ downtown headquarters on October 10, 2011. At that meeting GRU leaders provided their account of the GREC decision-making process, made many arguments, presented some asserted facts and answered some citizen questions.
RUC Chair Susan Bottcher is to be commended for her acquiescence to repeated citizen requests that she allow a video of the RUC meeting to be posted on the city’s website. But Commissioner Bottcher was also asked, weeks ago, to have the RUC meeting video made accessible to the public at the website location where most members of the public would expect to find it – i.e., next to the October 10, 2011 RUC meeting entry under the heading “video.” As of today – 44 days after the RUC meeting – the video link remains grayed out with the words “Not available.” Obviously, only by actually locating and viewing the RUC video are members of the public who did not attend the RUC meeting able to compare the assertions of GRU leaders at that meeting with facts about the GRU-GREC deal contained in documents now being made public.
By this letter, on my own behalf, I ask the city commission, as a body, to require that the October 10, 2011 RUC video immediately be linked to the city website location described above, where it is likely to actually be located and viewed by members of the public who wish to view it.
I also have another GRU-GREC-information related request to make, again, on my own behalf. Several Gainesville area citizens and GRU ratepayers have expressed to me their objection to the GRU public relations unit using GRU ratepayer funds to publish misleading propaganda in the GRU publication “the customer – answers & insights.” I share these concerns, and bring them to the commission as a GRU ratepayer, resident of Gainesville and District 1 voter, and, again, not as the representative of any person or group.
The latest, most egregious, instance of this misuse of ratepayer funds for propaganda purposes can be found in the latest issue, online at:
http://www.gru.com/Pdf/CustomerBulletin/November_2011_v26_n2.pdf
I ask you to consider two specific stories featured on page one of the November edition of “the customer – answers & insights,” and to consider my written responses to them.
GRU PROPAGANDA ITEM NUMBER ONE: “The site of the future Gainesville Renewable Energy Center (GREC) is beginning to take shape. Since beginning major construction on the biomass generating facility in June, construction crews have been busy excavating and laying foundations. ‘There are more than 200 workers on site now, and when construction peaks next year we expect to have around 900,’ said Josh Levine, development manager for GREC. ‘Based on an economic analysis of the project, we estimate construction will provide at least $55 million to the local economy through jobs and materials.’ GREC will be fueled by a sustainable, local supply of leftover clean wood waste. When GRU begins purchasing biomass energy in 2013, it will provide Gainesville with increased energy independence by becoming less reliant on fossil fuels imported from other states. In fact, GREC is expected to provide a $31-million boost to the regional economy annually from ongoing operations.”
RESPONSE TO PROPAGANDA ITEM NUMBER ONE: (1) As to GRU’s latest construction date claims, issued for the apparent purpose of leading GRU-ratepayers to believe that the project is a “done deal” – In an apparent attempt to discourage questions about what it would cost to get out of the GRU-GREC deal, GRU managers have repeatedly put forth misleading information about how far along the GREC project has advanced. GRU propagandists originally claimed GREC construction began in January 2011; next GRU propagandists claimed GREC construction began in March 2011; now GRU propagandists, in the November issue of the GRU “the customer” newsletter, claim that GREC construction began in June, 2011. GREC construction did not get underway in any real sense until after GREC on June 30, 2011 issued its so-called notice to proceed. GREC did not host a groundbreaking ceremony until October 11, 2011. Yet GRU’s unelected leaders – with the complicity of most of the elected members of the city commission – have issued misleading pronouncements while maintaining a wall of silence behind which GRU leaders refused to acknowledge, much less answer, important questions about GREC’s financial details until substantial construction funding expenditures began to be made, increasing the cost of getting out of the GRU-GREC deal. City Commissioner Todd Chase at the July 7, 2011 city commission meeting – a week after GREC finally filed its notice to proceed – finally had his standing request to have the matter or GREC-related rate impacts referred to the city’s Regional Utilities Committee approved by other city commissioners. RUC Chair Susan Bottcher, nevertheless, thereafter ignored public requests for the RUC to act expeditiously to take up the referral, waiting more than four months to have the RUC meet to discuss rate impacts, thereby assuring that construction expenditures had risen to the point that seeking to adjust or get out of the GRU-GREC deal could be claimed to be cost prohibitive – as GRU General Manager Hunzinger, in fact, did claim, when the RUC finally did hold a meeting to discuss rate impacts. (2) As to GRU’s claim of a $55 million GREC-related construction payment infusion of cash into the local economy – Assuming GREC’s economic analysis of the construction project is accurate, GRU’s claimed $55 million job-and-construction-material cash infusion into the local economy during the period 2011 through 2013 is a poor return on investment in relation to what GRU ratepayers will have to pay the out-of-state entrepreneurs who comprise the foreign limited-liability corporation known as GREC. First, $55 million in local construction-related cash infusion is an overstatement. Many of the GREC construction jobs are being performed by workers brought in from out of state, as became clear at the October 9, 2011 Gainesville Citizens CARE, Inc. Community Biomass Forum, where members of the audience included construction workers who had been brought in from Texas to begin GREC construction. Second, $55 million is only a small portion of what will be spent to construct the GREC facility. Gainesville Mayor Craig Lowe and City Commissioner Jeanna Mastrodicasa on December 7, 2010, perhaps inadvertently, revealed the previously secret cost of GREC construction when they told the Governor and Cabinet that timely site certification was necessary in order to ensure GREC would receive a $200 million federal taxpayer funded construction grant. Given that the federal ARRA grant GREC’s out-of-state investors expect to receive is 30 percent of allowable construction costs, the public now knows that, unless GREC intends to defraud the government, allowable construction costs on December 7, 2010 were believed by in-the-know city commissioners to be $667 million1 ($667 million1 = $200 million/.30). Thus the public can calculate that about 3/4 of the federal government subsidy check will NOT go to the local economy. And the public can calculate that of GREC’s as-of-December-2010 expected construction costs of $667 million1, the asserted $55 million going into the local economy amounts to barely 8 percent of the total being spent on construction ($55,0000,000/$667,000,0001 = 8.25 percent). Another way of stating this is that about 92 percent the as-of-December-2010 expected construction payout will not go to the local economy. Instead, about 92 percent of the cost of construction ultimately paid by GRU ratepayers ($612 million) will be paid to those who live outside of the area. (3) As to GRU’s claim of a GREC-related annual $31 million fuel-purchase-related boost to the regional economy – $31 million annually paid into the regional economy is a pittance in the context of the $3.2 billion minimum GREC expects to extract from GRU ratepayers over three decades (likely to be closer to $4 billion). A less than 1 percent annual return flow into the REGIONAL economy is a poor return on investment. [For the GAINESVILLE area economy it is an even poorer return. The forest studies relied on by GRU show that Alachua County has less than 1 percent of the timberland from which GREC intends to harvest and collect so-called forest residue and trimmings. Only a small percentage of the $31 million in GREC fuel payments will come to Alachua County providers. Most of the $31 million will flow to distant counties such Nassau County and Volusia County, much of whose forest land is owned by Rayonier Corporation, a multi-national real estate investment trust (REIT) with whom GREC has contracted to provide most of the forest residue and trimmings that will be burned in the GREC biomass facility.]
GRU PROPAGANDA ITEM NUMBER TWO: “Natural gas prices have fallen in the past few years, and thanks to an investment made nearly a decade ago, GRU is using this market shift to save money for customers. In 2001, GRU repowered a natural gas unit at the John R. Kelly Generating Station to increase its efficiency and take advantage of more environmentally friendly technology. This unit, known as Combined-cycle Unit 1, did not run as frequently at first because natural gas prices were high. Today, it is a key component to producing cost-effective, reliable energy for customers on a daily basis. GRU’s current fuel mix includes coal, natural gas, nuclear, solar and landfill gas, and biomass will be added in late 2013. Kelly Plant Production Manager Joe Shaw said this diverse portfolio allows the utility to respond to changing market conditions and pass savings along to customers. ‘There is only one natural gas pipeline that serves our part of the state. What we saw after Hurricane Katrina were enormous spikes in the cost of natural gas, probably four times what it is today,’ said Shaw. ‘Strategically, having multiple fuel types gives us the flexibility to adjust to price volatility and shield customers from huge fluctuations.’”
RESPONSE TO GRU PROPAGANDA ITEM NUMBER TWO: (1) As to GRU’s claim that it has used falling natural gas prices over the last few years “to save money for customers – GRU’s managers, in the face of sharply declining natural gas prices, have stated that GRU kept the cost of electricity per 1,000 kilowatts the same since 2008, touting this as an important accomplishment. During this same period – while GRU leaders have conceived and constructed a new $52 million operations center complete with employee gym, the cost of which has been factored into rate increases – GRU’s peer utility, Tallahassee City Utility, has used falling natural gas prices to cut the cost of electricity per 1,000 kilowatts by nearly one quarter. (2) As to GRU’s suggested that GRU hit a home run in the repowering of the Kelly Combined-Cycle Natural Gas Unit 1 – the 2001 repowering was a good idea, in theory, but poorly executed by GRU management. A primary reason that the repowered facility “did not run as frequently at first” was because much of the time it was either broken or malfunctioning.
I request that the matters contained in this letter be discussed during Commissioner Comment at tomorrow’s city commission meeting.
Does the Gainesville City Commission sanction this sort of misleading propaganda being promulgated at ratepayer expense? If not, will the city commission direct GRU’s unelected leaders to cease using ratepayer funds for propaganda purposes in the future, or else require GRU to provide ratepayers a forum to respond to GRU’s misleading assertions?
I am also attaching three letters containing several important RUC-meeting-related questions that I wrote to Commissioner Bottcher two weeks ago. These questions contained in these letters – written on my own behalf as a constituent, not as a representative of any person or group – she declined to answer because, she asserted, “you need to make an appointment with me (or any commissioner) if you wish to discuss GREC (or any city-related issue or business). This is so I can arrange for our legal counsel to attend said meeting(s).” I request that the questions contained in these letters be discussed during Commissioner Comment at tomorrow’s city commission meeting.
Sincerely,
RAY WASHINGTON
Encl: November 3, 2011 letters to Commissioner Susan Bottcher
Notes
1The $667 million GREC construction cost inadvertently revealed by Mayor Lowe and Commissioner Mastrodicasa on December 7, 2010 vastly understates what will actually be paid by GRU ratepayers to “lease” the GREC facility over a period of 30 years. The 30-year “lease” cost will total more than $1.3 billion, and does not include biomass fuel costs, operation and maintenance costs or property taxes, all of which must be paid by GRU ratepayers in addition to the more than $1.3 billion lease charge. [See the so-called “non-fuel energy charge” described in the GRU-GREC Purchased Power Agreement released to the public on April 6, 2011 –https://www.gru.com/Pdf/futurePower/GRECBiomassPPAUnredacted-withLetterandEquitableAdjustment-final.pdf, pages 80-85. As this document shows, the minimum “non-fuel” lease charge GRU will be obligated to pay to GREC will be $54.40 per megawatt hour, which minimum was increased by GRU sometime after June 30, 2011 without specific city commission approval. To date, GRU has not released any details of this “construction cost adjuster.”] The minimum lease charge can be calculated as follows: the per megawatt hour “non-fuel energy charge” of $54.40 is multiplied by 100 megawatts ($5,450 per hour), which is multiplied by 24 hours ($130,800 per day), which is multiplied by 365 days ($47,742,000 per year), which is multiplied by 30 years ($1,432,260,000 over the life of contract) which is reduced to the minimum capacity GREC is required to provide (90 percent, or $1,289,034,000 over the life of the contract), which figure is increased by the so-called construction cost adjuster, a minimum of 2.4 percent (establishing the a current lease charge of $1,319,970,816 over the life of the contract). If GREC for any reason fails to complete construction by December 31, 2013 the minimum total lease charge to be borne by GRU ratepayers will rise to $1,515,383,640. Pursuant to Section 3.2 of the PPA, lease charges can be increased at any time by GRU – without city commission approval – through a so-called “equitable adjustment” mechanism. Assuming the best-case scenario – a $1,319,970,816 lease charge, rather than a $1,515,383,640 lease charge – GRU’s asserted $55 million construction-related cash infusion into the local economy amounts to a 4.2 percent return on investment ($55,000,000/$1,319,970,816 = 4.2 percent).
November 3, 2011
Commissioner Susan Bottcher
Chair of the Gainesville Regional Utilities Committee
200 East University Avenue
Gainesville, FL 32601
RE: Misrepresentations about GRU’s predicted GRU-GREC-related ratepayer cost increases
Dear Commissioner Bottcher:
As you are aware – as a result of your attendance at, and participation in, the October 10, 2011 Regional Utilities Committee (hereinafter “RUC”) meeting – Gainesville Regional Utilities (hereinafter “GRU”) unelected leaders on that date made certain representations that the RUC accepted and apparently now intends to present in a report to the full city commission (and the public).
Among the representations made by GRU representatives at the October 10, 2011 RUC meeting was a claim that GRU on May 7, 2009 told the city commission that GRU’s position was that the GRU-GREC biomass deal in 2014 would likely result in a $10.56 per month payment increase (a $126.72 per year increase) of a 1000 kilowatt per month electricity user. This claim by GRU officials is false.
GRU’s actual representation to the commission on May 7, 2009 – documented in the video of the May 7, 2009 commission meeting, still available for review online on the city’s website – was that a $10.56 per month increase as a result of the GRU-GREC deal was unlikely. GRU leaders in fact stated that it was GRU staff’s opinion that the impact of the GRU-GREC biomass deal in 2014 would be a $3.88 per month increase (a $46.56 per year increase) for a 1000 kilowatt per month electricity user.
It is clear that GRU leaders on October 10, 2011 misled the RUC (and the public) by effectively claiming that what GRU leaders are now predicting to be the likely rate impact for a 1000 kilowatt per month ($10.56) is no different than what GRU leaders predicted on May 7, 2009 ($3.88).
Do you as Chair of the RUC intend to endorse these misrepresentations, or will you perform your fiduciary duty and make clear to the public that GRU has increased its estimate of the likely GRU-GREC biomass deal rate impact on a 1000 kilowatt per month electricity user by more than 172 percent?
Sincerely,
RAY WASHINGTON
November 3, 2011
Commissioner Susan Bottcher
Chair of the Gainesville Regional Utilities Committee
200 East University Avenue
Gainesville, FL 32601
RE: RUC truth-in-reporting on the GRU-GREC biomass deal
Dear Commissioner Bottcher:
As you are aware – as a result of your attendance at, and participation in, the October 10, 2011 Regional Utilities Committee (hereinafter “RUC”) meeting – Gainesville Regional Utilities (hereinafter “GRU”) unelected leaders on that date made certain representations that the RUC accepted and apparently now intends to present in a report to the full city commission (and the public).
Among the representations made by GRU representatives at the October 10, 2011 RUC meeting was a claim that the increased cost of electricity to a 1000-kilowatt-per-month GRU ratepayer in 2014 – the result of the GRU-GREC biomass deal – would be limited to $10.56 per month ($126.72 per year).
This representation, as you know, was based on the following suppositions:
• that GRU would be able to find a long-term buyer for 25 percent of the GRU-GREC plant’s power production that GRU leaders claim GRU customers will not need;
• that GRU would benefit from system wholesale power sales of unneeded power;
• that GRU would be able to secure a contract to sell unneeded power to a federal agency;
• that GRU would be able to establish (and the city commission would approve) GRU’s participation in an off-books “conduit” entity that would issue tax-free bonds in order to acquire some or all of GREC’s private debt, payment to which GRU will be obligated.
Do you as Chair of the RUC intend to report to the city commission that the RUC has fully examined these claims and can reasonably predict that each of these contingencies actually will occur – or will you perform your fiduciary duty and report that it is unknown whether these contingencies will occur, and further, that it is unknown whether, if these contingencies actually do occur, that they will have the claimed effect of preventing the already excessive GRU-GREC-biomass-plant-induced electric bill adjustments from accelerating more than the172-percent rise in GRU’s predictions of likely electric bill impacts between May 7, 2009 and October 10, 2011?
Sincerely,
RAY WASHINGTON
November 3, 2011
Commissioner Susan Bottcher
Chair of the Gainesville Regional Utilities Committee
200 East University Avenue
Gainesville, FL 32601
RE: Will the RUC recommend an independent examination of the GRU-GREC biomass deal?
Dear Commissioner Bottcher:
As you are aware – as a result of your attendance at, and participation in, the October 10, 2011 Regional Utilities Committee (hereinafter “RUC”) meeting – Gainesville Regional Utilities (hereinafter “GRU”) unelected leaders on that date made certain representations that the RUC accepted and apparently now intends to present in a report to the full city commission (and the public).
Among the representations made by GRU representatives at the October 10, 2011 RUC meeting was a recommendation that in order to pay for the excessive electric bill impacts expected to be visited upon GRU ratepayers as a result of the GRU-GREC biomass deal, GRU leaders will be seeking:
• a scaling back of GRU’s expansion into solar-generated electricity, by the mechanism of early termination of its Solar Feed in Tariff Program; and
• a scaling back (or “offset”) of GRU annual transfer to the City of Gainesville’s General Fund, which scale back will be made up with new property taxes.
Do you as Chair of the RUC intend to report to the city commission that the RUC endorses these extreme measures in order to pay for the irregularly negotiated and excessively expensive GRU-GREC biomass deal – or will you perform your fiduciary duty and instead recommend an independent examination of the GRU-GREC deal and demand that GRU leaders provide the city commission and the public information about the alternatives for altering the GRU-GREC contract, and the costs for buying out of it?
Sincerely,
RAY WASHINGTON