Healy Clean Coal: Rewarding cheats and con men
After twenty years of screwing both the State of Alaska and the US Department of Energy over a clean coal plant that they wanted built in the first place, it looks as if the Palin administration is on the verge of allowing Golden Valley Electric Association to screw the state one more time.
According to sources, the Palin administration is reportedly close to a deal that would have AIDEA, the state's economic development arm, basically give away the $300 million clean coal plant completed in 1999 to GVEA, the very same utility which backed out of paying for the plant and cheated the state out of tens of millions.
Over the last eighteen years, GVEA has used one excuse after another in refusing to accept responsibility and management for a plant that they were hoping to get for free at taxpayers expense. Instead, over the last ten years the plant has been sitting idle, with GVEA putting up roadblocks in front of AIDEA's attempts to utilize the asset.
Finally in November of 2005, the Murkowski administration had enough of GVEA's stalling tactics and filed legal action.
But then along comes Palin and after stacking the board with her cronies, is now proposing to let GVEA be rewarded after screwing the state for the last twenty years, for her own political gain.
Funny, if GVEA were Exxon, something tells me this wouldn't be happening.
Whats worse is when you look at the cast of characters involved in this giveaway of a state asset, you can't help but be alarmed.
Since Governor Palin has come into office she has replaced the head of AIDEA with a fellow Wasilla crony and planted her resident babysitter and former administrative problem child, Ivy Frye, at AIDEA. Inside sources confirm she seldom attends work, preferring to hang out in the Governor’s suite.
But the biggest red flags are those who have something to gain with the GVEA giveaway.
In March, Palin appointed Steve Haagenson as the head of the Alaska Energy Authority and as the State Energy Czar.
So what was Haagenson's prior job?
He was CEO of Golden Valley Electric Association (GVEA).
In his brief stint as State Energy Czar, lawmakers have complained that he has totally botched the renewable energy grant program and has so far failed to deliver the statewide energy plan on December 17 as he promised a week earlier while speaking to the Anchorage Chamber of Commerce.
Sources say the delay in releasing the energy plan was due to criticism about the plan Haagenson described to Chamber members on December 8, wasn't a plan at all, it was simply a menu of options. The delay was necessary in order for AIDEA to rush this giveaway of the coal plant through to try and add substance to a weak energy plan and to provide cheerleading material for Palin's state of the state speech.
Multiple sources confirm that Department of Revenue Commissioner Pat Galvin, who is an AIDEA Board member, and Fairbanks Representative Mike Kelly have engineered a sweetheart deal giving away the HCCP to GVEA.
According to my sources, Kelly has long promised to right this situation and resolve the issue in favor of GVEA.
So what was Kelly's former job before he landed in the legislature?
Like Haagenson, Kelly is a former CEO of Golden Valley Electric Association (GVEA).
HCCP was built by AIDEA for GVEA in a deal when Kelly was CEO of GVEA. The HCCP cost AIDEA $300 million to construct and after years of GVEA refusing to accept the plant or pay for it, it has been written down on the AIDEA books in 2002 to some calculation around $180 million. In the 2005 lawsuit filed under the Murkowski administration, the state was suing GVEA for $167 million in damages.
So because Kelly was CEO during the time the coal plant was being built for GVEA, he has had this albatross hanging around his neck for the last decade. It has long been rumored that Kelly and the GVEA Board are still working to save face over a deal gone wrong years ago with the state now picking up the tab.
Galvin and Kelly’s deal basically gives HCCP to GVEA. Cost will be $50 million, with 100% long term financing at 5% interest by AIDEA. AIDEA immediately pays $45 million in “restart” costs. That means the state nets out $5 million while GVEA gets a plant that will provide a profitable long term revenue stream.
Documents obtained by a legislator explicitly confirm reports from an outside source that Galvin and Kelly have told the GVEA board and management that the deal must be done “before Mike Chenault takes over as Speaker of the House," on January 19,2009.
Why the rush to get this deal done so fast?
One reason is that Chenault represents the Kenai Peninsula where Homer Electric Association already has an offer on the table of $85 million to purchase the plant from AIDEA.
Sources outside the legislature have alleged that Rep/ Kelly used his position as Budget Subcommittee Chairman for DCCED with administrative authority over AIDEA to obtain confidential information about the HEC offer that he took to an executive session of the GVEA Board.
There are rumors that Kelly counseled GVEA Board against negotiating or agreeing to any HCCP settlement plan until he derailed the HEC proposal and put the fix in with the administration who would do his bidding.
The second reason for urgency is the administration wants a deal closed by the State of the State which is scheduled to be given by Governor Palin on January 20.
This will give her something to offer as an accomplishment since her administration has done very little in the last twelve months.
AGIA, ethics reform, increasing oil taxes...she claimed credit for all of those during last years state of the state. In fact one source told me yesterday that in this year's accomplishments sent out to employees, the administration listed the Santa visits to rural Alaska as an accomplishment.
Then there is our dear friend Tom Irwin, who was fomerly a public relations executive at GVEA after he dropped out of the Murkowski administration.
So that makes three Fairbanks neighbors and former GVEA executives that quite possibly have a hand in handing over a $300 million state asset to their former employer for a reported $50 million, minus the start up costs.
But wait, according to my sources there is more. The HCCP will be transferred to a new entity controlled by GVEA, but GVEA will not provide any guarantee of the $50 million debt. How’s that for bankruptcy protection and leaving the creditor totally exposed?
From what I understand the deal is done and AIDEA is only waiting for its next board meeting to approve the giveaway of the Heally Clean Coal Plant.
According to the AIDEA website, their next board meeting is January 15, 2009.
To read the AIDEA press release from 2005 regarding the filing of a law suit against GVEA as well as a detailed time line of the Healy Clean Coal Plant history, click on link: