Bill Gates puts $50 million into Big Stone II
February 28th, 2007
Hot off the press, Bill Gates, a/k/a Cascade Investment, LLC, is digging in his pockets to the tune of $50 million to hand over to Otter Tail Power — for Big Stone II, I’d guess, what else would they want this kind of $$$ for? I’d say he’s in the running for “The Enabler of the Year” award.
Here’s straight from their February 23, 2007 SEC filing:
OTTER TAIL CORPORATION
3203 32nd AVENUE S.W.
FARGO, NORTH DAKOTA 58106-9156
$50,000,000 5.778% Senior Note due November 30, 2017
Dated as of
February 23, 2007
Cascade Investment L.L.C.
Ladies and Gentlemen:
     OTTER TAIL CORPORATION, a Minnesota corporation (the “Companyâ€), agrees with CASCADE INVESTMENT L.L.C., a Washington limited liability company (the “Purchaserâ€) as follows:
ARTICLE I
AUTHORIZATION OF NOTE
   Section 1.1 Authorization of Note. The Company will authorize the issue and sale of its 5.778% Senior Note due November 30, 2017 in the aggregate principal amount of $50,000,000 (the “Note,†such term to include any note or notes issued in substitution therefor pursuant to Article XIII of this Agreement). The Note sh all be substantially in the form set out in Exhibit 1 with such changes therefrom, if any, as may be approved by the Purchaser and the Company. Certain capitalized terms used in this Agreement are defined in Annex A; references to a “Schedule†or an “Exhibit†are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
     Section 1.2 Interest Rate; Adjustment to Interest Rate.
     (a) The Note shall bear interest at a rate of 5.778% per annum (the “Interest Rateâ€); provided, however, that if, after the date hereof but on or prior to the Closing, a rating assigned by either Moody’s or S&P to the long-term senior unsecured indebtedness of the Company is downgraded below “Baa3†or “BBB-,†respectively, then the Interest Rate will increase by 0.50% for each rating notch downgrade below “Baa3†by Moody’s, and 0.50% for each rating notch downgrade below “BBB-†by S&P. For illustration purposes only, if each of Moody’s and S&P downgrades its rating of the Company’s long-term senior unsecured indebtedness by one rating notch, the Interest Rate will be increased by 1.0%.
     (b) If, after a downgrade as described in the first sentence of Section 1.2(a) but on or prior to the Closing, a rating assigned by either Moody’s or S&P to the long-term senior unsecured indebtedness of the Company is upgraded, then the Interest Rate will decrease by 0.50% for each rating notch upgrade by each of Moody’s and S&P. For illustration purposes only, if, Moody’s and S&P each downgrade their respective ratings assigned to the Company’s long-term senior unsecured indebtednes s by one rating notch after the date hereof but on or prior to the Closing (resulting in a 1.0% increase in the Interest Rate pursuant to Section 1.2(a)), but then, on or prior to the Closing upgrade their respective ratings of such indebtedness by one rating notch each, the Interest Rate, as previously increased, will be decreased by 1.0%.
     (c) Notwithstanding the provisions of Sections 1.2(a) and (b), in no event shall the Interest Rate be (i) less than 5.778% or (ii) adjusted following the Closing.
     Section 1.3 Subsidiary Guarantors. The payment by the Company of all amounts due with respect to the Note and the performance by the Company of its obligations under this Agreement described in Article II below will be unconditionally guaranteed by all Subsidiaries designated on Schedule 5.4 as Guarantors (the “Subsidiary Guarantorsâ€) under the Guaranty Agreement dated as of December 3, 2007 (the “Guaranty Agreementâ€) from such Subsidiary Guarantors, which Guaranty Agreement shall be in the form attached hereto as Exhibit 2.
=================
… blah blah blah… Are there enough lumps of cheap, plentiful and available coal for Mr. Gates this coming Xmas???  Whatever is he thinking.
TXU deal goes down — at what price?
February 25th, 2007
Per CNN: TXU buyout may scrap new coal plantsÂ
NRDC’s Hawkins and ED’s Krupp have done a deal with TXU, the Texas mega utility that wants to build 11 stinkin’ coal plants across Texas. TXU’s in the middle of a buy-out/sell-out , and I’d like to see the actual agreement on this deal, the deal, the WHOLE deal, and nothing but the deal. What does this mean to those working against the plants not “dropped” and remember this only includes TXU, and that NRG proposed IGCC plant is not part of this. Why is my stomach turning?
————————–
NEW YORK TIMES
February 25, 2007
In Big Buyout, Utility to Limit New Coal Plants
By FELICITY BARRINGER and ANDREW ROSS SORKIN
Under a proposed $45 billion buyout by a team of private equity firms, the TXU Corporation, a Texas utility that has long been the bane of environmental groups, will abandon plans to build 8 of 11 coal plants and commit to a broad menu of environmental measures, according to people involved in the negotiations.
The roster of commitments came through an unusual process in which the equity firms asked two prominent environmental groups what measures could be taken to win their support. The result is an about-face from the company’s earlier approach to climate-change issues, and includes a goal of returning the carbon-dioxide emissions by TXU to 1990 levels by 2020.
Environmental groups said yesterday that they had never known of a financial deal with such an ambitious built-in environmental component.
Two private equity firms, Kohlberg Kravis Roberts & Company and the Texas Pacific Group, have proposed to buy TXU in what would become the largest leveraged buyout ever.
The transaction will be put to the TXU board for a vote on Sunday.
People involved in the negotiations said that Goldman Sachs, an adviser and lender to the buyers, helped broker peace with environmental groups and sought their support for the transaction. Goldman Sachs has been one of the most aggressive firms on Wall Street about taking action on climate change; the company sends its bankers home at night in hybrid limousines.
For the investor groups, the effort was as much about making a sound business decision to ensure the deal’s completion as it was about any environmental concerns.
By bringing the environmental groups into the process, the buyers may have helped avert years of costly litigation over emissions from their plants. But they may also have raised new questions about how they will meet the energy needs that TXU intended to address by building all 11 plants; the company is said to be examining ways to expand in cleaner forms of energy. None of the parties interviewed was able to provide details.
Environmentalists said they hoped that the TXU deal would represent a turning point in the attitude of energy businesses as they adjust to what many anticipate will be a new regulatory and public-relations landscape in an era of climate change.
“We have history’s largest purchase of a power company, with the new owners wanting to move the company in a direction that is consistent with a world that takes global warming seriously,†said David Hawkins of the Natural Resources Defense Council, one of the two environmental groups invited to the negotiations. That group, and the other participant, Environmental Defense, which often use the courts to confront businesses, are persistent critics of TXU.
The commitments come at a time of uncertainty for utilities that are considering building coal-fired plants. They do not know if such plants will be grandfathered by Congress and excluded from future restrictions on carbon-dioxide emissions, or whether anything they build now will have to operate in a starkly different regulatory environment.
TXU will discard plans to build eight of 11 proposed new coal plants, which would have been major new sources of emissions. Those plants — which would have added more than 9,000 megawatts of new capacity, the equivalent of 3.5 percent of the nation’s current coal-fired power — had been part of a planned $10 billion expansion of coal-fired electricity.
TXU, which is based in Dallas, also intends to expand the renewable energy portion of its portfolio and reduce or offset its emissions significantly, said people who were familiar with the plans.
Less than a week ago, according to Fred Krupp, the president of Environmental Defense, the two environmental groups were approached by representatives of the private-equity buyers. He said he received a call from William K. Reilly, the former Environmental Protection Agency administrator, who is advising the Texas Pacific Group.
Mr. Hawkins, who runs the climate-change program for the Natural Resources Defense Council, said that the investment team was essentially asking “what would it take†to gain environmentalists’ support.
James D. Marston, who runs the Texas energy program for Environmental Defense, yesterday called TXU’s plans “a turning point in the fight against global warming.â€
Mr. Marston had led an intense advertising campaign painting TXU as an environmental outlaw pursuing a strategy that would hurt the climate and perhaps its own bottom line, if federal policy changed and companies were charged for the carbon dioxide they emitted.
But people familiar with the investors’ thinking took pains to say that the investors brought the measures to the environmental groups, and were not acting out of any fear of the groups’ potential to wage a legal and public-relations campaign against them.
Matthew L. Wald contributed reporting.
At least 11,500MW mothballed in Texas
February 24th, 2007
Speaking of mothballed fleets… Now we all know that Texas wants to build a gazillion or two megawatts of new coal plants. It’s bad enough that they propose coal plants, and now NRG jumps into the fray and proposes a coal gasification (IGCC) plant. I’ve been talking and emailing with a bunch of people down there of all power plant persuasions, because why aren’t they doing wind and gas combo like we’ve started here? Or wind and concentrated solar given the solar and land resource. In the midst of this, it occurred to me that I’d better take a look at the NERC report and see what they had to say about ERCOT, the Texas region. Well I did, and land sakes, OH MY DOG, so should you!!!
The juicy bit, from p. 15:
However, approximately 7,000 MW of existing mothballed generating capacity is not included as vailable capacity that could potentially be brought back into service in a short time frame.
Did y’all know that five or so years ago they shut down more than a dozen gas-fired plants? NERC reports that now, there are 7,500MW mothballed in ERCOT! And we know NERC is very conservative. AEP shut down a bunch, it’s hard to get a handle on it , one articles says they shut down 1,628 and are looking at another 2,253MW. CenterPoint shut down 3,400MW. TXU shut down 3,612 at least. In 2006, a PSC Commissioner reported that 11,500MW (link GONE, grrrr) was mothballed:
11,500 MW of inefficient, high-heat-rate units retired or mothballed. 1,100 MW of mothballed units have been returned to service for summer 2006.
Suffice it to say, there’s a lot of gas plants sitting around, and I’ll bet Mr. Gas Turbine World has a bunch of turbines to get those plants humming.
Can someone explain to me why anyone would recommend all these new $2 billion coal plants when there’s all this wind already in Texas that could be built around these mothballed plants and use them for back up to the wind? Just LOOK at all the wind:
Or better yet, think about all the open spaces, no trees, and cover it with PV or concentrated solar:
Coal? Whatever are they thinking? Tens of thousands of megawatts of coal?
Next — well, it could take a while, but I want to see a map of where those mothballed plants are compared to the new coal plants and considering “need” if they even bother to claim need. Something tells me we’re being hoodwinked.
Delaware nixes NRG’s IGCC
February 22nd, 2007
EEEEEE-HA!!!! It’s not over, but I’d guess the fat lady is about to sing!
Dig this! Yesterday, Delmarva, the utility, released its report, a thorough well done analysis, similar to that of MN Dept. of Commerce. Today, the state’s independent consultant released another analysis, along the same lines. These reports compare and evaluate the three bids, wind, natural gas, and NRG’s IGCC:
I’ll pull out some choice quotes — but there’s a lot going on so don’t hold your breath…
Where’s our Excelsior Mesaba Project ALJ recommendation?
February 22nd, 2007
I guess the rules only apply to some, the schedule only applies to some… The Excelsior Mesaba Project PPA ALJ Recommendation to the PUC was due yesterday. Word comes from a lobbyist, and separately from a non-party, that the ALJs’ recommendation is delayed. I had inquired at OAH because I hadn’t received it. No response… I called back and asked about the comments of others I’d heard that the Recommendation was coming out late and got confirmation. WHY AREN’T THE PARTIES NOTIFIED? Finally, at 9:45 a.m., the day after the Recommendation was due:
Dear Parties:
The Administrative Law Judges hope to issue the report in this matter late next week. Thank you for your patience.
Sincerely,
Maria Lindstrom
Staff Attorney
Office of Administrative Hearings
612-349-2527
Patience? Uh-huh… As a party whose name I can’t recall often says, “I feel like I’m at the Mad Hatter’s tea party.” I guess I’ll just sit here and collect and disseminate information from elsewhere in the country about IGCC as it goes down in flames. Today it’s Delaware!