December 25, 2010

Plan B

From Watts Up With That:
T. Boone Pickens Abandons U.S. wind power
From Slashdot:
In 2008, billionaire T. Boone Pickens unveiled his �Pickens Plan� on national TV, which calls for America to end its dependence on foreign oil by increasing use of wind power and natural gas. Over the next two years, he spent $80 million on TV commercials and $2 billion on General Electric wind turbines.

Unfortunately market forces were not favorable to Mr. Pickens, and in December 2010 he announced that he is getting out of the wind power business. What does he plan to do with his $2 billion worth of idle wind turbines? He is trying to sell them to Canada, because of Canadian law that mandates consumers to buy more renewable electricity regardless of cost.
And it turns out that there was an ulterior motive. From The Washington Examiner of August 21, 2008:
T.Boone Pickens wants your water
Texas oil billionaire T. Boone Pickens is about to make a killing by selling water he doesn�t own. As he does it, it will be praised as a planet-friendly wind project. After he pulls it off, the media will deride it as craven capitalism. In truth, it is one the most audacious examples of politics for profit, showing how big government helps the biggest business steal from the rest of us. The plotline behind Pickens� water-and-wind scheme is almost too rich to believe. If it were a movie script, reviewers would dismiss it as over-the-top.

The basic story amounts to this: Pickens, thanks to favors from state lawmakers whose campaigns he funded, has created a new government whose only voters are two of his employers; this has empowered Pickens to more cheaply pump water from an aquifer and, by use of eminent domain, seize land across 11 counties in order to pipe the water to Dallas. To win environmentalist approval of this hardly �sustainable� practice, he has piggybacked this water project onto a windmill project pitched as an alternative to oil.

Pickens� scheme is a perfect demonstration of why it�s worth asking cui bono � who benefits � from regulatory and environmental initiatives. Last week, this column pointed out that Pickens, before his current lobbying blitz for increased federal support of wind power, built the largest wind farm in the world.
Location, location, location:
Roberts County, Texas, sits atop the Ogallala Aquifer, a huge underground reservoir that stretches all the way to South Dakota. It�s in Roberts County that T. Boone Pickens set aside eight acres from his ranch for drilling deep into the aquifer.

Then he turned this parcel into a town, basically, with only two eligible voters � both of whom were his employees. (This required a change in Texas law in 2007 � a change facilitated no doubt by his $1.2 million in campaign contributions to Texas legislators in 2006).

Then there was an election in this district, in which both voters voted to make this 8-acre municipality a special fresh-water district.

Pickens� wholly owned government entity now can issue tax-free bonds (meaning he can borrow at a serious discount) and use the power of eminent domain to pressure landowners to sell � or to take their land if they hold out. The eminent domain power is key to building the pipeline that will run this water down to the Dallas area, where Pickens hopes to sell the water. If your land lies in the path of his proposed pipeline, you got a letter explaining that T. Boone wants to buy a stretch of your land � and explaining that he can use eminent domain if you resist. If this begins to sound too cutthroat to the public, Pickens just reminds journalists and politicians that following this water pipeline will be the transmission cables for Pickens� mammoth wind farm.
So he installs the wind turbines with federal subsidy (our tax dollars), gets the right of way to run the towers to bring the minimal energy to Dallas and then runs water lines under the towers. The water was his main profit. The guy is not stupid and none of this is really illegal, more in the "I drink your milkshake" category. Good that it comes out now rather than after the infrastructure has been put in place and the land has been taken. Posted by DaveH at December 25, 2010 11:36 AM
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