Malone Town Planning Board recommends...read more below

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Malone Planning Board urges ban on industrial wind turbines...

... this evening, in four minutes flat, the Malone (New York) Planning Board unanimously recommended that the Town of Malone, NY, ban industrial wind turbines within the township.  The town has a draft ordinance in the works that does precisely this, and with this evening's unanimous decision the Town of Malone has taken a large, decisive step in the direction of keeping our town from being turned into a wind turbine wasteland. 
 
I say the Planning Board took all of four minutes to reach this decision, whereas in reality it took 14 months & 4 minutes.  In the past year, the Planning Board read through voluminous evidence, listened to hours of testimony, visited wind industrial sites, took pictures, interviewed people, watched videotapes -- in short, did a ton of homework.  Once the evidence was assembled and digested, all it took was ... four minutes to peg industrial wind as an economic and cultural non-starter in our community. 
 
May other municipalities around the world follow the example of Malone.  We're not out of the woods yet in Malone, but we're mighty close.  We have high hopes that our neighboring towns of Brandon and Burke will do the same, along with Chateaugay and Constable. 
 
Much of the credit for this goes to an intelligent and informed Planning Board, an intelligent and informed Town Board, and:
  • We Oppose Windfarms (especially its chairperson, Anne Britton, along with Bill & Liz Clifford, Dinah Miller, Judy Baker, and many others),
  • RAW (Residents Against the Windfarm) Deal (especially its chairperson, Rich Douglass, together with John Hill, Mary Renkon, along with many others), and
  • North Country Advocates (with people like Gerry Duffy, Wayne Miller, Mary Armstrong, Kaye Johnson, Nina Pierpont, Bill McCabe, Heidi Miletich, Beth Mosher, John Chodat, and a host of others). 
Our thanks, too, to Attorney Daniel Spitzer for giving us an ordinance that bans industrial turbines. 
 
Calvin
Calvin Luther Martin
Malone, New York

Wind Energy’s Colossal Profits at the Taxpayer’s Colossal Expense

 

 

A Study for New York State

 

prepared by

 

RAW (Residents Against the Windpower) Deal

WOW (We Oppose Windfarms)

North Country Advocates

 

Contact:  wow@westelcom.com

 

February 7, 2006

 

 

 

* jump to the bottom of the page (Bottom Line) if you don’t care to wade through all these calculations …

 

 

 

Major (though not exclusive) sources of profit for the wind energy companies in New York State (NYS):

 

… let’s assume a 100 MW windplant.  This amounts to 67 1.5 MW turbines, which is what Noble Environmental seems to be calling for in Brandon and Ellenburg and Clinton Townships (Clinton & Franklin counties).  The rule of thumb is that each turbine costs about $1.5 million to erect; hence we’re talking about a $100 million project for the wind company.

 

… okay, on a $100 million project, with a 5-year, non-linear depreciation schedule (one of the incentives granted by the federal & state governments), the wind companies can depreciate:

 

          $20 million the first year (20% write-off) = $8.7 million tax savings

          $32 million the second year (32% write-off) = $13.9 million tax savings

          $19.2 million the third year (19.2% write-off) = $8.4 million tax savings

          $11.5 million the fourth year (11.5% write-off) = $5 million tax savings

          $11.5 million the fifth year (11.5% write-off) = $5 million tax savings

 

(There is an obvious incentive to sell the wind project after 3 years operation.)  The federal corporate tax rate is 35% and New York State’s is 8.5%, so that’s 43.5%.  Hence, if the wind energy company is taking $20 million off the top of their (gross) income the first year, that’s a tax savings (shelter) of $8.7 million in year 1.  This figure goes up substantially for year 2 ($13.9 million), drops back down to $8.4 million for year 3, and dips down to $5 million for years 4 & 5. 

 

… then there’s the federal Production Tax Credit of 1.9 cents/kWh.  Multiply 24 hours x 365 days x 0.3 (for 30% efficiency) = $4.9 million … let’s say $5 million from the federal government. 

 

… the wind company then sells its electricity to the power grid (NYISO) at 3 cents/kWh (approximately the going rate) thus making another $7.8 million.

 

… then we have the Renewable Portfolio Standard production incentive with the New York State Energy Research & Development Authority (NYSERDA), which appears to be 2.25 cents/kWh.  (By way of explanation, the wind companies each sign a contract with NYSERDA, agreeing to sell to the NY grid, whereupon NYSERDA then gives the wind companies this 2.25 cents/kWh production incentive.)  This works out to another $5.9 million.    

 

 

Total profit:

 

… assuming 30% turbine efficiency (a generous estimate, one routinely given by the wind energy companies themselves), the first year profit for a 100 MW (67 turbine) project comes to, at a minimum, $18.7 million (from electricity sales + federal Production Tax Credit + NYSERDA credit) + $8.7 million in tax savings = $27.4 million in year 1.

 

(These figures do not include the front-loaded incentives from NYSERDA for scoping out an area for wind-sites.  These can be substantial, as was the case with the Maple Ridge Wind Power Project which received, we believe, $5 million for its Tug Hill, Lewis County, mega-windplant.)

 

 

Costs to the wind energy companies in the North Country of NYS:

 

… $500,000 PILOT they are offering to each town.

… the rental (easement) agreements with individual property owners.  Noble Environmental’s contract calls for $4,000/MWh installed capacity.  This comes to $400,000/year for the lease agreements with landowners.   

 

 

Summary:

 

… in sum, wind companies in NYS operating a 100 MW windplant (67 1.5 MW turbines) at 30% efficiency make at least $27.4 million in cash flow in year 1, and they incur chiefly $1 million in expenses, resulting in a net cash flow of $26.4 million for year 1.  This net cash flow goes up substantially in year 2, goes back down to approx. $26.4 million in year 3, and drops down to about half $26.4 in years 4 & 5. 

 

 

 

Cost to the taxpayer/ratepayer:

 

if we assume the turbines are 30% efficient, the wind companies generate 262,800,000 kWh/year from a 100 MW windplant.  This computes to 10.4 cents/kWh that we, the customer and taxpayer, are paying for our electricity (divide the $27.4 million net profit by 262 million kWh generated, yielding this 10.4 cents/kWh.  Remember that since this $27.4 million is from the taxpayer/ratepayer, we are paying this 10.4 cents/kWh produced.)  This is over 3 times the cost of the current energy rate we’re paying for conventional sources of energy (which is 3 cents/kWh). 

 

if, on the other hand, we assume the turbines are 10% efficient (which is actually the case in NYS due to supply/demand mis-match, according to a General Electric study done in March 2005 for NYSERDA[1]), we divide 262.8 million kWh/year by 3 to get 10% efficiency, yielding 87.6 million kWh/year that we are actually getting and using.  Thus, divide $27.4 million by 87.6 million kWh/year = 31.3 cents/kWh is what we’re paying for the privilege of using wind-generated electricity—10 times our current rate of cost for conventional electricity. 

 

 

Postscript:

 

… notice that each company which takes over an existing windplant gets to take advantage of the same depreciation schedule as the original company.  This provides a strong incentive to sell one’s windplant to another company, perhaps another version of one’s original company.  Thus there is an incentive to keep rolling over the title to the windplant—a game of “musical chairs”—which is precisely what one sees around the country. 

 

 

According to NYSERDA, wind energy can produce, at most, a mere 1.7% of NYS’s electrical needs.  The cost to the taxpayer for this 1.7% would be $879 million/year:

 

… it would require approximately thirty-two (32) 100MW windplants consisting of a total of 2144 turbines covering 268 miles of terrain (eight to a mile) to achieve the maximum amount of wind energy the NYS grid could handle (anything over this would unbalance the grid, according to GE’s 2005 report to NYSERDA, see below).  Multiply $27.4 million (equals the annual cash flow to a wind company from a single 100 MW windplant) x  32 (100 MW windplants) = $879.9 million/year in cash flow to the wind companies in NYS for achieving maximum wind energy on the grid (again, any more than this would destabilize the grid, according to GE’s March 2005 report to NYSERDA).  Now, multiply 3200 MW x 8760 (no. of hours in a year) x 0.10 (10% efficiency, which is what we get in usable electricity) = 2803 million kWh of actual, usable electricity produced annually at maximum wind energy penetration of the grid.  If we divide this 2803 million kWh by the amount of electricity actually used annually in NYS, we see that wind energy can produce, at best, a meager 1.7% of NYS energy needs.  That is to say, 3200 MW of wind power (which would be wind energy’s maximum contribution to the grid) would amount to 1.7% of our state’s energy needs, at an annual cost to the taxpayer of $879,680,000 ($879 million). 

 

… now, the cost of 2803 million kWh, if produced by conventional production (not wind energy), would be:  2803 million kWh/year (output of 3200 MW windplants) x 0.03 (wholesale electric price) = $84 million.  And yet we’re paying $879.7 million/year to the wind companies for this 2803 million kWh/year.  This means the wind companies are pocketing $795.7 million/year of taxpayer money when the taxpayer should really be paying only $84 million for this electricity.  Remember, this $795.7 million/year to the wind companies is payment to them for providing 1.7% of NYS’s energy needs.  This is a hefty profit of 10 times the cost of the electricity (this is called a false cost).  For providing 1.7% of our state’s energy needs, the wind companies get over of a billion dollars in profit.  Bear in mind, we will never, ever, get any more than 1.7% of our state’s energy needs from wind energy, since any more than 3200 MW would destabilize the grid, according to NYSERDA. 

 

 

Bottom line (in case you don’t want to slog through all the above numbers):

 

… from a 67-turbine windplant operating at 30% efficiency, the wind companies will gross at least $27.4 million in cash flow in year 1 (more in year 2, the same as year 1 in year 3, and less than year 3 in years 4 & 5).  They will pay $1 million in municipal PILOT money plus lease fees to property owners, yielding a net cash flow of $26.4 million in year 1 (more in year 2, the same as year 1 in year 3, and less than year 3 in years 4 & 5).  The cost to you is that you, now, will be paying 3 times more for your electricity than you are currently paying. 

 

… from a 67-turbine windplant operating at 10% efficiency (which is actually the case in NYS, according to the General Electric study done in March 2005 for NYSERDA, see below), the wind companies still have a net cash flow of $26.4 million in year 1 (more in year 2, the same as year 1 in year 3, and less than year 3 in years 4 & 5), but the cost, now, to the ratepayer is 31.3 cents/kWh—10 times our current rate of cost for conventional electricity.  This 31.3 cents/kWh is our true cost of wind energy—again, 10 times our current rate of cost for conventional electricity.  We’re paying for 262.8 million kWh/year when in fact we’re getting only 87.6 million kWh/year. 

 

… according to NYSERDA, wind energy can produce, at most, a mere 1.7% of NYS’s electrical needs.  The cost to the taxpayer for this 1.7% would be $879 million/year.  This means the wind companies are pocketing $795.7 million/year of taxpayer money when the taxpayer really should be paying only $84 million for this electricity (were it produced by conventional means). 

 

… according to the 3/4/05 NYSERDA report[2], when wind energy is available, the grid shuts down the hydro power, not the coal or gas or nuclear-fired plants.  However, if you talk to a hydro plant operator you will discover that hydro plants are never shut down; instead, the operators “motor” the hydro plant.  This means that when they are not generating electricity, they turn it into a “motor,” thus drawing electricity from the grid.  Hence, the grid operator (NYISO) tells the hydro plants to stop generating and the hydro plants now draw electricity (perhaps even the same electricity being produced by the wind turbines at that hour of the day?).  Moreover, the NYSERDA report notes that, should very high winds sweep the state, all of the windplants would have to be shut down for fear of overloading the grid. 



[1] “The Effects of Integrating Wind Power on Transmission System Planning, Reliability, and Operations, Report on Phase 2:  System Performance Evaluation,” prepared for NYSERDA by GE Energy et al., March 4, 2005.  See also “The Effects of Integrating Wind Power on Transmission System Planning, Reliability, and Operations, Report on Phase 1:  Preliminary Overall Reliability Assessment,” prepared for NYSERDA by GE Energy et al., February 2, 2004. 

[2] “Effects of Integrating Wind Power …,” 3/4/05, p. 2.12, under “System Operating Costs” (2.3.6).

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(518)483-9555
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