The Buffalo Billion fraud and bribery scheme: corruption and pay-to-play, a symbol of everything they’re doing

Commentary by Marita Noon

When New York’s Democrat Governor Andrew Cuomo gushed over SolarCity’s new solar panel factory in Buffalo, New York, the audience likely didn’t grasp the recently-revealed meaning of his words: “It is such a metaphor – a symbol of everything we’re doing.”

The 1.2 million square foot building, being built by the state of New York on the site of a former steel plant, is looking more and more like another political promise of help for one of the poorest cities in the state that ends up enriching cronies without ever achieving any potential for the people.

Yes, it is a symbol of everything they’re doing.

Previously, during her first senatorial bid, Hillary Clinton also promised jobs to the economically depressed region of the state of New York – 200,000 to be exact. Citing a report from the Washington Post, CBSNews states: “Jobs data show that job growth stagnated in Upstate New York during her eight years in office, the report said, and manufacturing jobs dropped by nearly a quarter.” The Post’s extensive story reveals that jobs never materialized – despite “initial glowing headlines.” It claims: “Clinton’s self-styled role as economic promoter” actually “involved loyal campaign contributors who also supported the Clinton Foundation.” Through federal grants and legislation, she helped steer money to programs, companies, and initiatives that benefitted the donors but failed to reverse the economic decline of the region.

Now, new corruption charges reveal the same pay-to-play model linked to Cuomo’s upstate “Buffalo Billion” economic revitalization plan – and the promised jobs also look they will never materialize.

Back on January 5, 2012, Cuomo announced a $1 billion five-year economic development pledge for Buffalo.  It was to be the governor’s banner economic initiative with the SolarCity factory as the cornerstone and a pledge of 1,460 direct factory jobs. Other companies, including IBM and a Japanese clean-energy company were also lined up.

With the state-of-the-art solar panel factory ready for equipment to be installed, the wisdom of the entire program is being scrutinized – and is coming up short.

First, on September 22, two of Cuomo’s closest aides – along with several others – were charged in corruption and fraud cases involving state contracts worth hundreds of millions of dollars. Addressing the press at his Manhattan office, U.S. Attorney Preet Bharara asserted: “that ‘pervasive corruption and fraud’ infested one of the governor’s signature economic development programs. Companies got rich, and the public got bamboozled,” reports The Observer. Bharara described the bid-rigging and bribery arrangement: “Behind the scenes they were cynically rigging the whole process so that the contracts would go to handpicked ‘friends of the administration’ – ‘friends’ being a euphemism for large donors. Through rigged bids, state contracts worth billions of dollars in public development monies, meant to revitalize and renew upstate New York, were instead just another way to corruptly award cronies who were willing to pay to play.”

The 79-page criminal complaint notes that campaign contributions to Cuomo poured in from people connected to the bribe-paying companies as soon as those businesses began pursuing state projects.

One of the companies that received the lucrative contracts was LPCiminelli – run by “Cuomo mega-donor” Louis Ciminelli. He allegedly offered bribes to Cuomo confidante Todd Howe – who has admitted to pocketing hundreds of thousands of dollars from developers to rig bids on multimillion-dollar state contracts linked to Buffalo Billion projects.

Ciminelli received the $750 million contract to build the SolarCity plant. The Buffalo News cites Bharara as saying: “the state’s bidding process for the factory being built for SolarCity at RiverBend in South Buffalo turned into a ‘criminal’ enterprise that favored LPCiminelli, where company executives were given inside information about how the deal was to be awarded.”

Part of Cuomo’s deal with SolarCity – in which the state owns the building and equipment with SolarCity leasing it under a 10-year deal – requires the company to meet a timetable of job-creation quotas or pay hefty penalties. Even before the building was complete, however, the company slashed its job commitment from 1460 to 500. According to the Investigative Post, SolarCity claims it will still employ the original number, but due to automation, the majority of them will not be at the Buffalo plant. With the state’s $750 million investment, that works out to $1.5 million per manufacturing job. In a press release, Cuomo promised 1460 “direct manufacturing jobs at the new facility.”

Even the 500 jobs will only materialize if the plant actually starts production – currently slated for June 2017. SolarCity’s future is, as Crain’s New York Business puts it: “uncertain.”

Amid the company’s myriad problems are the facts that it has never been profitable, nor does it have manufacturing experience.

In February 2014, SolarCity’s stock price peaked at about $85 a share. Today, a share is less than $20. Microaxis gives it a probability of bankruptcy score of 48 percent. Crains reports that it posted a $251 million loss in Q1 2016 and a loss of $230 million in Q2. To “stop the bleeding,” Elon Musk (a donor to both the Obama and Clinton campaigns and the Clinton Foundation), who owns more than 20 percent of the company, announced that Tesla (of which he also owns more than 20 percent) would purchase SolarCity – this after as many as 15 other potential buyers and investors looked at the company and decided to pass. SolarCity even considered selling the solar panel manufacturing business.

Both SolarCity and Tesla are, according to the Buffalo News, facing a “cash bind” – this despite receiving billions in federal and state grants and tax credits as I’ve previously addressed. Tesla is described as “cash-eating electric vehicle and battery making businesses.” For SolarCity, its model – which finances its solar panel installations in order to make a profit on a lease that can be as long as 30 years, while it collects the lucrative government incentives worth billions (a practice for which Solar City is currently under Congressional investigation) – requires constantly raising new money from investors. Once the Tesla deal was announced, SolarCity’s lenders started to pull back.

The Buffalo News reports: “Stock in SolarCity…now trades for $4 a share less, or 19 percent less, than what Tesla is offering – a gap indicating that investors are uncertain the deal will be completed.” Additionally, the deal is being challenged by four separate lawsuits – which could delay the deal. Addressing the merger, one analyst said: “We see a lot more that can go wrong than can go right.”

Then there is the manufacturing angle. Originally, the Buffalo plant was going to manufacture high-efficacy solar panel modules developed by Silevo – a company SolarCity bought in 2014. Crain’s reports that it will instead produce complete solar roofs: something it says “Dow Chemical recently abandoned after five years because it could not find a way to make a profit on the technology.” But then, the Buffalo News says: “The initial production in Buffalo is expected to include photovoltaic cells that SolarCity purchases from suppliers and are used in the products that will be assembled in the South Park Avenue factory.”

Whatever the plant builds or manufactures, getting it operating will be expensive – even with the New York taxpayers owning the building and equipment – and will drain scarce cash from SolarCity at a time when its financing costs have increased.

Buffalo residents wonder if they’ll be stuck with the world’s largest empty warehouse and without the promised jobs.

No wonder the entire project is in doubt. Because of the Cuomo administration corruption allegations, other proposed job-creators, including IBM, have pulled out until the probe is completed.

For now, Cuomo is not a part of the criminal complaint – though his name is mentioned many times – and he claims he knew nothing about it, nor does he think he’s a target of the ongoing federal probe. “It is almost inconceivable the governor didn’t know what was going on,” Doug Muzzio, a professor of public affairs at Baruch College, said. “And if he didn’t know what was going on, you can argue he should have known.”

Bharara has suggested that the better name for the program would be: “The Buffalo Billion Fraud and Bribery Scheme.”

Yep, the Buffalo Billion project is a “symbol” of the political promises and crony corruption – “everything we’re doing” – that takes taxpayers dollars to reward political donors and then walks away when the jobs don’t materialize.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy – which expands on the content of her weekly column. Follow her @EnergyRabbit.

Rooftop solar companies will only play if the game is stacked in their favor

April 5, 2016 · Posted in Business and industry, Marita Noon, National politics, Politics, Radical Green · Comments Off on Rooftop solar companies will only play if the game is stacked in their favor 

Commentary by Marita Noon

The past couple of weeks have highlighted the folly of the energy policies favored by left-leaning advocacy agencies that, rather than allowing consumers and markets to choose, require government mandates and subsidies. Three major, but very different, solar entities – that would not exist without such political preference – are now facing demise. Even with the benefit of tax credits, low-interest loans, and cash grants that state and federal governments have bestowed on them, the solar industry is struggling.

We’ve seen Abengoa – which I’ve followed for years – file for bankruptcy.

Ivanpah, the world’s biggest solar power tower project in the California desert, is threatened with closure due to underperformance.

Then there is SunEdison, the biggest renewable energy developer in the world. It’s on the verge of bankruptcy as its stock price plunged from more than $30 to below $.50 – a more than 90 percent drop in the past year.

All of these recent failures magnify the solar industry’s black eye that first swelled up nearly five years ago with the Solyndra bankruptcy.

Worried about self-preservation, and acting in its own best interest – rather than that of consumers specifically, and America in general – industry groups have sprung up to defend the favored-status energy policies and attack anyone who disagrees with the incentive-payment business model. Two such groups are TASC and TUSK – both of which are founded and funded by solar panel powerhouses SolarCity and SunRun with involvement from smaller solar companies (SolarCity recently parted ways with TASC).

The Alliance for Solar Choice (TASC) is run by the lead lobbyists for the two big companies – both have obvious Democrat Party connections.

Bryan Miller is Senior Vice President, Public Policy & Power Markets at Sunrun (a position he took in January 2013) and is President and co-chair of TASC (May 2013). His LinkedIn page shows that he’s worked for the National Finance Committee for Obama for America and was Finance Coordinator/Field Organizer for Clinton-Gore ’96. He’s also served as s senior political appointee in the Obama Administration and ran an unsuccessful 2008 bid for election to Florida’s House of Representatives, District 83.

Co-chair John Stanton is Executive Vice President, Policy & Markets at SolarCity. In that role, he, according to the company website, “oversees SolarCity’s work with international, federal, state and local government organizations on a wide range of policy issues.” Previously, Stanton was Executive Vice President and General Counsel for the Solar Energy Industries Association (SEIA) – the national trade association for industries that support the development of solar power – with which he oversaw legal and government affairs for the association. There he played a pivotal role in the 8-year extension of the solar investment tax credit. He was also legislative counsel for the Environmental Protection Agency under the Clinton administration.

A news report about the founding of TASC states: “First and foremost, the group will work to protect net-energy metering (NEM) rules in the 43 states that have them.”

On March 25, the Wall Street Journal reported: “two dozen states are weighing changes to their incentives for rooftop solar…incentive payments have been the backbone of home solar firms’ business model.” In the past several months, Nevada and Hawaii have ended their NEM programs. TASC has responded with lawsuits. In Hawaii, TASC’s case has already been dismissed with a report stating: the judge’s “ruling in favor of the Defendants has eviscerated TASC’s claims.” Last year, Louisiana capped its “among the most generous in the country” solar tax credit. Arizona Public Service was the trailblazer in modifying generous solar policies when, in 2013, the Arizona Corporation Commission approved a fixed charge for solar customers.

As one of the first states to challenge the generous NEM policies, Arizona is still a battleground. That’s where TASC formed another group: TUSK – which stands for Tell Utilities Solar won’t be Killed. Lobbyist and former U.S. Congressman Barry Goldwater, Jr. was brought in to give a Republican face to the industry’s advocacy. TUSK even has an elephant, the Republican mascot, as part of its logo. The TUSK home page states: “Republicans want the freedom to make the best choice and the competition to drive down rates” – true, but a core value of the Republican Party is allowing the free markets to work rather than governments picking winners and losers.

While registered in Arizona, TUSK has recently been active in other states – including Nevada, Oklahoma, and Michigan.

The reoccurring theme in the TASC/TUSK campaign is to connect the word “kill” with “solar” – though the NEM modification efforts don’t intend to kill solar. Instead, they aim to adjust the “incentive payments” to make them more equitable. However, without the favors, as was seen in Nevada, rooftop solar isn’t economical on its own. Companies refuse to play when the game is not stacked in their favor.

TASC and TUSK are just two of the ways the rooftop solar industry – also known as a “coalition of rent seekers and welfare queens,” as Louisiana’s largest conservative blog, The Hayride, called them in the midst of that state’s solar wars – is trying to protect its preferential policies. It has other tricks in its playbook.

In addition to the specific industry groups like TASC, TUSK and SEIA, third party organizations like the Energy and Policy Institute (EPI) are engaged to intimidate public officials and academics. EPI, run by Gabe Elsner, is considered a dark money group with no legal existence. It can be assumed to be an extension of what is known as the Checks & Balances Project (CB&P) – which was founded to investigate organizations and policymakers that do not support government programs and subsidies for renewable energy. CB&P has received funding from SolarCity. Elsner joined CB&P in 2011 – where he served as Director – and then, two years later, left to found EPI – which C&BP calls: “a pro-clean energy website.” EPI produces material to attack established energy interests and discredit anyone who doesn’t support rooftop solar subsidies. I have been a target of Elsner’s efforts.

Then there is the Solar Foundation – closely allied with SEIA and government solar advocacy programs – which publishes a yearly report on solar employment trends across the country. Solar employers self-report the jobs numbers via phone/email surveys and the numbers are, then, extrapolated to estimate industry jobs nationwide. Though the reports achieve questionable results, threats of job loss have proven to be an effective way to pressure state and federal lawmakers to continue the industry’s favorable policies – such as NEM.

Together, these groups have a coordinated campaign to produce public opinion polling that is used to convince politicians of NEM’s public support. Such cases can be found in Maine, Nevada, New Hampshire, Colorado, and Kansas. They gather signatures from solar advocates and use them to influence legislators and commissioners. They engage in regulatory and rate proceedings – often creating, as I’ve experienced, an overwhelming presence with mob-like support from tee-shirt-wearing, sign-waving advocates. They run ads calling attempts to modify solar’s generous NEM policies a “tax” on solar and, as previously mentioned, attack utilities for trying to “kill solar.” If this combined campaign isn’t fruitful, and NEM policies are changed, lawsuits, such as those in Hawaii and Nevada, are filed.

This policy protection process may seem no different from those engaged by any industry – as most have trade associations and advocacy groups that promote their cause. Remember “Beef, it’s what’s for dinner” and “Pork, the other white meat”? Few are truly independent and self-preservation is a natural instinct.

Yes, even the fossil fuel industry has, for example, the American Petroleum Institute, the Independent Petroleum Association of America, the National Mining Association, and the American Coalition for Clean Coal Electricity. And there are advocacy groups who support various limited-government, free-market positions, as Miller recently accused.

The difference is that fossil fuels provide, and have been providing, America with efficient, effective, and economical energy. Its abundance has lowered costs for consumers and increased America’s energy security. Advocates are not fighting for special favors that allow this natural resource to survive, but are rather attempting to push back on new rules and regulations aimed at driving it out of business.

By comparison, the solar advocacy efforts are, as acknowledged by TASC: “First and foremost, the group will work to protect net-energy metering (NEM) rules,” as without them – and the other politically correct policies – rooftop solar energy doesn’t make economic sense. Because rooftop solar power isn’t efficient or effective, its major selling point is supposed savings that are achieved for a few, while costing all tax- and rate-payers.

With the potential of a change in political winds – remember the solar supporters all seem to be left-leaning, big government believers who want higher energy prices – the campaign for America’s energy future is embedded in the presidential election.

Will big government pick the winners and losers, or will free markets allow the survival of the best energy sources for individual circumstances?

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.

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