A foreign wind-energy company is in such a hurry to collect the maximum possible amount of subsidies from the U.S. Treasury that it has taken an unprecedented step: It has promised to share the federal gravy with individual voters in two Vermont towns, Grafton and Windham. Earlier this month, Spanish energy company Iberdrola announced that it plans to distribute about $565,000 per year among 815 registered voters in the two towns. The payments would continue for 25 years.
But here’s the catch: On November 8, the towns of Grafton and Windham are holding referenda to decide the fate of Iberdrola’s 82-megawatt Stiles Brook wind project. If voters reject the project, Iberdrola will pay them nothing.
Iberdrola and other wind promoters may be eager to collect more federal subsidies, but they are facing lots of angry voters in Vermont. As I reported on NRO in August, the battle over renewable-energy siting has been raging in the state for years, and wind-project siting has become a defining issue in Vermont’s gubernatorial race.
Sue Minter, a Democrat, favors state control over siting. She’s being supported by fellow Vermonter Bill McKibben, the founder of 350.org and an ardent proponent of schemes that claim that the world can be run solely on renewable energy. Minter’s opponent on the November 8 ballot is Phil Scott, a Republican, who has vowed to protect Vermont’s ridgelines from wind-energy development. While the race is close, Scott can likely count on support from most or all of the voters who supported Peter Galbraith in the Democratic primary. Galbraith made opposition to wind energy the primary focus of his campaign.
The showdown in Grafton and Windham has particular significance because both towns are on the National Register of Historic Places. Many locals believe that putting two dozen 500-foot-high wind turbines near the historic towns will ruin their distinctive flavor. “We are fighting tooth and nail to stop this project. Absolutely,” says Lynn Barrett, a public-relations consultant who is working for the Grafton Woodlands Group, a local non-profit that is opposed to the Stiles Brook project.
The fight over the Stiles Brook project has been raging for four years. Among the more recent developments: The Windham Foundation, a Grafton-based philanthropy that owns significant real estate in the region, declared its opposition to the wind project, saying “the risk to Grafton and all we seek to preserve is too great. Altering the delicate balance inherent in the rural character of this area is a risk that should not be taken unless we are certain that the benefits outweigh any negative consequences.”
In June, the Windham Selectboard sent a letter to Iberdrola, declaring its opposition to the company’s proposed wind project. It said the 5,000-acre forested site for the turbines “is one of the largest unfragmented habitat blocks remaining in southern Vermont.” It went on to say that Windham is
unwilling to subject any of our town’s property owners to the unknown short- and long-term effects of exposure to turbine noise, vibration, infrasound, and shadow flicker. In addition, we find your repeated dismissal of the question of proximity troubling, as is your lack of truthfulness about the problems your company has experienced with turbine neighbors who have been sickened, annoyed, and deprived of quiet use of their property by your activities.
But Iberdrola hasn’t given up. The Spanish company claims the planned payments to voters are part of their good-faith negotiations with the towns. Voters in Windham, which will have 16 turbines, would each get $1,125 per year. Voters in Grafton, which will have eight turbines, would get $427 per year. In addition, Iberdrola will give the towns several hundred thousand dollars per year, which can be used to cut property taxes.
Good faith or not, here’s the real story: The production tax credit is so lucrative that Iberdrola simply made a business decision. It can pass on about 10 percent of the value of the federal subsidy to individual voters and still make millions of dollars per year in profit. Here’s the math: The production tax credit provides $23 for each megawatt-hour of electricity produced. A typical wind project produces at full output about a third of the time. Therefore, the 82-megawatt Stiles Brook project will probably produce about 237,000 megawatt-hours of electricity per year. Even if we ignore the value of the electricity that will be generated by the project, the production tax credit alone will be worth about $5.4 million per year. Given those numbers, it’s easy to see how Iberdrola can afford to give $565,000 of that sum to local voters. But if Iberdrola can’t start the Stiles Brook project until 2017, the value of the PTC will drop to about $4.4 million per year.
It’s clear that Iberdrola’s push in Vermont isn’t being driven by consumer demand; it’s being driven by subsidies.
Is Iberdrola’s offer to pay voters legal? On October 7, the Vermont attorney general’s office said that it was. Locals disagree. On October 13, Bill Dunkel, a member of Windham’s planning commission, published a piece in Vermont Digger, a state-focused publication, saying that Iberdrola’s cash offer is “a blatant effort to influence voters who, in a democracy, are in a position of trust when they go to the polls. This certainly seems to fit the definition of a bribe.”
Bribe or not, it’s clear that Iberdrola’s push in Vermont isn’t being driven by consumer demand; it’s being driven by subsidies. According to Subsidy Tracker, Bilbao-based Iberdrola has already collected about $2.25 billion in federal and state subsidies. (Subsidy Tracker is a project of Good Jobs First, a Washington, D.C.–based nonprofit that seeks to “make economic development subsidies more accountable and effective.”) As I explained on NRO in June, since 2000, the companies that have board seats at the American Wind Energy Association have collected a total of $176 billion in subsidies from local, state, and federal taxpayers as well as loans and loan guarantees.
How critical is the production tax credit to the wind industry? Earlier this year, Patrick Woodson, chairman of E.On North America, a subsidiary of German energy company E.On (which, according to Subsidy Tracker, has collected $785 million in state and federal subsidies), told Recharge News that “it’s going to be enormously challenging” for wind-energy developers to build projects after the end of 2016 due to the decrease in the value of the PTC.
To be sure, supporters of wind energy claim that the subsidies are needed and that rural residents must learn to live with massive wind projects near their homes because, well, climate change. Vermont has pledged that it will be getting 90 percent of its electricity from renewables by 2050. The state’s Democratic governor, Peter Shumlin, who did not seek reelection, has been a key backer of wind in the state. He recently told the New York Times that “there’s nothing I’m more proud of than my legacy of having helped to get Vermont off of oil and coal” and move toward renewables.
Shumlin backs another Iberdrola wind project. Known as Deerfield, the 30-megawatt project is now under construction on two ridgelines in the Green Mountain National Forest in southwestern Vermont. It’s the first wind project to be built inside a national forest.
The surge in wind-energy development in Vermont has left Ron Holland, a resident of Irasburg, fighting mad. In 2011, Holland, an emergency-room physician, was arrested while protesting the construction of a wind project on top of Lowell Mountain. Holland, who is in his 70s, doesn’t fit the stereotypical profile of Greenpeace or Earth First! activists, but he has become one of Vermont’s most active wind critics. While fighting the Lowell Mountain project, which was ultimately built, Holland did a cost-effectiveness analysis that showed the project was eight times more costly than other options for cutting carbon dioxide emissions.
Like the referenda in Grafton and Windham, Holland will be on the November 8 ballot: In May, he announced his candidacy for the state legislature. He’s running as a Democrat. If elected, he told me that he will focus on health-care reform. He will also focus on what he sees as the corruption of Vermont’s political system by the wind industry. In explaining his opposition to wind energy, he used a medical analogy. “It’s an inappropriate dose,” he told me. If wind-energy projects in Vermont were really going to make a difference with regard to greenhouse-gas emissions and climate change, “we’d measure the effect and figure out if these wind turbines were going to make a difference.”
That’s not happening. Instead, he said the wind industry uses lots of “smooth marketing.” When I asked if the push for wind energy in Vermont was about climate change, he replied, “It’s being done in the name of climate change. But it’s really about corporate profits.”
— Robert Bryce is a senior fellow at the Manhattan Institute.