I’m very confused too, Mr. Friend.  In fact, what you said in the quote I used for this title is pretty much how I feel after reading an article by Richard Kerns in the (Keyser, WV) Mineral Daily News-Tribune last week – “Managers say firm is focused on safety and community.”

By the way, sorry for the long title, but I wanted to quote Mr. David Friend of US Wind Force LLC directly from a statement he made to WV PSC Commissioner Albert, to describe the Edison group that may or may not purchase Pinnacle Wind Force LLC from US WindForce LLC.  The actual testimony interchange I pulled the title from is this:

BEGIN

COMMISSIONER ALBERT: “Do they own that — Edison Mission Group sounds like a division or an organization as opposed to a legal entity. Is each of those projects individually owned by, say, Edison Mission Grantown Project, Inc. for instance or something as opposed to — I take it Edison Mission Group is not the legal entity?”

Friend:  “I believe it is. I get confused sometimes. There’s an Edison Mission Group and Edison Mission Energy, and there’s a little bit of synonymous use of the two names.  Every once in a while I’m confused, but it’s the unregulated subsidiary that holds the generation assets.  Homer City, for instance, I suspect — I don’t know this for a fact, but I suspect that Homer City is an LLC that’s owned. It’s owned by Edison Mission Group.  Edison Mission Group is in turn owned by Edison International.”

END

So, what’s the big deal?  Business today is a mash of LLCs tucked within an Inc. or a Corp. with maybe a wholly owned subsidiary and one or two non-profits to cash out philanthropy.  Maybe even a sole proprietorship in the structure to make it interesting which is all owned by a couple of LLCs tucked within an Inc. or a Corp. with … well, you get my point.  Businesses are structured in a particular way for very specific reasons, not the least of which is to take advantage of tax laws and protect itself from liability and lawsuits … those pesky protections we consumers learn about if we feel like we’ve been taken and want to do something about it.

Anyway, with the high visibility US WindForce has by direct participation in conversation, applications to the PSC, verbal agreements and contracts, vague discussions about construction jobs, full time jobs, tax rebates to the community and article after article in the hometown newspapers, not to mention a pretty nifty project schedule, I just assumed US WindForce would be designing, building and running the project under their offspring LLC named Pinnacle Wind Force, and would actually be here to see it all take place.  Now, I’m not so sure.

It did make sense that after construction, should US WindForce decide to sell the project, they have everything wrapped up in a neat little bundle so the sale would be clean and all the stuff that was done up to that point would move to the new owner.  That’s sorta what I thought Pinnacle Wind Force LLC would be … the little bundle of spinning propellers all in a row.

But, fly met ointment when Mr. Kerns wrote in the above article dated November 4, 2009 that “The (Community Advisory Panel for the Pinnacle project) was commissioned by U.S. WindForce, which as the developer of the 23-turbine Pinnacle wind farm, has invested several years in designing the project, researching its effects on the environment and addressing the many other issues related to wind energy development. If the West Virginia Public Service Commission approves the $131 million project, WindForce will essentially turn the keys over to Edison Mission Group, which will build and operate the wind farm.”

Let me repeat … “If the West Virginia Public Service Commission approves the $131 million project, WindForce will essentially turn the keys over to Edison Mission Group, which will build and operate the wind farm.”

See, that flies in the face of the article Mr. Kerns wrote way, way, way, way back on September 1, 2009 titled “WindForce panel this Thursday” saying, “US WindForce has been holding Community Advisory Panel meetings since early 2008 as a way to gauge public reaction to the proposed Pinnacle Wind Form, and to help the company respond to concerns about the project. The meetings are open to the public.  After several years of research and preliminary development, the Pinnacle project is nearing the end of what will be a nearly year-long review by the PSC. A decision on the permit application is due by early January. If approved, WindForce officials expect to begin construction in the spring, with completion by the end of 2010.”

Let me repeat … “If approved, WindForce officials expect to begin construction in the spring, with completion by the end of 2010.”

I hate to bore you with this but, within a month:

RICHARD KERNS News-Tribune Tue Sep 01, 2009, 11:58 AM EDT – “If approved, WindForce officials expect to begin construction in the spring, with completion by the end of 2010.””

RICHARD KERNS News-Tribune Wed Nov 04, 2009, 12:23 PM EST – “If the West Virginia Public Service Commission approves the $131 million project, WindForce will essentially turn the keys over to Edison Mission Group, which will build and operate the wind farm.”

That sorta floored me!  I read Mr. Friend’s testimony before the PSC and it seems to lean toward the Nov 04 explanation because, if for no other reason, Edison controls all the specifications.  Mr. Friend testified that “The challenge is we don’t know quite for sure when it will go to construction. In other words, Edison’s — the very high echelons of Edison have to make a final go/no-go decision for this project. And if for some reason something changed between us getting the permit and they’re making that final determination, some kind of a significant change in the economy, they may look at it and say, look, we don’t want to do this. And then if they don’t, then it’ll be my job to go find another suitor. And frankly they may have a different turbine. It may be very similar, but it might not be the Mitsubishi MWT 952.4.”at the , however it is never clearly said that.”

So, US WindForce or Pinnacle Wind Force … whoever Mr. Friend was representing doesn’t control when or what will be built, then what exactly do they control?  Seems there’s not much left besides the approval paperwork.  All I can tell you is the more I dig the less comfortable I feel about the firm that’s been going about in the community making presentations and deals and estimates and applications to the PSC.  Perhaps this begins to explain why more specific questions I and others have raised about construction, jobs, equipment design and other items of interest were never answered.  It might explain why, on two different meetings I attended, where the project was blasted to smithereens and there was opportunity for representatives of US WindForce to counter, they did not.

Then, it struck me … perhaps US WindForce just doesn’t know.  It’s probably not their fault if they really have nothing to do with anything but the up front paperwork?  Not to minimize that effort, but that’s a far cry from construction and operation!  And that might not bother others, and maybe shouldn’t bother me, but somehow it just does.

You see, US Wind Force, at least for me, has been the name on the placard.  They were the guys walking up and down main street for a few years with the sandwich board signs basically saying “we want to be your good neighbors.”  Now I’m concerned they may not even be here for the ground breaking ceremony.

Maybe it was clear to others.  Maybe others that received commitments from the folks at US WindForce don’t have concerns that the hands they shook might not be here to hold if problems should arise or a deal falls through.  I really thought US WindForce was serving a larger role than permit broker.  Again, not that that’s a small task.  But it’s not what I thought.  If I’m wrong about the role, please correct me.  I’m just going by what I’ve read.  Here are a few examples that lead me to believe that US WindForce was taking this thing all the way.

From surrounding communities:

• When the City of Keyser Councilman Dave Sowers announced support, he invited officials from US WindForce to the council meeting.
• The Elk Garden town government voted at a recent meeting to show support for the US WindForce Pinnacle Project“

The June 25, 2009 News-Tribune article “County has face-to-face with U.S. Wind Force reps” in addition to the title contains these references:

• Finally face-to-face, the Mineral County Commissioners questioned representatives of U.S. Wind Force
• David Friend, vice president of sales and marketing for US Wind Force
• Friend said U.S, Wind Force is committing approximately $50,000 in the first year and $25,000 each year after
• Friend noted that, when the company signs a lease with a landowner, the documentation includes the requirement that U.S. Wind Force set up an escrow account for decommissioning of the structures
• “We have an agreement with local labor,” Friend said, noting that the company hires as many local workers as they can.
• “We are very much committed to hiring local folks. The item we don’t know the answer to is how many local workers will be available,” added Jim Cookman, vice president for Wind Force project development.

The October 30 News-Tribune article “County, WindForce agree to tax income ‘floor‘” (written after the WV PSC evidentiary hearing) contains these references:

• send a letter in support of the proposed U.S. WindForce Pinnacle Wind Farm project to the Public Service Commission
• U.S. WindForce has been distributing a tax table estimating that the total property taxes
• U.S. WindForce Community Advisory Panel
• U.S. WindForce therefore agreed to enter into a contract with the county in which they would guarantee a “floor”

That’s why, after the most recent News Tribune article indicating the US WindForce role might end at permitting, I started digging around to find how these companies I thought I knew, fit into the process and, sure enough, I got more confused.  That’s when I read the short clip of testimony from the PSC evidentiary hearing a couple of weeks ago I’m providing below for you.  The full PSC hearing is linked at the end.  But for now, follow the conversation between PSC Commissioner Albert and US WindForce or Pinnacle Wind Force or both’s, David Friend.  It looks longer than it reads, and believe me, it’s well worth the read.

Because, if you are clear on the whole US WindForce LLC and Pinnacle Wind Force LLC arrangement, even after Mr. Friend’s explanation of the connection to Edison Mission Group and Edison Mission Energy and, oh yeah … just plain Edison, is added to the mix, then maybe you can set me straight.

My question is simple.  When Commissioner Albert of the PSC asks in regard to Edison, “can they come in and say, I want to buy it, or do you have to offer it to somebody else first and then they can say, I want to match that?  There’s a difference.” Mr. Friend replies,  “In other words, if they said, we don’t want to buy it, we have the right to sell it to someone else. But they have the right to buy it if they chose,” is the “it” they both speak of a complete set of 23 turbines US WindForce has completed and is operating on Green Mountain, or simply a “permission package” that would supply the buying group with the PSC’s  permission to finalize design, contract and build?

It’s either yes, US WindForce will be here and responsible to complete construction or no, they won’t.

Here’s my recap of the testimony:

COMMISSIONER ALBERT: All right. Mr. Friend, you in your — I’m looking at your Direct testimony, page two. You talk about the Edison Mission Group.  There isn’t much testimony anywhere else about the Edison Mission Group and I’m just trying to find out a little bit about them.  There was some concern raised at public hearings, and I want to talk about them. Who or what is the Edison Mission Group?

Friend:  Edison Mission Group is a subsidiary of Edison International, which is a holding company based in California that owns Southern California — it’s one of the largest utilities in the country.  They have a financial arm, I think it’s called Edison Capital.  They have an unregulated subsidiary, Edison Mission Group, that owns and operates much of their unregulated generation, it’s about 10,000, 12,000 megawatts worth of
generation.

COMMISSIONER ALBERT: And Edison Mission Group is going to operate the Pinnacle project after its constructed?

Friend:  They will likely be the acquirers of the project.  They are not required to purchase it under our agreement, but we believe they will be the entity that purchases it.

COMMISSIONER ALBERT: Under what agreement?

Friend:  We have a joint development agreement. I’m sorry.  There was a reference in there, I believe, where we work collaboratively on the development of certain wind projects. And long story short, it gives them sort of a right of first refusal to the projects.

COMMISSIONER ALBERT: Are they, in fact, partners or co-venturers in the Pinnacle project?

Friend:  Technically they are, yes.

COMMISSIONER ALBERT: And what has been their role in the Pinnacle project?

Friend:  Largely providing financial capital for the development process, and they provide some oversight where they help us with certain issues.

COMMISSIONER ALBERT: And they have the right to acquire the Pinnacle project on a right of first refusal or as an option?

Friend:  Right.

COMMISSIONER ALBERT: Which? I mean, do you — can they come in and say, I want to buy it, or do you have to offer it to somebody else first and then they can say, I want to match that?  There’s a difference.

Friend:  Actually, they can do either one. In other words, if they said, we don’t want to buy it, we have the right to sell it to someone else. But they have the right to buy it if they chose.

COMMISSIONER ALBERT: And can they trigger that, right, I guess is my —?

Friend:  Yes.

COMMISSIONER ALBERT: All right. They’re not a party to this proceeding in any way?

Friend:  They are not.

COMMISSIONER ALBERT: All right. Is Wind Force or Pinnacle Wind Force or any of Wind Force’s affiliates an affiliate of the Edison Mission Group?

Friend:  No.

COMMISSIONER ALBERT: So it’s only through this agreement that you all have a relationship with respect to this project?

Friend:  Correct.

COMMISSIONER ALBERT: What are the — I don’t want to get into confidential information. I don’t know whether it is, but what is the understanding with respect to the purchase of the system? I mean, is there a fixed price or a factor of construction costs or —?

Friend:  Essentially the way the deal is constructed is they would, at a point of financial closing on the project, they would pay us a development fee for having brought the project to fruition. So essentially it’s not unlike a commission or a fee for having provided those development services. They would buy the project and pay us a fee.

COMMISSIONER ALBERT: So they will be then the operator —owner/operator of the project?

Friend:  That’s right. And so they would be buying the entire project company, the LLC, Pinnacle Wind Force, LLC and we develop the assets of — we have a lease with the counter party or we have a commitment to an agency or a commitment to a landowner or a commitment to a community.  All of those assets that they own, that the project owns and the commitments that it has made go with the project LLC.  They buy it in its entirety.

COMMISSIONER ALBERT: Does that include all of the obligations with respect to — if the project is unsuccessful or over time the towers become inoperable or they’ll be removed, is it their obligation at that point?

Friend:  Right. Any thing that Pinnacle Wind Force, LLC has committed to becomes an obligation of the current owner of Pinnacle Wind Force, LLC. It’s our way of keeping it in a bucket separate from other U.S. Wind Force assets so it’s easy to transmit the entire bucket of obligations, assets and liabilities all to that other party whether it be Edison or anyone else.

COMMISSIONER ALBERT: Is there anything in the application that I’ve missed that describes Edison beyond sort of the general description you got here?

Friend:  No, I don’t think there’s actually much in the application, but their website is readily available.  I’m sure we can make that available to you quite easily.  Just as a point of reference, they own the Homer City plant, the coal fired station in Pennsylvania. It’s one of the largest coal fired generators in, I think, the whole PJM.  They have the Grantown facility near Morgantown, Fairmont, in that direction.

COMMISSIONER ALBERT: Do they own that — Edison Mission Group sounds like a division or an organization as opposed to a legal entity. Is each of those projects individually owned by, say, Edison Mission Grantown Project, Inc. for instance or something as opposed to — I take it Edison Mission Group is not the legal entity?

Friend:  I believe it is. I get confused sometimes. There’s an Edison Mission Group and Edison Mission Energy, and there’s a little bit of synonymous use of the two names.  Every once in a while I’m confused, but it’s the unregulated subsidiary that holds the generation assets.  Homer City, for instance, I suspect — I don’t know this for a fact, but I suspect that Homer City is an LLC that’s owned. It’s owned by Edison Mission Group.  Edison Mission Group is in turn owned by Edison International.

COMMISSIONER ALBERT: Does the application contemplate in any way that — since it’s merely an EWG application, I assume it doesn’t contemplate that we’re approving the sale to Edison Mission Group?

Friend:No. Certainly as I understand the siting rules, we would have to come back and ask for permission from the Commission to transfer ownership to Edison or any other entity.

COMMISSIONER ALBERT: And is that your commitment here?

Friend:  Certainly.  Otherwise you won’t grant it.  I didn’t mean that to sound —.

TESTIMONY GOES TO VIEWS WE’LL SKIP FOR NOW – ON TO THE EDISON RELATIONSHIP

COMMISSIONER ALBERT: And on page seven of your testimony you talk about the general size and scope of — size and scale of the project. You talk about the final determination of the turbine locations and models will affect the size and generating capacity of the project. What does that mean exactly?

Friend:  You mean the first paragraph?

COMMISSIONER ALBERT: Yes, at the end of the first full paragraph on page seven of your Direct testimony.

Friend:  I think I can speak to that.  We’ve modeled the project built on a specific turbine, and we believe that that turbine will be available at the time of construction. The challenge is we don’t know quite for sure when it will go to construction. In other words, Edison’s — the very high echelons of Edison have to make a final go/no-go decision for this project.  And if for some reason something changed between us getting the permit and they’re making that final determination, some kind of a significant change in the economy, they may look at it and say, look, we don’t want to do this. And then if they don’t, then it’ll be my job to go find another suitor. And frankly they may have a different turbine. It may be very similar, but it might not be the Mitsubishi MWT 952.4.

COMMISSIONER ALBERT: The Edison Mission Group makes that call?

Friend:  They make the call as to whether or not they assign that turbine to this project.  Right now they preliminarily made that determination, but they haven’t made the last sign offs to say this is the turbine that will be on that project.  They could be switched out.  I think it would be a similar turbine, you know, in size and scope.  It would be the same kind of turbine, but maybe not the same brand and maybe not the exact same
dimensions.

COMMISSIONER ALBERT: Are there larger turbines than the ones you’re proposing?

Friend:  Not much. Just very, very slightly there are a couple that — I don’t know that they’d even work on the site.

End of testimony recap.

If you made it this far you can see why we’re not going to stop here.  We plan to break this into small bits to make sure we all understand this maze.  If any parties would like to participate, they are welcome to do so.

We make every effort to be accurate.  Should you find an error, omission or broken link let me know in the comment section and I’ll remedy as quickly as possible.  If you find I’m totally full of “it,” be sure to specify what your meaning of “it,” is!

Related links:  “WV PSC Testimony Pinnacle Wind Force LLC Day 1“