Questions Of Legality, Financial Impact Should Compel Legislature To Reject Alpine Energy Group Proposal
Q. Why should the Legislature reject the Alpine Energy Group (AEG) proposal on Monday?
A. Because based on documents we’ve read, Alpine should never have been allowed to bid on the project in the first place.
Q. Why else should the Legislature reject the Alpine Energy Group proposal on Monday?
A. Because if they don’t, the Diageo deal may never provide the return on our investment that was promised.
Stay with us.
The answer to the first question is simple mathematics. AEG did not meet one of the basic initial requirements of the original Request for Proposal from the Water and Power Authority for the project. According to documents on file in the Colorado Office of the Secretary of State (CSOS), AEG, incorporated in September, 2007, had not been an established business for three years prior to bidding on the job in December of that same year and had no relevant experience.
There is no record of a “parent” or “affiliate” company related to AEG on the CSOS website and nothing to indicate any prior entity from which AEG could have been formed to establish the required “history.”
This is not a new issue but during its AEG’s first attempt the question of the date the business was established got buried in the pet coke debate and as the measure was rejected, never returned to the forefront.
Both WAPA Executive Hugo Hodge and AEG representative Don Hurd were questioned about Alpine’s creation date and whether they had relevant experience during a public meeting at St. Thomas’ Charlotte Amalie High School during their first attempt to gain approval in the Territory.
Hodge said:
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And Hurd, who gave conflicting information on Alpine’s formation date than appears in documents, responded this way to a question about their prior relevant experience.
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As always, CIF welcomes rebuttal on any of the issues raised relative to this proposal and will publish them if they can be verified.
The Request for Proposal
The following information was taken directly out of WAPA RFP PR-11-08 ATTACHMENT G – Criteria for pre-qualification and for non price evaluation.
PR-11-08
Request for Proposal
To Provide Electric Energy to the
Virgin Islands Water and Power Authority
DATE ISSUED: December 28, 2007
OFFERS DUE: May 1, 2008
ATTACHMENT G – Criteria for pre-qualification and for non price evaluation.
“Criteria for Pre-qualification (Respondent must PASS all to pre-qualify).
- Company Information: Pass/Fail Comment
- Company or affiliated parents established for more than three years?
- Respondent has demonstrable experience operating generating facilities similar to the one being proposed?
Respondents who are proposing new technologies (e.g. OTEC, wave) must demonstrate relevant experience that will ensure WAPA that they can successfully build, finance and operate the proposed solution.”
According to official state documents at the Colorado Secretary of State’s office, AEG was established in September 2007. They had no affiliate Parent Company on record at the time of this establishment. Alpine was established 3 months prior to WAPA’s release of its RFP.
This date was confirmed as recently as December 18, according to the “Certificate of Good Standing” on file in the CSOS office. The Certificate states:
“I, Scott Gessler, as the Secretary of State of the State of Colorado, hereby certify that, according to the records of this office, Alpine Energy Group, LLC is a Limited Liability Company formed or registered on 09/25/2007 under the law of Colorado, has complied with all applicable requirements of this office, and is in good standing with this office.
This entity has been assigned entity identification number 20071439442. This certificate reflects facts established or disclosed by documents delivered to this office on paper through 12/15/2011 that have been posted, and by documents delivered to this office electronically through 12/18/2011 @ 05:58:56.”
Therefore, they were never eligible to bid on this project and, absent some evidence to the contrary, approving their proposal would be one more illegal act related to a government contract.
Didn’t they get the message from the Legislative Audit findings that this is not a good idea?
The Diageo Deal
The AEG facilities are planned for a 20-acre site leased from the St. Croix Renaissance Group (SCRG) – the Diageo plant is located on SCRG land as well. (See pg. 6, Alpine Letter to EPA Attached)
Enter the Environmental Protection Agency (EPA).
The EPA establishes emission ceilings based on the total emissions from a defined area, in this case the SCRG. Therefore it takes into account the emissions generated by any entities that hold leases on the site, in this case including Diageo, in determining whether standards are being met.
The Diageo plant is operating at significantly less than capacity and even at these levels, emissions are evident to anyone living downwind from the distillery. Despite promises made when the infamous rum deal was struck, this year alone, the loss in cover-over revenue to the Territory based on the 45% share Diageo is entitled to under the terms of the agreement (and the consequences of the Cruzan Rum agreement that followed) has been placed at $73 million.
AEG was required to submit information to the EPA on the emission levels expected to be generated from its waste-to-energy facility (letter attached). The 48-page document outlines their case on anticipated emissions levels, including the fact that they will generate their own electricity and not rely on the emission laden boiler system that provides energy to others leasing land at the Renaissance site.
However true their estimates may be, any addition to the emissions at the site will bring the entire SCRG property closer to its established ceiling and any increase in production at the Diageo plant may well push the property as a whole over its EPA limit.
So while we’ve been hearing about labor and materials issues as the reasons behind Diageo’s lagging productivity, could it be that they are producing as much as they can and still remain under EPA emissions guidelines for the SCRG site?
The Diageo agreement established minimum production guidelines that had to be met for the cover over agreement to remain in place. But those guidelines were not the platform for the revenue projections used to promote this arrangement to the public, and will not generate the payback to offset the overwhelming total payments the Territory is bound to in this ludicrous (minimum of) 30-year contract.
So be advised, Senators, the impact of a “yes” vote on the apparently illegal AEG contract proposal carries consequences far beyond the need for a solution to the Territory’s waste removal issues. Aside from issues of legality, which we have seen carry little weight with this Administration, the impact on any hope of realizing even limited benefits from the rum fiasco is astronomical and will be suffocated beyond resuscitation.
Are you prepared to smash the final nail into the coffin?
Don Hurd you can run but you can’t hide. Give CIF the Damn document if you’re not guilty of fraud.
bye bye Dumb Hurd. close the door behind of you.