byte&chew

A sweetheart deal

PSNH - Biomass Deal: A Billion Dollars And An Unusual Provision NH Public Radio The Public Utility Commission’s approval late Thursday of a 20-year contract between Public Service of New Hampshire and a proposed Berlin biomass plant is a huge economic deal with plenty of ramifications.  NHPR’s Chris Jensen reports. “This power purchase agreement represents a 20-year commitment to purchase power and renewable energy certificates. It is a deal valued at notably over $1 billion over those twenty years.” That’s Eric Kingsley. He’s an energy analyst with Innovative Natural Resource Solutions LLC. “And, it affects New Hampshire ratepayers but it also affects New Hampshire’s rural economy, the loggers and truckers that will be suppliers and it certainly affects Berlin, the city of Berlin that we all know is facing challenging times.” The agreement contains one unusual element. That is the chance to buy the Burgess BioPower plant. It is a proposal that caused some consumer advocates to do a double take. But basically here’s how that would work. PSNH is promising to pay Burgess a certain amount for electricity. It the market price is lower than that PSNH will put that extra money into an escrow account. That money can be used later to help buy the plant. For NHPR News this is Chris Jensen http://www.nhpr.org/psnh-biomass-deal-billion-dollars-and-unusual-provision

A chill at Laidlaw

I’m not sure that writing about Laidlaw/LLEG has any relevance since it appears that Laidlaw/Bartoszek has sold(?) his interest in the Berlin Station biomass plant. I say “appears” since the details of what has transpired between Cate Street Capital and Laidlaw are sketchy at best and, Mr. Bartoszek has not shared that information with too many people, not even with his shareholders. As I’m sure most of you know, a couple weeks ago the Securities and Exchange Commission pulled the plug on all trading of Laidlaw stock for reasons still quite unclear, but certainly serious. Last Tuesday 6/21 the SEC gave the green light for the sale of shares to resume on the “grey” market (which I know nothing about”, but “grey” appears to be one step below the “penny stock/pinks” Not knowing what “greys” are all about is also a problem for many of the shareholders who are scrambling around to see what their options are and figure out how much money they’ve lost. On Tuesday when Laidlaw shares were once again being traded, the value of LLEG dropped a whopping 80% with a whole bunch of investors dumping their shares for a fraction of what they had paid and in fear that the values could go down even further. There’s wild speculation on several shareholder blogs with emotions running high. I’ve been keeping an eye on the I-HUB site and I’ll close this post with quotes I’ve cut and pasted over the past couple days.                                                                                                                                                                                                                                                                                                                                                                                 “I just got home can't believe I got 500k more at .001 Weeeeeee.”                                                                                                                                                                                    “Whether "if it makes sense or not it's called the SEC's new task force on "microcaps". As usual they are several years late to the party, but in the long run it should help "retail investors" It will either kill LLEG or make them stronger only time will tell.”                                                                                                  “Only if would have been lucky enough to match with a buyer. But you are missing the fact that there was a number of consistant trades today around .001, 80% down. Your stock and mine is now worth 20 cents on the dollar from the last day it traded. lets see how many trades we get above .0015 tomorrow”.                                                                                                                                      “as stated before, i wouldn't buy any Grey Sheet stock including LLEG. i don't believe in flushing money down the toilet.”                                                             

 

"just because LLEG has engaged a big auditing firm does not mean that a successful audit that doesn't uncover improprieties will be the result."

“It does hoever mean they have parted company with their previous audit firm, which in itself is a huge red flag, as anyone who has experience of Pink Sheets scams knows well.
Indeed if LLEG were a reporting company then they would need to furnish a letter from the outgoing auditors confirming that their departure was unrelated to any issues with LLEG's business. As a "dark" Pink Sheet, there is no requirement for them to do so.
Always easier to get rid of an auditor who asks too many awkward questions, and start with a new one hoping you can pul the wool over their eyes.
Indeed, it's entirely possible that the old audit company, Gruber & Co. LLC, were the ones who alerted SEC to something they found when reviewing LLEG's accounts that led to the very serious and not-lightly-taken step of suspension.
Interestingly while the item on LLEG's news release page does link to the Marcus website:
http://www.laidlawenergy.com/News
on right”

"NEW 6/22/11 Laidlaw Energy engages Marcum, LLP as new auditor"
there seems to be no link to a complete PR, and there is no official release from the company on the newswires.
Which is odd.

Where from here.....

Bridgewater Manager Explains Stance on Biomass

Laconia Citizen
 
By VICTORIA GUAY

BRIDGEWATER — Following Thursday’s protest by more than two dozen workers in the building and construction trades at the Bridgewater Power Company, over the biomass plant’s seeming opposition to a prospective biomass venture in Berlin, the manager of the Bridgewater facility responded Friday to set the record straight.

Michael O’Leary, manager of the Bridgewater Power Company, a wood-burning energy plant in operation since 1987, said he is not opposed to a biomass plant being built in Berlin; however, he, along with three of the state’s other biomass power producers, does want the Public Utilities Commission to reconsider the terms of  a 20-year power purchase agreement it conditionally approved for the Laidlaw Berlin-BioPower project.

“Clearly we support jobs;clearly we are sympathetic with the situation in Berlin,” O’Leary said. “If the [Berlin] project can move forward and our plants can stay viable it’s a win-win situation.”
Yet Joe Casey, president of the New Hampshire Building and Construction Trades Council, said the actions the four biomass plants took could completely derail the project in Berlin, costing the area an estimated 400 construction jobs and 40 permanent jobs.

The Bridgewater Power Company, Pinetree Power in Tamworth, Whitefield Power and Light Company and Indeck Energy in Alexandria, recently filed motions to reconsider the power purchase agreement with the New Hampshire Public Utilities Commission and the New Hampshire Supreme Court. As a result, the conditional agreement has been suspended.
That is why the Buildings and Trades Council, along with members of the United Steel Workers Union, local 75, from the Berlin area, staged the protest at the Bridgewater Power Company on Thursday, Casey said.   

“Their [the other biomass companies] continued protest will further delay the project,” Casey said Thursday. “One of our biggest fears is that the investors will say they’ve had enough and walk away.”

O’Leary countered Casey’s remarks on Friday by saying that the current agreement between the state and Berlin-BioPower will create an unlevel playing field that could jeopardize the jobs currently supported by the existing biomass plants.

O’Leary said the Bridgewater plant and the plants in Alexandria, Tamworth and Whitefield have existed since the late 1980s and each plant directly employs approximately 20 people and indirectly 100 jobs each in their respective areas.
In all, O’Leary said, that’s 500 existing jobs.

Due to the depressed economy and the until-recently-low fossil fuel prices, the state’s biomass plants are struggling.

“We find ourselves in a position where the viability of our facilities are severely threatened,” O’Leary said, adding that the plants have been negotiating with the Public Utilities Commission and other state officials to find a short-term solution until the economy turns around.

Meanwhile, the Laidlaw Berlin-BioPower project went through the Public Utilities Commission approval process and ended up with a conditional, long-term agreement over 20 years that includes a fuel price pass-through clause that none of the state’s existing biomass plants has, O’Leary said.

A fuel price pass-through means that, if or when the Berlin biomass plant goes online, it can change its rates based on fuel prices.

“A lot of their risk is taken off the table and we don’t have that luxury,” O’Leary said.
That is why the Bridgewater Power Company and the other biomass operations want the Public Utilities Commission and the state Supreme Court to reconsider the Berlin-BioPower agreement.

O’Leary said the four biomass companies are not looking for a 20-year deal themselves; rather, they are looking for short-term, three- to five-year agreements with the state that would keep the plants viable while the economy has more time to turn around.

O’Leary said he feels the recent media campaign undertaken by the New Hampshire Building and Construction Trades Council and a Berlin-based steel company is counterproductive.
He said he would be willing “to have a dialogue with” either Casey or Steve Griffin, president of Isaacson Structural Steel, Inc., in Berlin.

Griffin recently took out full-page ads in some regional newspapers that said the four biomass companies should withdraw their objections and allow the project to move forward.
O’Leary reiterated that his company and the other biomass plants are not opposed to the project itself but, rather, with the way the deal has been structured.
He added that the biomass companies are just exercising their rights by seeking a rehearing of the matter.

“We’re not against creating jobs, but we want to maintain existing jobs,” O’Leary said.

http://www.citizen.com/news/newfound_region

Trying to untangle the web

As I watch the people who had invested in Laidlaw/LLEG scrambling to figure out what’s going on and what their next move might be, I’m trying to put myself in their shoes and asking “How in hell did I get here and what do I do now?”  I’ve followed what I believe is the main conduit for conversations about Laidlaw on I-HUB for the past 3 to 4 years and have been amazed at the lack of common sense in many of their conversations. In my opinion, their conversations reflect a combination of arrogance, ignorance, overconfidence and blind faith in the company and its CEO Mr. Bartoszek. “MBB” or “Mike” as many call him, was their guru and whatever Mike said became gospel to most investors. How does one become so…popular? How does one become so popular in fact that people will give him their hard earned money? There was ample evidence along the way that Laidlaw and its managers were not the most trustworthy individuals around after the Ellicottville NY project, yet the faith and trust of the investors kept growing. To this day I’m puzzled by this blind faith when I listen to the investors questioning the action of the Securities and Exchange Commission and who blame the SEC not Laidlaw or Mike. What transpired over the years that built-up the credibility of Laidlaw to this point? Going back 5 years or so to Laidlaw’s failure in Ellicottville NY and all the negative publicity that came out of that fiasco you would think that the company would have died on the vine. But no, Mike regrouped and came to Berlin and found the right combination of circumstances and people to give it another try, this time on a grand scale. How did Mike manage to distance himself from the dismal failure of the past and do such a remarkable job going forward with the Berlin project? I’ll go out on a limb here and conjure-up a possible explanation which goes like this; At first Mr. Bartoszek did not make a very positive impression in Berlin. City Hall was less than enthusiastic about the Laidlaw project as a matter of fact the incumbent mayor Danderson was defeated by a 3 to 1 margin by Dave Bertrand who ran on an anti-Laidlaw platform. Mayor Danderson had proclaimed that a vote for him was a vote for Laidlaw coming to Berlin and he lost in a landslide! Many of the candidates running and winning council seats were also anti-Laidlaw. I believe that we need to study what transpired after the Danderson defeat to figure-out what were the events that turned what was a bad start for Laidlaw to a positive outcome. Although the Bertrand Administration was sour on Laidlaw, they failed to mount a successful campaign against the project. They worked behind the scenes gathering information about Laidlaw, but concentrated primarily on challenging the project at the permitting level. By this time there was also a fear in City Hall that Laidlaw would sue the City if the City acted too boldly, something the company had done in Ellicottville NY to the tune of $10M. The City working behind the scenes with their lawyer was not something that the residents of Berlin were impressed with and, at the same time, a dark cloud began to hang over the future of the Cascade Mill. While all of this was going on in Berlin, I believe that Mike was putting together a strategy to turn his fortunes around.(LLEG $.0003/shr then) I believe he made a concentrated effort  packaging his project by running photos of himself with high profile individuals such as Hillary Clinton and Charlie Bass and locally supporting Paul Grenier.  He knew that Charlie Bass could open the door to the business community in Berlin and the State and it worked. By then he knew that Charlie had connections to many companies, including PSNH, who he needed on his side if he was going to win the heart and minds of folks in Berlin and Concord. I can only speculate that Mike and Charlie had numerous meetings with PSNH and a collaborative strategy for going forward with the Berlin project included a new mayor for Berlin who was pro Laidlaw/PSNH. Armed with the endorsement of PSNH, placing Charlie on the Board of Directors and a pro-Laidlaw mayor, Mike had a powerful PR message for potential investors. As a side benefit, PSNH now had ammunition to kill the efforts by Clean Power to build its own biomass plant in Berlin by stating that Mel Liston was a “bad person” and that they were now supporting a more credible project and developer, the Laidlaw Project and Mr. Michael Bartoszek. All of this played well on I-HUB for weeks and months and, the investors were more and more impressed with company and CEO. The stock went from $.0003 to over $.005 as investors were encouraged by events such as the announcement that PSNH was offering a PPA to Laidlaw while denying the same to Clean Power. The PSNH and Bass connection put Laidlaw on the front page of newspapers not only in New Hampshire, but in energy publications nation wide. I believe that PSNH provided more than a market for the power; it provided credibility and trust “to believe in the Laidlaw project” and the CEO. Now I realize that this is my fictional account of events and may require some imagination, but at the moment, it’s my only explanation as to why so many investors are now like deer in the headlights of the SEC truck and searching for answers.

Dodging a bullet

I’ve been watching the online conversations taking place about the action taken by SEC against Laidlaw a few days ago. I believe that there are some important lessons to be learned from that action and from the reaction of shareholders and other supporters of Laidlaw. First we need to be careful not to assume that Laidlaw or Mr. Bartoszek will be found guilty of doing anything wrong or criminal. Having said that, there’s no question in my mind that, Laidlaw and its managers are not nice folks and, maybe not the most honest people on the planet. You just have to look at the history of the company or speak to people who have worked with the company to come to that conclusion. There’s a history of law suits following the company and multiple charges by individuals and companies that claim to have been wronged by Laidlaw and its CEO. What I find really interesting is the anger of the shareholders and supporters who are upset not at Mr. Bartoszek and Laidlaw for not being candid with them, but at the SEC who temporarily pulled the plug on Laidlaw stock trading. We need to consider that the SEC is acting to protect investors and potential investors from what might be improper behavior by the company and these investors are angry at the SEC? This is a bit like somebody being angry at the police for disrupting the actions of bank robbers or somebody driving drunk. I think we need to take a moment and ask why these people are being so irrational. Well, as is often the case, it’s about money. The action by the SEC will have a negative impact on the value of their investments and their anger is also an emotional knee jerk reaction to their feeling of being duped in believing that they were on the road to becoming millionaires. Like parents who blame the teacher for the poor behavior of their child in school, they blame the teacher for their own failure in raising that child. So these “followers” (as they are cult like) that I’ve described as “clones” or being drunk on Laidlaw “Kool Aid” are mindlessly upset at those who are forcing them to look at the reality of their decision to invest in Laidlaw and their blind trust in the company and its CEO. In a way Berlin is lucky to apparently have dodged the bullet on this one.(Although we’ve spent well over $100K) It’s my opinion that if Paul Grenier had been mayor when Laidlaw first came to town, the City would have immediately jumped in bed with Mr. Bartoszek and who knows to what extent the City would have become involved and vested in the project. In contrast, the Bertrand Administration hired a lawyer to represent the City, a more professional manner to conduct business with a then unknown company. Let’s also remember that Mr. Grenier was upset at Mayor Bertrand and Council for “wasting money” on the lawyer. Another factor to consider was the relentless research by Jon Edward who kept brining up issue after issue about the company and its history in New York and elsewhere. Jon did a remarkable job investigating and later challenging some key issues. Again I must ask, how much would the City have swallowed (hook line and sinker?) of the Laidlaw bait? Luckily as it turns out the project is now in more legitimate hands with Cate Street and Berlin is less exposed to exploitation. When it comes to making smart decisions about the credibility of companies, Paul Grenier has a very bad record. A few years ago when Mr. Grenier claimed to be the “watchdog of the City budget” a scam artist came to Berlin and for months the City wasted hundreds of taxpayer dollars housing and feeding the man that was going to start a business mining our ledges and making stoneware. In his haste to be viewed as a hero and being in control all while playing to the next election, Mr. Grenier often comes to conclusions that are erroneous and costly, both financially and in human terms.

It's just money

Has the Security and Exchange Commission discovered what some of us were told and believed for a long time, that Laidlaw was a shady operation? Over the years I’ve had several conversations with people who had first hand experiences dealing with Laidlaw management and almost everybody had the same impressions of the Laidlaw management style, sly, slippery and loose with the facts. I was told by Ellicottville NY officials that the company fabricated numbers and made false claims on a regular basis. On several occasions over the past 4 years, I’ve written posts on this subject and warned both investors and public officials that this was a company that needed close attention and scrutiny. I have no inside information about the latest move by the SEC and I haven’t placed any calls to discover what led the SEC to believe that Laidlaw may have violated the law or the rules. As I’ve posted in the past, “leopards don’t shed their spots”, so this incident doesn’t surprise me in the least. Personally, my interest in Laidlaw has waned over the past few months for several reasons. First was the election of mayor Grenier in Berlin who ran on a pro Laidlaw platform and refused to take into consideration the Laidlaw track record. (Don’t confuse me with the facts, my mind is made up.) Second, the hearings with the Site Evaluation Committee and the Public Utilities Commission were public forums for all to see and form their own opinions. Third was my conclusion that Laidlaw had been bought out, dealt out or forced out of the Berlin project, therefore the leopard was less and less of a threat to Berlin. It’s my opinion that Laidlaw no longer has any influence on the Berlin Station project and that Cate Street is in full ownership and control while Laidlaw and its managers are off to new adventures. Where this leaves the investors in Laidlaw/LLEG is unknown since the details of the liquidation of the Berlin project by Laidlaw has not been explained in detail, not even to the shareholders. If I was an investor in Laidlaw I would be extremely concerned about my investment and I hope they didn’t invest more than they could afford to lose.

It's not the economy stupid, it's the feeling!

The Laidlaw/Berlin Station project is just about a given while the fundamental issues raised by Jon Edwards remain a mystery to most residents. The issues may be mysterious, but they won’t vanish with the approval of the Power Purchase Agreement by the PUC. All of the negative impacts of this power plant won’t really be felt for months, even years, at least not until the old recovery boiler is fired up, the pressure within the boiler rises to around 850psi, steam is released and the turbine starts spinning. Until then, the proponents of the project will walk around with smirks on their faces because they believe they’ve saved Berlin from its economic decline and defeated those who thought Berlin had an opportunity to go in a new and better direction. Once the plant is on line, Barry Kelly will feel the warmth of those burning wood chips deep in his heart and yes, that smoke from the stack will remind him of past prosperity! Steve Griffin will proudly point to those steel beams holding the structures together, but in his heart he’ll always know that this contraption closed the door to better uses for that property and to a better Berlin. Mayor Grenier will claim that he played a pivotal role in bringing biomass burning to the center of the City and for changing our favorite excuse/slogan from “It’s the smell of money” to, “It’s the sound of 40 jobs”. I’m sure he’ll do his best to put “the chimney” back on the City Seal to help the residents bring back that feeling of well-being that Barry so ably described. By then the residents of Northern Lights and St. Regis will own a variety of ear plugs and be wearing headphones when watching TV. Sales of those wide brooms used by East Side residents to clean their porches and driveways of sawdust will increase, helping the local economy. When living on the East Side, sealing windows with plastic to keep sawdust out will also cut down on heat loss in winter, a side benefit to living in close proximity to a mountain of smelly wood chips. Ahh, the traditions live on! Our kids learning at an early age how to dodge those chip trucks while on their way to Community Field/Park and that sawdust on ice cream is good for you. Having grown up on the East Side and now writing this post, I can finally understand why Mr. Grenier wanted this biomass plant so bad, it confuses our biological clocks and  makes us all feel 30 years younger!  Paul Grenier and Barry Kelley may have discovered the fountain of youth in the Laidlaw/Berlin Station project.