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By Robert Rapier on Sep 3, 2014 with 44 responses

Guest Post: U.S. Renewable Energy Industry Dominated By Monopolism and Cronyism

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This week we have a guest post for readers. The following article was written by S. Michael Holly, the Chairman of Sorgo Fuels & Chemicals, Inc. Sorgo has developed technology for the production of ethanol, electricity and protein from sweet sorghum. Mike was formerly an alternative energy engineer and business analyst with the Minnesota Department of Energy and Economic Development. He holds masters degrees in chemical engineering and business administration from the University of Minnesota.

My standard disclaimer applies: Publication of a guest post does not imply endorsement. Rather it indicates that I think the subject matter is worthy of debate and discussion. However it is clear the the US government discriminates against various energy sources. Among renewable electricity producers, some receive higher tax credits and subsidies than others. This has long been the case with biofuels as well. Governments preferentially subsidize certain pathways that in many cases have little chance of commercial success, yet they have allowed themselves to be fooled by vested interests.

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U.S. Renewable Energy Industry Dominated By Monopolism and Cronyism

by

S. Michael Holly

More than 40 world governments, including the EU and China, require electricity monopolies to offer non-discriminatory electricity prices to independent power producers whose generation qualifies for the meeting of renewable energy mandates. Prices for so-called “feed-in tariffs” (FITs) are set at the typical costs of the technology (e.g., wind, solar, biomass, geothermal and small hydro) and low enough to discourage over-production. Just that simple.

In contrast, the U.S. has made renewable energy mandates an option for the states, who in turn have almost all given control of the mandates to their electricity monopolies (e.g., utilities). Typically, these monopolies use subsidized wind power either by building the generation themselves or conducting informal or formal bidding that is readily rigged to favor higher-cost bids from themselves and cronies. For example, Northern States Power (NSP) selected four $300 million plus wind projects last year: two owned by themselves and two led by a former NSP employee.

The U.S. is subverting its own federal and state laws that require utility monopolies to offer non-discriminatory prices to ALL independent power producers, especially those using renewable energy and cogeneration. In 1973, the U.S. Supreme Court ruled the Sherman Antitrust Act required utility monopolies to provide competitors with access to essential transmission and distribution lines. The 1978 U.S. Public Utility Regulatory Policies Act (PURPA) requires utility monopolies to pay qualifying facilities (QFs) using renewable energy or cogeneration at the utility’s cost of adding generation (i.e., “avoided cost”).

The U.S. cedes control of retail electricity markets to the states, who allow their monopolies to control prices. Regulated states allow utility monopolies to low-ball prices paid to QFs by claiming they don’t need more capacity. If the QF contests the price offer from the utility, regulators force them into expensive and utility-biased regulatory hearings. Sometimes regulators set avoided costs with discriminatory bidding. Since the 1990s, 17 states deregulated their electricity industries while repealing state PURPA laws. But politically-connected utilities like Enron were allowed to rig the deregulation rules. Utility spinoffs formed deregulated monopolies. The U.S. has done little to reform the deregulation rules.

The U.S. Congress has even tried to repeal federal PURPA law for utilities in regulated states (without adding anything to replace it for QFs). This could leave QFs with legal rights to only the 17 deregulated markets. Congress has to know from the 2000 California Energy Crisis that these markets are dysfunctional. Our biomass company led a protest with cogeneration interests during the writing of the Energy Policy Act of 2005. However, Congress still used the bill to gut PURPA by allowing utility monopolies in regulated states to circumvent paying QFs anything at all, if they shipped the generation to one of the deregulated states.

The U.S. allows the states to decide whether they use renewable energy at all. Renewable energy mandates can be rationalized by the failure of states to create sufficient regulation or competition needed to encourage monopolies to build or purchase even low-cost renewable energy. Some 33 states have renewable mandates, including virtually all of the 17 deregulated states, but only about half of the 33 regulated states. Most states without renewable energy mandates are in the southeast. In 2012, most renewable energy was added by just four deregulated states and six regulated states.

The U.S. has favored mainly wind power for meeting state renewable energy mandates and natural gas to back up the wind. In 2012, wind turbines captured 45% of U.S. capacity additions at a capital cost of over $30 billion (although the intermittent generation can only produce about 15% of new electricity). Natural gas was second at just over 40% of new capacity at a capital cost of about $10 billion. More recently, homeowners in California and Arizona have been adding solar photovoltaic (PV), and utilities in the southeast have been building their own biomass power plants.

The U.S. hides the full costs of the wind power behind large complicated subsidies (while hiding the full societal costs of natural gas behind environmental exemptions). The Federal “wind energy” tax credit and five-year accelerated depreciation (based on the time value of money) were designed with help from Wall Street to surreptitiously reduce the costs of capital-intensive wind power by about 60% to about four cents per kilowatt-hour while providing complicated tax shelters for the passive income of the wealthy (Note: the tax credit expired last year, but the wind industry is lobbying for renewal). In addition, the Federal Energy Regulatory Commission doesn’t require the price of wind to include the additional transmission and integration costs needed by the grid to compensate for intermittent output.

The U.S. discriminates against low-cost base-load renewable energy, like biomass, geothermal and small hydro, and also cogeneration by undercutting the prices with large subsidies favoring wind, and sometimes states even mandate wind specifically. Moreover, utilities practice predatory pricing by offering lower prices to large consumers, especially those that threaten to use cogeneration, and then charging higher rates to smaller customers.

The U.S. is also discriminating against potential new base-load disruptive technologies (e.g., cold fusion), not only by reducing the costs of wind and gas, but also by promoting monopolism and cronyism. Risk investors are discouraged by the need to compete with subsidized wind prices as low as three cents and know electricity monopolies could block them from the market at any time (especially since patents often offer limited protection). The U.S. spends less on research and development of electricity technologies than dog food. Technological innovation, the key to increased productivity and economic growth, is low in the industry.

The U.S. allows states to let electricity monopolies satisfy renewable energy mandates and needs for gas generation by just building it themselves at their own discretion without any competition from independent power producers. For example, Warren Buffet’s Iowa utility MidAmerican Energy has been building thousands of megawatts of wind power capacity with billions of dollars of ratepayer money and without any competitive bidding (under protest from independents).

The U.S. also allows states to let electricity monopolies satisfy needs for generation through bidding that discriminates against lower-cost competitors. In the 2008 report “Competitive Procurement of Retail Electricity Supply: Recent Trends in State Policies and Utility Practices,” the National Association of Regulatory Utility Commissioners said “the utility’s own investment in a new generating resource may compete against offers from third-party power suppliers.” When wind developers and other independent power producers (e.g., Electric Power Supply Association) are able to politically pressure the state and monopolies to issue informal or formal requests for proposals, the monopolies can just rig the bidding to favor higher-cost bids from their affiliates or cronies by giving extra credit for arbitrary non-price criteria.

The U.S. has created a conflict of interest by allowing states to rely on the integrity of monopolies while judging the arbitrary non-price factors of their competitors during bidding. Examples of non-price factors include the integrity and credibility of ownership and management, track record, uncertainties involving project development, project operation and environmental impacts. Bidding proponents argue subjective non-price criteria are necessary to weed out insincere bids that would often result from competitive bidding that awards bids by low price. But bidding doesn’t work fairly either way.

The U.S. doesn’t require that state regulators actually regulate. Generally, regulators don’t even monitor utility purchases unless the utility is purchasing supplies from its own production affiliate and even these purchases are not challenged. Some states create a conflict of interest by allowing the bidding to be monitored by consultants hired by the utilities themselves. So-called “independent monitors” serve those that pay their fees (e.g. like Enron hired Arthur Anderson). In addition, consultants admit they cannot gain access to all of the decision making, especially that inside the minds of the utility bid writers and evaluators.

The U.S. use of rigged bidding introduces the potential for corruption and collusion. Both public and private bidding of other products has resulted in payoffs and firms conspiring to take turns being the winning bidder (even while most continue to bid). The American Wind Energy Association (AWEA) has been a suspicious venue for cooperation between wind developers and utilities. Instead of seeking feed-in tariffs for all renewable energy, AWEA has supported a combination of mandates and subsidies for wind energy combined with monopolies for utilities, including the repeal of PURPA. This arrangement only makes sense if the independent AWEA members making the deal are benefiting from bidding by utilities.

The U.S. use of self-building and rigged bidding violates federal and state antitrust and PURPA laws because it allows the monopolies and their cronies to receive more opportunity and higher prices. Since most independent competitors receive less opportunity and suffer more expensive losing bids, they are pressured to bid even lower and cannot compete over the long term. Moreover, the high cost of bidding favors large companies. The “wind energy” tax credit violates at least the spirit of antitrust and PURPA laws.

The U.S. allows regulated states to force independent power producers through the following convoluted, expensive and discriminatory regulatory process controlled by the utility monopolies:

(i) spend (waste) up to millions of dollars developing power projects (while knowing the process is rigged),

(ii) wait up to years for the utility to admit they need to add capacity and specify the type, and for regulators to approve the need for the generation,

(iii) lobby the state to require the utility to request bids and not just build the generation themselves,

(iv) spend (waste) about a half million dollars on a transmission study and connection fees and some more money submitting a bid,

(v) wait up to years for the utility to rig the bidding with arbitrary non-price criteria in favor of bids from themselves and cronies,

(vi) wait up to years for regulators to finish acting like they are regulating before giving approval to what the utility wants, and

(vii) decide not to file a lawsuit against the utility and regulators since the state allows both to charge their legal defense to ratepayers.

Examples of monopolism and cronyism can be provided by NSP, the Minnesota regulated utility of Xcel Energy. Xcel has been the number one wind energy provider in the U.S. for the last ten years and a member of AWEA, which named them its “Utility of the Year” for two of the last five years. NSP supported a 2007 Minnesota law that violates PURPA by requiring the utility to purchase virtually all additional renewable energy from wind. NSP owns almost a third of their wind power and has selected many bids from cronies.

For example, NSP selected four wind bids late last year: two from RES Americas that were wired for future ownership by the utility, and two from Geronimo Wind Energy that were represented by Betsy Engelking, a former senior manager in Xcel’s resource acquisition department.

In 2011, Geronimo won a bid from NSP where Ms. Engelking worked at the time and soon after hired her as Vice President. Ms. Engelking also worked for the Minnesota Public Utility Commission (PUC) and represents just one of many who have benefited from the revolving door between regulators and utilities.

Since utility bidding is confidential, it isn’t publicly known if any of the winning bids had the lowest prices. However, it was clear the utility and Minnesota PUC ignored state laws requiring a determination of the full costs of the winning bids, especially transmission and integration costs, during the 2013 bidding.

Our biomass company, which has been kept out of the U.S. electricity market for 20 years, complained to the PUC with no response and was unable to raise enough money to sue NSP and the PUC for ignoring the state laws. However, a group of small established Minnesota wind developers that also tried to complain to the PUC to no avail, is now litigating in the courts against NSP for ignoring other state laws required by the regulatory process.

NSP admitted they favored the bids on an “ownership perspective.” It is not surprising that NSP believes they and their cronies are better owners, but it is conflict of interest for the state to allow them to judge the ownership of the competing bids. Moreover, NSP has proven itself to not be the best judge of character since one of their favorite bidders between 1997 and 2004 was former AWEA board member Greg Jaunich, who was sent to prison twice for overcharging the utility and defrauding wind project investors.

Recently, our company took another look at the bidding by Minnesota’s largest utility after 15 years of avoiding the state’s bidding. In 1997, we had complained to the PUC about regulator tolerance for NSP’s unethical practices:

  • The PUC allowed NSP to deny a $200,000 conservation project to St. Paul Neighborhood Energy Consortium in 1994 even after the Department of Public Service ruled that an NSP employee had threatened to reject their bid if they opposed the utility’s nuclear waste storage bill.
  • The PUC ignored a complaint against NSP by Minnesota Windpower, who also was an opponent of NSP’s nuclear waste storage bill, after the wind company had initially won NSP’s first wind bid for $25 million in 1994, but NSP rebid the project to a California developer, who then had problems adapting windmills to Minnesota’s cold weather and went bankrupt.
  • The PUC ignored a 1994 complaint by one of about ten losing bidders for NSP’s only cogeneration bid claiming that the utility allowed the winning bidder to sign the final contract after legislation favored the project with a $6 million per year Minnesota property tax exemption.
  • The PUC ignored a losing wind bidder’s 1995 complaint that NSP had awarded the utility’s second wind project of $100 million to Zond, even though Zond used a wind turbine design that had not been proven on any commercial scale. The contracts were never made public or examined by the PUC, fueling concerns that NSP may have allowed only Zond to bid low by holding ratepayers financially responsible in the event of failure.
  • The PUC ignored a losing biomass bidder’s 1995 complaint that NSP had rejected their lower price bid on a technicality and awarded the first biomass bid to a $260 million alfalfa project that used technology developed by NSP. The alfalfa project, which was rumored to have a bid price greater than 13 cents per kilowatt-hour, later got special tax breaks and sought to hold state taxpayers financially responsible for the unproven technology because they said they couldn’t find private investors at their bid price.

These examples of bid rigging are likely just the “tip of the iceberg” since they are only the obvious cases that our company found through the grapevine. We followed only the bidding of NSP and only from 1994 to 1997 and after 2012. NSP is only one of 3000 or so electric utilities in the U.S. But rigged bidding has went on elsewhere since the Wisconsin Public Service Commission had to make bidding reform their highest priority after a utility chose its own generation bids for the top three spots in the late 1990s.

The bid rigging documented in these cases also likely “barely scratch the surface.” Bidding of electricity supplies is left to the proprietary discretion of utility monopolies. Because the bidding is subjective and clandestine, it is very difficult to get much information to uncover all of the abuses. The public could obtain a court order to examine the bids but only under a confidentiality agreement. The bids could be analyzed during rate cases but everyone including the losing bidders has moved on by that time. It would be a waste of time anyway since it would be nearly impossible to challenge a discretionary and subjective scoring system in regulatory proceedings.

The utilities use political lobbying financed with ratepayer money to manipulate politicians, regulators and the media into ignoring abuses. NSP has set state records for both legislative and administrative lobbying expenses and carries the most lobbyists of any company. Utilities donate campaign contributions and volunteer help to the state party caucuses, energy committee legislators, the state’s attorney general, and governors who appoint regulators. Utilities control the media with multi-million dollar annual advertising budgets using television, newspapers and radio.

In 1997, the Minnesota Legislature voted down our company’s amendment that would have allowed public scrutiny of the bidding. The Chairman of the Minnesota House Energy Committee Loren Jennings, who was later sent to prison for pressuring NSP to invest in a company that he partly owned, cut short the presentation of the amendment in committee. The Chairman of the Minnesota Senate Energy Committee Steve Novak, who blocked the amendment, received campaign contributions and other support from Xcel and other utilities during his political career (that has also included unsuccessful runs for Governor and Congress).

Minnesota legislators offer to rig the bidding for first-time non-wind renewable energy projects (probably because they know the developers are getting cheated). For example, legislators singled out Itasca Power for a biomass power contract from Xcel in a 2001 statute. However, the politicians offer no guarantee that future projects won’t get thrown back into rigged bidding by the utilities. One-time bid rigging might work for proven technologies but not new technologies, whose risk investors need assurances that products can be sold at future plants (i.e., not just the first plant) or they require a prohibitive cost of capital.

Unlike most utilities, NSP offers contracts to small power producers without bidding, but what the monopoly “giveth, they can taketh away.” Utilities claim independent power can be sold in wholesale markets, but investors will not invest if the utility and their cronies can be awarded higher prices. Many independent power producers that relied on wholesale pseudo-markets went bankrupt when electricity prices crashed in the early 2000s.

In 2012, the Republican majority in the Minnesota Senate and House ignored our proposed bill that would have required the PUC to obey PURPA law by setting avoided costs (which can be considered a form of feed-in tariff). Regulators in California have calculated avoided costs for independents. The Republicans said the other party have to be the ones to support renewable energy, but Democrats support mainly only wind and solar. (Republicans receive more support than Democrats from utility monopolies and fossil fuel interests, especially Big Oil.)

In 2013, the Democrat chair of the House energy committee Melissa Hortman refused to even consider a feed-in tariff bill for all renewable energies introduced by Democrat Representative David Bly. Instead, she pushed through legislation intended to add externality values for only expensive distributed solar PV. (Democrats are supported mainly by government workers, Wall Street, high tech, environmental groups, and wind and solar interests).

Representative Hortman claims feed-in tariffs in the Bly bill violate PURPA by offering prices greater than avoided costs. Perhaps, but she is violating PURPA by not requiring the PUC to calculate avoided costs and instead allowing utilities to set the costs with rigged bidding.

  1. By MikeH123 on September 3, 2014 at 12:48 pm

    Just to warn readers in advance: I respond to comments for 7 days.

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    • By Paul on September 10, 2014 at 6:49 am

      What do you think of New York’s attempt at changing its policies governing electricity generation and distribution?

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      • By MikeH123 on September 10, 2014 at 8:11 am

        I don’t know which policy changes you are talking about. Maybe you could provide a link. This is the problem with the electricity market – too many states. And my technology is most suitable for the central part of the country.

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        • By Paul on September 11, 2014 at 6:56 am
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          • By MikeH123 on September 11, 2014 at 8:59 am

            The intention may be laudable but the devil is in the details, especially since it is complicated. The special interests will be looking to hijack it from the get-go and gouge the consumers. New York should hire gadflies to try to punch holes in it every step of the way or it will end up like deregulation.

            The involvement of the Rocky Mountain Institute concerns me. Amory Lovins has been distorting the economics of wind and solar.

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  2. By Sam Geckler on September 3, 2014 at 9:53 pm

    This is quite a rant. Typically, in a blog post like this, we look for recommendations or suggestions of changes that would improve the situation. Maybe a paragraph on that would be worthy?

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    • By MikeH123 on September 3, 2014 at 10:03 pm

      I said “our proposed bill that would have required the PUC to obey PURPA law by setting avoided costs.” Simple as that.

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  3. By Broncobet on September 4, 2014 at 1:41 am

    Great article, I can see something is wrong even though I’m a little unsure about what to do about it.

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    • By MikeH123 on September 4, 2014 at 9:44 am

      Thank you for the comment. I think the best answer would be the EU approach – where the central government requires the states to require the utilities to provide FITs, while repealing PURPA. The states are too easily controlled by the utilities.

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  4. By Forrest on September 5, 2014 at 8:36 am

    Thanks for the inside look at our utility contract process. The political regulatory process is commonly fraught with abuse as entities all have been trained to position themselves to benefit. Complexity and lack of public daylight the biggest indicators of abuse. Clever hooked in professionals see such opportunities to increase wealth per reputations of self made influence. Politicians look to shake down wealth of business to leverage ample political security. Citizens need to educate themselves that attempting to energize their political cronies, will only result in corruption and loss of quality of living per average middle income wealth. We hear often the disparity of rich and poor. Folks, the wealthy are maligning the system to their benefit and enjoying the political energies to do so. You like wind power and support the cause? Well the “system” has pivoted to exploit the political machinery to make it happen at a great expense to middle and lower class of rate payers to the benefit to wealthy. Funny, how the Tea Party politics are attacked by political machinery, yet they alone appear to be capable to destruct this type of business as usual politics. Media will only disclose violations of PC culture biases. Example to disclose an evil Landlord and hapless tenant without fully reporting the full truth of horrors of the business of renting.

    Michigan is attempting to set up fair exchange for power market, but the politics and misinformation is fully attempting to thwart such reform. We have a somewhat deregulated market. Also, the power generators are separate from utilities whom own the billing and power lines. Politics of Left claim deregulation will hurt the industry per California experience. It’s not that simple as you post. I remember a farmer whom used his own wealth to construct bio digestors for power generation. He was promised by utility company a good price for power. They reneged after the project completed. He spent a fortune on lawyer fees and lost years of power receipts. He won the lawsuit, but the story struck fear in other alternative energy projects. Co-generation projects also minimized per the low cost of power reward. Regulatory process to gain approval of micro grid must be high as no one attempting the feat. The utility industry is in defense mode per the threat of change to good old boy business as usual. The biggest threat is micro grid, small generators, and cost effective technology to enable off grid solutions. Politicians if acting in behest of benefit of citizens can easily be identified per their effort of reform, simplify, and increase competition. The increase in competition would entail nurturing alternative power producers whom can demonstrate benefits and future improvement tends.

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    • By MikeH123 on September 5, 2014 at 9:06 am

      Thank you for the very insightful comment. I realize my lack of experience with so-called deregulated markets. However, I knew it was hopeless when I heard Illinois was allowing the utilities to sell power plants (financed by the ratepayers) to affiliates for pennies on the dollar and collect the losses as stranded costs. Also, I have heard there has been no real attempt to fill the transmission bottlenecks that would allow for real competition. That was a big reason California deregulation failed.

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      • By Robert Pollock on September 10, 2014 at 6:20 pm

        At some point you have to accept that those ‘traitors’, (I call them ‘seditionists’, the Bush Admin, the Military Industrial Complex, the banks, the insurance co.’s, the oil industry, healthcare) are considered to be the epitome of ‘American Partiotism’, by more than half the citizens. You can debate until the cows come home, the two sides will never agree to do the sensible thing. Good friends of ours mindlessly support the military, deeming anything less a personal betrayal, and counter to the well being of everything American. Like all the wars before, the want to ‘scale up’ the war on terrorism using ‘conventional’ weaponry. Bomb anything that moves. They have two big ICE vehicles, we have one electric, they think driving an EV is un-American. The don’t see or understand that they’re on a crusade, the only result possible is more ignorance and hate.

        If our friends could see the wounded children….

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        • By MikeH123 on September 11, 2014 at 1:18 pm

          Good points. I would add the wars in Israel/Palestine, Iraq Sunnai/Shiite and Ukraine/Russia are all about control and cronyism. If everyone just had a level playing field, there would likely be no war. But everyone is afraid the other will gain control. If the US would set a good example against crony capitalism, maybe it would be asked to help form stable democracies instead of bombing their enemies.

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  5. By rusholmeruffian on September 5, 2014 at 1:20 pm

    Did you put “(e.g. cold fusion)” in there just to see if people were actually paying attention? Because if you’re not actually joking…wow.

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    • By MikeH123 on September 5, 2014 at 1:34 pm

      What do you know about cold fusion (other than Stanley Pons made a joke out of it)? I talked to a physicist who sees real potential.
      My point is electricity markets should be open to all technologies, as long as they don’t require government money or cause too much environmental damage. The US is the opposite – block everything that doesn’t serve the pols.

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    • By Alain Samoun on September 6, 2014 at 6:18 pm

      No, actually I don’t think that he was joking, read this article about a test of a cold fusion reactor made by a group of international scientists:
      http://www.e-catworld.com/may-2013-3rd-party-test/

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    • By bachcole on September 6, 2014 at 6:52 pm

      I have been following the cold fusion, E-Cat, LENR story for the past just short of 3 years. I am a sceptic. I don’t let hope sway my judgement. As far as I can see, cold fusion is for real and will soon be breaking on to the world’s stage.

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    • By Boutros Gladius on September 7, 2014 at 11:33 am

      I also have been following the cold fusion, E-Cat, LENR story for years. Apart from a slew of websites breathlessly pushing the story, and the charlatan-in-chief, Andrea Rossi, changing his story about the “technology” every other day, it hasn’t got the slightest thing to recommend it. No reproducible results, no credible supporting theory, no controlled testing (and yes, I include the Uppsala one). The one thing you have to grant Rossi is that it’s quite incredible how his snake-oil story has been kept going for so long.

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      • By psi2u2 on September 8, 2014 at 9:24 am

        You have clearly NOT been “following the story” with anything approaching a critical skepticism. The present holder of Ing. Rossi’s patents is the Cherokee Industries affiliate Industrial Heat, Tom Darden CEO. The fact that the mainstream corporate news media still doesn’t know this is a big story is unsurprising and says nothing at all about the credibility of Rossi’s achievements, which you grossly misrepresent.

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        • By Boutros Gladius on September 9, 2014 at 1:18 pm

          I don’t see any connection between who holds the patents and the credibility of the evidence, unless you’re suggesting a “serious” person couldn’t get taken in by Rossi’s snake oil.

          Among the lack of evidence, and general smell of rat, I include:

          No evidence of nuclear reactions from radiation measurements;
          No explanation for how there could be only aneutronic fusion with no detectable side reactions;
          no attempt to demonstrate a self-sustaining reaction (i.e. why did last year’s measurements have to include a continuous electrical input — with 500% excess energy production it sounds like it should have been simple enough to heat the apparatus to reaction temperature and disconnect the power, or preferably remove the heating coils altogether to isolate the experiment);
          no serious theoretical insights — even Rossi’s fans don’t think his own explanation is credible;
          no attempt to explain how structures involving electronic binding energies interact with atomic nuclei with binding energies millions of times higher, no matter how much you invoke crystal lattices, or whatever;

          I’ll be delighted when my skepticism proved to be unfounded, but I’m not holding my breath. The above are just objections on technical grounds, ignoring the credibility of Rossi himself, who has been in jail for fraud and toxic waste dumping, and separately has previously “demonstrated” thermoelectric generators that turned out to have no merit at all. Now it’s not impossible that the person who demonstrates the first working LENR device just happens to be a blatant charlatan who has been caught out twice previously, but even the most credulous would have to accept there would be a certain irony involved.

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          • By psi2u2 on September 9, 2014 at 2:51 pm

            You are arguing from third hand principles, not first principles. Your position is apparently that science already knows everything, and that clear and widely replicated experimental results (Here is Dr. Rob Duncan on 60 Minutes to verify this: https://www.youtube.com/watch?v=UTvaX3vRtRA) should be rejected because their theoretical basis is poorly understood.

            If we followed your logic, science would be dead. Over and over again in the history of science we see that results are obtained before their theoretical articulation can be completed. This is where we are with LENR generally, and Rossi in particular at this moment.

            Here’s a link to the third party report of Rossi’s device from a year ago: http://coldfusionnow.org/andrea-rossis-third-party-report-released/. Note the (impossibly) red hot temperature of the reactor vessel.

            Another report, this time based on experimental results obtained by independent researchers at several universities, operating e-cats on their own premises and with a full year of testing data, is imminent. Watch for it.

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          • By AlainCo on September 9, 2014 at 3:23 pm

            you make good point on patent, not evidence, just intriguing…

            500% energy to be looped is not so easy because the reaction is hard to control (self catalytic) and that positive retroaction is what limits the COP in fact… higher the COP greater the risk of runaway.

            whatever you say on the theory there is a problem.

            it is observed… hundreds of peer review papers,

            http://lenr-canr.org/acrobat/RothwellJtallyofcol.pdf#page=6
            (153 peer reviewedon excess heat for exemple gathered by Jed rothwell)
            including some more recent replication of iwamura by Toyota in JJAP, of the list of papers from US navy Spawar…

            it works, it is real, and the rest is denial… desperate denial…

            just because there have been too many insults to admit they screw up and were just wrong, as the papers says …

            did you know there was in 2001 only 4 papers criticizing f&P calorimetry… all refuted. 2 refuted by the last… no author still support his claim because they cannot be defended facing mainstream science…

            http://iccf9.global.tsinghua.edu.cn/lenr%20home%20page/acrobat/BeaudetteCexcessheat.pdf#page=35

            now if cold fusion is real, if excess heat is real, as the scientific method show…
            observed in many various context, but with difficulties…
            why should it be so difficult to imagine people making it usable … like the transistor…

            just have to consider the evidence with some reasonable skepticism, not with the desperate pretended skepticism of a conspiracy fan.

            the theory to deny cold fusion, like did Gary taubes, Huizenga, were simply conspiracy theories… refuted by basic science and logic, but who cared? it was so comfortable to say there was nothing.

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            • By Boutros Gladius on September 9, 2014 at 4:08 pm

              AlainCo — your comment doesn’t make sense. You don’t have to “loop” the excess energy. It is already deposited as heat in the reactants. If it is self-catalytic then a thermal runaway will occur unless it is controlled or damped. Merely disconnecting the power would not do this. There is no report of any damping arrangement as part of the apparatus measured by Levi et al. So how did it achieve the consistent power output if it was only “primarily initiated” by the heating coils as reported?

              psi2u2 — actually, I refute your assertion that experiment generally precedes theoretic explanation in the area of nuclear physics. Yes, if you are talking about Becquerel and the Curies. No, if you are talking about technological developments like the Manhattan, JET or ITER projects. Those latter efforts involved years of development to practically apply very well understood principles. Science is littered with far more quack experiments demonstrating “zero-point energy”, and violations of the laws of thermodynamics than you could shake a stick at.

              Of course it is not true that established science is unassailable. But generally accepted core principles require extraordinary evidence to overturn them. Take, for instance, the apparent discovery of fast-than-light neutrinos at Gran Sasso. It took more than a few experimental results to prove the case, even the extremely well designed experiments of the Gran Sasso neutrino observatory. To nobody’s particular surprise, it turned out to be faulty equipment.

              Now, on the scale of well-designed experiments, the Levi et al. observations don’t even register. The experiment is so full of holes it is laughable. You might as well have had Rossi playing Wizard of Oz behind a curtain. None of the measurements that Rossi allowed betray the slightest hint of nuclear reactions. Several measurements that he *didn’t* allow might have cast more light on the process.

              I don’t claim to have a privileged view of the subject. I *do* have a degree in physics though, and a broad knowledge of the concepts. Without intending any disrespect you seem to describe yourself as an E-Cat junky and subscribe to some strange ideas including disproven 19th century concepts. Why are you sure you have a balanced view of the topic?

              In any event, the matter will be settled by Rossi’s near-term release of working commercial products, will it not? I’ll look out for that.

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            • By AlainCo on September 9, 2014 at 5:31 pm

              about reusing the produced heat to activate the reactor you are right, but it is is more complex than what you imagine.
              the way you increase the COP is as you say, but the more you increase it the more you can reach unstable zone where a tiny variation of reaction rate can trigger meltdown.

              about the declaration of love you made to theory agains experiments, maybe you should learn more calorimetry, and learn transistor history.

              quantum mechanics is a young science compared to calorimetry, and ther is more surpise like HTSC, nanotech…
              today if you have to choose between the existence of a collective quantum effect similar to laser or HTSC, and the breaking of the thermodynamic laws like what you claim… best is to bet on the oldest of the two.

              moreover it is sure you did not read the evidence I cited for you.

              E-cat is simply one industrial test in line with hundreds of scientific experiments.
              the theory you are fond of is already challenged… E-cat is not an evidence of that.

              the experiments that gave result one year after F&P were ridiculed gave clear evidence of the impossible to exist anomalous heat.
              one year more there was massive replication of tritium, without the expected neutrons…
              few more years there was He4 measures at commensurate quantity to the heat.

              E-cat is no more an evidence than a talky walky is an evidence of shockley transistor.

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            • By Boutros Gladius on September 9, 2014 at 7:54 pm

              And what does anomalous heat + helium, or anomalous heat + tritium (or anomalous heat + neutrons for that matter) have to do with ECat? None of those things have been measured with Ecat. So it is ridiculous to say that ECat is “one industrial test in line with hundreds of scientific experiments” — the only claimed resemblance is anomalous heat. Since Rossi isn’t allowing detailed investigation of the reaction or its products, nobody knows which, if any, other experiments ECat resembles. In terms of the anomalous heat and secret workings, it most resembles quackery like Steorn and its like.

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            • By AlainCo on September 10, 2014 at 5:19 am

              it seems that like many you rationalize to avoid the mass of evidences.

              trying to find bad excuse to ignore the evidences…

              it is hopeless, the data are here for the curious.

              From the data, after serious analysis, it is impossible to be a fraud.

              this can hel realize the desperate behavior of deniers
              http://ecatnews.com/?p=2620

              Stephan Pomp the author of the desperate and only cirtic of the test, which s decribed in detail as a shameful paper, was anyway proposed to participate the second long term third party test…

              HE REFUSED

              he was not even shy to say it on his blog… Proposed with the ability to debunk a fraudster, he flee like the pope fleeing in from of an atheist.

              in cold fusion denial i see much of what could be name Cargo Cult skepticsm, Cargo Cult scientific method…

              people pretending to respect science, to be skeptic, but like conspiracy theorist, who behave like believers avoiding data.

              before Pomp who is of the next generation of cargo cult skeptics, there was a very similar description of those skeptics by Beaudette.

              “http://iccf9.global.tsinghua.edu.cn/lenr%20home%20page/acrobat/BeaudetteCexcessheat.pdf#page=359

              “When Goodstein learned, inadvertently, about the solid scientific work going on in cold fusion research his response was not unique. Earlier, I mentioned the three experienced electrochemists who visited the McKubre laboratory at SRI, Menlo Park, California, during the years 1990 through 1994.

              They were A. Bard, (University of Texas, Austin, Texas), H. Birnbaum, (University of Illinois, Urbana, Illinois), Richard Garwin, (IBM, White Plains, New York), and N. S. Lewis, (Caltech). Each spent several days examining McKubre’s laboratory practice in detail.2 They found no procedural error with the measuring technique or data reduction techniques used to evaluate the operating performance of the cold fusion type cells. They had no contractual obligations either to reveal or to keep the things they learned confidential. Nevertheless, they chose to say nothing to the scientific community.

              Dr. John O’M. Bockris, distinguished professor of chemistry at Texas A&M University, College Station, Texas, ran cold fusion cells during the summer and fall of 1989. He reported excess heat and tritium, but the results were sporadic. At last, he came to a point where he had a cell that ran continuously for three weeks. It was time to call in some of his critical colleagues in the department who knew what he was attempting to do, so they could witness his results. The first one to be invited explained that he was busy moving from one house to another and could not spare the time. The second explained that he was simply too immersed in an examination schedule to break away, and the third just happened to be leaving on a trip shortly, so sorry. This inference of fear was a continuing pattern.

              Dr. Huizenga visited the cold fusion laboratory at California State Polytechnic University, Pomona, California, on February 28, 1997. At this time, he was retired. He was visiting at the invitation of the physics department to speak against the cold fusion heresy that was alive in their department.

              Drs. Robert Bush and Robert Eagleton, full professors in the department of physics, were running light water cells. Bush was Huizenga’s host in the laboratory.

              In Bush’s words, one cell was, “. . . evidencing excess power. And, while the gain (Pout/Pin) was rather modest at that time (about 1.12), the excess power was well outside the possible error bars . . .”3 Huizenga was invited to spend time taking data. Huizenga demurred. Bush invited him to return on another date and do so. Huizenga demurred. Bush then offered him a fellowship to cover the expense of a return visit. Huizenga demurred. He refused all offers to participate in the experimental work in accordance with the manner of Drs. R. W. Wood and Irving Langmuir in the cases of Blondlot and Barnes respectively.

              These illustrations of avoidance of the laboratory are representative of the intellectual climate ten years after the Utah announcement. If the reader feels that I have belabored my theme too long, let me say that, prior to his Italian visit, Goodstein represented the intelligent, knowledgeable, and cosmopolitan American physicist in his ignorance of cold fusion research after 1989, and in the audacity with which he has written and spoken about it without troubling to read up on the subject beforehand. What Goodstein learned was that, except for Petrasso’s well founded criticism of Fleischmann and Pons’s nuclear measurements, Baltimore was bogus. Cold fusion research was not a pathological science. The assault of Koonin and Lewis was mistaken: Fleischmann and Pons were not incompetent and delusional. Indeed, evidence of a new means of generating energy had been found in the flow of anomalous heat power that defied contemporary science.”

              as I said many times, Beaudette have well studied the mechanics of epistemological errors behind LENR denial. He made that small summary, which is worst keeping on a post-it.

              http://iccf9.global.tsinghua.edu.cn/lenr%20home%20page/acrobat/BeaudetteCexcessheat.pdf#page=164

              “In general, skeptics display the following habits.

              1. They do not express their criticism in those venues where it will be subject to peer review.

              2. They do not go into the laboratory and practice the experiment along side the practitioner (as does the critic).

              3. Assertions are offered as though they were scientifically based when they are merely guesses.

              4. Questions are raised that concern matters outside of the boundaries of the claimed observation.

              5. Satire, dismissal, and slander are freely employed.

              6. When explanations are advanced for a possible source, ad hoc reasons are instantly presented for their rejection. These rejections often assert offhand that the explanation violates some physical conservation law.

              7. Evidence raised in support of the claims is rejected outright if it does not answer every possible question. No intermediate steps to find a source are acceptable”

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            • By psi2u2 on September 9, 2014 at 8:11 pm

              The point of my mentioning the patent status was to indicate, perhaps too elliptically, that this is no longer a “Rossi says” situation – as almost everyone who has closely followed the developments is now aware. One may assume that Tom Darden, a leading industrialist in the alternative tech/energy/green field has done extensive due diligence before paying $12mill. + for Rossi’s technology. Darden et al. are not stupid. They say, by their actions, “this technology is real. We are developing it.”

              So, actually, I would say that it is significant evidence, albeit of an indirect and circumstantial nature. When you couple it with the absolutely crystal clear evidence that LENR is real (see the 2006 Sixty Minutes show linked below), the Fall 2013 E-cat tests by independent third parties, and the high probability for a much more extensive favorable report forthcoming probably this month and certainly before the end of the year, following another year of testing on Rossi’s device, then it begins to become clear that numerous indications contradict the claims put forth by Boutros Gladius

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  6. By Left Cold on September 8, 2014 at 1:08 pm

    I stopped reading at “cold fusion.”

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    • By MikeH123 on September 8, 2014 at 1:31 pm

      I am surprised a close-minded person like you got that far.

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      • By Left Cold on September 9, 2014 at 2:15 am

        In Coulomb’s law I trust. In those who deny the laws of physics, I do not.

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        • By AlainCo on September 9, 2014 at 2:33 am

          coulomb barrier, even in quantum context, is respected, however the freespace and two body assumption are simplistic and don’t match the context of the surface of a metal, especially when you consider the contaminants and the metalurgical change caused by the electrolysis.

          material science, like semiconductor science, is a speciality and probably nuclear physicist are not prepared to such complexity.

          to understand the problem, those 2 articles make comparison with transistor invention

          http://www.infinite-energy.com/iemagazine/issue25/transistors.html

          to understand the complexity of palladium surface the book “the Explanation of LENR” by Ed Storms, explain how the surface is far from the theoretical composition.

          It is contaminated, alloying with Li, full of cracks whos structure change with impurities

          http://lenrexplained.com/

          this is real complex lab science, not armchair and amphitheater joke science.
          You can read that presentation of ENEA results identifying the metalurgical parameters, conditioning the sucess of a F&P experiment, like impurities and crystallographical structure. Sucess can reach 100% if the surface structure is controlled.

          https://mospace.umsystem.edu/xmlui/bitstream/handle/10355/36833/ExcessPowerDuringElectrochemical.pdf?sequence=1

          anyway whatever you think , there is one point where you are wrong.

          if an experiment really challenge a law, the law have to surrender.

          but this law is not even violated, just simplictic assumption, as far as it seems. This story is an epistemology failure of nuclear physics method… and lack of bollocks by real scientist in chemistry and material science.

          for more detail, read Excess Heat by Charles beaudette who cover very well in parts “Validation” the errors on epistemology.

          http://iccf9.global.tsinghua.edu.cn/lenr%20home%20page/acrobat/BeaudetteCexcessheat.pdf#page=35

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          • By MikeH123 on September 9, 2014 at 8:43 am

            Good explanation. The fact that a panel of the DOE found that it was worthy of funding is good enough to at least allow for the
            possibility.

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    • By Robert Rapier on September 9, 2014 at 11:29 am

      I did have a concern when I read “cold fusion” in the article that it could very quickly become a distraction. Count me among the skeptics.

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      • By MikeH123 on September 9, 2014 at 12:16 pm

        I am skeptical that cold fusion can be developed in the foreseeable future. That is why I have devoted my life to sweet sorghum. My point is the market must be open to all technologies. Biomass, geothermal and hydro must be given a chance in the present and potential disruptive technologies like cold fusion for the future. As long as wind costs are subsidized to 3 or 4 cents and monopolies control markets, there will be no incentive toward technological advancement. I find that point too important to worry about it becoming a distraction to some people.

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    • By Robert Pollock on September 10, 2014 at 6:27 pm

      I couldn’t make sense of the first paragraph, but the gist of it is clear; This guy knows the inside deal-making, but he loses the non-familiar readers with his arcane rhetoric.
      In typical American fashion, we’re witnessing the emergence of new industries wherein everyone is jockeying for positions of advantage over the competition. At first this is very productive until the winners start to become obvious, and then they team up. It’s the cycle America runs through every forty years or so.
      Wall street trashed the US economy back in ’29 too, but people don’t remember.

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      • By MikeH123 on September 11, 2014 at 1:19 pm

        Don’t forget the huge contribution toward the Depression of the electricity monopolies.

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  7. By John Ihle on September 29, 2014 at 9:36 am

    Many of the points underscore the problem with energy markets and how complicated energy policy is. Most people simply don’t understand the energy business. After decades, in the U.S., of cheap energy ratepayers are used to “inexpensive” power and certain utility business models, especially in regulated states, that foster business relationships. I agree with almost everything in this article but especially with the comments concerning the ptc which is enjoyed by a handful of passive investors and c-corps. Tax policy sucks and is big time discriminatory. I don’t know much about the economics of bio mass but if people/communities fully realized how much money they export out of their communities and how those dollars could otherwise be put to better uses, vis a vis ancillary economic benefits, then there may be much more support. Community support is key and once you show how communities can participate in the economics it’s a big step forward concerning legislative support….. but then there are other obstacles such as finance and better finance models, coupled with tax and energy policy should be developed that makes sense.

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    • By MikeH123 on September 29, 2014 at 7:38 pm

      Good points. But my experience indicates trying to promote new technologies may be as difficult in communities as pols. America has politicized energy on so many levels. I would rather take my chances in countries with FITs like the EU.

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      • By AlainCo on September 30, 2014 at 2:30 am

        worse in EU.
        Try in China, it is less corrupted. ;-) no joke.

        The government know they will be beheaded if energy and pollution problems are not solved quickly… really beheaded, not an image, not politic. the usual Chinese popular revolt.

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        • By MikeH123 on September 30, 2014 at 10:37 am

          I am interested in talking or exchanging emails with you about experiences in both EU and China. I will look for you on your web site.

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  8. By Forrest on September 30, 2014 at 8:59 am

    Your post definitively whistle blower status. You have unique qualifications and experience to make the call. Most would not rock the boat, but attempt to crone up to the power base for gain. It does disgust me, with omnipresence advice of youth, that it is not what you know but who you know. I was listening to a economist talk of negative attitude to countries future as being a horrible development. Media entertainment could chose to instil viewership with a positive attitude, but it appears to be more popular to go to the dark side. You will become depressed if consuming pop culture. The economist was inspired per the positive attitude of science and invention during his youth. He fears the youth of today are convincing themselves to eat, drink, and be merry as doomsday is approaching. Nowadays, we are frightened by the politics of global doom and environmental collapse, unless axing capitalism and investing fully in central control politics. We appear to be doubling down on onerous regulations, that we all know just empowers cronyism and big contributors. We wonder why the rich get richer and middle class is dwindling down to lower class, but still vigorously support federal politics as the solution much like Argentina or Venezuela voters.
    Your solution does sound simple and effective. Also, I would like to see obtaining utility status dirt simple, for small generators and neighbors. For what I know, Enron’s biggest triumph was the supply trading of power. They had devised a marketplace per electronic trading to easily accomplish the task. This type of real time market trading could revolutionize this sector. Also, consumers per software could adjust to minimize their cost. FIT could be adjusted per price load of environmental unfriendly power production. A bias upon market to friendly power production. Also, cushions applied for low cost base load power to stay on line. I would love to see the consumer back in charge for a refreshing change. We should deregulate the market and forbid utilities from generating power. They sell power generation assets per open air auction. Utilities are linemen and metering business people. Encourage them to compete per fiber cable as well.

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    • By MikeH123 on September 30, 2014 at 11:02 am

      You have a similar rare perception of what is really happening to the world. Although I agree real-time trading is the best solution, I have found electronic marketplaces devised by utilities, including Enron, to be self-serving. It must be formulated by a neutral third party. But the corrupt pols won’t allow it.

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