Energy Trust Board Red Rocks Biofuels Extension Recommendation Wednesday Missing Some Key Facts.

The Energy Trust of Oregon Board Package for Wednesday July 21 has a staff recommendation for action that would provide a 27 month construction complete deadline extension for the Red Rocks Biofuels Lakeview biomass facility, from September 30, 2021 to December 31, 2023. This preserves the current $2 million in Energy Trust fund commitment to the project. 

It would also add a March 31, 2022 milestone for securing construction financing. 

[ Pre registration to Zoom this 10 AM meeting is required  https://zoom.us/webinar/register/WN_Rop5EKstTWSWJ5zOZWjTIw ]

The staff recommendation indicates the project is now 60% complete but it missing multiple salient facts necessary to make an informed decision. 

This includes disclosure that the project has already received one prior extension and that the new March 2022 secure financing milestone would now be 5 1/3 years AFTER the first Board approved secure financing milestone of November 2016. 

[The Board meeting package download indicates that the June 6, 2018 briefing paper is included in the briefing materials but it isn't. It helps answer some of these questions; the Red Rocks Biofuels briefing paper in the Board Package is at PDF page 29 HERE].  

QUESTIONS:

1. What was the projected project cost when Energy Trust first approved the $2 Million incentive payment?
2. What is the projected project cost currently? Is that cost to just complete construction OR to get to operating status after completing performance testing? What happens if Red Rocks Biofuels misses its March 2020 secure financing milestone?
3. How much public funding has been provided to date to Red Rocks. What are the amounts of  PPP loans to Red Rocks and its contractors?
4. What is the status of a lawsuit to recapture funds paid to a Texas contractor that went into bankruptcy and how much to date did Red Rocks pay to this contractor?
5. Why did the Port of Morrow recently decline to provide $65 million in requested public financing for this project?
6. How does the market view the prospects for the project/ What is the pricing history of bonds for this project? 

PARTIAL ANSWERS

My prior Red Rocks Biofuels posts are HERE and can help provide some of the answers to these questions. 

The project received it first $74 million in public funding in 2014 from the US Agriculture and Defense departments. 

The Energy Trust Policy Committee discussion of this project began in November of 2015.

The Energy Trust Board first approved financing for this project on April 6, 2016 requiring the project to secure financing by November 30, 2016. It did not. 

The latest request would extend that secure financing milestone to March 30, 2022---5 and 1/3 years AFTER the first secure financing milestone.

In their June 6, 2018 meeting the Energy Trust Board approved an extension request (PDF page 25 in the meeting materials ) that required project completion by September 30, 2021. Minutes of this meeting (PG 12) indicated that the September deadline included an 8 month cushion for potential delays.

The project broke ground in July of 2018.

I calculate public subsidy to date of at $356 million, NOT including PPP loans or the value of any railroad improvement subsidies OR any opportunity zone/enterprise zone benefits. 

• $74 million from the Defense/Ag Departments
• $  2 million from Energy Trust of Oregon
• $ 280 million from private activity bonds from both Business Oregon and Oregon's Private Activity Bond Committee. 

Projected costs in the Energy Trust of Oregon June 6, 2018 briefing materials were $337 million. 

It is unknown what the cost to date has been, how much funding is not yet spent, and what the projected costs are to make the project operational. 

We know that Red Rocks Biofuels sought $65 million from the Port of Morrow beginning in the fall of 2020 so we know projected costs JUST to get to construction completion are at least $402 million and perhaps higher if the project is only 60% complete. 

We don't know how much if any Red Rocks Biofuels lost to the Texas contractor who went into bankruptcy, nor the status of the court case or how much is subject to possible recovery.

We know that price of bonds traded for this project demonstrate market views on the financial  feasibility of this project. 

Originally created and posted on the Oregon Housing Blog.