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Reply to Milwaukee Magazine

The following story in Milwaukee Magazine repeats as fact speculation about Koch Industries and a group of power plants in Wisconsin. Koch Industries has no interest in the power plants. The plants are obsolete and do not in any way fit the Koch companies’ current operations or their business plans moving forward.

The only mention of Koch potentially having an interest has come from partisan political activists and Koch opponents who have falsely injected Koch Industries and its owners into the Wisconsin storyline. These political opponents provide no direct, or even secondhand, evidence of interest from Koch. Rather, our opponents provide only false rumors.

By continuing this gossip, without doing the legwork necessary to find any substantiation of these rumors, the Milwaukee Magazine fails its readership.

STATE TO PUMP MILLIONS INTO POWER PLANTS IT COULD SELL

A Democratic legislator says Gov. Scott Walker’s $9 million plan to upgrade state-owned utility plants is a “sweetheart deal” designed to benefit someone unknown corporate interest. The allegation is the latest bit of speculation to arise out of Walker’s request to sell the plants without seeking bids.

What basis in fact is there for this and how would a legislator know about what a Governor is planning or not planning? Where is the substantiation of this alleged deal? The entire lead is literally based on “unknown” “allegations” and “speculation.”

As the Milwaukee Journal Sentinel reported in February, the proposal to potentially sell the power plants at issue was first raised in 2005, years before Governor Walker took office. It is inaccurate to call this “Walker’s request” to sell the plants.

Contained within Walker’s 2011-13 capital projects budget is $64.5 million in funding for the “repair and renovation” of state-owned utility infrastructure, including $9 million for the plants. In the original version of his budget repair bill, introduced in February, the governor asked the state Legislature for the authority to sell the plants in no-bid deals. That request was denied, but it fueled (and continues to fuel) speculation that Walker intended to repay campaign contributors.

Speculation from whom? The reporter doesn’t specify. One is left to conclude that the people speculating are the same people spreading the rumors.

According to State Rep. Mark Pocan (D-Madison), one of two Democrats on the commission, $9 million would be earmarked to improve 37 heating, cooling and power plants around the state. Investing in those improvements would increase the value of the plants, which Walker still intends to sell, the lawmaker says.

It is unclear why Rep. Pocan believes the $9 million “improvements would increase the value of the plants.” According to the Journal Sentinel story, “the value of the 34 plants [was] $235.9 million, offset by $83.9 million in debt.” In addition, the plants are the subject of litigation by the Sierra Club and potentially have environmental liabilities as well.

“This sure seems like a back-door giveaway to a still unnamed corporation that could buy those facilities,” Pocan said in a statement. “Giving $9 million in taxpayer money through a sweetheart deal to some super-secret private buyer is a shameful abuse of government and an affront to Wisconsin taxpayers.”

Milwaukee Magazine is not reporting news of any actual deal. Rep. Pocan is speculating.

Beyond the “repair and renovation” funding, one of the plants would receive an additional $7 million to convert its coal-fired boilers to natural gas. The coal boilers at the Waupun Central Generating Plant, which provides electricity and steam to Department of Corrections facilities, are 61 years old, the budget says, “and inefficient by modern standards.” The plant was forced to temporarily switch over to a backup natural gas boiler a couple years ago “because the emissions limit of the plant was close to being reached.”

Also included in Walker’s capital budget is $18.8 million for “health, safety and environmental protection” projects at several plants. The budget calls for using part of this money for new air emission controls at heating and cooling plants as well as chimney lighting, helping at least nine plants to meet Federal Aviation Administration regulations.

Walker’s budget repair bill, in its original form, would have permitted the state Department of Administration, DOA, to sell or lease any of the plants “with or without solicitation of bids for any amount that the department determines to be in the best interest of the state.” It also would have eliminated oversight of the sales by regulators at the state Public Service Commission, which would have determined if they served the public interest. Money from the sales, after the payment of debts, would have gone to balance the budget.

Obviously, the last sentence above is key to the proposal to sell the power plants in the budget repair bill.

As explained above, these plants are dilapidated and riddled with environmental liabilities. If the state were able to find a buyer for these plants (something many in Wisconsin feel is unlikely) it could use the proceeds to “balance the budget.”

Given Wisconsin’s grave fiscal circumstances, that is the true purpose of the power plant provision, and not some unknown, alleged, speculated “sweetheart” deal to an unknown company.

In the turmoil that erupted after introduction of the budget repair bill, bloggers and Walker opponents suggested that the plants would be sold at a cut rate to energy company Koch Industries as a thank-you for campaign contributions. The billionaire owners of the Koch companies, David and Charles Koch, are major funders of conservative causes, including Walker’s 2010 campaign.

These malicious rumors have no basis in fact. No evidence is presented to substantiate the charges of a deal which are continually repeated despite all evidence to the contrary.

Further, neither David Koch nor Charles Koch contributed any money to the Walker campaign. While KochPAC contributed $43,000 to the Walker campaign (or one-tenth of 1 percent of the total amount of money spent on the 2010 Wisconsin gubernatorial campaign, as has been reported in other news outlets), Charles and David Koch do not make any decisions concerning KochPAC’s contributions to any candidates, including Governor Walker.

Koch Companies Public Sector, the Koch lobbying arm, disavowed there was any such deal in the making: “We have no interest in purchasing any of the state-owned power plants in Wisconsin and any allegations to the contrary are completely false.”

In fact, Koch Industries has repeatedly disavowed any notion that the company would be interested in these obsolete power plants.

As Koch Industries commented to NBC Nightly News on February 22, “We have no interest in purchasing any of the state owned power plants in Wisconsin and any allegations to the contrary are completely false. This is a dispute between public-sector unions and democratically-elected officials over how best to serve the public interest. Unfortunately, there are those who would prefer to portray it as something else entirely. A balanced budget will benefit our company and its nearly 3,000 Wisconsin employees no more and no less than the rest of the state’s private-sector workers and employers.”

Asked by NewsBuzz at the time why the bill would permits sales without bids, Walker spokesman Cullen Werwie said the power plant section of the bill was intended to allow DOA to start looking at the possibility of selling the plants. The no-bid provision generated controversy in the state Legislature, even among Republicans, before it was removed: The Republican-controlled Joint Finance Committee successfully pursued an amendment in the state Assembly requiring JFC approval of any plant sales. The amendment would also have required DOA to provide a cost-benefit analysis of any proposed sale as well as an assessment of the plant’s value “by at least one qualified, privately-owned assessor.”

Even without the provision, DOA can still sell the plants, according to the nonpartisan Legislative Fiscal Bureau, although it must seek bids and, after June 30, must demonstrate the plants are “surplus properties” not needed to support state agencies.

Walker’s capital projects budget, approved by the State Buildings Commission, heads to the JFC next for debate.

To repeat once again: Koch Industries has no interest in the power plants. The plants are obsolete and do not in any way fit the Koch companies’ current operations or their business plans moving forward.

The only mention of Koch potentially having an interest has come from partisan political activists and Koch opponents who have falsely injected Koch Industries and its owners into the Wisconsin storyline. These political opponents provide no direct, or even secondhand, evidence of interest from Koch. Rather, our opponents provide only false rumors.

By continuing this gossip, without doing the legwork necessary to find any substantiation of these rumors – not found because they are, in fact, non-existent – Milwaukee Magazine fails its readership.