Applecart tipping?

Critics of an Apple/NVEnergy solar energy project, including at least two labor unions, say it needs heavy scrutiny from state utility regulators because of Apple’s history of secrecy and deception in exchange for financial sweetheart deals paid for by the public.

There are plans for Apple to construct an 18 megawatt photovoltaic solar plant in Yerington that will supply power to NVEnergy’s power grid, some of which would be used by Apple in its Reno and Truckee River Canyon facilities.

“We believe that we should have more green energy,” said Laborers Union Local 169 business manager Richard “Skip” Daly. “We support Sierra Pacific Power [parent of NVEnergy]. We have no qualms or problems with them. And we don’t have any, really, problems with Apple wanting to build it. We just are concerned about the lack of transparency—gag orders, all secret again. And if we end up with a similar deal through the secrecy and nobody can know what’s going on—that we did with the data center stuff and the $89 million through the governor’s office—that causes us concern.”

In June and July 2012, Apple cut a deal for tax breaks on a data center in exchange for facilities to be built in Reno and Sparks, a deal which was shrouded in secrecy. Use of code words and deceptive language in official documents, plus distribution of legally required information at the last minute, prevented members of the public and even some public officials who had to vote on the deal from knowing about it until after a consensus had been formed among state and local governments in favor of the project (“Deception,” RN&R, July 5, 2012).

The result was that Apple received the biggest chunk of welfare in state history—$89 million—in exchange for a data center that employs fewer than 50 people in full time jobs. Two hundred other employees are contract workers whose hours and benefits are uncertain. The public never had a chance to be involved.

A filing by NVEnergy with the Public Utilities Commission (PUC) said the solar plant construction would have no impact on ratepayers. Daly doesn’t think the Public Utilities Commission should take their word for it, given Apple’s history of secrecy.

“Apple’s going to finance it. From what I understand, Apple’s going to cut a deal and get discounted power, which benefits them. Sierra Pacific Power will eventually buy it back from them. And it will be paid for eventually by the ratepayers.”

Plus, Daly said, the plant’s power will count for NV Energy against the amount of alternative energy it is legally required to provide.

Another labor group, the Building and Construction Trades Council of Northern Nevada has petitioned the PUC to intervene in the case.

Apple spokespeople could not be reached for comment, but NVEnergy’s Faye Andersen said there’s a lot of bad information floating around.

“Apple will pay more for their desire to be green when it comes to energy,” she said in an email message. “This is a program that was developed that would allow customers to pursue greener energy outside of what’s mandated by the state’s renewable portfolio standards. Apple wanted to have additional renewable energy for their company’s energy use in Nevada. Apple will pay their full retail rate (no discount) PLUS an additional amount for renewable energy. They are therefore subsidizing the cost of the plant to make sure all other customers are held harmless since renewable energy is more expensive. The structure of the project lowers the cost of the project for all parties and requires that NVE and Apple be involved. Apple takes responsibility for building it and its initial performance. It also allows NVE to operate the facility thereby limiting the impacts of an intermittent resource by optimizing its operation in conjuncture with the Ft. Churchill gas facility.”

The arrangement makes it possible for NVEnergy to acquire the solar plant six years after it is constructed, which raises the question of why the utility isn’t building the plant and leaving Apple out of it.

Would a computer company turn to a power utility to build a computer manufacturing plant?

Daly, who is also a state legislator, said of the power utility, “We wonder why they wouldn’t just build it themselves. … One bill that was down in Carson City—I think it was S.B. 123—allowed them to build more of their own renewable energy.”

The Apple/NVEnergy deal has caused talk among local energy experts. One calls it “inexplicable,” pointing out that NVEnergy has a long history of building its own plants and resisting any other plans.

Since the simplest route to a solar plant is for NVEnergy to build it, bringing Apple aboard must have some effect that benefits someone, Daly suggests. And he suspects there is some financial incentive for the computer giant, which is known for expanding on other people’s money. There is a famous story about the city council in Apple’s corporate hometown, Cupertino, Calif., asking Steve Jobs for free wi-fi, and Jobs threatening to pull out of town and then saying, “Now, if we can get out of paying taxes, I’ll be glad to put up Wi-Fi.” The New York Times once ran an article titled, “How Apple Sidesteps Billions in Taxes.” When Apple came to Nevada, it was arriving in a state with no corporate tax, so it instantly saved California’s 8.84 corporate tax rate—yet it still shook officials down for the additional $89 million in tax breaks.

According to testimony by Sierra Pacific exec Bobby Hollis before the Public Service Commission, “By partnering with a third party on the project, the company [Sierra Pacific] is able to avoid the normalization impact which would limit the tax credit benefit for its customers under a federal tax requirement. … By undertaking the [purchase] option in a future year while the solar array is still fairly new, Sierra will be able to take advantage of tax benefits available at that time potentially yielding additional economic benefits.”

Anderson added, “While we have historically built many of our fossil facilities, we typically contract for renewable facilities. Apple is the customer specifically requesting renewable energy, a more costly resource, so it is subsidizing the cost for other customers. Apple has also built several renewable facilities throughout the country for its other data centers. And just as a point of reference, the Valmy plant [a Sierra coal-fired plant built in 1979-1981] from the beginning was and still is a 50-50 partnership between Sierra Pacific and Idaho Power Company.”

Daly still wants to know what’s in it, financially, for Apple. While both corporations emphasize Apple’s environmental commitment, it is not known as a green corporation. Under the subhead “Apple’s Been More Brown Than Green,” Mac WorldNews reported this summer, “Apple has had a spotty record when it comes to being environmentally conscious, however. In 2011, a Greenpeace report listed Apple as being the worst environmental offender in the technology industry.” Incidents in China have led to complaints about Apple’s use of toxic materials.

“The ratepayers are paying for Apple to get discounted power,” Daly said.

But one energy consultant said even if Apple does get discount rates, it does not necessarily hurt ratepayers unless the discount is below cost. And the consultant said that would certainly be examined by the PUC.

Daly wants all questions and implications of the deal explored by the PUC before various players get an economic stake in the project and make it impossible to stop.

“Apple wants to keep it all secret until it’s done and then say, ’Oh, great, here it is—take it or leave it. … Oh, we have the jobs, it’s just wonderful, we have jobs, we have green energy, it’s wonderful that we have green energy.’ Never mind that it may not be the best deal for the ratepayers long term. And that’s the transparency it lacks. … And then it’s all about, ’You can only have this if you do this.’ … Of course we want the jobs. We need the jobs. It’s great to have the jobs. But how much are we paying for the jobs? We’re paying Apple to take us out on a date.”