Senate Candidate Conducts Post Mortem of a Possum's Kingdom

Are We All Wet Yet?

Until one begins to delve into the true facts of the
dispute, it just looks like any ordinary West Texas hassle
over water.

But as the spade turns the earth, the awful truth begins to
sink in.

Dig this.

In 1938 the Works Progress Administration began turning dirt
to construct the Morris Sheppard dam at the Possum Kingdom
Reservoir. So named for the U.S. Senator from Texas who
arranged the financing, the massive hydroelectric power dam
soon backed up 550,000 acre feet of available water in a
total area of 750,000 acre feet on the unruly old Brazos
River. This resulted in average depths of nearly 80 feet of
clear, blue water - 17,700 acres of lake touching
alternately drought-stricken, flood-ravaged Young, Palo
Pinto, Stephens and Jack Counties and producing electrical
power with its two 11,250 kilowatt generators in 9 spillway
gates.

But in the year 2007 - 66 long years later - matters began
to go hincty in a big, big way.

It was in that year that the Texas Water Plan came up for
its five-year review and the legislature rolled it over for
another walk in the sun, eschewing sunset or alterations in
favor of its outstanding operation.

Problem: It was also in that year that the massive turbines
stopped turning to produce electrical power for the Brazos
Electric Power Company, purveyor of juice to cities all over
north and central Texas such as Cowtown and other western
environs.

Why? It was because of a lack of maintenance, according to
the folks who cut the operating permits for such projects.
It seems the Brazos River Authority had stopped keeping the
old tried and true project's bearings in plumb, its gears
and axles lubricated properly and its generators
refurbished.

Cussed old New Deal kind of thing, anyway, the renewable
energy project is the only one in the entire United States
that has been deactivated and closed for any reason - any
reason whatsoever.

What happened? The deal with Brazos Electric was subject to
state and Federal regulatory approval - approval that never
came. Brazos Electric could not justify investing in
repairs or replacements and the asset "remained in a state
of deterioration," according to the laconic language of
bureaucratic reportage.

Brazos River Authority is actively decommissioning the
operation at the present, according to a Brazos River
Authority Board Meeting Agenda item - number 9 on the
board's list of items for October 26 of 2009.

Where did all that leave Brazos Electric? They're stuck
with a half million dollar a year electric bill for power
they cannot receive. They allege a breach of contract.

They've brought suit against BRA in State District Court at
Waco, the 414th District, Judge Vicki Menard, presiding.

So, what does all that have to do with the State Senatorial
District 22 Repubican Primary race?

Plenty, as it turns out.

Waco's own Senator Kip Averitt is the chairman of the
Natural Resources Committee. He shepherded the current
water plan with its 4,500 "water management strategies"
designed to meet a need for water demands that will be
caused by an estimated population increase of more than
double the present 21 million to a projected 46 million
people by the year 2060. That represents an estimated
increase in demand for water to 21.6 million acre feet per
year, up from the present consumption of 17 million acre
feet at present.

Here's the rub. Existing water supplies will decrease by 18
percent - from about 17.9 million acre feet today to about
14.6 million acre feet in the year 2060.

The state's water managers say that is due to natural
sedimentation on the bottom of the state's reservoirs and
the depletion of aquifers. Texas will need 8.8 million more
acre feet of water by 2060 if new water supplies are not
developed.

Hydroelectric power as a renewable energy source helps pay
for water management projects such as the old New Deal
reservoir at Possum Kingdom with its venerable Morris
Sheppard Dam.

But it gets even better when you stop and look at the total
pattern that emerges in these questionable policy shifts.

The old Roman tradition of asking cui bono - Latin for who
benefits - throws the facts into stark relief.

On January 14, Senator Averitt suddenly announced he is
finding it "hard to strike a balance between my health, my
family, and my public service."

Putting his health "above all else," it was "with deep
regret" that he announced "the cessation of my Senate
campaign."

It was the end of multi-term tenure in the State House of
Representatives that began in 1992, followed by years in the
Senate for the Waco tax consultant, a product of the Baylor
School of Business.

But then along came his friend and colleague Chris DeCluitt,
a Waco attorney educated at Baylor Law who once served as
Judge Menard's campaign manager and is the presiding officer
of the Board of Directors of the Brazos River Authority. He
is also a member of the Republican Party of Texas' State
Executive Committee.

He decided to launch a "Keep Kip" movement, regardless of
the old boy's health.

The only other candidate in the race, Burleson investment
banker and commercial insurance broker Darren Yancy, a
conservative who has spent his business career researching
and promoting alternative, renewable energy projects,
decided to fight back in a big way. He's trying hard to
wear a couple of pairs of wingtips and he's gaining on his
goal.

He's not ready to let the County Republican Chairmen from
the 10-county Senatorial District select a candidate if he
should lose to a man who has declared if he's nominated, he
won't run and if he's elected, he won't serve.

He is touring the District letting voters know just what the
"fiscally conservative" Senator and his esteemed colleague,
the attorney and rock-ribbed Republican Executive Committee
member who helps run the Brazos River Authority with
conservative values galore, have left on the table.

It comes up to a lot of money when you take a hard look at
the figures.

Appearing before the Lake Granbury Waterfront Property
Owners Association last week, Mr. Yancy pointed out the
options facing BRA's management team.

They aren't very pretty to survey.

First of all, the stimulus package approved by the previous
Congress created a 30 percent energy tax credit on income
generated by renewable resources such as hydroelectric, wind
or solar-powered projects. When the current Congress
reauthorized that stimulus package, they changed the term
employed from a "tax credit" to a "grant." It's a hell of
break for those who sell electricity made with renewable
resources as opposed to fossil fuel solutions such as coal,
oil or natural gas.

Unfortunately, it's still laying there on the table where
the Brazos River Authority left it.

It won't be there for long, either. The grant expires with
the end of this year, 2010.

Remember, now, this is the only hydroelectric power project
that has been discontinued and deactivated in the entire
United States of America. It's a free country, but it's
also a very, very big country, remember?

But I digress. Let's go on to the options as outlined by
the investment banker, Mr. Darren Yancy, the once and
possibly future unopposed Repubican candidate for State
Senator in District 22.

We're going to have to take his word on these matters
because the executives and board members of BRA cannot
comment in any way.

They're involved in litigation, remember? It's only prudent
to keep their mouths shut about this affair.

There you have it. It's a state agency with taxing
authority, its leadership appointed by the Governor, but
they just cannot give up any details about their options or
what their intentions may be once they get this pesky
problem of Possum Kindom straightened out in District Court.

Onwards.

Option 1. - Since the State of Texas owns the facility, it
could always replace the asset with an "issuance of public
debt," taking advantage of what time remains to reap the
benefit of the 30 percent renewable energy "grant" bestowed
upon them by Congress. The advantage? Replacing the
facility that way would not have the same regulatory
constraints as a private solution. It should therefore come
online faster.

Option 2. - Find a private entity that will invest the $100
million it would take to refurbish the hydroelectric plant.
A questioner asked Mr. Yancy "just how realistic" would that
eventuality be. He answered, "There is probably $10 million
of venture capital available at this time." No problem
there. The down side? The transaction would be subject to
the same state and federal regulatory approval that snarled
the deal with Brazos Electric to start with, remember?

Option 3. - Restore a natural flow through the dam,
something the lake needs to survive. It can't be left to
stagnate and build sediment. It was designed for a natural
flow-through rate because of its hydroelectric function.
The way things stand now, in wet years such as 2007, 2009
and the present, the sluice gates are opened and water is
sent downstream. In drought conditions, who knows?

Still got to have water, hoss.

According to the hydrologists, it's bad news, a lose-lose
situation for those downstream and the condition of the lake
itself. They cite problems with bacterial build-up, for one
thing, algae blooms for another.

In any case, the figures tell a grim tale.

This would be the best case scenario:

With a total output of 25 Megawatts, assuming a 30 percent
tax grant of $45 million and a net financeable project of
$105 million, gross annual production revenue of $13,008,600
gets whittled down by an annual 10 percent administration
cost of $1,300,860, an annual loan payment of $5,957,756 at
5.25 percent - 360 payments - for a net annual production
revenue of $4,749,984.

Mr. Yancy's parting shots were acidic and timely.

For example, in response to a question about the BRA's
depressing proclivity to go into "executive session" when it
comes to any discussion of Possum Kingdom - litigation,
remember - "What you're trying to be nice about is, do we
need some changes at the BRA? The answer is yes.

"The reason they go into executive session is to do
something they don't want you to know about."

Asked why all the confusion, heat, thunder, lightning and
other distractions from the men behind the curtains, he
said, "This is where you have to look at who stands to
benefit more - one community or the entire Brazos River...I
have a bit of a problem signing off on a water plan when
these are the same people who mismanaged one of the state's
great water assets."

It seems the mainstream media chooses to ignore the status
quo - which is what that famous Texas Ranger once defined in
court testimony as "The mess we done got ourselves into
now."

Mr. Yancy's answer: "It's a grass roots effort - until
you've got someone in a legislative position to address it."

jim@downdirtyword.com