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Andrew Cuomo, Governor Corruptocrat, imagines he can now get away with anything. That’s obvious from the deal he just cut with the Musk empire and SolarCity.
The SolarCity deal made by Andrew Cuomo, Governor Corruptocrat of New York, is emblematic of the Tammany Hall governance Mario’s boy has brought to the Empire State. It’s also as revealing as any case could be of the problem with subsidized renewable energy. It’s a special brand of corporatism that distorts markets rather than disrupts them (which is healthy) and rips off other ratepayers and taxpayers to the long-term detriment of that which it promotes – economically viable renewable energy. The deal Corruptocrat just gave SolarCity, now part of Tesla, just took New York and the solar industry another giant step in this wrong direction.
Many readers are, no doubt, well aware of the investigations of big-time donors to Corruptocrat among the principals of the Buffalo Billion / SolarCity deals. They also know what a politically correct sham the whole deal is; Corruptocrat’s answer for what he would do for Upstate after stopping fracking and killing pipelines, while, of course, coincidentally rewarding his donors and burnishing his green credentials for a Presidential run. Finally, they know how Elon Musk, the ultimate huckster, had to ride to the rescue of his cousins at SolarCity to save their behinds by rolling the failing company into Tesla, which still has enough true believers to maintain a decent stock price and some equity to borrow against.
What readers almost surely don’t know, though, is that Corruptocrat signed a deal giving SolarCity — more precisely, it’s subsidiary Silveo, everything being part of Tesla now — the ability to stiff New York State and walk away from the obligations it took on to get that $750 million from courtesy of their governor-emperor. The story is told at Seeking Alpha, a investment commentary blog, by a guy named “Montana Skeptic,” who is shorting Tesla because of it. Can you trust a guy named “Montana Skeptic” or not? Well, you be the judge but I’d say he’s picked up on a major scandal anywhere but the Emperor State where graft is assumed to be among the spoils of victory in a way that makes pikers of everyone but those governors of Illinois who alternate terms of office with prison time.
Observers of New York State politics tell me that one of the state’s selling points for the deal was that if SolarCity were to fail, the taxpayers would still own the building and equipment. As the deal amendments keep shifting equipment expenditures to building expenditures, though, the taxpayers will still own the building (same size, but with construction costs ever growing) but less equipment…
When we left off, SolarCity had conceded its Silevo Triex technology was completely worthless. Let’s recall that Triex was not merely important to the Riverside Agreement [the SolarCity deal with New York], but rather was at its very core:
The accomplishment of these Essential Purposes was to result in a Riverbend factory housing 1,500 or so employees and producing 1 Gigawatt of Triex modules per year at the start, and expanding later to provide an additional 5 Gigawatts of Triex modules.
None of this happened. And, more fundamentally, in view of the complete failure of Triex technology, none of this can ever happen.
Any lawyer worth his or her salt will look at these facts and see an obvious case for terminating the agreement. To start with, there’s the familiar rule that when one party breaches an agreement, and the breach cannot be cured, the other party can terminate and exercise its remedies…
But Instead of Terminating the Agreement Itself, New York State Made It Easier for SolarCity To Do So.
The original Riverside Agreement has a lengthy force majeure clause. Such a clause operates to excuse a party from performing its obligations when a “greater force” beyond its control intervenes.
As I mentioned in my most recent article, the parties quietly amended that clause…
Let’s now take a closer look. The amendment added the highlighted phrase:
This change is far from innocuous. What New York State did was to give Silevo a huge “out.”
It’s crucial to note that in the force majeure clause, “Silevo” is defined to include Silevo’s parent company and affiliates. Further, to create a force majeure excuse, the change in laws or policies doesn’t even have to be related to solar panels. All that’s necessary is that the change adversely affect the business of Silevo or its affiliate.
Silevo, of course, no longer has any business (as was quite clear at the time the amendment was signed). So, the amendment is really directed to changes that affect the business of Silevo’s affiliates, SolarCity and Tesla.
So, if a U.S. state changes its net metering laws (as Nevada did 18 months ago, and as several other states are now considering doing), then the adverse effect on SolarCity’s business will enable Silevo to escape its employment and capital contribution obligations under the Riverbend Agreement.
Or, if Congress were to reduce the 30% ITC allowed solar installations, same result.
Or, if Congress were to tighten the phase-out provisions of the electric vehicle tax credit, or pass legislation tightening up restrictions on “autopilot” claims, then the adverse effect on Tesla’s business also would enable Silevo to abrogate its employment and expenditure promises.
What’s that, you say? Surely the people who drafted the Eighth Amendment did not intend these sweeping effects.
Well, the people on the New York State side of the table may well have been too obtuse to understand what they were doing, but I am pretty confident the people on the Tesla side had a keen appreciation for what they were accomplishing.
Get that? SolarCity (a/k/a Silveo, a/k/a Tesla. a/k/a Musk) can walk away with a “Get Out of Jail Free” card. And, here’s more on the deal; none of it good for anyone but Elon Musk. What a country! What a state! No wonder New York is failing and Upstate is dying. It’s for sale to the highest bidder at an auction where the only accepted currency is either Cuomo campaign contributions and/or PC messaging credits to be redeemable during a Cuomo Presidential campaign.
Meanwhile, a free-market partial solution to Upstate economic woes that requires no government help — fracking — lies bound on an altar to the false god of subsidized “green energy.”
Hat Tip: C.A.