Tag Archives: No Powerplant


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Naivete

I look at the death to AES campaign and see a cynical manipulation of a worthwhile public movement by self-serving political operatives. I can’t help it. That’s what I see.

One part of the campaign seems to be driven more by lack of understanding and business experience than anything more sinister.

The fundamental choice not to include AES and consider the company’s interests in a conversation that is intended to determine the fate of the company’s operations in Redondo Beach could only be categorized as naive. Even if the leadership of the anti-AES movement is correct and the popular sentiment against power generation in the South Bay manages to push AES into a corner, it’s naive to think the decisions the company makes will not have a huge impact on what ultimately transpires between AES and Redondo Beach. Those decisions may have more impact on the overall outcome than anything coming out of the California Energy Commission.

Big, strategic decisions in corporations are made by boards of directors (BOD). I currently serve on the board of directors of a company that conducts business around the world. I also served on the board of a national industry association for 6 years. That board was made up of CEOs of all major businesses within the industry.

I only mention this because I think I can provide some valuable insight based on experiences I’ve had that the people leading the charge to crush AES have not had. We’re not talking about your condo owners association. The people who sit on BOD are industry leaders. They’re the one percenters, the people Republicans call job creators.

A quick look at the AES board will reveal some credentials like Freddie Mac, World Bank, IRS Commissioner and work in the office of Secretary of Defense, to name a few. It’s worth checking out, AES Board.

Board members make the most critical decisions within a corporation yet hardly any of them have any operations experience in the company. They’re the big, global thinkers. They don’t need to know how to turn on the power plant or clean the smoke stacks. They need to know how to set the company’s strategic goals and move toward them.

These people know where to look for the information they need. They know how to sift through it quickly and get to the most important material. They rarely hesitate to make big decisions because their own business success came from making the right decisions more often than making the wrong decisions. They have a confidence that’s bolstered by habitual success.

I’ve participated in hundreds of board meetings. Here are two situations that are entirely possible, maybe even likely, based on that experience.

(Note: The following accounts of board meetings are COMPLETELY fictional. I made them up. Also, unlike my fellow board members, I am not a one percenter. I don’t have an attorney on retainer who can advise me on the legality of using real names so I opt for names I’ve made up.)

Situation #1

Chairman: “Our next agenda item is the future of AES Redondo Beach. You all know AES Southland President, Ed Entwhistle. I’d like to call Ed up to fill us all in on the status of the plant and the repowering application.”

Entwhistle: “Thank you Mr. Chairman. As you all know, we’re up for a license review and renewal. The current license expires in 2018.”

“You’re also well aware we’ve had considerable resistance from various factions within the community, to any plan to repower and resume operations beyond the 2018 expiration date. We have a city council that seems to blow in the direction of the prevailing wind so we can’t expect any guidance from them.”

“The people behind the public opposition just want a fight. They won’t talk or consider anything other than a complete shut down of the plant.”

“The board may want to consider some limited options for maximizing the return from the underlying real estate in the event we fail to get permitted. For now, I believe we need to focus all our lobbying and legal resources behind pushing the permitting process through the CEC. We may find a reason or an opportunity sometime in the future to offer some concession on land, operations or both but for now there’s no one to negotiate with. My recommendation is to petition state regulators for an expansion and complete build out of the plant to its total, potential capacity.”

Situation #2

Chairman: “Our next agenda item is the future of AES Redondo Beach. You all know AES Southland President, Ed Entwhistle. I’d like to call Ed up to fill us all in on the status of the plant and the repowering application.”

Entwhistle: “Thank you Mr. Chairman. As you all know, we’re up for a license review and renewal. The current license expires in 2018.”

“You’re also well aware we’ve had considerable resistance from various factions within the community to any plan to repower and resume operations beyond the 2018 expiration date. The city council has shown considerable leadership in facilitating dialogue between the staunchly, anti-power plant citizens and the people within the community who believe the best thing for Redondo Beach and the South Bay is for some kind of negotiated solution.”

“We have a community that’s somewhat receptive to a solution that provides some significant benefits to the city and surrounding areas. My recommendation is that AES capitalize on this opportunity for dialogue and make every effort to find a way to bridge the significant gaps between the interests of the company and those of the community.”

Of course, Mr. Entwhistle’s address to the BOD would have much more data and substance but his observations on the ground and his recommendations would most likely influence the board’s decision.

The anti-AES leadership would probably respond to these imaginary conversations by saying they didn’t care. They don’t need or want AES to participate in the discussion of the company’s future in the South Bay.

That predicted response is based on their behavior thus far on the powerplant issue and past behavior on DD and Measure G. But does everyone else in the community who wants the powerplant to shut down believe we are going to get the best deal possible with the least damage to the city by staging an assault that doesn’t even acknowledge AES’s rights as a property owner and partner in the community?

I remember one time I went to court to fight a ticket I got for turning right at a red light that was posted, no turning. I took pictures of the branches that obscured the sign and created speed calculations that clearly showed I couldn’t have seen the sign. After showing it all to the judge he said, “So?” That was that. I paid a $200 fine.

Every argument the anti-AES people have, the plant isn’t needed, no one wants it, etc. may be completely valid and true. But in the end, being right about all of it my have little or no impact on the CEC ruling for the new license.

When that ruling comes down, 2 or 3 years from now, AES might get everything they want, a permit for a new plant, maybe even an expansion. It’s anyone’s guess how that decision will go.

Which BOD do you want in charge of AES if that happens, the one from Situation #1 that’s been pulled into a fight with Redondo or the one from Situation #2 that’s agreed to try to find an equitable solution?

If that decision comes down in favor of AES’s application to re-power, the company will have no further incentive to give up any land or any part of its operations. If the relationship to the city is hostile, you can bet the city will get nothing. Although it might get a hefty legal bill if the anti-AES folks drag us in that direction.

On the other hand, the process of facilitating the concessions the company made to the city could be well underway at that point. There would be no going back regardless of how good a deal they got from the CEC.

I can only speak for one person who would like to see a Redondo Beach with no powerplant on its waterfront. That’s me. I’d rather deal with a big business in a business-like manner, than take a naive position that risks landing the city in a worse place than where it began.