Charity? Yes, but charity for whom?

Ain’t charity grand? Even if it ain’t charity?

Some of the news accounts that heralded the announcement by Telsa Motors that it was giving $1.5 million to Nevada K-12 education as the first installment in a $37.5 million donation did get around to mentioning toward the end that the handout was part of a “commitment” the company made when it accepted $1.3 billion in tax breaks for building its electric care battery factory near Sparks in 2014.

All of the handouts were specifically targeted to items such as robotics and battery programs that might benefit the company.

The Las Vegas newspaper wrote that Gov. Brian “Sandoval said in a statement he was grateful for Tesla’s commitment and the opportunities it would provide.”

Grateful?

As one of the paper’s columnists got around to pointing out, the handout was required in the original deal. “Tesla will make direct contributions to K-12 education of $37.5 million beginning August 2018; grant $1 million to fund advanced battery research at UNLV; prioritize the employment of Nevadans and Veterans,” the deal states.

For that paltry sum and few other “commitments” the company got:

Columnist Victor Joecks noted:

Normally a company giving away millions of dollars for educational programs would be worth celebrating. But this wasn’t an act of corporate generosity. In 2014, the state provided Tesla with $1.3 billion in tax credits and abatements. As part of its pitch, the company promised to give $37.5 million to fund education programs.

Let’s save our praise for those doing philanthropy, not for a company using charity as political cover for a massive handout.

According to projections made in 2014, the gigafactory was to have 6,500 employees by now, but as of the end of 2017 it had only 1,400 employees.

According to the Nevada Appeal, Tesla qualified for $36.85 million in transferable tax credits, plus $115 million in tax abatements during the 2017 fiscal year alone.

Ain’t charity grand?

By the bye, Tesla’s CEO Elon Musk is worth $20 billion.

Tesla gigafactory tour in 2016. (AP pix via R-J)

 

 

Editorial: Billions for billionaires, pittance for parents

We now know the pecking order in Nevada.

In his State of the State speech this past week Gov. Brian Sandoval boasted that the Tesla gigafactory near Sparks, in addition to making batteries for electric cars, would also be making electric motors and gearboxes, adding 550 workers.

Left unsaid was who would pay for the police and fire, schools and other government services those workers would need, since Tesla was given $1.3 billion in tax breaks and credits, as well as promises of millions more to improve roads, by lawmakers in a special session in 2014.

Tesla is owned by billionaire Elon Musk.

Nevada takes care of billionaires.

Nevada lawmakers in a special session in 2015 agreed to dole out $215 million in tax abatements and credits plus millions in road improvements to entice Faraday Future to build an electric car factory at Apex in North Las Vegas. The company is owned by a Chinese billionaire.

As if on schedule, legislators in 2016 agreed to pony up $750 million in tax money to help build a domed football stadium for the billionaire owner of the Oakland Raiders, Mark Davis, and Sheldon Adelson, billionaire owner of the Sands casino corporation and the Las Vegas daily newspaper. The stadium would also require the state to spend $900 million for road improvements.

Mark Davis and Sheldon Adelson.

Almost as an afterthought, Sandoval tossed out a $60 million sop to the parents who have applied for education savings accounts (ESAs) approved in 2015 by lawmakers. The ESAs were blocked when the state Supreme Court said ESAs are constitutional but the funding mechanism devised by the lawmakers was not.

Under the law, parents who opt out of sending their children to public schools would be given an education savings account that would equal a portion of the statewide average the state spends per public school pupil, currently that is about $5,700. Low-income parents and parents with special needs children would get 100 percent of that amount, while all others would get 90 percent, or about $5,100 currently.

That money could be spent on private schooling, tutoring, transportation, distance education and/or homeschooling.

“We’ve heard from the thousands of Nevada families about how crucial it is that we give them freedom of choice in the education of their children,” Sandoval said in his speech. “I look forward to building a bi-partisan solution to get this done. It is time to give Nevada families more choice.”

Well, a few Nevada families perhaps.

It turns out the $60 million — $25 million in the first fiscal year and $35 million in the second — would fund about half the 8,000 to 9,000 ESAs already applied for so far in the first year and about two-thirds of them in the second year.

To add insult to injury, a spokesman for the governor said Sandoval is open to limiting who is eligible for ESAs by imposing means testing — the more a family earns, the less the family could get back from its own taxes.

When Sandoval announced his funding proposal for ESAs, Republicans applauded and Democrats sat on their hands, prompting the governor to quip with a chuckle, “I knew it would be a split house on that one.”

In 2015 not a single Democrat voted in favor of authorizing ESAs. Now the Democrats have majorities in both chambers of the Legislature, making that bi-partisan solution look like a pipe dream.

The governor had his chance to fund ESAs in that special session, while Republicans still held majorities in both chambers, in which lawmakers approved $750 million for that football stadium in Las Vegas, but he failed to put that on the agenda. Just not as important as the billionaires.

Nevada doles out billions for billionaires, but pittance for parents.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Tesla keeps raking in tax credits though its jobs and capital investments are falling short of projections

Inside Tesla gigafactory.

Nevada keeps handing out money to Tesla Motors even though it is not coming close to living up to projections made when the Legislature in 2014 agreed to $1.3 billion in tax breaks and credits in return for the company building a $5 billion, 10 million-square-foot factory battery factory near Sparks.

This week the Governor’s Office of Economic Development agreed to provide Tesla with $8 million in transferable tax credits, bringing the firm’s tax credits to more than $35 million so far, even though the company has created only 331 jobs so far, well under the projected 1,700 jobs, according to a 2014 analysis of the project by Applied Economics.

The factory’s capital investment is also falling short — with only $600 million invested so far, compared to a projected $2 billion.

Since the company has almost no tax liability in Nevada the tax credits can to sold, presumably at a discount, to companies who owe taxes. Previously, Tesla has sold $20 million in tax credits to MGM. The certificate for the $8 million specifies it is to be applied to gaming licensing fees.

The projections provided lawmakers in 2014 forecast the plant would have 4,700 workers in 2017 and 6,500 in 2018. It also estimated an economic impact of over $100 billion over the next 20 years.

 

Tesla finding empty boxes under its Christmas tree?

The writers at Seeking Alpha keep plucking ornaments off Elon Musk’s Christmas tree and smashing them.

John Peterson reports that the gigafactory near Sparks that is to produce lithium-ion batteries for Musk’s Tesla Model 3 electric car so it can carry a price tag of $35,000 is barely a shadow of the vision painted in smoke back in 2014 when the Nevada governor and Legislature swooned and handed out $1.3 billion in tax breaks and credits to Tesla for locating that factory in Nevada. (As reported by the Nevada Policy Research Institute and others, Tesla recently sold $20 million in tax credits, presumably at a discount, to megacasino company MGM, which will now pay $20 million less in gaming, sales and other taxes.)

“Unfortunately, the facility that’s taking form in the desert only has two manufacturing competencies (instead of the promised seven) and is a sickly shadow of the Gigavision that can’t deliver the promised savings,” writes Peterson, who predicts the gigafactory’s batteries will not be  cheap and the Model 3 will not have a $35,000 price tag.

Peterson said he sees nothing in Tesla’s SEC filings, press releases or conference calls indicating experienced industry partners are willing to fill the gap in those manufacturing competencies. “Without suitable industry partners the Gigavision will remain a Gigafarce,” he snipes.

Montana Skeptic also seems to think Musk has been more naughty than nice, noting that in the third quarter Musk used referrals, price-cutting, email solicitations, inflated values on trade-ins and two-year leasing deals to achieve his promised number of vehicle deliveries. But in the fourth quarter Tesla won’t have $140 million in regulatory credits to cover losses and now has SolarCity hanging around its neck.

Meanwhile, Anton Wahlman points out that “Tenneco’s chief technologist claims that new automobile emissions control technologies are reaching a dramatically efficient stage for regular gasoline/diesel cars. So efficient, in fact — he claims — that what comes out the tailpipe of the new car/truck is cleaner than what enters it through the air filter.”

So, who needs a zero emission electric car — or coal-powered car as skeptics like to call it — when gasoline and diesel cars and trucks can actually clean the air while operating?

Merry Christmas, Mr. Musk, and you too, Gov. Sandoval.

Tesla Model 3

 

Newspaper column: Ballot measures may let voters determine battle of titans

It can be rather entertaining to watch titans grapple for power — unless they are doing it in your backyard and you can be trampled.

The titans in this case are billionaires Warren Buffett, whose companies own Nevada’s largest electricity provider NV Energy, and Elon Musk, chairman of SolarCity, which installs rooftop solar panels that allow customers to purchase less electricity from Buffett.

NV Energy managed to get the state Legislature to change the law regarding rooftop solar panels and then convinced the state Public Utilities Commission (PUC) to drastically increase the connection fees charged solar panel owners and drastically reduce the reimbursement rate for power uploaded to the grid from those solar panels, which is called net metering. The ruling applies not only to new solar panel installations, but also to the 17,000 who previously installed solar panels with an implicit state promise of being able to earn a return on investment, which now is no longer possible for many. The new rates are being phased in over 12 years.

Though the rule changes are specific to NV Energy they have the potential to affect power prices and policies for other power providers in the state.

As an outgrowth of this struggle two measures have qualified to be on the statewide November ballot after garnering qualified signatures of more than 55,000 voters.

Question 3 on the ballot would amend the state Constitution to prohibit power company monopolies by 2023. The approved description of the amendment as circulated for signatures reads, “This petition prohibits a legalized monopoly for electric utility generation and gives Nevada electric utility customers the right to choose their service provider from an open retail market based upon price, reliability, and other important factors. This includes the right for these persons, businesses, associations, and other entities, whether on their own or in conjunction with others, to produce their own electricity from renewable energy sources or other sources, and to sell that electricity on the open market.”

Elon Musk and Sen. Harry Reid are listed by Ballotpedia as supporters of the amendment.

Question 5 would essentially repeal the PUC’s tripling of connection fees for solar panel owners and cutting reimbursement for uploaded power to one quarter of the previous rate. SolarCity and Reid are listed as backers.

Whether Question 5 will remain on the ballot will be determined by the Supreme Court, which has a scheduled a hearing on the matter for this week. A lower court judge has held that the matter, which substantially changes state law, should first go before the 2017 Legislature and then before the voters in 2018.

Both measures have the potential to alter the power market in Nevada. The voters may decide which titan wins.

In a case of the right hand not knowing what the left hand is doing, the Governor’s Office of Economic Development enticed Musk’s SolarCity to open operations in Nevada by offering $1.2 million in taxpayer money to create new jobs — $800,000 of which was already paid out when the PUC altered the playing field for solar panel firms and SolarCity responded by laying off most workers and shutting down most operations. Other companies have done likewise and rooftop solar panel installations have practically disappeared.

The PUC bought into the argument that solar panel owners used less power and therefore weren’t paying a fair share of the basic infrastructure costs, even though the only difference between solar panel owners and those who are just frugal is that solar panel output can be measured. They also agreed solar panel owners should not be paid the current retail rate for uploaded power, while ignoring the fact solar power is uploaded at peak power usage times when wholesale rates are far higher than the 24-hour average and often higher than retail.

This killed the rooftop solar business. According to media accounts, applications for solar installation dropped from 1,368 in December to 69 in January and only 18 in June.

As for Question 3, a number of major casinos are currently in the process of opting out of the monopoly power system, saying they can purchase power more cheaply on the open market. Why not others?

According to the U.S. Energy Information Administration, in the Mountain West region as of May Nevada had the highest residential cost per kilowatt-hour.

Disclosure: The writer is a solar panel owner.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Update: See Thursday posting here.

Letter writer makes a point but fails to go far enough

Hyperloop vision or pipe dream?

Tom O’Farrell of Boulder City makes a good point in his letter published in today’s morning newspaper.

He needles Gov. Brian Sandoval for comparing the Hyperloop project at Apex — basically a proposed pneumatic tube that might someday carry passengers and cargo at a high rate of speed — to the first powered flight of the Wright brothers. The writer points out: “The Wright brothers independently conducted all their research and development; designed, built and modified their aircraft; and tested at facilities they built and maintained in North Carolina, while maintaining their businesses and supporting their family.”

On the other hand, the Hyperloop is being handed a $10 million incentive package from the Governor’s Office of Economic Development for its effort. “That’s hardly analogous,” O’Farrell says.

Wright Brothers at Kitty Hawk

Or perhaps it is.

Just more than a century ago the federal government gave a $70,000 grant to Dr. Samuel Langley, the head of the Smithsonian, to build a heavier-than-air flying machine. After two of his planes crashed on take-off in the Potomac, Langley complained he was inadequately funded.

If only the federal government had given him more funding, he could have built a whole fleet of planes that could not fly — just like the windmills and solar farms and electric cars and Hyperloop facilities being built today that for the next 20 to 30 years will never fly in the free market but will be carried on the backs of taxpayers and ratepayers because the government, which prints money or takes it from the people and redistributes it, will defy the laws of physics and economics.

In December 1903, without federal grants, the Wright brothers flew their plane at Kitty Hawk, N.C.

Also pay no heed to the fact that Hyperloop is being pushed by Elon Musk, whose Tesla Motors battery factory plan got $1.3 billion in tax credits and abatements from Nevada lawmakers and whose moribund SolarCity has been promised $1.2 million from the GOED and is being paid for creating jobs while it is laying off workers.

 

 

 

How Nevada tries to attract jobs and then kill those same jobs

As my ol’ Pappy used to say, sometimes the left hand doesn’t know what the right hand is doing.

Or maybe the Public Utilities Commission should be renamed the Governor’s Office of Economic Dismemberment. On Tuesday, the three-member panel decided to abrogate the contracts that thousands of residential and small business owners made by installing rooftop or backyard solar panels. The PUC ordered NV Energy to start charging so-called net energy metering (NEM) customers a connection charge and to slash the credit for power uploaded to the grid from the retail rate to the wholesale rate — stretching out for years the length of time it will take for current solar panels to provide a return on investment and possibly making it impossible for new installations to ever pencil out. NV Energy must now provide the actual rates by Jan. 1.

Investor’s Business Daily, in a front page article, reports solar panel installers are threatening to pull out of Nevada, a move that would cost an estimated 6,000 jobs.

One of those companies doing the threatening is SolarCity, which, lest we forget, was enticed to open operations in Nevada just two years ago with a $1.2 million handout from the Governor’s Office of Economic Development. SolarCity is run by Elon Musk, whose Tesla Motors was given a $1.3 billion package of tax credits, abatements and infrastructure to build an electric car battery plant near Sparks.

According to IBD, SolarCity stock fell 6.8 percent Tuesday following the PUC decision but rebounded 5 percent this morning.

Bryan Miller, a vice president of solar panel installer Sunrun and head of The Alliance for Solar Choice (TASC), told IBD there will be litigation challenging the PUC decision because state law requires Nevada to encourage renewable energy investment.

“We believe the (Nevada Public Utilities Commission), appointed by Governor (Brian) Sandoval, has done the exact opposite today,” he said. “In a similar situation in Wisconsin, the commission acted without evidence and attempted to eliminate the solar industry. TASC sued and TASC won, and TASC expects to do the same here.”

The Las Vegas Review-Journal reports there are more than 17,000 net metering customers in Nevada.

The PUC ruling would allow net metering customers eventually to switch to time-of-use (TOU) tariffs, but most have not had smart meters long enough to be able to calculate whether that would be beneficial. Under TOU, power rates vary depending on time of day, higher in the hot afternoons in the summer for both purchasing and selling.

Net metering customer Louise Helton told the R-J the rate change cost her more than $600 a year and will add more than $12,000 to the cost of her solar system over the useful life of the system.

According to the website Protect Nevada Ratepayers, billionaire Warren Buffett’s NV Energy has made $345 million in profits in Nevada this year.

According to IBD, net metering is required in 44 states but is a thorn in the side of utility companies, which can buy renewable energy cheaper from utility-scale solar plants instead of giving credit for rooftop solar at the same rate as retail. But solar panel owners say they are not “selling” power, but are banking it.

With net metering, conventional power users must pay an extra cost, the utilities claim.

The state also required NV Energy to provide subsidies to cover the cost of installing rooftop solar panels, a cost passed on in the form of higher power bills to all ratepayers.

 

 

State’s shining deal with Tesla showing tarnish?

Writers at the Seeking Alpha website are taking a more jaundiced view of the much vaunted Tesla Motors and plans for a gigafactory near Sparks that was given $1.3 billion in tax breaks by the state.

Paulo Santos opines that the gigafactory will be much smaller than the announced 10 million square feet, perhaps 80 percent smaller. He quotes Tesla head honcho Elon Musk as saying,” But what we have found is, with the Gigafactory, that as we spent more and more time on it, we found we’ve been able to improve the space efficiency of the production and the overall efficiency by more than our initial expectations. So the net result is that we think in the same volume we can do potentially significantly more output.” (Santos’ bold-face.)

Santos also notes that a union told its members in March the project was being cut by 80 percent.

Long/Short Trader has a headline that reads: “The Tesla Bubble is Bursting.”

It notes there are problems with the production of the first orders of the Model X, as well as “exaggerated promises, and profligate spending.”

The writer notes that Tesla has lowered its estimate for the number of cars it will ship for the year from 55,000 to between 50,000 and 55,000. “All of this should come as no surprise to Tesla watchers. Musk tends to promise more than he can deliver and then attempts to make up for shortcoming later on,” the article notes.

Then there is the problem of lower oil prices, as well the fact earnings per share continue to decline and remain negative.

When Musk’s SolarCity was awarded $1.2 million in taxpayer handouts to open an office in Nevada for rooftop solar installations, then-Secretary of State Ross Miller fawned, “You had me at Elon Musk,” while voting to award the handout.

Tesla gigafactory

Newspaper tells of Musk largesse from government

According to calculations by the Los Angeles Times, California businessman Elon Musk and his Tesla Motors, SolarCity and SpaceX companies are sucking up $4.9 billion from the government trough.

The figure includes government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits, as well as tax credits and rebates to buyers of solar panels and electric cars. A hefty $1.3 billion of that comes courtesy of Nevada lawmakers in the way of tax breaks and abatements of the next decade for Musk’s battery plant near Sparks.

“The $1.3 billion that Nevada may wind up awarding Tesla is actually spread out over 20 years,” Musk said, adding that, “In order for the factory to receive that economic incentive we actually have to have an economic output from that factory of about $5 billion a year.

He said the factory will create 6,500 direct jobs, as wells as indirect jobs for support workers.

It also helps billionaire Musk to make a profit that otherwise might be elusive. The free market just won’t work.

Elon Musk (LA Times photo)

 

What makes Cortez Masto qualified to succeed Harry Reid?

Catherine Cortez Masto seeking Democratic nomination to replace Harry Reid in Senate. (R-J file photo)

Former Attorney General Catherine Cortez Masto has become the first Democrat to announce her candidacy for Harry Reid’s Senate seat and Harry has already endorsed her. It was in all the papers, along with everything you need to know about her merits and demerits — well, not quite.

As it turns out, a couple of the people being touted as potential Republican candidates for the seat figure into those demerits.

On March 24, 2010, Republican Gov. Jim Gibbons sent Democrat AG Cortez Masto a letter directing her to file suit challenging the constitutionality of ObamaCare. She immediately fired back a letter saying such action would be frivolous and refusing to do so.

She wrote:

“Our state constitution creates the Office of the Attorney General as a separate constitutional officer within the executive branch. The Attorney General is the State’s chief legal officer. Like you I have a responsibility to represent the State’s interests. As such, I must be satisfied in my own professional judgment that the case has merit and should be filed. I also have the responsibility to decide how and when litigation is conducted.”

Well, not exactly. As I wrote at the time, the Nevada Constitution and Nevada Revised Statutes seem to reach a different conclusion as to her authority to refuse the governor’s direct order.

The constitution says:

“The Secretary of State, State Treasurer, State Controller, Attorney General, and Superintendent of public instruction shall perform such other duties as may be prescribed by law.”

For the AG, law in NRS 228 states unequivocally:

“Whenever the Governor directs or when, in the opinion of the Attorney General, to protect and secure the interest of the State it is necessary that a suit be commenced or defended in any federal or state court, the Attorney General shall commence the action or make the defense.” (Emphasis added.)

The governor directed. The AG refused.

Another section of NRS 228 reads:

“If the Attorney General neglects or refuses to perform any of the duties required of him or her by law, the Attorney General is guilty of a misdemeanor or is subject to removal from office.” (Again, emphasis added.)

Mark Hutchison

Instead, attorney Mark Hutchison, now the lieutenant governor, was hired pro bono to represent Nevada in the unsuccessful litigation to overturn ObamaCare. He is now being urged to run for Reid’s Senate seat.

An attorney general who refuses to follow the law seems imminently qualified to succeed Harry Reid.

Then there was the criminal indictment by AG Cortez Masto against then-state Treasurer and  later-Lt. Gov. Brian Krolicki and his chief of staff over alleged mismanagement of a college saving program. No funds were missing but the AG’s office claimed Krolicki was not following state budgeting rules.

A judge dismissed the charges completely and Cortez Masto did not appeal.

But during the prosecution an invitation to a fundraiser for a Democratic opponent of Krolicki for lieutenant governor listed a sponsor of the event as Paul Masto, husband of the attorney general. She denied any wrongdoing and the event was canceled.

Brian Krolicki

Nevada State Republican Party Chairman Chris Comfort said at the time, “Catherine Cortez Masto and her friends are so arrogant that they change a few words on an invite and pretend this is no longer about Catherine Cortez Masto. The event is hosted by Catherine’s husband and Catherine’s top donors, and it underscores her personal and partisan crusade to destroy Brian Krolicki.

“Catherine Cortez Masto’s political stunts continue to erode public trust in her and in the judicial system,” he was quoted as saying.

Another qualification to succeed Harry Reid.

Krolicki also is said to be considering seeking the Republican nomination for Harry Reid’s Senate seat and contemplated a run in 2010.

In announcing her candidacy Cortez Masto also announced her resignation as executive vice chancellor of the Nevada System of Higher Education, a job to which she was appointed only three months ago after being termed out as attorney general.

She was appointed without benefit of a national search to a job that had been vacant for five years and paid a salary of $215,000, far more than her pay as an elected official, even though she had no experience in higher education.

Was it merely a ploy to keep her nose in the public trough until some elective office opened up?

Further showing her liberal bona fides, while serving as executive vice chancellor, Cortez Masto testified before a legislative panel against a bill that would allow concealed carry permit holders to carry their weapons on college campuses.

“AB148 is overly broad,” Cortez Masto testified. “This is a solution in search of a problem,” adding that guns on campus would have a chilling effect on academic freedom.

Another qualification to succeed Reid, who claims to support the Second Amendment, while voting consistently to curb those rights.

Even though Article 8, Section 9 of the Nevada Constitution states: “The State shall not donate or loan money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation, except corporations formed for educational or charitable purposes,” Cortez Masto opined otherwise when the governor and lawmakers wanted to dole out money to various companies to get them to move operations to Nevada — such as Elon Musk’s SolarCity through a so-called Catalyst Fund. (Billionaire Musk’s Tesla Motors later got more than a billion dollars in tax breaks to build a battery plant near Sparks.)

On three different occasions state officials attempted to get the voters to amend the Constitution make subsidies to companies legal. In 1992, a proposal was nixed by 76.5 percent of the voters. In 1996, 64.8 percent of voters opposed it. By 2000, resistance dwindled to 59.3 percent, but it still failed.

Despite the clear wording of the constitution and the majority of voters, AG Cortez Masto’s opinion on the Catalyst Fund states: “The Nevada Constitution does not prohibit the State from disbursing Catalyst Fund money to regional development authorities that by definition must be local governments, or prohibit local governments from disbursing Catalyst Fund money to companies.”

Some lawyers might call that money laundering. But that’s how Harry doles out favors to his cronies.

 

The only announced Republican candidate for Reid’s seat is Las Vegas City Councilman Bob Beers.