Why LEAPS is not Economically Viable
(See also the Nitty Gritty of LEAPS Economics)
Action you can take to help stop LEAPS
Why LEAPS is not economically viable
What credible persons and agencies say
Lies, Inaccuracies, and Misleading Statements
The Elsinore Valley Municipal Water District (EVMWD) and others extolling the benefits of the LEAPS power plant will not tell you the single most important fact -
The power plant is not economically viable!!!
If built, taxpayers, like you, will be required to dig into their pockets to make the shark promoters and investors rich.
Here are the facts:
- Federal Energy Regulatory Commission (FERC) issued a massive report on LEAPS in January, 2007 that thoroughly analyzed of the economics of operating the proposed power plant. Their conclusion was that the maximum gross annual profit would be $17 million.
- But, because the power plant would cost approximately $1 billion to build, the maximum rate of return to the investors would calculate to be only about 1.7%. That’s too low to motivate an investor, who could easily make a 4.5% rate or return investing in Government bonds.
- In actuality, the shark investors don’t want to put the full $1 billion to build the plant. They want to use “leverage”. Their plan is to put up only 30% of the $1 billion, and get bank loans for the remaining 70%.
- The annual payment on the planned $700 million bank loan (at 9.5% interest) would be $66.5 million. When this amount is subtracted from the $17 million annual gross profit, the annual net profit for operation the power plant would be a negative $49.5 million. That means that each year the power plant is operated it would lose at least $49.5 million.
- So who will pay to keep the power plant going? You guessed it! You will! The shark investors’ plan is to have the Government guarantee them an assured rate of return on their investment of $14.5%. So you’ll not only have to pay to keep the power plant running but also to make the investors bloody rich.