Bob Worsley: Crony Capitalist

Research provided by S.H.I.E.L.D.

Bob Worsley drove Snowflake White Mountain Power, LLC, into bankruptcy in 2010. See Arizona's Snowflake, Still Generates Power, Melts to Bankruptcy

"In documents filed with the US Bankruptcy Court, Snowflake White Mountain Power claims it’s roughly $50-$100 million in debt. At the beginning of last year, the Arizona plant’s original owner, Renegy Holdings, Inc., was given a $12.3 million “tax equity cash infusion” which then made AZ Biomass, LLC its owner.

Renegy still owns 1% of AZ Biomass; CEO Robert Worsley was reported as saying the company’s lender, Greenwood Village, appointed a receiver back in December after Renegy leaned and cried on the bank’s shoulder for assistance."

See also Biomass Plant may Shut Down amid Lost Deal

"The $53 million plant near Snowflake in northeastern Arizona opened in June 2008. It was forecast to employ about 12 people in the plant, with many more collecting wood fuel. Company officials could not be reached to discuss current operation levels."

Read what Bob Worsley had to say back in May 2007, before the plant went bankrupt, about his green, renewable biomass venture.

Cedars Capital Assists in Closing 24MW Biomass Plant Financing

"Commenting on the merger, Bob Worsley, stated, "We are eager to join forces with Catalytica Energy Systems to pursue a broader growth strategy and expansion into the renewable energy marketplace. The worldwide market for renewable energy is estimated to grow from approximately $55 billion in 2007 to more than $225 billion by 2016, positioning renewable energy to become the fastest growing sector in the energy market over the next decade. In the U.S., in particular, an increased focus on climate change, environmental awareness, energy independence and security are driving significant market growth. Renewable Portfolio Standards (RPS) or voluntary goals for adopting renewable energy are already in place in 23 states plus the District of Columbia, representing over 65% of the U.S. population, requiring that utilities obtain as much as 30% of their electricity from renewable sources within the next 10 years. Increased demand for fuel diversity is also creating significant opportunities as utilities recognize that securing power from multiple generation plants, including renewable sources, can play an important role in helping to protect against price volatility and supply uncertainty.

"Worsley continued, "I am very excited to have the opportunity to lead Renegy and to work with Rob and our combined teams to capitalize on the substantial market opportunities we see ahead and to become part of the solution to ensuring a future of sustainable energy for generations to come."

The article continues, “Construction and implementation of the SWMP (Snowflake White Mountain Power) plant and related assets has been financed through $20 million in equity contributed by Bob Worsley and $53 million in secured, non-recourse debt, including $40 million in tax free industrial development bonds and a $13 million term loan with an 18-year amortization schedule. Once fully operational, the estimated debt payback period of the plant is approximately nine years based on revenues derived from its long-term PPAs.

"Multiple other renewable energy project opportunities are currently being explored in the Western and Southwestern U.S., including additional biomass plants along with anaerobic digester, concentrating solar and wind projects.”

Government Loans and Stimulus Money

Here’s the “$40 million in tax free industrial development bonds” that Worsley received from the Industrial Development Authority of the City of Show Low

Not mentioned in the article, Worsley also received a guaranteed $16 million loan from the U.S. Department of Agriculture to build the biomass electrical generating plant. 

"The U.S. Department of Agriculture announced Monday that it will guarantee a $16 million loan to an Arizona businessman who wants to build a biomass electrical generating plant, which will create energy by burning timber and paper.

Robert Worsley, sole owner of Snowflake White Mountain Power LLC, said he would put up the remaining $7 million to $10 million in cash needed to make the plant a reality."

Worsley was also the beneficiary of federal stimulus money.  See page 12, under “Success Stories.” 

Crony Capitalist/Venture Socialist

Bob Worsley is a crony capitalist who feeds at the government trough for loans and stimulus money.  These dollars flow freely from a government that has a preference for subsidizing the very industries in which Worsley has chosen to engage (biomass, solar, wind). 

Unfortunately, as his bankruptcy proves, Worsley’s not very good at being “part of the solution to ensuring a future of sustainable energy for generations to come,” as he states, even with the infusion of both government and private money. 

Yes, there is “opportunity” for Worsley's kind of venture socialist, because the government has mandated that “utilities obtain as much as 30% of their electricity from renewable sources within the next 10 years.”  That’s why APS and SRP are buying energy from Worsley.  Not because it’s cheaper.  It isn’t.  It’s more expensive.  They have been ordered by the United States Government to buy it from "green, renewable sources of energy."

That “opportunity” is costing us millions of dollars, as our government continues to force us to pay for their research and development projects.  We pay for it through guaranteed loans that default, government grants, special tax credits, free solar given to our neighbors, and higher energy costs.  

In July 2012, the East Valley Tribune reported SRP proposes 4.8% Rate Hike this Fall.    

“The rate hike would allow SRP to make $50 million in repairs to ensure reliability, invest $40 million in renewable resources and continue with $500 million of required environmental upgrades at the Coronado Station in St. Johns.”

Does the company that Worsley partnered with, Catalytica Energy Systems, sound familiar?  Maybe this will jog your memory.  Widespread Impact feared from paper mill closing in Snowflake, Arizona

Renegy Holdings, Inc. Losses since Inception

Here are excerpts from the 12/31/2007 Annual Report for Renegy Holdings, Inc.  Bob Worsley was the president, CEO, and Chairman of the Board.  Take special note of the very last line. 

"We have incurred significant losses since inception. We anticipate incurring significant losses until we are able to commence operations of the Snowflake plant and we likely will continue to incur losses, which may be significant, even upon operation of the plant.

We have had a history of losses since inception. For the twelve months ended December 31, 2007, we incurred losses of approximately $15,180,000 (which consists of our losses of approximately $11,561,000 for the fourth quarter of 2007 and the Snowflake entities losses of approximately $3,619,000 for the first nine months of 2007). The Snowflake entities incurred losses for the twelve months ended December 31, 2006 of $6,800,000. Our cumulative losses since inception, including the losses of the Snowflake entities, total approximately $23,627,000.

We anticipate that we will incur significant losses at least until the Snowflake plant is completed and fully operational. Further, even if the Snowflake plant operates as expected, we likely will continue to incur losses, which may be significant, because of the level of our corporate overhead, including the business development costs of seeking to acquire and/or develop additional power plants, and other operating expenses, including our fuel aggregation and wood products business and various lease and financing obligations for property, plant and equipment (collectively, our “corporate overhead”).

Even if the Snowflake plant generates positive cash flow in the amount anticipated, we do not believe such cash flow will be sufficient to fully cover our corporate overhead and debt payment requirements. Thus, we ultimately do not expect to achieve positive cash flow from our business until we have acquired and/or developed a sufficient number of power plants to generate enough cash flow to cover our corporate overhead, and we currently do not have the financial resources to acquire and/or develop such plants. Moreover, if the Snowflake plant performs poorly or costs of operations are significantly higher than anticipated, it is possible that the cash flow from the operation of the Snowflake plant may not be sufficient to pay the indebtedness on the plant, in which case we may default on the debt financing secured by the plant. Any of these scenarios would have a material adverse effect on our business, financial condition and results of operations and could result in our stockholders losing their entire investment."

NOTE:  Bob Worsley's Snowflake White Mountain Power, LLC declared bankruptcy in July 2010.