News and Features: Features
'Am I a true believer? Absolutely.'
April 09, 2013
This slightly edited interview with Cape Wind’s James Gordon took place at his office at the Park Plaza Office Building in Boston on Feb. 28 at 10 a.m. in the office’s conference room. Read the full story, and the full interview with Bill Koch.
CommonWealth: Tell me your impression of Bill Koch.
GORDON: I met Bill back in probably the late ‘90s, and I met him because I had developed a number of gas-fired power plants and we decided to sell an interest in some of those plants. Bill had a company called Oxbow Energy that was in the energy business in coal, petroleum coke, but he also had a couple of power plants. He approached me to see if he could bid on the plants. This obviously was a long process. My office was in Dartmouth, Massachusetts, at the time. This was the time when he was promoting the all-women’s America’s Cup team. He invited me to go out off of Newport and watch the trials and practicing. That is really the first time I met him and spent a little time with him. He was unsuccessful in the bid for our projects.
CW: What did you think of him? You were talking to him out on a boat?
GORDON: Yes, he’s in his natural environment. He’s watching the America’ s Cup women’s team, half of them came from that old television show American Gladiators, where they had the names like Raven and Lightening Bolt. Seriously. I’m not a sailor. I didn’t grow up in that milieu of Newport, so it was an interesting way to spend an afternoon. He had a party at this mansion he was renting in Newport.
It was surreal. I remember Dennis Conner walked in. I felt like I was kind of watching a movie. Ever had that experience when you’re out of your element and you’re watching a movie? It was interesting. It was an interesting evening.
CW: Did you feel like you could relate to him because you’re both businessmen?
GORDON: Obviously we’re in very different areas of energy. I could certainly relate to the challenges he faced as an executive trying to run an energy company, more so because he had developed a natural gas-fired plant in upstate New York and I believe that he had developed a geothermal plant somewhere. I will tell you that these meetings were – it was an afternoon and an evening – and then I didn’t see him for a long time. I remember I bumped into him one time on a plane.
It really wasn’t until I started doing the Cape Wind project that I made a call to him. I think it was around 2002. The reason that I made a call to him was I knew that he lived down on Cape Cod, he had a summer place there. What I was trying to do was meet with opinion leaders and I called him up because I knew he was an energy executive, I knew he was a sailor, and I wanted to brief him on the Cape Wind project.
CW: What did you say to him on that call?
GORDON: I said, “Bill, it’s Jim Gordon. How are you?” We kind of chatted for awhile. I said, “Bill, as you know, I’m going to develop America’s first offshore wind farm. I’m sure you’ve been seeing some stuff in the newspapers. It’s going to be on Nantucket Sound.” I didn’t know where his house was at the time or what proximity it had to the project. I wanted to call him up and talk to him because obviously what we were trying to do was start building support for our project. We were trying to educate people. So he said let’s get together. Come on over, we’ll have dinner.
CW: Did you know where he stood on Cape Wind at that point?
GORDON: No, I didn’t know either way. And we had dinner.
CW: Koch’s memory, and he mentioned this in a Wall Street Journal op-ed in 2006, is that you invited him to invest in Cape Wind at that dinner.
GORDON: Let me state one thing very clearly. The Wall Street Journal op-ed piece was much farther down the road from the first time we got together. At no time did I ask him to invest in the project.
CW: He says he asked you what’s in it for me and claims you said it would be possible for him to invest in the project.
GORDON: First of all, if I said that then, his next thing would have been let me see your financial statements.
CW: That’s what he says he did. He says he asked for your financials.
GORDON: No, absolutely not.
CW: He says he asked for your financials, but you refused to provide them unless he committed to the project.
GORDON: Let me tell you what he said he was going to do on his own. Let’s go back to this first meeting. We’re having dinner.
CW: Was the dinner at his home in Osterville?
GORDON: It’s a gated community….Have you ever seen the Daily Show segment? [He is referring to a segment on the Daily Show that spoofs the fears of Cape Cod residents about offshore wind turbines. The segment features a shot of the entrance to the gated Oyster Harbors community where Koch’s home is located.]
CW: When you’re eating dinner, where are you? Out on a veranda looking at the ocean or inside?
GORDON: We’re inside. It was the summer. We had gone out on his veranda and he walked me around the property with the Botero statues.
CW: What are the Botero statues?
GORDON: Botero is like this famous sculpter. He had some statues. He’s an art collector. He collects a lot of things. He took me down to his wine cellar which is designed like a ship’s hull. It had a – I’ll never forget this – this was like 2002, before they started doing the self-serving wands that pick up the universal price codes in the supermarket. He marks the inventory as it goes out. He had this wand. He’d take a bottle out and he’d wave some electronic thing over it and that would signal what he’s done. I’m not mocking any of this, I want you to understand, I’m just trying to give you the atmospherics.
So we’re talking and we’re catching up and talking about this and that and I had a map with me of where the site was on Horseshoe Shoal and I believe that I brought with me a couple of posters and showed him visual simulations. I brought him a poster where, under our permitting process, when the Army Corps was the lead permitting agency, we had to do visual simulations of what the wind farm would look like. So we actually hired a company out of Syracuse, New York, who specializes in doing visual simulations of bridges, buildings, whatever, that’s their sole specialty. There’s a protocol that you have to do it under the Army Corps of Engineers. Oftentimes people take our visual simulation and blow them up. On the Alliance’s website, they blow them up, which is completely false and not the way they will look.
CW: Did you bring those because he had expressed some concerns about the view?
GORDON: No. It was a natural thing, orienting him to where the site was. I also knew he knew the waters of Nantucket Sound as a sailor, or I assumed he did. Honestly, I didn’t know a lot about him, other than that meeting we had in Newport and the interaction his company did in looking at our assets that he was interested in buying, I didn’t know a lot about him. I really didn’t. I didn’t know his hobbies and personal things other than the sailing that you read about. I went into a presentation. I talked about the rationale of the project. I talked about having spent so many years in New England developing projects.
We talked about the portfolio of energy resources. He knew that one of the reasons we were developing natural gas-fired power plants was because at the time we didn’t really have natural gas-fired electrical generation in New England. It was coal, oil, and nuclear power, mostly. And this was a way of bringing diversity into the energy portfolio and anchoring the ability to bring in new natural gas supplies not only for natural gas generation but also for heating purposes. Those plants became anchors for pipeline investments. It was diversity and we were able to develop these natural gas projects because environmentally they were superior to heavy oil and coal.
We had talked about our experiences and I said, “Bill, we’re starting to see that New England is aiming toward an over-reliance on natural gas. What we’re trying to do is look at where we believe the trend of energy development is going in New England versus the alternatives. We think this is a good project. Here’s where it’s going to be. It’s on a very shallow shoal. It’s away from the shipping lanes and the ferry lanes. A lot of sailors avoid Horseshoe Shoal because it’s a shoal, and it can be very shallow in places. Here’s what it will look like.” I remember when I showed him the visual simulation he said, “Well I’m going to do my own visual simulation.” I said, “Yeah, fine, here’s what it will look like.” I even think he asked me for a layout of the turbines or a copy of the map because when we showed him the shoal we showed him where the turbines would be on the shoal. I believe that I did give him a copy of where the wind turbines would be so he could do a visual simulation on his own. He said to me – I’ll never forget – he said to me, Jim I’m going to do my own visual simulation and if I don’t like the way these things look I’m going to fight you tooth and nail.
CW: Was this at the end of the evening?
GORDON: Yeah, toward the end.
CW: And it’s just the two of you?
GORDON: His wife, it might have been his girlfriend at the time, Bridget Rooney, she ate with us. And her younger son was there. They ate and Bill and I went off and we sat in a sitting room somewhere and we were talking. If you’re saying he said what’ s in it for me, I don’t recall him saying that, but he might have said it later after I called him up after the Wall Street Journal op-ed. I told him you’re way off on this. At the meeting on the Cape, I wouldn’t say any die was cast.
CW: Mr. Koch told me he felt he had heard your pitch before, even given it himself. I got the feeling he felt he could relate to you because you’re a businessman, but he felt you talked as if you wanted to save the world.
GORDON: Am I a true believer? Absolutely. All you have to do is look at my career. I started in energy conservation and did energy conservation projects for 10 years. I was in a gas line during the oil embargo. I had just gotten out of Boston University and the events of the ‘70s really made me start thinking about energy and where things were going. I’ve always been like a political junkie and interested in geopolitics. So I got involved. I did energy conservation for 10 years. Basically, we started to develop biomass renewable energy projects and natural gas-fired generation. And the reason we did that was because I realized that if I could develop a natural gas-fired power plant – look at the heat rate of a coal plant or an oil plant, 13,000 mmbtus per kilowatt for coal, 12,000 for oil, 8,500 mbtus to generate a kilowatt with natural gas. It’s because combined-cycle gas plants were so much more efficient. The emissions were orders of magnitude less than coal and oil. We were one of the pioneers. We developed the first natural gas-fired cogeneration facility in New England, the Pawtucket power plant. We developed the first natural gas-fired independent power facility, which was strictly natural gas electric generation in Dartmouth. We developed the first merchant electric plants with no contracts. I felt that if we could provide environmentally superior, more efficient generation, the profits would follow. I wasn’t thinking I could make more money building a coal plant rather than natural gas or I can make more money building an oil-fired power plant. I was thinking about responding to the, trying to help pioneer and break through the utility monopoly. This was the early days of independent power generation, trying to come up with better ways of producing a product that we all need and use every day.
CW: That first call and meeting about Cape Wind with Koch was 2002, right?
GORDON: Yeah, I think so.
CW: Was the dinner a long time after the call or shortly after?
GORDON: The dinner was shortly after the call.
CW: Are you saying you didn’t talk again after that dinner until after he wrote the Wall Street Journal op-ed piece?
GORDON: We talked in between the dinner and the op-ed piece and he basically said I don’t like this and you shouldn’t do this and I’m going to fight you.
CW: So it wasn’t until after the dinner that you realized he was going to oppose Cape Wind?
GORDON: I thought that very first night at dinner. I sensed that this guy was going to be a problem. [Laughs.]
CW: Because of his comment about the visual simulation?
GORDON: Right. Later on, as I understood him more and saw some of the publicized activities like the art collections, the things we love at the Museum of Fine Arts, the fact that he’s recreating this frontier town for his own purpose. This is just the way it is. This is just my observation of the guy. Personally, on a level of sitting down with him and having a drink with him and talking, he’s a very amiable guy. He’s an interesting guy.
CW: So you had a parting of the ways but you continued to talk.
GORDON: I had lunch with him at his yacht club in Palm Beach. My mother, who is 86 years old, lives part-time on Cape Cod in the town closest to where the Cape Wind farm will be and also she lives in a small town in Florida near Palm Beach. So when I go to visit her and bring the grandchildren, I’ve gotten together with Bill a few times.
CW: So even after Koch had made clear his opposition to Cape Wind, you kept reaching out?
GORDON: Yes, I did. There’s no doubt about it.
GORDON: I knew he was the chairman of the Alliance to Protect Nantucket Sound. I knew that he was spending millions of dollars opposing this project. I knew from records that his company was lobbying as well.
I want to say something that you should know about. This is very well known. One day we woke up and we saw Walter Cronkite on television, the most trusted man in America, doing commercials for the Alliance to Protect Nantucket Sound. This was the guy who turned the tide on the Vietnam War. I reached out to Walter Cronkite and gave him the facts. I brought the map and the visual simulations and we spent 2 1/2 hours together at his house in Edgartown. He told me that he had been badly misled by the opposition group. As you know, shortly after the visit, he called the Associated Press and said he had made the cardinal sin of a journalist, talking to just one side. He said he had met with the developer and didn’t realize the project was located on a navigation wasteland, that was his comment. The opposition group was putting out these gross depictions of what it would look like and scaring people, all kinds of fear mongering.
Another guy I spent a lot of time talking with was Dan Wolf. [Wolf is now the senator from the Cape.] At one time Dan was an opponent. He was in the opposition group and he started listening to the hyperbole. I had many conversations with Dan and, to his credit, and what I admire about the guy, he got on a plane and took his 14-year-old daughter to Denmark [where ocean wind farms were already built] and he walked the beaches there and talked to people there. He came back and he wrote an op-ed piece saying he supported the project.
CW: So you’re saying your effort to reach out to Bill Koch was not unusual?
GORDON: That’s right. While they were spending their millions on political operatives, advertisements, and public relations people, we were spending our millions doing scientific research, environmental reviews, and socioeconomic reviews. We just didn’t have the money, we didn’t have the relationships with the entrenched elite. The former executive director of the Cape Cod Chamber of Commerce left the chamber to become a lobbyist for the Alliance.
From the day we went down there and had the first public hearing at the middle school in Yarmouth, before the ink was dry on the proposal, this group was formed and was trying to define the Cape Wind project through a litany of myths, red herrings, lies. We knew that we had to go through a very comprehensive regulatory process. A lot of the environmental organizations knew that we were a good actor in the business. It’s not often that you have environmental organizations working hand in hand with energy developers, particularly back 10 to 15 years ago. But they knew we were good actors because we came in and proposed good projects.
Three of our natural gas-fired power plants killed three coal plants. When they were proposing a 300 megawatt coal plant in New Bedford, we had a different idea. We wanted to put a natural gas-fired power plant in Dartmouth. When they were proposing a coal plant in East Providence, we had a better idea, to put in a natural gas-fired power plant. When the Silver City coal plant had almost been permitted, we decided to put in the first natural gas-fired merchant electrical plant in Dighton, Mass. By virtue of the choices that we were making and the projects that we were building, we were having an effect. That didn’t get lost.
While the Alliance is out there trying to define the project – Mark Rodgers and Rachel Pachter, our manager of environmental permitting – they were out there, including myself. I went into schools, senior citizen homes, coffee meetings and had cookies in people’s living rooms to talk about the project. We were waiting for the cavalry to come in. We were kind of surrounded, and that cavalry was the environmental organizations. But they said, Jim, we think this project has potential but we don’t react on a knee jerk or visceral reaction. What we need is to have the science. We need to have a draft environmental impact statement. We’re participating in the hearings. We’re making sure the regulators look at every aspect of this project. But we really need to have something on the table that we can look at and agree with. Finally, in 2004, the Army Corps of Engineers put out that 4,000-page environmental impact statement and that turned the tide. All of a sudden we had the Conservation Law Foundation, the Natural Resources Defense Council, Greenpeace, Clean Water Action, and the Sierra Club. They all started to look at this and they said this project looks good. There’s still a lot more work to do, but it looks good. So all of a sudden it wasn’t just us. The point that I didn’t finish was that at that first hearing in Yarmouth, I walked out on the stage and said, “Look folks, we have this idea. I’ve been in the energy industry for a long time. Some of the electrons from my Dighton and Dartmouth project have probably gone into your homes. What we try to do is figure out ways to produce energy more efficiently and more cleanly. What’s going to happen is there’s going to be 17 state and federal agencies that are going to look at this project and they’re going to weigh the benefits and the impacts. Folks, every energy project has an impact, including the Cape Wind project. But what we believe is that the impacts from this project will be a lot less than if you choose a coal plant or a nuclear plant or even a natural gas-fired power plant. If after the regulators look at this and they determine that we missed the mark or we were wrong, we are going to be the first ones to call it a day. So please keep an open mind.” A lot of people on the Cape and Islands kept an open mind. There were some people that thought we were heroes for coming down and then there were people that said no.
CW: Do you think Cape Wind would you be up and running now but for Koch’s opposition?
GORDON: It’s not just him. There’s a couple of other billionaires with him.
CW: The Egans?
CW: They don’t seem to be as active as Koch.
GORDON: I think it’s his name and his willingness to get out there. As you know, there are some billionaires and millionaires that are hiding behind the Alliance.
CW: When did you have lunch with Koch at his yacht club in Florida?
GORDON: It could have been after the Wall Street Journal article. I wanted to talk to Bill because, as I recall, that article was about runaway costs on the project. You heard me the other day at the offshore wind conference. One of the things that we always knew was that when you inject a zero fuel cost into the power supply, the clearing price is reduced. So if I were to ask you if you would pay a premium on 2 percent of something if it reduced the cost of the other 98 percent, you’d probably want to get deeper into the numbers but that’s what this does. You don’t have to believe me. You can look at the Massachusetts Department of Public Utilities findings. You can Google the impact of wind power and renewable energy, solar, on power pools in Texas and Germany. Any power pool that’s run on a competitive dispatch basis, you have this price suppression effect.
CW: That’s what you wanted to talk to him about?
GORDON: Yeah. I knew he was an energy executive. I just wanted to say, Bill, this is the way we see the impact of Cape Wind’s power. We didn’t have a contract then. I knew that not only did we have to satisfy the environmental regulatory agencies, but eventually we’d be at the Mass. Department of Public Utilities and we’d have a contract and we’d have to show the contract provided benefit.
CW: Koch says you would call him every six months.
CW: He said during one of your calls or one of your meetings you told him that if he came over to the Cape Wind side you would reimburse him for all the money he had spent fighting Cape Wind. Any truth to that?
GORDON: Let me say this. I am not going to comment on any confidential negotiations I’ve had or discussions I’ve had with him about settlement. I’m not going to confirm it. I’m not going to confirm that.
CW: Koch says your last call to him was sort of a heads-up that environmentalists were going to be coming after him for his opposition to Cape Wind. He portrayed the call as a warning to come over to the Cape Wind side or face attacks. Is that true?
GORDON: I’ve told him for a long time that environmentalists are furious with him. I told him that environmentalists are furious with him and they are.
CW: It’s interesting that Koch is despised by so many environmental groups yet you, a favorite of the environmental groups, keep talking to him.
GORDON: I kept hoping that he would come around. Environmentalists would be very happy to have Bill and the Alliance stop their obstruction and delay of this project. They would have been very happy with that. This isn’t a contest. It’s not does Jim Gordon ultimately win or does Bill Koch ultimately win. The real winner is the environment. It’s preserving the environment of Cape Cod, enhancing our health, energy security, creating jobs and a new industry for Massachusetts. That is what is at stake. This is not a clash of egos. If Bill is leading me on, if that’s what he’s doing, I’ve got to go down that path. I’ve got to go down every path that I can to try to make this project move forward.
CW: So it’s not just a business project for you, huh?
GORDON: To me it is more. And it was in the beginning when I started. I didn’t go to Harvard Business School. We live to do innovative things. This is going to sound so hackneyed and clichéd, but I’ve been very fortunate to have great people who work with me and have similar passions to build good projects and try to make a difference. In large part, that’s what we’re trying to do. Of course, we want to make a profit. We want to make money because it’s important that people in this industry see that it’s not just coal and petroleum coke people that can make money, but renewable energy developers can also make money. Because if they don’t, we’re not going to have innovation in this industry. We’re not going to have projects 2, 3, and 4. I certainly make no apologies about that, about recognizing that in order for this industry to be successful, developers have to make a profit. Developers need certainty. Developers need a realistic time frame. One of the things we take a little bit of pride in is that we’re making it easier for the people who come after us. But there has to be that first project. Whether we’re No. 1 or whether it’s Fisherman’s in New Jersey or Deepwater that’s No. 1, that’s not the important thing. Because as I said the other day at the conference, we’re going to be No. 56 in the world.
CW: So you see Cape Wind as the start of something much bigger.
GORDON: You were at that offshore wind conference. There were probably 50-60 companies represented, people who want to come in, want to invest, want to hire people in this region, want to help create an industry. I honestly believe this industry can take its place among biotech in Kendall Square, computers on 128. New Bedford and Fall River are areas that need this desperately. This is going to be an industry that can help revitalize those areas. I am going to do everything that I can. I will talk to friend, foe, government agency, you. [Laughs]
CW: Koch says you are a developer in love with his project.
GORDON: I am in love with the project.
CW: But he says it in a negative way.
GORDON: I think this is an important project for all of the benefits to Massachusetts. But also there are companies who have come over here and set up operations in Massachusetts. There are American companies that are gearing up for this. As Secretary Ken Salazar said the other day, this project is a standard-bearer, a flagship project. Yes, there would have been a lot of businessman that would have thrown up their hands.
CW: Do you feel you’re nearing the end?
GORDON: Don’t lose sight of the fact that we’re completely permitted, that we have signed the first commercial lease for an offshore wind farm in United States history. That we’re in a place now, and I want to get a couple bullet points now on our take on the litigation. We’ve gotten four FAA no hazard determinations. Four of them. They’ve appealed it. We’re going to win that case. By the way, we’re not a defendant in any of these suits. They’re suing the government, the FAA. In terms of the suit against the Department of the Interior, we went through this NEPA process. Some people would say it was too short, it was too abbreviated. I don’t think anybody who has looked at this, observed it, would think that. Most law firms will tell you this is one of the most exhaustive and comprehensive regulatory reviews in the history of an energy project. Here’s a project that produces zero pollutant emissions, zero greenhouse gas emissions, consumes zero water, and discharges zero waste. Contrast that with the Deepwater Horizon approval, which was like 32 pages. It’s not whether Ken Salazar was right or wrong. That’s not the legal question here. NEPA is a process. It’s procedural. Did the government take a hard look at the project? Did they weigh the impacts versus the benefits. This was an unusual situation in that in their zeal to delay this project (we’ve had about a dozen judicial decisions and we’ve won them all) they’ve pretty much litigated the project through this regulatory process. So the regulatory agencies knew the issues. So one of the reasons it took so long was they wanted to bullet-proof the decision from a successful appeal. So we feel pretty good. I know Bill has lots of business interests far-flung around the world and somebody walks into him and gives him a report saying they’ll win this thing…we feel we’re in a very good place.
CW: I have a few specific questions about the project. Right now you have power purchase contracts for 77.5 percent of the power. If you can’t sell the rest, do you plan to reduce the number of turbines?
GORDON: No, we’ll sell the rest. We’ll get power purchase agreements. It doesn’t have to be with a utility. We can sell the rest to institutions. There are a lot of colleges that are very interested in sustainability, a lot of companies that are interested in sustainability.
CW: How much money have you put into Cape Wind?
GORDON: We’ve put in more than $65 million.
CW: Is that all from you?
GORDON: Yes, as well as other senior managers in the company.
CW: What is the estimated cost to build the project at this point?
GORDON: We don’t put that information out there.
CW: At the conference you mentioned you were working with banks on financing. What happened to Ted Roosevelt IV? Is he still involved?
GORDON: He’s with Barclay’s. They’re our financial advisor. Ted owns a home in Chappaquddick.
CW: Do you consider yourself an environmentalist?
CW: Bill Koch says you are building a natural gas peaking plant to back up Cape Wind when the wind doesn’t blow. That isn’t true, is it?
GORDON: No, but if I was, what’s his issue?
CW: He raises it as part of an economic argument against Cape Wind. He also said climate change is happening but the earth is constantly adapting. He mentioned the Gaia Theory by James Lovelock, who basically argues that the earth and its inhabitants are constantly adapting to sustain life. Lovelock says climate change is happening and what’s coming will be very hostile to mankind. He recommends moving to higher ground, He doesn’t think wind power is a feasible answer.
GORDON: Does he want to put more coal in the air?
CW: No, he wants to go totally nuclear because nuclear can generate large amounts of electricity with no carbon emissions.
GORDON: Does he believe that emitting carbon into the atmosphere causes climate change?
CW: I think he does. I didn’t ask him that directly.
CW: What about Lovelock’s contention that the world is so badly damaged that we need to move to abandon wind projects, focus on nuclear, and move to higher ground?
GORDON: The choice of heading for higher ground is not one that I’m willing to accept. I have three children. One is six, one is nine, and I have a 24-year-old. That’s not an option for us. This is the greatest environmental threat. Looking at Cape Cod being a low-lying coastal community, it’s most susceptible to the impacts of climate change. My mother can’t get insurance on her house. She lives a quarter-mile from the water. She’s got a little three-bedroom ranch house. She has to be on the Massachusetts Fair Plan, subsidized insurance. So people from Holyoke and Brockton are subsidizing her insurance and the insurance for many of the big waterfront estates. There’s a biblical irony here. For someone like Bill Koch to fight this project, it is a biblical irony. Because no matter how much money somebody has, they can try to stop the tide by fighting what the Natural Resources Defense Council says is the largest single greenhouse gas displacement project or I hope one day that I can enlist Bill in trying to help solve the problem as well as everybody else. I want to try to inspire other energy developers to look at this and to try to do something and make a difference.
CW: Koch praises you. He says you’re brilliant and he’d like to hire you.
GORDON: I’m not working on the plantation, sir.