Avangrid Has Been Horrid in Maine & NY, But Far Worse in South & Central America & In Europe & the UK, They are a Force for Suppressing Renewables

We’ve published three pieces on Iberdrola/Avangrid, each more damning, but I read the detailed report of a Spanish think tank on Avangrid’s colonization of Brazil, Mexico, Guatemala, Columbia, Bolivia, Chile, much of Africa and now, us: New Mexico. As the PRC begins to accept public comment and initiate hearings, we will keep you posted on how and when to act most effectively. This post makes clear why that action is so important. These are some very bad corporate actors.

Less is More: Before we begin, a brief note that Part IV and the closing segment of our Less is More Conversations series will be aired on Saturday at 8:30 am on KSFR, 101.1 FM or streaming live from KSFR.org. The final segment will focus on the myriad of policies and initiatives that could facilitate the transition to a sustainable economy and what a limited to no-growth future could look like. So, even if you haven’t been able to get your hands on Less is More, you can get a very good sense of what the book is about from the Conversation series and profitably participate in our Book Club Conversation on Tuesday, June 8.

  • Click here to get to the audio visual recordings of Part I, II, and III. This page will be updated on Saturday with a recording of Part IV.
  • Click here to register for the Book Club conversation on June 8. In many ways, Less is More provides an excellent conceptual framework for the policies Rethink Our Democracy will be researching and translating into a NM context. So please join us.

Avangrid’s International Misbehavior:
They Richly Deserve Comparisons to EXXON

Today, we will use a series of excerpts from a study published by the Spanish think tank, HEGOA – Institute for International Cooperation and Development Studies, “Iberdrola is Not Green: The hypocrisy of a transnational energy corporation that painted itself green.” The study examined the corporate behavior on an international scale of Iberdrola, the Spanish corporate giant of which Avangrid is a subsidiary. Iberdrola has taken “greenwashing” to an entirely new level, purporting to be on the vanguard of the renewable movement while exploiting the Global South and undermining Spanish efforts to transition to renewables in ways that defy the imagination.

Iberdrola’s expansion in Latin America in the late 1990s took place at a time when
neoliberalism was at its peak. Low-wealth countries located primarily in the Global South and Africa fell prey to the International Monetary Fund (IMF) lending practices. with the IMF then imposing “structural adjustment plans.” These adjustment plans compelled the adoption of a range of austerity measures that crippled national economies and coerced their cooperation in multinational schemes to privatize strategic sectors of their economies, extract resources, and amass huge profits on the backs of workers who had the choice of starving or working for what these mega corporations offered in wages. The energy sector was among the most pilfered of industries and Iberdrola was a major player in this late 20th and early 21st century form of colonization.

Wherever Iberdrola goes, they use misinformation to portray themselves as this vanguard of the renewable energy movement, a “green” corporation that deserves high marks for corporate responsibility. They make promises they never intend to keep, and pile misinformation on misinformation to mislead and seduce policy makers, regulators and legislators to believe that Iberdrola and their subsidiaries– like Avangrid– can be a trusted ally in a quest for a just transition.

To read more about this history of corporate malpractice as it has unfolded in northeast US, click here, as Retake has assembled its three investigative pieces on Avangrid into one piece. But buckle up– as bad as Avangrid’s behavior has been in the northwest, their parent company Iberdrola is far worse and as we will see, they are NOT fierce advocates for renewables or trusted partners.

“The reality, however, is quite different. Iberdrola continues to operate thermal power plants run on coal
and fuel oil, as well as new combined cycle and nuclear plants, and large hydroelectric dams. As indicated on Iberdrola’s electricity bills, in 2013, depending on the time of year, between only 8.9% and 11.3% of the energy comes from renewable resources.”

HEGOA – Institute for International Cooperation and Development Studies, “Iberdrola is Not Green: The hypocrisy of a transnational energy corporation that painted itself green.”

HEGOA offers numerous examples of Iberdrola’s exploitation of Global South countries, beginning with Brazil. But Iberdrola’s strategy is the same throughout the Global South: extract concessions from the host country, concessions extracted under IMF threats, then purchase and privatize key industry assets and natural resources and displace anyone who might be in the way of their profit. Importantly, these behaviors show the business ethic (or lack of ethic) that drives Iberdrola business decisions. In Brazil:

“In 1997, Iberdrola acquired 39% of Neoenergia and, in 2011, took control of Elektro, the sixth largest electricity distribution company in the country. By doing so, it became the largest distributor of electricity in Brazil, with over 40 million consumers, which is 20% of the country’s population. Structural adjustment programs forced Brazil – a country where the energy system was entirely publicly owned – to put its state enterprises up for sale, often at much lower prices than what they were actually worth and with the active support of the Brazilian National Development Bank (Banco Nacional de Desarrollo Económico y Social, or BNDES)….

In Brazil, Iberdrola owns six cogeneration plants, one combined cycle station,17 one wind farm and 11 hydroelectric dams, as well as the Baixo Igauçu, Teles Pires and Belo Monte dam projects. Iberdrola has particularly benefited from Belo Monte, which will be the third largest dam in the world. This project is an enormous social and environmental disaster, as it will affect 516 km2 of forest (64.5 hectares in Permanent Preservation Areas, or APP for their acronym in Portuguese), 11 municipalities, nine indigenous territories
and 30 indigenous communities. It will cause the displacement of thousands of people, including 50,000 indigenous peoples.

HEGOA – Institute for International Cooperation and Development Studies, “Iberdrola is Not Green: The hypocrisy of a transnational energy corporation that painted itself green.”

What is excerpted above and below offers an excellent snapshot of what we can expect from Avangrid. They take advantage of any institutional or jurisdictional weaknesses and plunder at great expense to whoever is unfortunate enough to have attracted their interest.

If you have read Naomi Klein’s Future Shock, you will recognize the dynamic of an economic crisis (like being placed under the financial stewardship of the IMF) as being the precondition to major shifts in policy, generally shifts opening the doors for exploitation from multinationals. If you have been tracking the discussions of Less is More, you will recognize that the privatization of vast resources at steep discounts is nothing less than meeting one of the preconditions for profit in capitalism: expropriation of resources at little or no costs.

In Brazil, among the concessions was that for the hydroelectric power Iberdrola produces, there is no charge to them for the massive use of water. What does Brazil get in return? Electricity rates 25% higher than those in France, a country whose energy grid relies on nuclear energy, the most expensive form of energy available.

Of course, part of Iberdrola’s NM pitch is that they and only they can bring NM’s energy sector scale. PNM is too small, the costs will be significant, but the results will be worth it. But Avangrid and Iberdrola’s track record is clear. They dissemble and lie and then if a state dares to push back, recriminations follow, as they did in their homeland of Spain. Today, fully 80% of Iberdrola’s profit comes from abroad, putting them in a very powerful position in Spain where the revenue generated there was once a much larger proportion of total revenue. Not now.

“Its business abroad has been so profitable that in 2014, during its conflict with the Spanish government over the electricity reform the latter had proposed, Iberdrola
President José Ignacio Sánchez Galán announced that the corporation would not invest in the Spanish state and would only do so in countries offering favourable conditions. It justified its opting for the Latin American giants by arguing that both have “predictable and stable regulations”, but also due to their favourable production conditions.”

HEGOA – Institute for International Cooperation and Development Studies, “Iberdrola is Not Green: The hypocrisy of a transnational energy corporation that painted itself green.”

NM is now about to be offered the opportunity to extend to Avangrid some “favorable production conditions.” Spain heard from Iberdrola: You’ve changed your policies; we don’t like it; we will move on. Does that sound a bit like New Mexico Oil & Gas whenever the legislature considers raising lease rates or requiring adequate bonding levels to ensure remediation of abandoned wells? Well, look for Avangrid immediately to begin extracting concessions and offering plans to extract NM solar and wind at their profit and our expense and if we balk, expect consequences. And if you think for a moment that Avangrid and Iberdrola is the huge renewable advocate that will bring NM into the 21st century, think again.

“What is more, Iberdrola together with another 8 major European energy corporations proposed measures to the European Parliament to increase Europe’s dependency on fossil fuel and reduce renewable energy sources.”

HEGOA – Institute for International Cooperation and Development Studies, “Iberdrola is Not Green: The hypocrisy of a transnational energy corporation that painted itself green.”

Iberdrola’s claims of being an advocate for renewable energy are laid bare by their actions. It is clear from their action in relation to Spanish renewable energy policy that their allegiance is not to promoting cheap accessible renewable energy, but rather to promoting the profit generated from any energy from which Iberdrola can profit.

“Iberdrola’s greenwashing clashes with its belligerent policy against renewable energy in the hands of small producers. In 2011, the Spanish Association for the Thermoelectric Industry Protermosolar expelled Iberdrola for acting against the interests of the thermos-solar sector.29 In October 2013, Iberdrola president Ignacio Sánchez-Galán declared, ‘If the production of solar and photovoltaic energy was suspended, the electricity bill would drop 10%.’ In addition to these declarations, the corporation took out advertisements in several newspapers affirming how expensive renewable energy is. That same year, Spain’s Partido Popular government heeded the proposal of Iberdrola and other major energy corporations and reduced the electricity tariff deficit by 6 billion euros by eliminating subsidies for renewable energy sources, among other measures.

With this cutback, renewable energy producers were unable to compete with the large electricity corporations. The government also introduced a regulation33 to stop electricity generated by solar farms and domestic surplus from being fed into the power network. Until then, policies for the promotion of renewable energy sources gave priority to the entrance of this type of electricity into the grid. The reason for this change was that due to the crisis and the excessive expansion of the energy sector,34 the large electricity corporations did not have an outlet for all of the electricity they produced and opted for trying to limit small renewable energy producers (50,000 solar farms in the country.”

HEGOA – Institute for International Cooperation and Development Studies, “Iberdrola is Not Green: The hypocrisy of a transnational energy corporation that painted itself green.”

The above takes a bit to tease out. Iberdrola and other major European energy producers had overproduced their energy portfolio to the degree that its more expensive energy could not compete with locally generated renewables. So they were able to convince the Spanish government that the growing local renewable movement must be squashed. And squashed it was, to the immense profit to Iberdrola and at the expense of thousands of local jobs and lower rates for ratepayers.

So, bringing this home to NM, we’ve been battling PNM at the Public Regulation Commission year after year because they play by similar rules as Iberdrola / Avangrid. They have squashed efforts to advance legislation that could unharness local renewable energy development like Local Choice Energy and Community Solar all to protect its profit. Manipulate, dissemble, but spend freely with politicians and greenwash the public with smiley-faced ads and mailers. But, PNM does not have the resources to invest in what is needed to bring NM’s renewable potential to scale. What’s more, they are economically vulnerable at the moment, with any of a number of court hearings pending that could deprive them of hundreds of millions in bailouts for their own poor business decisions. PNM needs this sale to advance and Iberdrola sees a profit to be made in NM. The above citations lay out the kind of corporate giant with whom we would be dealing. As prior posts have made clear, Iberdrola / Avangrid are very capable of spending tens of millions on ads and politicians to get their way (see Maine right now).

HEGOA closes with a striking summary of who profits from Iberdrola corporate investments….and who doesn’t.

Despite the profits renewable energy generates for the corporation, the massive wind farms it has built in places like the Isthmus of Tehuantepec or the Aegean Islands are very far from having positive impacts on the people living nearby. In both cases, the goal is to develop large-scale production facilities geared towards foreign markets, while local inhabitants and neighbouring communities are the ones who end up being affected.

In Oaxaca, Iberdrola, together with other corporations such as the Spanish construction company Acciona and with the financial support of the BBVA bank, have seized the land of indigenous peoples (Zapoteca and Ikoojts).45 This land is particularly vulnerable, as ownership is communal and therefore, there are no individual property deeds.”

HEGOA – Institute for International Cooperation and Development Studies, “Iberdrola is Not Green: The hypocrisy of a transnational energy corporation that painted itself green.”

Clearly, the indigenous people of Oaxaca have not profited from the wind farms created on their seized land. But who has profited?

“Since the beginning of the 2008 crisis, while peoples’ wages fell, unemployment rose and electricity bills increased 323% (tariff) in Spain, the salary of Iberdrola president José Ignacio Sánchez Galán increased 119% from 2009 to 2012, reaching 6.2 million euros per year.56 In the first half of 2014, Sánchez Galán earned 7.58 million euros, an average of 42,000 euros per day. His astronomical wage was criticised by British parliamentarians. Economics professor Roberto Centento called for the trial and imprisonment of Sánchez Galán and his 13 advisors for having salaries that were 30 times higher than those of their counterparts at Japan’s third-largest electricity corporation (much bigger than Iberdrola) and five times higher than those of their colleagues at the E.ON power company.”

HEGOA – Institute for International Cooperation and Development Studies, “Iberdrola is Not Green: The hypocrisy of a transnational energy corporation that painted itself green.”

All of this points to the need for NM to develop a plan and legislation like Maine is doing: municipalizing New Mexico’s privately held utilities, creating a publicly owned and managed utility and investing a small portion of NM’s immense reserves to build its own energy infrastructure, deliver lower rates and more reliable service to New Mexicans and harvest the immense revenue potential from our wind and solar to states whose capacities for renewable energy generation are limited.

Turning our backs on Avangrid and PNM would allow the state to both accelerate its move toward meeting the ETA’s renewable energy goals while also developing our renewable energy generation potential as a means of diversifying our economy, creating thousands of good paying jobs and freeing ourselves of reliance upon gas and oil revenues. Or we can cower before the megacorporation while it extracts our resources and leaves us to forever wallow as 49th or 50th in child poverty.

In solidarity, hope and gratitude,

Paul & Roxanne

Categories: Climate Justice

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3 replies

  1. Having just read a review of Dennis Kucinich’s book about his struggle with power companies’ merger efforts, this Avangrid/PNM matter made me long for a Dennis Kucinich in NM right now.

  2. The fact that our Attorney General has officially sanctioned this Avangrid takeover of PNM tells us where the MLG administration stands on this issue, does it not? We need a whole lot of unified pushback. Perhaps the most we’ve ever come up with so far. This is not a divisive issue – voters don’t like this kind of “verging-on-corrupt” NM State political “management.” And we hope that will be made abundantly clear to our own elected representatives. Thank you to Retake for doing the real investigative work to inform us.

  3. So Iberdrola is somehow suppressing renewables, but they’re also building renewables at too large a scale? Also, Avangrid doesn’t own any non-renewable sources of energy generation… I’m not sure the authors of this article understand how the utility industry actually works.

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