Tracking the Natural Gas Plant Developer’s Track Record
From NH to Rumford to Rockland to the halls of Augusta
Thursday, December 17, 2015 9:17 AM
As Rockland City Council considers adopting a six-month moratorium on power plants in town, the debate continues over a vague natural gas plant proposal presented seven months ago by 22-year-old Evan Coleman on behalf of “Rockland Energy Center, LLC” (REC), said to be a subsidiary of Boston-based Energy Management, Inc. (EMI).
Evan Coleman of Clear Energy LLC and Rockland City Council at its agenda-setting meeting on December 7
On Monday night, after lengthy debate, the council voted 3-2 to pass the moratorium ordinance in the first reading, and they will likely take a final vote on the measure on January 11. Voting for the moratorium were Councilors Bill Jillson, Valli Geiger and Larry Pritchett. Mayor Louise MacLellan-Ruf and Councilor Will Clayton voted against it. Coleman told the city council last week that he would be back by the second week of February to present a very detailed plan, and he asked the council to hold off on enacting a moratorium until then.
EMI’s treasurer, Mitchell Jacobs, said the company hasn’t seen the ordinance, but it respects and will work with any decision by the council. In a Dec. 14 letter to the city manager, Jacobs wrote that EMI is also “considering alternative sites and various options for dual delivery.”
Scaring Off Investment?
Last Friday, the Rockland Professional Fire Fighters wrote a letter expressing strong opposition to a moratorium, writing that Coleman “stated in no uncertain terms” that he would stop all talks and move his plans to “another location outside Rockland’s borders.” In the letter, Local 1584 President Chris Whytock noted that the Walmart Supercenter moved to Thomaston because of local opposition.
“We lost out on an increase in tax revenue from a large expansion and gained all the headaches that come with increased traffic and the abuse of our roadways,” wrote Whytock. “If you are are taking note of the new ‘Super Center,’ then also picture an energy plant right beside it. There is plenty of land in Thomaston, and they are a town that will welcome money spent on infrastructure and numerous other upgrades, all of which Rockland will lose out on again.”
Others have reported that Scarborough-based Self-Gen, Inc., which in 2011 proposed to build a 25-megawatt natural gas co-generation plant adjacent to the Dragon Cement plant in Thomaston, is considering reviving its own proposal.
Self-Gen President Paul Aubrey told The Free Press this week that he has a new partner and might call back the original stakeholders to discuss the idea, but that nothing has been set up. He said that the main hurdle his company has faced is securing predevelopment funding to move the project along.
Unlike the REC plan, Aubrey said he positioned his proposed plant next to Dragon because that company has a high electrical load, and the waste steam could then supply FMC through a steam line that could run along the rail line. He said that Coleman had “basically copied” Self-Gen’s original plan, but that Self-Gen’s plan was different in that it would sell the discounted power to Rockland area customers.
“The proposal from that other group is they just want to sell to the grid and get the ratepayers to really fund their investment,” said Aubrey. “Ours was to the benefit of the community to provide low-cost electricity supply, the supply portion of your energy bill, through a municipal energy group.”
Coleman has not indicated whether he will consider Thomaston if the moratorium passes, but he expressed his vehement opposition to a moratorium during a meeting with the city council last week, and said:
“Elon Musk founded Tesla and the company PayPal.… One thing [Musk] says is that when you start a company or a venture, it’s like eating glass or staring into the abyss, you don’t know what’s going to come the next day and every step is getting harder. I think that’s a little dramatic … but when you have this much money at play and when you have hundreds of thousands of dollars of your own money, you have to balance what’s best for you as a company and what’s best for the community and again what’s best from a regulatory and policy perspective.”
Few Details, Forgotten Payments
Since he first presented his plan to build a natural-gas-fired electricity and steam-generating plant to the city in May, Coleman has provided few details about it. He recently announced that he has scaled down the size of the facility from 76 megawatts to about 25 to 35 megawatts. The option agreement between REC and the City of Rockland for the purchase of city property, including the current site of City Hall, that was executed in May was teminated by mutual agreement by unanimous vote of the city council at its meeting on December 14.
Coleman said at the previous council meeting on December 7 that he and his investors have secured a different site, on privately owned land in Rockland, on which to locate a plant.
According to the contract that was signed by Coleman on behalf of REC on August 1, REC was obligated to pay the city $1,000 per month in monthly option payments from August 1 through the time of closing or until the option was terminated. The Free Press requested a copy of the check on December 10, but City Manager James Chaousis said Tuesday that the city has not yet received any payments.
“With the changeover of Finance Directors we have several invoices that have been delayed including the REC invoices,” wrote Chaousis in an email. “We agreed verbally to invoice them and haven’t lived up to that. We are sending out invoices now and expect payment as soon as practical.”
According to Coleman, “Rockland Energy Center, LLC” is registered in Delaware, but there is no record of the company in the Delaware Division of Corporations database. Coleman told The Free Press on December 11 that he had asked a lawyer to send proof of REC’s registration, but has not yet provided it. EMI did not return a request for proof either. City Attorney Kevin Beal said he was not aware of the issue and didn’t comment on the legality of the option agreement signed with the city.
EMI Clarifies Coleman’s Role in Rockland Project
After seven months of not responding to media inquiries, EMI told The Free Press in an email on Tuesday that Coleman “represents Clear Energy LLC, not Energy Management Inc.” Clear Energy is Coleman’s own company registered in Montville.
“Clear Energy has presented several opportunities to EMI in Maine,” wrote EMI treasurer Mitch Jacobs. “One of those opportunities is the development of an energy project in Rockland. EMI is evaluating energy projects which can reduce energy costs for FMC and other industrial customers in Rockland and the mid-coast region.”
An FMC spokesman did not return requests for comment.
Coleman said at the council’s December 7 agenda-setting meeting that the proposed plant will receive its fuel from an underground pipeline that “will run from Searsmont to Camden to Rockland.” A spokesperson for the Maritimes & Northeast Pipeline, which runs through Searsmont, said the company “has no expansion plans on the books or even in the pre-filing stages.” While Coleman says he has “coordinated with the Maine Department of Transportation” to identify a pipeline route, DOT spokesman Ted Talbot said it has not gotten to the coordination phase yet. Talbot said that the department has provided some geotechnical information to Coleman about the rights-of-way in the area of a proposed pipeline route.
In order to go ahead with plans to develop a power plant, REC would likely need to win a bid for a long-term contract with the Maine Public Utilities Commission to sell power to local utilities. The PUC has not announced whether or not they will open the bidding process next year, although Coleman says he believes they will.
Coleman’s Track Record
While The Free Press has had several conversations with Coleman, he has mostly refused to speak to us on the record, except to send two statements, which have raised more questions. According to Coleman, at age 19 during his freshman year at Assumption College in 2012, he founded a separate division of his company United Energy, LLC that utilized compressed natural gas (CNG) in trailers to deliver gas to large industrial customers that did not have access to a natural gas pipeline. Prior to that move, Coleman operated a single-stream recycling and composting company under the United Energy name. United Energy was dissolved in 2013, according to state filings. Coleman claims that the CNG wing of his company was registered in Delaware, but no United Energy under his name exists in the state’s database.
After six months, Coleman claims that his CNG trucking company earned $11 million in revenue before he sold it to Boston-based Xpress Natural Gas (XNG). Coleman says XNG made him vice president of sales in the merger in July 2012. He said his company’s most notable client was AgraWest Foods in Souris, Prince Edward Island.
“This was the first project in the United States to export gas in compressed form to Canada and today holds the first license by the Department of Energy for the export of CNG,” wrote Coleman.
However, XNG spokesman Matt Smith told The Free Press that “XNG did not buy any company or entity from Mr. Coleman.” He confirmed that Coleman worked for XNG for about six months, and said “the circumstances of his departure are confidential.” He said XNG has the contract to supply AgraWest with CNG and that Coleman was not “involved in any of the negotiations with Agrawest on behalf of XNG.”
On February 13, 2014, Coleman formed Clear Energy, LLC, which he has presented as a Marlborough, Massachusetts-based company, though it is registered from an address in Montville. Coleman rents a mailbox at an office center in Marlborough, which he says he only uses for his legal filings. In a statement, Coleman said, “Clear Energy is a personal holding company for my assets, it does not serve any other purpose than to represent my ownership interests in ventures that I participate in.” He said last week that he is an employee of EMI and works out of the company’s Boston office when he’s not in Maine. Coleman said Wednesday that he never claimed to be an employee of EMI.
Block Island, Rhode Island, Deal
One of Coleman’s first projects with Clear Energy was a proposal in the spring of 2013 to supply liquefied natural gas (LNG) to the Block Island Power Company (BIPCo), an island utility in New Shoreham, Rhode Island. According to notes from the town of New Shoreham’s Electric Utility Task Group, Coleman estimated the savings would be in the range of $300,000 to $500,000 annually, or 25 to 30 percent. Coleman promised to cover the cost of the conversion equipment and wanted a three-year contract with a minimum purchase of 50,000 MMBTU annually. Coleman told the Block Island Times in May 2013 that he would cover all capital costs of the conversion and would transport the LNG to the island in his own trailer trucks. However, Coleman refused to provide a copy of his contract to the town, arguing that it contained proprietary information. In October of 2013, the Electric Utility Task Group said it could not verify whether Coleman’s cost savings estimates were accurate because Clear Energy and BIPCo “refused to do so, citing the information as proprietary.”
BIPCo General Manager David Milner told The Free Press that the deal fell through because the logistics of bringing the fuel over on the ferry and changing the injectors on their diesel generators to work with the fuel blend was not economical. Coleman says the deal never happened because the island went forward with plans to build the 30-megawatt Block Island Wind Farm, so there was no need for LNG.
The Groveton Non-Deal
Clear Energy’s most high profile project was the ambitious Groveton LNG proposal in Northumberland, New Hampshire. Coleman went to the town in the summer of 2013 and enlisted the help of the local economic development nonprofit NCIC to introduce him to local officials and businesses so he could pitch his plan to build a $100 million LNG facility and natural-gas-fired electricity plant at the site of the former Wassau Paper mill in Groveton Village. He said the gas would be drawn from an existing pipeline spur on the mill property and turned into 300,000 gallons per day of LNG to serve customers in southern New England. He said that once the plant was built, he would sell it to a third party to operate it. He also said a large natural gas company invested in him, but didn’t name which one. On February 11, 2014, Coleman presented his plan to the townspeople in a public meeting. He told New Hampshire Public Radio that he had the financing already lined up and would begin the groundbreaking ceremony in mid-2015.
However, by May 2014, Coleman told the Union Leader that he had not signed a purchase-and-sale agreement on the 67-acre parcel, and the project never materialized.
Coleman told The Free Press that he abandoned the project because “numerous problems with the site were discovered as due diligence was undertaken that made continuing development unwise.” He also said that “the property owner out of Arizona went bankrupt in the middle of our conversations.” But according to the former property owner, Scottsdale, Arizona-based Green Steel LLC, the company never went bankrupt and is still in operation despite some financial difficulties last year.
“I believe that the reason the deal fell apart is because Clear Energy did not have the funding in place to make it happen,” said Green Steel principal Eric Wnuck. “He missed multiple deadlines in his ability to actually close on the piece of property and we offered extension after extension to him and he was unable to come up with the funding.”
Mike Sterling, who formerly managed the Groveton property for Green Steel and now works for Milan, New Hampshire, businessman Bob Chapman — who bought the mill property from Green Steel late last year — says that the whole deal was contingent on Coleman getting commitments from customers to buy the LNG.
“The guys who are interested in building the plant are only interested in financing that $100 million if there are takers for that much gas on a daily basis,” said Sterling. “And the only way you can document it is to get people to sign contracts.”
According to Sterling, Coleman would have to get the contracts between suppliers and customers to sell at least 300,000 gallons of LNG before he could get the financing to build the facility. He said Coleman tried to get a year-and-a-half option agreement with Green Steel on a parcel of the former mill property for $1.
“It would have literally eliminated the possibility of talking to anybody else about the future use of the property,” said Sterling.
According to Sterling, Coleman did not want to deal with Green Steel in negotiating the sale of two other nearby parcels, so he asked Chapman, who was doing demolition and salvage work on the property, to purchase the two parcels, which included the cogen building and the clarifier tanks.
“Mr. Chapman went out and bought a couple pieces of the property from Green Steel to try and make the deal work,” said Sterling.
Chapman Scrap Metal Recycling & Demolition owner Bob Chapman said that Coleman claimed he had secured the mill’s lagoon property, so he wondered why Coleman couldn’t also buy the other two parcels himself. He said he also couldn’t believe Coleman hadn’t figured that he needed the cogen building and the clarifiers when he designed the plan.
“I said, ‘In all of your blueprints and planning, you never put that stuff in there?’” said Chapman. “I mean c’mon now. You must know what you’re going to need.”
But Chapman says he agreed to the deal and bought the cogen building for $650,000 and the clarifiers for $440,000 and paid $16,000 for the surveying work. Chapman said Coleman promised to pay for the cogen plant out of a separate LLC on May 1st of last year, but he never heard from him again.
“So when June comes, I says ‘This has got to be a hoax,” said Chapman. “I started checking in and companies was dropping him like flies and investors were dropping like flies.”
At the end of the day, Chapman says that Coleman walked away from the deal and he was stuck holding two pieces of property that he didn’t need. He said Coleman couldn’t come up with $10,000 for a deposit on the lagoon property, but the whole charade cost Chapman over $1.1 million.
Coleman denies that he had an agreement to buy the lagoon property or that he asked Chapman to buy the other two parcels.
“That kid is just going to tell stories and nobody can do anything different,” said Chapman.
Sterling said he believed that Coleman had a contract agreement with an end user and was trying to keep the owner of the property from knowing who the end user was in order to maintain his position in the middle as a
“Evan ran around trying to get everybody to agree to some things that worked for him without telling anybody who they were really dealing with,” said Sterling. “He was so intent on trying to keep the owner of the property from knowing who the project owner would be that he literally created the problems himself and that’s why the deal went flat.”
Sterling, Chapman and Wnuck say Coleman had what are called non-circumvent agreements, which is a contract signed between an agent and a large company to develop a potential project. Under the contract, the company is prohibited from going around the agent to the property or other principals involved. Sterling said he believes Coleman has a similar contract with EMI, although neither Coleman nor EMI have confirmed that. He says Clear Energy ran into problems because Coleman couldn’t get the same nondisclosure agreements with the property owners.
“Once he got sideways on this thing, he started screaming that he was going to sue, that he was going to do this, that he was going to do that,” said Sterling. “The problem with Evan is that … he has no skin in the game, and the only way he can try and get this thing to work is by trying to scare people into the idea that he can sue them because he’s got them locked up in some nondisclosure or noncircumvent.”
Chapman says he has since purchased the entire property from Green Steel and is making two industrial parks and two energy parks out of the site. He says two gas companies have expressed interest in the lagoon property.
Coleman Goes to Augusta
Coleman said in a statement to The Free Press that the project didn’t end in Groveton, but rather moved to an “alternative site in Maine that had the necessary infrastructure requirements without significant apparent issues.”
In January, Coleman and EMI registered Northern LNG with the intent of building a $100 million LNG facility in Rumford. According to Rumford Town Manager John Madigan, on November 19 the selectmen approved a five-year option agreement for $1 a month with Northern LNG for 18 lots in the town business park. The execution for the property cost $250,000, but Madigan noted that it would take a couple of years for Coleman to get the project off the ground because it’s contingent on sales to private companies as well as on pending legislation in Augusta.
Last March, Northern LNG supported LD 881, a bill sponsored by Rep. Barry Hobbins (D-Saco), which would allow the proposed facility to tap into public funds during winter peak-electricity-demand months under the “Energy Cost Reduction Act.” ECRA, also known as the “Omnibus Energy Bill,” was also sponsored by Hobbins and passed by the Legislature in 2013. The law authorizes the PUC to charge up to $1.5 billion over 20 years to subsidize natural gas pipeline capacity into Maine. The Maine PUC and the New England governors are currently debating the merits of the pipeline proposal. Hobbins did not respond to multiple requests for comment for this story.
In testimony supporting LD 881 before the Legislature’s Energy, Utilities & Technology Committee last March, Coleman argued that his project would provide “an efficient solution to meet gas supply constraints” in Maine while providing a “$100 [million] of investment into a rural Maine community.” He said it would also save Maine natural-gas ratepayers over $18 million each year in excessive pipeline capacity payments. Coleman brought with him written testimonies in support of the bill from the General Electric Corporation, the Catalyst Paper Corporation, the Mahoosuc Land Trust, Central Maine Medical Group, and Commissioner of Economic & Community Development George Gervais. All three Commissioners of Oxford County as well as Sen. John Patrick (D-Rumford) also offered their support.
However, Paulina Collins of the PUC questioned what market failure the bill was trying to address with the LNG subsidy. She also pointed out that the bill had no cap regarding the total costs to ratepayers and the bill didn’t identify how to fund such a contract. In the November 19 Lewiston Sun Journal story, the “unnamed developer” in Rumford said he was “getting close,” but “Without [ECRA] funds, we probably won’t build the facility. The reason for saying this is that it puts the state on the spot.”
The Energy, Utilities & Technology Committee is expected to take up the bill again during the coming legislative session beginning in January. Northern LNG has reportedly hired the law firm Bernstein Shur to lobby for the bill.
Whether Rockland City Council enacts a moratorium or not, many questions remain about whether REC has serious plans or investors for a plant in Rockland. City officials maintain that REC is the real deal, despite not doing much background checking beyond taking Coleman’s word for it.
“I can tell you that I haven’t vetted anybody,” said City Manager Jim Chaousis. “I’ve waited for a proposal in hand. We did the option agreement in good faith. There was no risk on the option agreement other than the potential of it not working out. Certainly if it had turned into a purchaseand-sale agreement, we would have taken it into a much higher level of scrutiny, but that never happened.”
Assistant City Manager Audra Caler Bell says that the city has met with several of Coleman’s associates.
“Factually, I’ve met with these people and I’ve spoken to them,” said Bell. “They exist and he does work for them. That’s all I can tell you about that.”
But Northumberland Selectman Jim Weagle said Rocklanders should be careful about any deals they make with Coleman or Clear Energy. Said Weagle,“He has all the answers, but he has nothing concrete behind it.”