A Company Backed by This Mega Oligarch Helped Kill Clean Power in Maine

Russian President Vladimir Putin’s savage assault on Ukraine has shocked the world, galvanized global democracies, and sent fuel prices surging.

But months before Kremlin troops poured into the country, a company tied to one of the regime’s erstwhile elite allies fought and won a major battle in the Maine woods. And the outcome of that saga will have its own ramifications for the future of the world and its energy supply.

A mere 412,086 residents of the Pine Tree State—less than 38 percent of the eligible electorate—voted in the November referendum that decided the fate of the New England Clean Energy Connect (NECEC) project. The scheme would have linked the Maine and Massachusetts electrical grids with 1200 megawatts of renewable hydroelectricity from Quebec. The 243,943 people who voted against construction of the 145-mile transmission line did so against the wishes not only of Gov. Janet Mills, but of Energy Secretary Jennifer Granholm, who tweeted just days before the plebiscite about the benefits the already-underway venture would deliver to the environment and the economy.

Despite receiving approval from multiple Maine agencies and from the Army Corps of Engineers, securing a presidential permit for cross-border infrastructure, and installing some 120 structures and completing much of the tree clearance, the NECEC lost on Election Day. And Calpine, owner of the state’s biggest power generator and the enormous natural gas plant in the town of Westbrook, won—as did one of the company’s largest shareholders, Access Industries and its owner Len Blavatnik.

Born in Soviet-controlled Odessa in 1978, Blavatnik emigrated to the United States with his family as a young man and completed his degree at Columbia University. He founded Access Industries in 1986, a few years before receiving his master’s in business administration at Harvard. Through a spokesman, his company declined to comment on Calpine’s activities in Maine.

Today, Blavatnik is known in the West for posing with celebrities in his capacity as head of Warner Music Group, and for his profuse philanthropy. His family name adorns institutions in the U.S., Britain, and Israel, and in 2017, Queen Elizabeth knighted him in recognition of his generosity.

But the mogul owes most of his estimated $33.4 billion fortune to his dealings in the old USSR., where he began dabbling in the 1990s, experts say.

“Len Blavatnik is one of the top oligarchs in Russia,” Dr. Anders Aslund, a former economic advisor to the Russian and Ukrainian governments, told The Daily Beast. “He just happens to be a U.S. citizen.”

According to Aslund, American citizenship has shielded Blavatnik from the sanctions that hit two of his biggest former business partners under legislation passed in 2018: Viktor Vekselberg, with whom Blavatnik once ran one of the biggest Russian oil concerns prior to a 2013 sale to state-owned Rosneft, and aluminum tycoon Oleg Deripaska.

Like other men who accrued vast fortunes by gaining control of Russian heavy industries, Blavatnik belongs to the uppermost stratum of the infamously corrupt country’s society, Aslund said. Such a privileged perch was only possible by way of tight ties to the Putin regime, according to Aslund, who published a book on the nation’s crony capitalist system in 2019.

“An oligarch essentially means you are at least a billionaire, and that you have very good relations with the Kremlin,” Aslund explained. “That is a precondition for success.”

Blavatnik has long denied being an oligarch. A Financial Times profile noted Blavatnik’s PR team stipulates to publications he not be referred to as such before granting interviews (the paper also cited Russian officials as saying Blavatnik was never personally a “regular visitor” to the Kremlin). But Aslund is far from alone in his assessment; the Free Russia Forum, founded by dissident chess champion Garry Kasparov, placed him on its “Putin’s List” of accomplices and enablers—and media outlets have declined his requests to stop applying the term.

In defense of its owner, Access Industries highlighted a statement in the FT piece by since-jailed Russian opposition leader Alexei Navalny, who praised Blavatnik’s charity and distinguished him from the crew surrounding Putin.

“At least university campuses get built,” Navalny told the publication in 2019. “As far as Russia and I are concerned, he’s not a political oligarch. He isn’t buying newspapers here, he isn’t intimidating journalists, he basically isn’t involved with Putin at all.”

However, Access Industries does hold a majority stake in one of Russia’s biggest TV and movie production companies, which has exclusive rights to air HBO’s library of content in the country. Earlier this year, the media giant revealed it would not be broadcasting HBO’s documentary on Navalny’s 2020 poisoning, which he and others have blamed on the Kremlin.

Access also asserted that “less than than 1 percent of Access’ investments are in any way Russian-related.”

However much the company has diversified his portfolio, Aslund asserted that Blavatnik’s main interest remains petrochemicals and fossil fuels. Between 2005 and 2007, Blavatnik’s company gained control of the Netherlands-based LyondellBasell and its massive Houston refinery. Corporate documents show that LyondellBasell has sold millions of dollars worth of gas each year since at least 2017.

Access Industries, in a joint maneuver with venture fund Energy Capital Partners and the Canadian federal pension system, acquired Calpine itself in a $17.1 billion deal in 2018. The largest natural gas and geothermal electricity producer in the nation, Calpine made headlines when plants failed in its home state of Texas in the 2021 winter blackout. Its stations in Corpus Christi and Hayward, California, also suffered explosions over the summer.

Calpine operates the natural gas-fired generation facility in Westbrook, Maine, that federal Energy Information Administration figures show is far and away the largest single power producer in the state, pumping out more than a million megawatt-hours in 2020.

Calpine did not address their ownership structure in a statement to The Daily Beast, and characterized itself as “only a minority participant” in the political push to defeat the hydropower corridor, an apparent allusion to other energy firms’ heavy investment in the effort. The company also noted that a handful of local conservation groups joined the fight against the NECEC.

“We’re pleased to support local voters and environmental leaders who felt the project was little more than greenwashing and a ‘bad deal for Maine that was flawed from the very beginning,’” said a corporate spokesman, noting the firm’s own commitments to emissions reduction.

But this ignores the leadership role Calpine played in the fierce and costly campaign to persuade first authorities, and then the public, to block the project.

It was Calpine, along with two smaller power producers, that unsuccessfully begged the Maine Public Utilities Commission in 2018 to block the plan to channel hydroelectricity in from Canada. It was Calpine that bankrolled two studies asserting the project would increase carbon emissions by depriving other areas of hydroelectricity and by undercutting local renewable energy development (power supplier Hydro-Quebec disputed the first conclusion, asserting a recent expansion would grant it capacity to serve all its customers).

And it was Calpine that appealed to the Department of Energy in early 2020, urging it to block the NECEC’s application to construct its conduit to Canada.

The company’s concerns were explicitly financial: it feared that the NECEC would flood the region with so much cheap electricity that its own assets would become unprofitable.

“We’re concerned about the long-term viability of our operations in Maine,” John Flumerfelt, Calpine’s director of government and regulatory affairs, told Maine Public Radio in 2019.

In December of that year, Flumerfelt became the principal officer of a new political action committee, Mainers for Local Power. Calpine co-founded the group with Vistra Corp., which owns a plant in Maine. The PAC’s treasurer was an attorney with a firm that also works for Calpine. To date, Calpine has dumped more than $3.2 million into the PAC; also backed by Vistra and Nextera Energy, the PAC bankrolled the signature-gathering effort to get the question to block the clean energy corridor on the ballot. (The other two energy firms did not respond to a request for comment.)

Flumerfelt was ubiquitous throughout the process, appearing at numerous public events, volunteering constant commentary to local news, and even drafting his own family members into the petitioning process.

Mainers for Local Power and another committee it financed inundated the airwaves and social media with advertisements attacking the project. Particularly devastating, local politicos said, were efforts casting the referendum as a way for voters to strike back at the unpopular distributor Central Maine Power, which owns much of the grid the NECEC would serve and shares a parent company with the entity behind the project.

Anti-NECEC politicians raged against “foreign governments” trying to influence the process, pointing out that Hydro-Quebec—which launched its own multi-million-dollar PR campaign—belongs to its eponymous province.

But Calpine’s ownership seems to have simply never come up. And the state’s dependence upon fossil fuel-fired plants would soon become devastatingly clear.

Just weeks after the vote, the Maine Public Utilities Commission announced residents would face a more than 80 percent hike in their electricity rates. The culprit, the agency said: the spiking price of natural gas, which currently provides roughly half of New England’s power.

“They set up this referendum to stop hydropower coming in, then a month later they jacked up the prices on natural gas that the hydro was going to displace from the grid,” raged State Sen. Trey Stewart, a fierce NECEC supporter. “The companies that won are now reaping serious benefits off the backs of Maine rate payers.”

A Republican, Stewart is an ardent advocate of expanding American natural gas production and a bitter critic of President Joe Biden’s opposition to pipeline construction. But even as he acknowledged the NECEC would not have come online until 2024, the legislator argued it could have guaranteed Mainers reliable low-cost electricity for decades to come.

In the meantime, benchmarks are fast approaching for ambitious emission reduction plans state governments in Maine and Massachusetts have passed. And experts warn Maine may have erased one of the best and easiest ways to reach their goals: replacing fossil fuel generation with hydropower.

“It makes it that much harder for New England to find a path for reaching its targets for decarbonization,” warned John Parsons, executive director at the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research, who co-authored a study on the subject in 2020. “This was part of the cheapest, the best economical deal for customers.”

The irony is, the plan’s opponents included a number of local environmental activists—all of them “hoodwinked” by the fossil fuel industry, according to Stewart.

Jeff Marks, senior policy advocate at the Acadia Center—an anti-climate change think-tank—was less acerbic. The Acadia Center itself was ambivalent about the project, recognizing the need for the clean power it would provide, while insisting the utility firms behind it provide further public benefits if and when it came to fruition.

Many people, Marks believes, were persuaded by slick ads depicting the project as a threat to the state’s beloved forests. This even though the new transmission capacity would have largely run along existing power lines and would have removed a small fraction of the state’s overall tree cover.

“This is a state of 90 percent trees. This is a pretty tiny footprint in the forest of Maine,” Marks said. “The earth is burning, we’re having brutal heat waves, more drought, and extreme rainfall. We looked at this project purely from the standpoint of: ‘Does it provide a solution on climate change? Does it have potential to reduce carbon?’ And we kind of erred on the side of ‘yes.’”

For now, the NECEC is scheduled to argue to the state’s top court in May that the Maine constitution does not allow for a referendum to retroactively cancel an approved project. But a lower court denied a request for an injunction against the referendum’s results in December, halting the project’s progress.

Aslund has long warned about the influence of Blavatnik and other Russia-linked elites in American affairs, influence he asserted in a 2020 paper “can hardly be considered legitimate,” even if, as he himself noted, it “is both public and legal.” He told The Daily Beast that, with Moscow slaughtering civilians in its bid to subjugate Ukraine, his concerns have only intensified.

Meanwhile, in the months since the referendum, prospects for New England and other natural gas-dependent areas of the country have only grown more dire, given that one of the earth’s major fossil fuel-producing regions seems headed for years of market-wracking conflict.

“I think those problems in Eastern Europe are going to get worse before they get better, and so prices are only going to go up,” said Stewart, the Maine lawmaker. “I’m not as worried about power coming from Canada as I would be about oil coming from Russia. That’s a much less stable market, not just in terms of base-level concerns, but in terms of price volatility.”

Sure enough, on Tuesday, President Biden announced a ban on Russian oil and natural gas imports, which could wreak new havoc on energy prices across the country.

“And I think the Canadians are better partners,” Stewart added, noting the state’s economy, and especially that of his own district, is tightly intertwined with that of the nation’s neighbor and ally to the north.

Read the full article at the Daily Beast here.