Wall Street Power Surge: Questions of Energy Policy and Finance After Connecticut Power Plant Explosion - ABC News

Wall Street Power Surge: Questions of Energy Policy and Finance After Connecticut Power Plant Explosion - ABC News

Goldman Sachs has attracted a long line of critics and conspiracy theorists convinced the Wall Street bank is at the root of many an economic catastrophe.

The Kleen Energy plant is seen in this aerial photo after an explosion in Middletown, Conn., Sunday, Feb. 7, 2010.

(Jessica Hill/AP Photo)
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But after a deadly power plant explosion in Middletown, Conn., involving a company called Kleen Energy, even members of the conspiracy crowd might have been surprised to learn that the natural gas-fueled plant was being built by a private equity fund and that it had been bankrolled by Goldman.

And while no one is suggesting the bank's involvement underwriting the nearly $1 billion project would have in any way compromised safety -- indeed, the exact cause of the explosion is still under investigation -- the incident does call attention to the ever-growing alignment between a shifting national energy policy and the Wall Street financiers who hope to profit from the green movement.

In terms of promoting clean energy, greed, for lack of a better word, is good, power industry members said.

"In simple terms, the clean fuel industry is dead without Wall Street funding," said Karl Miller, a former Wall Street banker, power industry executive and energy investor.

Goldman's financing, a complex debt issuance sold mainly to European banks, got done just a few months before the financial market meltdown of autumn 2008. Kleen, in fact, was to be among the biggest power plants in the Northeast and the hope was that its becoming operational would eventually reduce electric bills in Connecticut, which gets most of its power from out-of-state providers.

Coal-fired power plants are seen as Environmental Enemy No. 1, and the backlash against them opened the door for the Kleen project and others like it.

While coal fired plants still produce roughly half of all the kilowatt hours of electricity consumed in the United States, natural gas, which a decade ago accounted for just 10 percent of electricity produced, now accounts for upwards of 20 percent, according to the Edison Electric Institute. Hydro and alternative sources make up the balance.

With the backlash against carbon emissions only growing, coal-fired power plants could soon be a thing of the past.

Storm Clouds Gathering in Washington Threaten to Rain on Wall Street’s Parade

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The political climate in Washington has become progressively more hostile. President
Obama unveiled plans to impose a special tax on big banks two weeks ago, and last week
he proposed an overhaul of financial regulations with new restrictions on the size and
scope of activity for large banks. Ronald Reagan, our 40th President and famous political
philosopher, may have captured the White House’s attitude best when he said,
“Government’s view of the economy could be summed up in a few short phrases: If it
moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

It appears to us that President Obama’s proposals would intensify the financial sector’s
problems because they would lower profits, increase uncertainty and lessen credit
availability without benefiting economic growth. The wave of anti-Wall Street sentiment
sweeping through the White House and the halls of Congress is deeply distressing to
investors. As detailed in this report, stocks have traditionally reacted violently to the type
of anti-business rhetoric flowing from Washington and the odds of a politically driven bear
market are rising.

Although erratic stock market performance is likely to continue as a result of this political
uncertainty, we maintain our positive perspective. Profit trends seem to support our
optimistic strategy. Fourth quarter earnings reports have exceeded elevated expectations by
a huge margin, corporations are raising guidance for the second straight reporting season
(see chart below) and we believe S&P 500 profits could increase an additional 20% in the
next four quarters. As a consequence of strong profit performance, companies are
generating extraordinary amounts of surplus cash, which is increasingly being used to
repurchase shares and to make acquisitions. MORE RESEARCH
Storm Clouds Gathering in Washington Threaten to Rain on Wall Street s Parade