Koch's New Fight - Forbes.com

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Koch's New Fight
Tim Doyle 09.21.06, 6:00 PM ET

On a blustery, gray morning in August, William I. Koch, the billionaire energy mogul, gazes out a window in his Osterville, Mass., home down to the choppy waters of Nantucket Sound, just a few hundred yards past a barrier island of sand that protects the seven boats parked at his dock. “I go out and sail on the Sound; it’s so beautiful,” says the 1992 America’s Cup champ. “Why would you want to sail in a forest of windmills?”

He certainly wouldn’t. Koch, 66, has jumped into a five-year fight to stop a quixotic plan for a wind farm in Nantucket Sound, pushed by New England energy developer Jim Gordon. Koch has pumped in $1.5 million to an anti-windmill group of which he is now chairman, commissioned several economic studies undermining the idea and assigned his lobbyists to torpedo the plan in Washington.

Koch’s stout opposition, of course, is almost a cliché: rich guy, who doesn’t want his views ruined, takes a not-in-my-backyard position against a 130-turbine wind farm whose upper tips would rise 400 feet above the sea. But there’s some irony here. Koch, through his Oxbow Group ($1.5 billion sales), had once made a mint off eco-friendly power plants by using laws that required power companies to buy Koch’s power for above-market rates. He sold them for $660 million in 2000. Moreover, he once thought Gordon’s idea was pretty good, especially the notion of using free land in federal waters.

But, alas, he now says the project’s economics, requiring heavy government subsidies, don’t add up, and then there’s that aesthetic thing outside his window. So Koch now spends his time trying to kill the plan, partly by raising money to re-energize the once stumbling Alliance to Protect Nantucket Sound. The not-for-profit has raised $11 million to date--with Koch and rich counterparts accounting for 90% of the money donated. Continuing the fight may be harder to keep up. “It’s so damn expensive, the alliance has to spend $2 million to $3 million a year to fight [Gordon] and people down here are cheap Yankees,” Koch says. “The Mellons and the Duponts live down here, and trying to get $50,000 out of them is like trying to twist a rock.”

That’s vintage talk from Koch. After a bitter split from his two brothers the fight over Koch Industries dragged on for 18 years. He settled for an undisclosed sum (he initially got $1.1 billion in 1983). He shelled out $68 million in an improbable run to win the America’s Cup over the Italians after defeating famed San Diego skipper Dennis Connor. For the last five years, he hasn’t been in a public tiff. Now the sails are back up. As detailed in a story in The Wall Street Journal, he recently filed a suit alleging that he was duped on bottles of wine purportedly owned by Thomas Jefferson that he bought in 1987 for $500,000.

Last year, the 6-foot-4 Koch joined the windmill fray because he didn’t like the Nantucket Sound group’s “goofy” P.R. tactics and its purely environmental stance. Koch’s economic arguments have joined the alliance’s battery of other objections: It could undermine Cape Cod, Martha’s Vineyard and Nantucket’s $1 billion-a-year tourist industry, impair radar for boats and planes, kill birds, hurt fishermen and be an eyesore in a body of water that’s equivalent to a national park.

Gordon, the project’s creator, bemoans the alliance’s strategy. “They’re trying to wage a war of attrition,” says Gordon, 53. “They’re trying to make us bleed death by 1,000 cuts.”

Gordon is no wallflower. The son of a Boston grocer who graduated from Boston University, he spent his last year in school pounding on doors under the Mystic River Bridge selling then-nascent cable TV for Warner Communications. Then one day during the 1973-1974 oil embargo, Gordon sat in a long line for gas and suddenly decided to start a company that would get into the energy conservation business with $3,000. Over the next twenty years, he consulted for plants across New England on energy efficiency and built six eco-friendly natural gas-fired power plants and even one that burned wood chips. Sensing a peak in the market and not liking how fossil fuel prices were rising, he sold them for $250 million in 2001.

Intrigued by the possibility of using wind for energy in New England, he built a $2 million tower in the Sound that clocked an average wind speed of 19 mph. With those winds, the project would produce 170 megawatts of electricity, which is 75% of the power needed for Cape Cod and the islands. “We’re the Saudi Arabia of wind,” Gordon says, adding that the wind farm could produce as much as 450 megawatts when the winds are howling. He’s shelled out $25 million bankrolling the project and has commissioned Lehman Brothers (nyse: LEH - news - people ) to secure debt and equity financing if the project is approved from 17 local and federal agencies. Notwithstanding Koch’s opposition, Gordon thinks he’ll win leases from the Department of the Interior late next year. He has no plans of quitting and will wait until the end of the decade to begin building. “Why would I stop now?”

Except the turbines will be in Koch’s view. Over a windswept lawn, Koch looks out to the sound and says, "Jim is very good and an extremely formidable opponent.” At his seaside estate he has his seven boats (one is a speedboat designed for the Navy Seals that can hit 50 knots), Botero sculptures and a playground for his six children. He’s amassed an estimated wealth of $1.3 billion according to Forbes estimates, won the 1992 America’s Cup (“All I got from the San Diego Yacht Club was this $68 million belt buckle,” he says mocking the bill to win the cup), and collected Picassos and Renoirs, but yet he’s focus on the aesthetics of his view. Koch, re-engaged in another fight, won’t stop either. “I don’t want this in my backyard.”