Archive for the ‘Public Utilities’ Category

1 Mar

The Challenges to Offshore Wind

Posted by John Renehan in Coastlines, Development, Government Contracts, Public Utilities, Renewable Energy, Subsidies, Wind Power.

Photo by Rob Farrow, some rights reserved.

Mother Jones has a succinct piece on the challenges facing offshore wind projects, challenges that explain why the U.S. still doesn’t have a single offshore wind turbine. The UK has 870, and Germany has 416, for comparison. Now that has Congress extended the wind Production Tax Credit (after a long battle detailed here and here) and outgoing Interior Secretary Ken Salazar said he is optimistic that the Cape Wind project in Nantucket Sound will begin construction in 2013, it is a good time to look at the roadblocks that remain.

Though offshore projects benefit from the Production Tax Credit, worth $1 billion a year, and the Incentive Tax Credit, which pays 30% of wind projects’ constructions, higher construction and transmission costs make electricity from offshore turbines twice the price of electricity from more traditional sources. While in the U.S., states and utilities are understandably hesitant to embrace it, Germany, for example, fully subsidizes the offshore wind system.

The opponents of offshore wind that have gotten the most press are “stakeholders” in areas near potential projects, those who organize groups like the Alliance for Nantucket Sound in opposition to the Cape Wind project, which to date has fought a dozen lawsuits over the turbines’ effect on interfering with boat traffic, desecrating sacred sites, and harming avian and marine life (the GM has covered this here and here). Not surprisingly, these wildlife worries have been hijacked by waterfront homeowners; meanwhile, the National Wildlife Federation, Greenpeace, and the Sierra Club are all in favor of the project.

The strangest problem offshore wind is facing is a 1920 law requiring ships sailing between ports in the U.S. to be U.S.-flagged. This is apparently a problem because the small fleet of ships capable of installing a 400-foot turbine in the ocean floor is based mostly in Europe – and once one of those ships installs the foundation for a turbine, it qualifies as a ‘port,’ and cannot proceed to dock in the U.S. A shipbuilder in New Jersey is building a turbine-installation ship, but until its completion at earliest in 2014, the cost of bringing in ships from abroad can be prohibitive.

Finally, our beloved federal system of government means that states award utility contracts, while the Interior Department manages the deep water where wind turbines can be built. Developers worry that even if they get a contract with a state to buy their power, Interior could award the ‘land’ rights to someone else.

14 Dec

Expiring Wind PTC: Who Stands Where?

Posted by John Renehan in Department of Energy, Power Plants, Public Utilities, Renewable Energy, Subsidies, Sustainability, Wind Power.

Photo by Francesco Gola. Some rights reserved.

In the intensifying battle over the extension of the wind energy production tax credit, a new tactic has emerged. The main lobby for extension, the American Wind Energy Association, on Wednesday announced its support for a middle ground solution. AWEA recommends a one-year extension, followed by a five-year gradual decrease in the PTC until it goes away completely. If gradually reduced until 2019, according to industry analysis, the PTC could be eliminated and a minimally viable industry could exist and be able to continue achieving cost reductions.

Our friends at Grist worry that this tactic essentially admits that the PTC is not actually needed, and that other renewable energy sources whose production tax credits expire soon, like solar, are left in a weaker position.

The tax credit, originally passed in 1992, has been extended three times. But now 17 days remain until its expiration, and the stakes are high for both sides.

Conservative groups argued in a letter to lawmakers Wednesday that the credit “essentially transfers taxpayer dollars from your constituents and subsidizes the states with such mandates.” The states without renewable electricity standards, mostly in the Southeast, Appalachia, and the Gulf Coast, generally have less installed wind power.

In addition, Republicans have pointed to the credit as a way to help close the deficit, as it will cost $12.1 billion over ten years. Not all Republicans are convinced, though. Joining many Democrats in voicing support for the extension are Republicans whose districts house more than 80% of wind installations.

Separately, the Department of Energy has offered some good news to the wind industry. DOE announced that seven projects will receive up to $4 million in grants to complete engineering, design, and permitting processes, and three of these will be selected to receive up to $47 million over four years with a target opening of 2017.

For readers to whom the above means anything, it is probably needless to say that DOE is optimistic about the energy potential from offshore wind generation. Data suggest that 4,000 GW of energy could be tapped in state and federal waters, which is four times the capacity of all existing US electric power plants.

17 Aug

Cape Wind Gets FAA Approval, Again.

Posted by John Renehan in Coastlines, FAA, Power Plants, Public Utilities, Renewable Energy, Wind Power.

The Cape Wind turbines won’t be this close. Photo by Morten A. Mitchell Larød, some rights reserved.

The FAA announced Wednesday that the 130-turbine Cape Wind project off the Massachusetts coast posed no danger to air travel. The FAA’s approval means that Cape Wind is fully permitted, with federal and state approval, a commercial lease and construction and operations plans, and power purchase agreements with utilities in Massachusetts – the only offshore wind farm so close to construction. Massachusetts, then, is about to add to its fast-growing use of renewables.

The approval does not come without controversy, however. Republican lawmakers want to investigate the possibility that the Obama administration put pressure on the agency to approve the project despite safety concerns. Even with that threat looming, the project is the subject of numerous legal challenges.

Last year, the Alliance to Protect Nantucket Sound challenged the FAA’s previous approval of the project, and the DC Circuit overturned that approval, ordering the agency to review its findings. Cape Wind must also set aside $15 million to address any issues with the radar systems used to locate aircraft in the area, but because the turbines, at 440 feet, are below a 500-foot threshold, the FAA does not expect them to obstruct pilots. Boston.com has the story here.

For those of us who might have been following this story since the George W. Bush administration, this storyline might sound familiar. That’s because this is actually the FAA’s fourth no-hazard determination, an approval that must be reviewed if construction does not begin within 18 months. Maybe the fourth time is the charm on the high seas of Nantucket Sound.

7 Aug

Massachusetts Whooshes Ahead With Wind and Other Renewables

Posted by Hester Serebrin in Public Utilities, Renewable Energy, Solar Power, Wind Power.

 

Photo by Oast House Archive. Some rights reserved.

Following in its own footsteps, Massachusetts again made moves to advance the use of renewables such as wind and solar in the Bay State. Late last week ML Strategies (a consulting affiliate of law firm Mintz Levin) wrote in depth about Massachusetts Governor Patrick signing into law Senate Bill 2395, An Act relative to competitively priced electricity in the Commonwealth. The bill aims to “protect Massachusetts ratepayers while providing greater reliability and energy independence for all residents of the Commonwealth,” according to a press release from the Governor’s office, through the use of expanded incentives and opportunities for renewable energy companies.

Specifically, the bill:

  • Extends long-term contracts between the utilities and renewable energy companies;
  • Raises the cap on net metering, allowing customers to run their meters backwards and sell power back to the distribution company for credits;
  • Allows for long term contracts as an incentive for companies that purchase coal-fired power plants, and transition them to gas-fired generators, so long as they agree to completely remediate the site;
  • Enables more municipalities to install solar panels on community landfills;
  • Requires electric companies to file for rate cases every five years and gas companies to file every ten years;
  • Requires EEA’s agencies to complete a number of studies to analyze further steps in energy efficiency as well as the exploration of other renewable energy sources;
  • Establishes a three-year energy efficiency rebate pilot program for the five largest gas and electric users in each service territory;
  • And more! For more details, don’t forget to check out ML Strategies’ overview.

21 Feb

The Wind May Keep Blowing, Just Not From Congress

Posted by John Renehan in Public Utilities, Renewable Energy, Tax Credits, Wind Power.

Image by Chris Winters. Some rights reserved.

The American wind energy industry has long relied on a production tax credit (PTC) that returns 2.3 cents per kilowatt-hour produced as a tax credit to investors. Following the PTC’s expirations in 1999, 2001, and 2003, the industry’s installed capacity fell each time by three-quarters or more. In the past few months as the industry lobbied Congress to pass an extension to 2016 – the year the solar PTC expires – it has presented two arguments.

First, the industry has increasingly turned to domestic manufacturing for its components, sourcing 60% of its parts from American manufacturers in 2011 compared to 25% at the time the PTC was allowed to lapse at the turn of the century. Second, the industry is at such a scale that the cost of wind energy is decreasing, and a PTC effective through the 2013-2016 window would allow the industry to “finish the job,” in the words of American Wind Energy Association Denise Bode, quoted in a Greentechmedia article.

But Congress left the PTC, which had been tucked away in the payroll tax cut bill, out of the final version of the legislation. A standalone bill to extend the PTC is unlikely to pass, but some expect a lame-duck Congress to pass an extension after November’s elections. For now, it is a race for developers to get their turbines up and running before year’s end, when the tax credit ends.

The industry expects to see frantic building in anticipation of the deadline, but for construction to stall after the summer as uncertainty over the credit’s future intensifies. Business leaders say many projects that cannot be accelerated to completion in 2012 will have to be cancelled or delayed as land leases, interconnection agreements, and other permits expires. Inexpensive natural gas in addition to generally weak demand for electricity is prompting manufacturers to look to areas with strong government support for business, including Southeast Asia, Turkey, and much of Latin America.

This does not paint a rosy picture for the industry. Where can wind look for hope? To the states, for now, perhaps. On the same day that Congress appeared to leave the wind industry to its fate, Massachusetts governor Deval Patrick announced a major step forward for Cape Wind, which is aiming to be the first offshore wind project in the United States. Massachusetts utility NSTAR agreed to purchase 27.5% of the proposed project’s capacity. In December, New England utility National Grid, agreed to a power purchase agreement for 50% of Cape Wind’s capacity.

With the Massachusetts Supreme Judicial Court’s acceptance of the Department of Public Utilities’ approved price, the project can begin financing for its estimated $2.6 billion cost. The turbines will be five to thirteen miles off Cape Cod in Nantucket Sound, and construction will take 2.5 years. By then, who knows how the wind industry will look.

30 Dec

Vermont’s Plan for 90% Renewable Energy

Posted by John Renehan in Electric Cars, Fuel Efficiency, Greenhouse Gas Emissions, Hydroelectric Dams, Power Plants, Public Utilities, Renewable Energy, Solar Power, Sustainability, Uncategorized.

Photo by Andrew Curtis. Some rights reserved.

While Irene proved little more than a light rain shower where I waited it out in New Hampshire, Tropical Storm Irene launched a surprise assault across the Connecticut River in Vermont. The resulting damage shocked the state and people across the country, but Vermonters now see the potential to rebuild infrastructure in a smarter way. The state government is hoping to align local, regional, and state energy policies to support “resilient growth,” foster economic stability, and safeguard the environment.  New Governor Peter Shumlin led the effort to develop a Comprehensive Energy Plan, Vermont’s first in more than a decade, setting their sights on obtaining 90% of their total energy from renewable sources by 2050.

Vermonters have a history of thinking progressively about their energy. In 2011, they got 23% of their energy from renewable sources, compared to 14% across the U.S. (though Knowledge Mosaic’s home state of Washington’s number stands close to 80%).  Even before Irene, the state had set a goal of reducing energy usage in state government by 5%. And while proud of their efforts to increase efficiency and keep demand for electricity down, the CEP goes further.

Identifying oil and fossil fuels, which remain the backbone of heating and transportation, as particular areas of focus, the CEP emphasizes four drivers of progress: finance and funding, innovation, outreach and education, and regulatory policy and structures. Their goal is to consider all four areas in every energy policy.

A first priority of the plan is to promote efficiency and make progress metrics, while continuing to improve the structure for allocation and pricing of energy. It supports reducing household heating cost through building codes and biofuels, and recommends a plan to move transportation infrastructure towards supporting electric vehicles.

It is a bold vision. But even the state’s own overview of the program recognizes that they are a “state leading by example.” Vermont’s economy is the smallest in the U.S. But they hope to make progress they could not consider if not facing significant infrastructure repairs across the state, and maybe have an outsized impact on other states’ future decisions.

14 Sep

Seattle’s Future Water Woes

Posted by Kyle Hargus in Public Utilities, Water.

Photo by tarnalberry. Some rights reserved.

No doubt there are bigger water related-problems in the national news, with the summer’s drought in Texas casting a grim agricultural shadow over the coming year and the storms that have hit the east coast and the Gulf in recent weeks causing more than a just a stir. But seeing as we at Knowledge Mosaic are based in Seattle, let’s put national issues aside and take a little look at some local news! Trust me, I’m sure this has some inklings of national resonance anyhow, as this must be a pattern occurring more or less on a wide scale across the US.

Though Seattleites have done an admirable job of lowering water usage to its bare essentials in recent years (we are reported to be using the same amount of water now that we were using in 1957, and the population has almost doubled in that time), the Seattle Times reports that the amount Seattle has been paying for water has, regardless of the amount of water conserved, almost doubled since 2000, and may see an additional 25% raise before 2014.

Seattle citizens have voiced displeasure with Seattle Public Utilities, stating that they’ve done their best to follow the “How to Reduce Water Use” tips that they’ve put on their website, and that their bills are still rising month by month. The issue is that maintenance and construction work on water-related projects (“dams, reservoirs, pipelines and pumps,” as the Times alliteratively puts it)continue to rise, while consumers are still on the hook for paying off hundreds of millions of dollars in loans to build facilities like the Cedar River Watershed. The Seattle City Council voted last night (before this post went to press!) on the proposal to raise water bills, and it was expected to pass.

29 Jul

FERC’s Transmission Planning and Cost Allocation: The Law Firm Analysis Rolls In

Posted by Hester Serebrin in FERC, Public Utilities, Transmission.

Approximately one week ago, FERC published a much-anticipated Final Rule (“Order No. 1000”), which aims to ensure that “Commission-jurisdictional services are provided at just and reasonable rates and on a basis that is just and reasonable and not unduly discriminatory or preferential.” Specifically, the rule amends the transmission planning and cost allocation requirements established by Order No. 890 back in 2007, by requiring public utility transmission providers to a) “improve transmission planning processes and allocate costs for new transmission facilities to beneficiaries of those facilities,” and b) “align transmission planning and cost allocation.”

The folks over at FERC feel confident that the changes laid out in Order No. 1000 could remove barriers to development of transmission facilities, and “provide consumers with greater access to efficient, low-cost electricity.”

That sounds good and all, but what does it mean for you? Legal experts at some of the top-rated law firms are crawling all over each other to break down the requirements and help you comply. Below, you can browse related memos added to Knowledge Mosaic’s Law Firm Memos library so far, or you can even set up a Daily Memo Alert (I recommend using the text string: FERC and 1000) to catch them going forward.

Alston + Bird

Dewey & LeBoeuf

King & Spalding

Mayer Brown

Morrison & Foerster

Van Ness Feldman

Winston & Strawn

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