Yesterday, the Minnesota Public Utilities Commission (“MPUC”) approved Xcel Energy’s first Minnesota-based Community Solar Garden (CSG) program. After Xcel’s initial program filing was rejected by the MPUC in April, Xcel filed a revised CSG tariff with the MPUC in June. In a related filing, Xcel also argued that a value of solar (“VOS”) rate for CSG projects was not in the public interest and applicable retail rates should be used for the program instead. The MPUC approved Xcel’s basic program, with relatively minor modifications and at the applicable retail rates. As a result, Xcel customers will soon be able to invest in a solar project without having to own a home or the perfect roof for solar.
Many of the details were already prescribed by statute (Minn. Stat.§ 216B.1641):
- Subscribers to a CSG will purchase one or more 200-watt subscriptions up to 120 percent of their energy load
- CSG projects must include at least 5 subscribers with no single subscriber amounting to more than 40% of the total CSG capacity
- Each CSG is to be no more than 1MW in size, but the program as a whole remains uncapped
The statute also requires that Xcel Energy purchase all of the energy output of a CSG system at a VOS rate once it is approved by the MPUC. Many interested parties have invested considerable time and resources into developing a way to calculate the costs and benefits distributed solar deliver to a utility, its customers and society (more on that process here, here and here). Last spring, the MPUC approved a final methodology to calculate VOS rates - the culmination of that work. Xcel’s CSG tariff filing was then the first test of the methodology and the CSG program its intended first application.
Ultimately, the MPUC approved the use of the applicable retail rates instead of a VOS rate as Xcel requested. With parties diverging on the VOS rate itself as well as what, if any, additional incentive may be needed to make the projects financeable, the MPUC opted to spend more time getting any future VOS rate and associated incentive right. As that work continues, the program will go forward with the rate for immediate CSG projects being the applicable retail rate and an additional 2-3 cent adder for associated solar renewable energy certificates transferred to the utility. This amounts to rates from approximately 11.5¢/kWh for larger systems subscribed by commercial and industrial customers to 15¢/kWh for smaller systems subscribed by residential customers.
Will such rates “reasonably allow for the creation, financing, and accessibility” of CSG projects under Minnesota law? One of these days, perhaps before the Harvest Moon, we will see whether Minnesota solar gardens are ready to sprout.
In a first-of-its-kind report announced this morning, Ceres and Clean Edge ranked the nation's largest electric utilities and local subsidiaries on their renewable energy sales and energy efficiency savings. The report focused on three clean energy indicators: renewable energy sales; cumulative annual energy efficiency; and incremental annual energy efficiency.
Earlier this year, a group of Stoel Rives attorneys traveled to Mexico to assess existing opportunities and pending developments in the Mexican power markets. Some of the reforms and key trends identified during that trip are now taking shape. See also my blog post “Let the Market Decide: The Third Wave of Energy Investment in Latin America and Caribbean.”
Our work in Mexico included meetings with existing clients, senior partners of a major Mexican law firm, a briefing with a senior Mexican policymaker regarding implementation of the reforms and attendance at the Mexican International Renewable Energy Conference. Here are some key "take-aways" from these meetings:
- A Mexican renewable energy market has been successfully launched, with more wind than solar developed to date.
- A package of "secondary" laws implementing Mexico's energy reform legislation are pending in the Mexican Congress.
- The secondary laws will include some form of renewable portfolio standard (e.g., 30% by 2024) that relies on (among other elements) renewable energy certificates.
- The secondary laws are also expected to launch a wholesale electricity market, a demand response market and other provisions designed to encourage distributed generation.
- Solar module manufacturers and other stakeholders are concerned about the government's decision to apply a 15% import tax on electrical "generators" to non-NAFTA solar modules.
We wanted to invite our readers to listen in on a one-on-one conversation between our colleague Jon Wellinghoff and Marty Rosenberg, EnergyBiz editor-in-chief, July 15, noon-1 p.m. Eastern. You can register here.
Jon, the immediate past chair of FERC, helped initiate a national debate about grid security when he raised concerns in a Wall Street Journal article titled “Assault on California Power Station Raises Alarm on Potential for Terrorism” published last February. Register and hear Jon speak on these important matters:
- What is FERC doing on the cybersecurity front?
- What is the role of smart grid and renewables in security?
- What is the role of microgrids in security?
Qualification and Application Checklist for New DOE Loan Guarantee Solicitation for Renewable Energy and Efficiency Projects
Late last week, the United States Dept. of Energy (“DOE”) Loan Program Office issued a final solicitation for projects seeking loan guarantees titled “Federal Loan Guarantees for Renewable Energy Projects and Efficient Energy Projects.” Issued under the DOE’s Section 1703 Loan Program (named for Section 1703 of Title XVII of the Energy Policy Act of 2005), the Renewable and Efficient Energy Projects solicitation will make up to $2.5 billion in direct loan guarantees* available to “catalytic projects”- i.e., those that will push the commercial deployment of innovative technologies in future projects. Download a copy of the solicitation (PDF).
We provide a checklist of project eligibility, program requirements and the loan guarantee application process below.Continue Reading...
On July 1, 2014, the City of Palo Alto Utilities (CPAU) issued a Request for Proposal (RFP) to create a CPAU-branded Community Solar Program. According to CPAU, "the primary objectives for the program are 1) to help facilitate reaching the City’s target of meeting 4% of its energy needs from local solar energy by 2023 (from 0.7% in 2013), and 2) to give all of its customers – including those who rent and those without sufficient solar access – the opportunity to experience and derive benefit from cost-effective local solar development."
CPAU expects to purchase the full output of electricity produced by a 3rd-party owned, operated, and maintained solar facility resulting from the program and all associated attributes, including renewable energy credits (RECs) and environmental benefits. The desired capacity of a community solar facility is 1 to 3 MW (CEC-AC), to be interconnected to CPAU’s distribution grid.
The RPF is available here.
A pre-proposal webinar will be held Wednesday, July 9, 2014 at 2:00 p.m. PST (https://global.gotomeeting.com/meeting/join/891095109; dial in (712)432-1212; meeting ID 430-877-385). CPAU encourages all prospective bidders to participate.
The Idaho Supreme Court recently determined in Idaho Power Company v. New Energy Two, LLC, No. 40882-2013 (Idaho June 17, 2014), that the Idaho Public Utilities Commission has jurisdiction to interpret or enforce contracts when given the authority by the parties. In May 2010, IPC and the defendants entered into two energy contracts that were to be completed by a date certain. In advance of the operational dates, the defendants notified IPC of events they claimed were force majeure. Markedly, the defendants’ claim was that the decision-making process of the PUC itself, or the alleged lack thereof, was the force majeure event causing lenders to be “unwilling to lend in Idaho pending the outcome” of the PUC proceedings. IPC filed petitions with the PUC seeking a ruling that there was no force majeure event(s), and that IPC could terminate the contracts. The defendants filed a motion to dismiss that was denied, and the Idaho Supreme Court heard the issue on a permissive appeal.Continue Reading...
On Friday, June 20, 2014, the U.S. Fish and Wildlife Service (“Service”) announced its plans to engage the public in a review of how permits are issued for the non-purposeful take of bald and golden eagles under the Bald and Golden Eagle Protection Act (“Eagle Act”). This process is a continuation of the Advanced Notice of Proposed Rulemaking process, which began in April 2012 and focused on three general areas for public comment: eagle population management objectives, compensatory mitigation, and programmatic permit issuance criteria.
The Service will hold public meetings in Sacramento, Minneapolis, Albuquerque, Denver, and Washington D.C. in July and August, and accept written comments by U.S. mail or via regulations.gov. Topics that will be highlighted at the public meetings are: permit duration, management objectives, programmatic permit conditions, criteria for nest removal permits, compensatory mitigation, and the low-risk project category.
The public meetings will serve as scoping meetings under the National Environmental Policy Act (“NEPA”), and the Service will use the comments received to prepare either a draft Environmental Assessment or Environmental Impact Statement and proposed revisions to the eagle permit regulations. The deadline for submitting public comments is September 22, 2014. More information can be found in the Service’s news release, Federal Register notice, and eagle scoping website.
Meanwhile, the Service is processing programmatic eagle take permits but to date has not issued one for any project. And the American Bird Conservancy (“ABC”) followed through on its 60-day notice of intent to sue, asserting that the 30-year eagle permit rule does not comply with NEPA because the Secretary of Interior relied on a categorical exclusion. The ABC complaint also alleges that the rule contravenes the purpose of the Eagle Act and violates the Administrative Procedure Act.
Supreme Court Rolls Back EPA's Regulation of Greenhouse Gases in Utility Air Regulatory Group Decision
The U.S. Supreme Court has delivered a stunner with its decision this morning in Utility Air Regulatory Group v. Environmental Protection Agency. The Supreme Court has curtailed the U.S. Environmental Protection Agency’s (EPA) regulation of stationary source greenhouse gas (GHG) emissions under two Clean Air Act permitting programs - New Source Review Prevention of Significant Deterioration (PSD) and Title V. EPA can no longer require PSD or Title V permits for stationary sources based on a source’s GHG emissions, unless a source is already subject to the permitting programs. However, if a source triggers PSD permitting for another pollutant, the Court has left the door open for EPA to require the source to undergo a Best Available Control Technology determination for GHGs. Today’s decision in Utility Air Regulatory Group has significant ramifications for industrial source permitting. See our alert for more details.
The Administration's Clean Power Plan (the "Plan"), released on June 2 and published on June 18, confirms that climate change mitigation goals are now a key driver of both environmental and energy policy. By imposing total power sector CO2 emission reductions of 30 percent (from 2005 levels) by 2030, the Plan is likely to trigger both a wholesale shift of power production fuel usage from coal to natural gas and renewable energy, and a critical debate about energy resource priorities.
The Plan reflects the latest development in a multi-year conflict over climate change legislation and energy policy. Early in the Administration's first term, a "cap and trade" approach was proposed by Congressional Democrats and opposed by most Congressional Republicans. The opponents prevailed, effectively blocking the legislation.Continue Reading...
Yesterday EPA Administrator Gina McCarthy unveiled the highly anticipated carbon dioxide rules for existing power plants. Dubbed the “Clean Power Plan,” the rules taken together likely will have a significant impact on industrial and other consumers of electricity as well as developers of natural gas-fired and renewable generation (e.g., solar, biomass and wind). Stoel Rives attorneys with significant Clean Air Act experience react to the new rules in a client alert available here.
During today's open meeting, the Federal Energy Regulatory Commission (FERC) issued a proposed rulemaking that impacts the owners of gen-tie lines, particularly those owners who are developing multi-phase projects that require priority to interconnection capacity to support future phases. The proposed rule would ease existing FERC policies that treated gen-tie lines just like any other transmission facility and required owners to make interconnection capacity available to third parties if the owner could not provide enough documentation proving its planned use of the gen-tie lines.
FERC has proposed the following:
- Gen-tie line owners will be granted a blanket waiver from the requirement to (x) maintain a transmission tariff and OASIS and (y) comply with the standards of conduct. FERC will revoke that blanket waiver only when it is in the public interest to do so, and not simply when a third party requests transmission service over a gen-tie line.
- Third parties seeking to interconnect with existing gen-tie lines will be required to do so using the rules and regulations applicable to service requests under sections 210 and 211 of the Federal Power Act.
- Gen-tie owners who are eligible for the blanket waiver from maintaining a tariff, etc., will be granted a 5-year safe harbor period giving the owner the benefit of a rebuttable presumption that (1) the owner has plans to use the gen-tie line's capacity, and (2) the owner should not be required to expand its facilities. Third parties would have an opportunity to rebut that presumption, but those third parties would have the burden of proof. FERC proposes that the 5-year period would begin on the gen-tie energization date. Gen-tie owners would also be required to make an informational filing with FERC in order to take advantage of the safe harbor rights.
- Lastly, FERC has asked whether the affiliates of public utility transmission provider should receive the benefit of the proposed rules.
The proposed rulemaking is available here: Gen-Tie Rulemaking
Comments are due by 60 days after publication of the proposed rule in the Federal Register. Please let us know if you have questions about the proposed rulemaking and/or would like to submit comments to FERC.
I recently moderated an ABA/ACORE webinar focused on cross-border renewable energy development in Latin America and the Caribbean. To introduce the topic, I recounted a recent experience at an on-the-record dinner hosted by David Bradley, publisher of The Atlantic Magazine. The dinner was sponsored by the global CEO of one of the largest energy companies in the world, and included a Pulitzer prize winner, a former Member of Congress and other prominent energy, government and media representatives.
What does this Washington vignette have to do with renewable energy in Latin America and the Caribbean? Quite simply, everything, because it goes to the fundamental challenges inherent in making good policy decisions without metrics that allow for "apples to apples" comparisons.
As you might expect, the dinner conversation focused on global energy. As the meal progressed, it became clear that most guests fell into one of three categories: those invested in traditional fossil fuel technologies; those invested in renewable energy technologies; and those who were either agnostic or insufficiently knowledgeable to choose a side.Continue Reading...
American Bird Conservancy Sends Notice of Intent to Sue Administration Over Revised Eagle Permit Rule
On April 30, 2014, the American Bird Conservancy (“ABC”) sent a Notice of Intent to Sue (“Notice”) to Secretary of the Interior Sally Jewell and Director of the U.S. Fish and Wildlife Service (“Service’) Dan Ashe, alleging violations of the National Environmental Policy Act (“NEPA”), the Endangered Species Act (“ESA”), and the Bald and Golden Eagle Protection Act (“Eagle Act”) in connection with the Service’s issuance of the revised eagle permit rule.
The Notice relates to the revised rule that was issued in December 2013 and that extended the maximum term for programmatic “take” permits under the Eagle Act to 30 years, subject to a recurring five-year review process throughout the permit life. Under the previous rule, programmatic permits for incidental “take” of bald and golden eagles could extend only for five years.
In the Notice, ABC alleges that the Service violated NEPA by failing to prepare an Environmental Impact Statement or Environmental Assessment on the rule changes, arguing that the changes are more than “administrative” in nature and therefore the Service erred by applying a categorical exclusion. ABC asserts that the Service’s application of a categorical exclusion is improper given the fact that the Service prepared an Environmental Assessment when it adopted the original rule in 2009. The Notice also alleges that the Service violated the ESA by failing to consult concerning the impacts to listed species under ESA Section 7. Finally, the Notice argues that the revised rule violates the Eagle Act itself, noting that, in revising the rule, the Service’s “principal, if not sole, purpose was to ‘accommodate’ the purported ‘needs’ of the wind power industry for longer term permits.” This, ABC alleges, cannot be reconciled with earlier findings by the Service that it was appropriate to issue programmatic permits for terms of five years or less.
It is unclear whether AWEA or any individual wind developers will seek to intervene or file amicus briefs in the litigation if it moves forward. It is also unclear whether ABC will seek a preliminary injunction to halt the permitting process while the litigation is pending, although our initial assessment is that a court would be unlikely to enter any such injunction. For that reason and others, we do not anticipate that the notice or any suit that is filed will have an immediate impact on whether or not developers continue to seek “programmatic” take permits. But ABC’s move adds yet another wrinkle to an area that is already fraught with more than its share of regulatory uncertainty.
* 5/14/14 update: FAQs released
Northern States Power Company (d/b/a Xcel Energy) released its long-awaited solar request for proposals (RFP) today. Although it had earlier suggested the RFP would be for up to 150 MW, today’s RFP seeks up to 100 MW of PV resources. The Company explained that the amount acquired through this RFP may ultimately be impacted by other Minnesota Public Utility Commission decisions involving solar resources (see more on at least one related proceeding here).
Eligible proposals must be at least 5 MW AC and the company expressed caution about bids coming in over 50 MW in light of the company’s total solar needs being in flux. Xcel continues to desire projects that will be in commercial operation by December 31, 2016 in order to take full advantage of the 30 percent Investment Tax Credit (ITC). Further the company desires to fulfill the requirement through power purchase agreements (the associated model PPA is available on Xcel's website here), though it is open to bids with different ownership structures. Xcel has indicated an interest in “proposals that offer PPAs along with an indicative offer for ownership in the project through an affiliate of NSP”. Proposals are due June 20, 2014 with selections to be filed with the Commission in late October, 2014.