Oregon Senate Bill 190 Would Change Oregon Geothermal Law
The Oregon Legislature is set to consider a bill during the 2009 Regular Session (Senate Bill 190) that would substantially revise ORS Chapter 522 dealing with geothermal resources. Among other things, the bill eliminates the specified minimum per well and blanket bond amounts and gives the State Department of Geology and Mineral Industries (“DOGAMI”) authority to set bonds amounts in a future rulemaking. Future bond amounts set by DOGAMI “must be based on the estimated costs of plugging and decommissioning the well and any other associated expenses for reclamation of the site of the well.”
SB190 also increases permitting fees and extends permitting timelines. For example, geothermal well permit fees are increased from $250 to $2,000 and DOGAMI’s timeline for responding to a complete permit application is extended from 45 to 90 days. The bill also imposes new fees for extending the period for completion of drilling ($500), permit transfers ($500), and requests to plug and decommission a well ($1,000).
The bill would take effect July 1, 2009 and would apply to wells permitted before that date.
Stoel Rives has also published information about the bill in the Geothermal Energy Association's "GEA Weekly Update" for February 18, 2009 (p. 8).
California PUC Proposes Criteria to Evaluate the Viability of Proposed RPS Projects
Under California’s Renewable Portfolio Standard, investor-owned utilities only have until 2010 to procure 20% of their power from renewable sources (although certain flexible compliance measures do apply). There are concerns that the rapidly-approaching deadline is leading utilities to sign power purchase agreements with projects that are not viable and may never achieve commercial operation. To help prevent this going forward, the California Public Utilities Commission Energy Division has proposed project viability criteria to evaluate each project bidding into California’s RPS program. Utilities would be required to score potential RPS projects based on developer experience in project financing, RFOs, and facility ownership and operation; technical viability; and project-specific viability criteria such as equipment procurement, project development lead time, transmission lead time and cost of transmission interconnection, site control, permitting, and pricing structure. The project viability score could be taken into account in PPA approval by the CPUC and in gaging whether to excuse utilities that fail to meet RPS goals. Scoring projects based on viability criteria has the potential to affect who successfully participates in the RPS solicitation process and the types of technologies that are selected as RPS projects. Comments on the CPUC proposal are due on February 27, 2009. Read more about the proposal in my colleagues’ recent Renewable Energy Law Alert.
FERC Technical Conference on Wind Integration
From our colleague Jason Johns:
The Federal Energy Regulatory Commission will host a technical conference on March 2 to discuss the challenges of integrating large amounts of variable generation into wholesale markets and the grid. The Commission is also asking for innovative proposals that will help accomplish such large integration. Notably, the conference could hardly occur at a more appropriate time, as wind installation grew by 8,358 MW in the US in 2008 (more than gas-fired capacity) and certain regions of the country are hotly debating the costs of putting wind on the grid. Conference panelists will include Don Furman (Iberdrola Renewables), Brian Parsons and Brendan Kirby (National Renewable Energy Laboratory), Bob Kahn (Northwest & Intermountain Power Producers Coalition) and Steve Oliver (Bonneville Power Administration, which put its first wind integration charge in place in 2008).
FERC Rejects MISO's Market Coordination Service Proposal, Approves Anchor Tenant Merchant Transmission
From our colleague and FERC guru, Jason Johns:
MISO’s Proposed Market Coordination Service:
The Federal Energy Regulatory Commission today rejected the Midwest ISO’s proposed Market Coordination Service that would have given certain transmission owners access to the ISO energy and operating reserve markets without requiring those owners to hand over control of facilities or share in transmission development costs. Although the proposal was an innovative approach to expanding the ISO’s market footprint, FERC worried that the proposal would harm consumers and cause the ISO to unravel as transmission owners opt out of full membership to avoid transmission cost-sharing. FERC also questioned whether the proposal would attract more wind energy into the ISO market because, by leaving pancaked transmission rates intact, wind resources could face higher transmission rates as ISO members withdraw in favor of Market Service. The Midwest ISO must remove all Market Service language from its tariff within the next 30 days.
Renewable Energy Transmission Project Rates:
In other news, FERC accepted a request for waiver of criteria traditionally used to evaluate merchant transmission projects. In their applications, the Zephyr and Chinook merchant transmission projects proposed to presubscribe 50% of the projects’ 3,000 MW capacity to an “anchor tenant” wind developer in order to defray upfront development costs, and then allocate the remaining 50% through a traditional open season process. The proposal was intended to avoid the “chicken-and-egg” scenario often associated with merchant transmission, i.e.,resources will not develop without assurances that transmission is available, and likewise transmission projects will not move forward without assurances from resource developers. FERC’s acceptance of this modified approach to merchant transmission expressly opened the door to similar proposals in the future. “Anchor tenant” merchant transmission is the new standard.
Utah PSC Revises Net-Metering Policy Creating New Incentives for Solar and Wind Energy
Renewable energy supporters in Utah are cheering a recent order which will make renewable energy systems such as wind turbines and solar panels more cost effective for consumers.
On February 12, 2009, the Utah Public Service Commission issued an order revising the Rocky Mountain Power net metering policy. In the past customers who own renewable-energy facilities were credited for excess generation based on an avoided-cost calculation, which results in a low financial benefit to the customer. The new net-metering policy provides a "full retail" or dollar-for-dollar credit for every kilowatt-hour of excess power generation, creating a much greater incentive for renewable-energy production by residential, commercial and industrial consumers. In addition, the order declared that renewable energy certificates shall be "deemed owned by the net-metering customer or as otherwise agreed to or designated by the net-metering customer." The PSC order will become effective on April 1, 2009.
Salt Lake County Mayor Peter Corroon and Salt Lake City Mayor Ralph Becker, both supporters of renewable energy and this net-metering policy change, are reportedly investigating ways to promote investment in solar power in the region having jointly received a Solar America grant from the U.S. Department of Energy.
Utah Governor Urged to Withdraw from Western Climate Initiative
On February 13, the Utah Public Utilities and Technology Committee voted to favorably recommend a House Resolution urging Governor Huntsman to withdraw Utah from the Western Climate Initiative. The resolution, 1st Sub. H.R. 3, contains recitals referring to “Utah’s abundant and clean burning coal,” the lack of balance in the Governor’s Blue Ribbon Council on Climate Change, the absence of economic analysis of the costs and benefits associated with carbon reduction mandates, and other concerns regarding the economic impact of a cap and trade mandate. The resolution is among a number of proposed resolutions and bills addressing energy issues, including H.J.R 9, Joint Resolution on Cost-Effective Energy Efficiency and Utility Demand-Side Management, H.J.R. 12, Joint Resolution Supporting Hydrogen Power From Advanced Coal and Carbon Capture and Sequestration Technology, and House Bill 412, Energy Policy Amendments.
Utah Legislation Addresses Definition of Independent Power Production Facility
Last year, we reported on Utah Public Service Commission decisions regarding the need for the Milford Wind Power Project to obtain a certificate of convenience and necessity. Ultimately, the Commission ruled that the Project’s 90-mile transmission line connecting the wind farm to a point of interconnection at the Intermountain Power Project generating station was not part of the power production facility and was therefore not excluded from Commission jurisdiction. Docket No. 08-2490-01, Order on Petition for Rehearing, July 2, 2008. Thus, Milford Wind was required to obtain a certificate of convenience and necessity for the transmission line. In an apparent attempt to avoid that type of result in the future, the Utah Legislature is considering a bill that adds a definition of “generation facility” to the Public Utilities Code, providing that “’Generation facility’ means all electric plant used for the production or generation of electricity, including all electric plant used to interconnect the production or generation plant.” S.B 76. The bill also then uses that term “generation facility” in the definition of “independent power production facility,” and through other definitions, exemption from Commission jurisdiction is provided for such facilities.
Michigan Governor Creates Great Lakes Wind Council
On February 6, Michigan Governor Jennifer Granholm signed an executive order creating the Great Lakes Wind Council, an advisory body within the Department of Energy, Labor, and Economic Growth that will provide citizens with a public forum to begin to identify where, in the Great Lakes, wind energy systems may be prudently sited. Appointments to the Council include representatives from the Michigan State University Land Policy Institute, the Michigan Environmental Council, the Little Traverse Bay Bands of Odawa Indians, ITC Holdings Corp., the Michigan Charter Boat Association, and Detroit Edison. This follows on the heels of actions by the Wisconsin Public Service Commission and others to investigate the feasibility of siting wind turbines in the Great Lakes, as discussed in one of my recent blog entries.
ENERGY TAX PROVISIONS INCLUDED
From a bootleg copy of the tax provisions in the stimulus bill:
The grant in lieu of tax credits is in the bill. However, it is now Treasury rather than DOE that will issue the checks. The provision has also been changed to allow the grants to be issued even though the property is not placed in service before 2011, so long as the credit is still in effect and construction began before 2011.
In addition, the bill also includes:
1. the placed in service date for the PTC is extended three years,
2. taxpayers can elect the ITC (30%) in lieu of the PTC, beginning in 2009 through 2013 (2012 in the case of wind),
3. the allocation for CREB bonds is increased by $1.6B,
4. the allocation for qualified energy conservation bonds is increased by $2.4 B,
5. Bonus depreciation and small business expensing extended through 2009,
6. 5-year NOL carryback allowed but only for small businesses,
7. A 30% investment credit for investment in qualified advanced energy projects,
Stoel Rives will be issuing an alert describing the provisions in detail in the near future. If you are not already a subscriber, please click on the "Subscribe" button to sign up.
Will California be Able to Regulate GHG Tailpipe Emissions?
The California Air Resources Board may soon get its wish. Back in 2005, ARB first requested a waiver from the U.S. Environmental Protection Agency, to allow California to regulate motor vehicle greenhouse gas emissions. EPA denied the waiver two years later, after California threatened to sue EPA to force the agency to take action on the request. The very day after President Obama's inauguration into office, ARB filed with EPA a request for reconsideration of its waiver request. Several days later, President Obama himself signed a Presidential Memorandum directing EPA to assess whether denial of the waiver was appropriate in light of the Clean Air Act. Last Friday, Lisa Jackson, head of the EPA, issued a Notice for Public Hearing and Comment on California's request for consideration of the previous waiver denial, which officially initiates reconsideration by EPA. Discussion at the public hearing on March 5, 2009 may get interesting, as the Notice's 'supplementary information' included a brief discussion on how the waiver denial had "significantly departed from EPA's longstanding interpretation of the Clean Air Act's waiver provisions and from the Agency's history, after appropriate review, of granting waivers to California for its new motor vehicle emission program." Stay tuned.
Continue Reading...AGREEMENT REACHED ON STIMULUS PACKAGE
Congressional leaders have just announced that they have reached an agreement on the details of a stimulus package. The details have yet to be announced, other than the total cost of the bill is estimated to be $789 billion. That amount is less than either the House or Senate bill.
We will post details as they become available and will be sending out an alert. Congressional leaders are currently meeting with their respective caucuses to obtain their approval. The Conference Committee is expected to meet in formal session immediately after.
Is More Bad By-Product News Coming for Biofuels Producers?
(this article was written by my colleague, Rick Goldfarb, and may also be accessed at www.foodliabilitylaw.com)
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2008 was a terrible year for makers of ethanol and biodiesel. Huge spikes in the prices of raw materials, natural gas and transportation and drops in the prices they received for their main products have driven many of them to cut back production, shutter plants or even seek bankruptcy protection. In addition, U.S. biodiesel producers saw themselves faced with an antidumping investigation by the EU that might affect their export market.
If you thought it couldn’t get any worse, hang on.
The National Grain and Feed Association reports that at the International Feed Expo in Atlanta on January 27, Dr. Daniel McChesney of the Food and Drug Administration spoke about studies the agency has reviewed concerning distillers’ grains, the main by-product of ethanol, and glycerin, the main by-product of biodiesel. The information presented by the FDA’s Center for Veterinary Medicine is of concern to anyone in the biofuels industry, as well as anyone who feeds livestock or purchases, processes or consumes meat and poultry.
The FDA has tested 45 samples of distillers’ grains from ethanol plants and in over half of them detected antibiotics, including virginiamycin, erythromycin and tylosin. NGFA later learned that the concentration of those antibiotics exceeded the level (0.5 ppm) from a letter of no objection relating to virginiamycin issued in 1993 to the predecessor of Philbro Animal Health. There are no safe levels established for the other two antibiotics in feed grain. The FDA has 15 more samples to test and intends to make its final report available this summer.
With regard to biodiesel-derived glycerin, Dr. McChesney stated that the FDA does not consider it to be GRAS, or generally recognized as safe, for use as animal feed. Two issues raised concerns:
· Many samples contained more methanol than the 150 ppm level recognized as safe for animal feed; and
· Samples contained salt in concentrations as high as 16,500 ppm.
Accordingly, the FDA will be conducting a safety review of glycerin as a by-product of biodiesel. This will focus on the type of feedstock used, the manufacturing process and how the glycerin is introduced into feed.
Developing markets for by-products has been a significant challenge for the emerging biofuels industry. The latest news of the FDA’s concerns about both distillers’ grains and glycerin will increase those challenges in an already difficult environment.
UPDATE -- Deal Reported Among Senate Democrats
Within the last hour, it is being reported that Senate Democrats have reached an agreement with certain Republican Senators and the White House on the outlines of a compromise stimulus bill that can pass the Senate. Although details are sketchy, apparently WH Chief of Staff Rahm Emanuel met with Senate Democratic leaders and swing Republicans to hammer out the agreement. It is being suggested that the bill, in its altered form, could be passed as early as tonight (Friday).
The Senate adjourned last evening without taking final action on the stimulus bill. Senate leadership has speculated publicly that they currently do not have sufficient votes to pass the measure in its current form.
A group of 12 Senators -- Democrats and Republicans -- led by Susan Collins (R-ME) and Ben Nelson (D-NE) -- have been working behind the scenes on an alternative proposal to address many concerns expressed by members. This effort reportedly would strip as much as $100 billion from the bill. While the group has, apparently, found it difficult to achieve a consensus on the proposal, the leadership decided it was important to give the group more time to work rather than continue floor debate.
Majority Leader Harry Reid has stated that the Senate would reconvene on Saturday morning. Saturday sessions are fairly unusual and extremely unpopular among members. As a result, it may be difficult for the Leader to make that happen.
Senate Energy Committee staff proposes new RPS
The staff of the US Senate Energy Committee, chaired by Jeff Bingaman (D- New Mexico) has just released the draft of a proposed renewable portfolio standard. The draft RPS would require that, by 2020, at least 20% of the electricity sold to retail consumers be obtained from renewable sources, such as wind, solar, geothermal and biomass. The Committee has also announced that it will hold a hearing on Tuesday, February 10, to take testimony on the draft RPS.
In addition, Rep. Ed Markey, chair of the House Select Committee on Energy Independence and Global Warming, has introduced his own bill that would impose an RPS of 25% by 2025.
Stoel Rives will be issuing an email alert with more details about the proposals. If you are not already receiving our email alerts, please click on "Subscribe" to ensure that you do.
Consultant Reports on City of Los Angeles' Solar Plan
On February 2, 2009, Huron Consulting Group released its independent assessment of the City of Los Angeles’ proposed Measure B, which would require the Los Angeles Department of Water and Power to develop 400 megawatts of solar generation by 2014. In late 2008, the Los Angeles City Council approved a motion to place Measure B on the March 3, 2009 ballot. Measure B is one component of the City’s “Solar LA” program, which is designed to increase the amount of renewable energy powering the City.
According to its Report, Huron based its analysis on a macro evaluation of the solar industry, expected program costs, and identification of key value drivers. Huron created a computer model based on a series of twelve inputs, including, amongst other things, hardware costs, installation costs, monitoring and maintenance costs, capacity factor, and cost of capital. Interestingly, the Huron Report projects that the cost per DC watt installed for solar generation will decline to $2.20-$2.40 in 2012. Additionally, the Huron Report predicts that thin film technologies will create more competition in the solar market and that “the realization of lower thin film manufacturing costs and scalability will put pricing pressure on traditional crystalline silicon PV technology manufacturers.” Huron ran 10,000 simulations through its model to compute the expected cost per kilowatt. The Huron Report concluded that the expected cost of implementing 400 MW of LADWP owned solar generation is $0.119 per kWh generated, which equates to an incremental rate increase of approximately one percent over LADWP’s existing financial plan.
The Los Angeles Times (1/29/09 editorial ) has criticized the process by which Measure B was placed on the ballot, pointing out that the City Council was not provided with the estimated cost of the project before it approved placing Measure B on the March 3, 2009 ballot. It remains to be seen whether the Huron Report allays these concerns.
