FERC and Feed-in Tariffs: Opportunities and Challenges in California and Other States Webinar - March 2, 2011
Seth Hilton, Jason Johns, and Morten Lund will be presenters at the following webinar on Wednesday:
FERC and Feed-in Tariffs: Opportunities and Challenges in California and Other States
Wednesday, March 2 at 11:00 a.m. CST/ 9:00 a.m. PST.
After prolonged consideration by the California Public Utilities Commission, California recently adopted a reverse auction mechanism for renewable energy projects 20 megawatts or smaller. That program initially arose from the California Public Utilities Commission's efforts to expand an existing feed-in tariff program and was structured as a reverse auction mechanism to avoid potential conflicts with Federal Energy Regulatory Commission (FERC) jurisdiction. This webinar will explore feed-in tariffs and similar programs, such as California's Renewable Auction Mechanism. It will also address the Federal Energy Regulatory Commission's decision in October concerning the California Public Utilities Commission's proposed feed-in tariff for combined heat and power generators, as well as the implications of that decision for feed-in tariff design.
Learning Outcomes
- Discuss feed-in tariff policies, including benefits and drawbacks
- Analyze FERC's decision on California's feed-in tariff for combined heat and power generators
- Recognize the implications of FERC's decision on feed-in tariff design
- Examine California's Renewable Auction Mechanism and feed-in tariff
- Compare California's feed-in tariff with those in other states while examining feed-in tariff success in other states
Tradable Renewable Energy Credits in California Webinar - March 1, 2011
My partner Seth Hilton will be presenting on Tuesday March 1st on Tradable Renewable Energy Credits in California.
Tradable Renewable Energy Credits in California
Tuesday, March 1 at 12:00 p.m. CST/ 10:00 a.m. PST
In January, 2011, the California Public Utilities Commission lifted its moratorium on the use of Tradable Renewable Energy Credits for compliance with California's 20% Renewable Portfolio Standard (RPS). However, the CPUC imposed a cap on the use of TRECs, limiting the amount that California's three largest investor-owned utilities and their energy service providers can use to reach RPS.
In addition, The California Air Resources Board adopted regulations to implement a 33% Renewable Energy Standard last year, and intends to harmonize its RES with the limits on TRECs adopted by the CPUC.
Join a panel of esteemed energy experts, including Stoel Rives Partner Seth Hilton, for an engaging discussion of where California is headed with a 33% RPS, the use of TRECs, and how regulated TRECs will affect the REC market.
Environmental Leader: Green Marketing Certifications - No 'Angels' in the USA
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Environmental Leader published a column today by Stoel Rives' Joseph Eckhardt, addressing the regulation of environmental certification programs.
On the one hand, the FTC in the United States takes an enforcement approach, recently challenging a company that was marketing a sham certification program. In Europe and Canada, in contrast, regulators have done something different, appointing private firms to assess and certify "green" products and services.
Read the full column here.
Energy-Related Tax Proposals in President's 2012 Budget
The Obama Administration last week released its proposed budget for 2012, which includes a number of tax proposals that could have a direct impact on the financing of renewable energy projects. Some of the more significant proposals include extension of the grant in lieu of tax credits, an additional allotment of qualified advanced energy manufacturing project credits, replacement of the deduction for energy-efficient commercial buildings with a tax credit, and an extension of the new markets tax credit.
For a more thorough discussion of these and other proposals, click here .
Please contact one of the attorneys listed below if you have questions.
Chris Heuer at (503) 294-9206 or ckheuer@stoel.com
Greg Jenner at (612) 373-8857 or gfjenner@stoel.com
Adam Kobos at (503) 294-9246 or ackobos@stoel.com
Carl Lewis at (206) 386-7688 or cslewis@stoel.com
Kevin Pearson at (503) 294-9622 or ktpearson@stoel.com
IRS Circular 230 notice: Any tax advice contained herein was not intended or written to be used, and cannot be used, by you or any other person (i) in promoting, marketing or recommending any transaction, plan or arrangement or (ii) for the purpose of avoiding penalties that may be imposed under federal tax law.
Washington Senate Bill has potential for eliminating state renewable energy requirements
Currently, electric utilities in Washington that serve more than 25,000 customers are required to obtain the following percentages of their electricity from new renewable resources:
- At least 3% by January 1, 2012
- At least 9% by January 1, 2015
- At least 15% by January 1, 2020
This has been the case since the passage of the Washington Energy Independence Act in 2006. The current Legislature has introduced a bill which, if passed, would essentially wipe out these RPS requirements. SB 5563 -- which was introduced in the Washington State Legislature on January 31, 2011 -- plainly states its intention of “temporarily suspending provisions of the energy independence act during periods of economic downturn.” If SB 5563 passes, qualifying utilities would be deemed to have met the 2012 target and, from 2015, the target for any year in which the the Washington unemployment rate goes above six percent. Furthermore, utilities would be deemed to have met their renewable target not only for that year but for four subsequent years, regardless of the unemployment rate during the look back period.
A historical look at Washington’s unemployment rate shows that a look back period for four years would be able to eliminate the RPS standards in even the most prosperous economic times. For example, Washington state’s unemployment rate[1] for the past 20 years was below 6% during only five calendar years (1998, 1999, 2000, 2006, 2007) and never for more than three consecutive years. That means if SB 5563 had been in effect for the past two decades -- decades that included some of the most robust economic times this generation has known -- at no time would utilities have been required to meet the renewable energy requirements of the EIA. Given where the U.S. economy currently stands, it’s highly unlikely SB 5563 would play out any differently for the next 20 years, much less between now and 2020.
For more information on this bill including its full text, see the Washington State Legislature website.
Washington SB 5563 is sponsored by Sen. Jerome Delvin (R-8th Dist.), Sen. Mark Schoesler (R-9th Dist.), Sen. Mike Hewitt (R-16th Dist.), Sen. Jim Honeyford (R-15th Dist.), and Sen. Tim Sheldon (D-35th Dist.) and was referred to the Environment, Water & Energy Committee on January 31, 2011.
[1] Not seasonally adjusted.
DOE Approves Loan Guarantee for ON Line
On October 20, my colleague Janet Jacobs reported that the U.S. Department of Energy ("DOE") had offered a conditional commitment of $350 million to NV Energy, Inc. and Great Basin Transmission South, LLC, an affiliate of LS Power Group, for development of the 500-kV One Nevada Transmission Line (the "ON Line project").
Well, good news.
Two days ago, Secretary Chu announced that DOE had approved a $343 million loan guarantee for the ON Line project- the first of its kind for a transmission line. The ON Line project will stretch 235 miles from Ely, Nevada to a substation just north of Las Vegas at a projected cost of $500 million. As the first phase of a larger transmission infrastructure project, the ON Line will initially be able to transmit approximately 600 MW of otherwise landlocked renewable energy to load centers. When the final phase of the project is completed, the line will be able to transmit approximately 2 GW (or 2,000 MW) of renewable electricity from Idaho, Wyoming, and Nevada to serve customers in southern Nevada, California, and the rest of the Southwest.
New Jersey Adopts Rules for Offshore Wind Energy Approval
In a long-awaited announcement, last week the New Jersey Board of Public Utilities adopted rules to codify the State’s Offshore Wind Economic Development Act. The new rules provide the process for an applicant to submit project information and to propose a pricing method and structure for Offshore Renewable Energy Credits (ORECs) for the Board’s consideration. If approved, each retail provider of electricity in New Jersey will be required to buy Board mandated levels of ORECs in proportion to retail sales.
The application process requires detailed disclosures concerning the proposer’s business information, its collective project experience, and key employees. A proposal must describe the proposed technology, the anticipated schedule for completion, the financial details of the project including a specified cost-benefit analysis, and documentation that the project has applied for all applicable State and federal grants, rebates, tax credits and other incentive programs. In addition, the applicant must describe its anticipated operations and maintenance plan, its decommissioning plan and must provide segregated decommissioning funds. Upon receipt of completion of application, the Board shall approve, conditionally approve, or deny the application within 180 days. Perhaps the most complex aspect of the required application is the cost-benefit analysis. The rules suggest the use of one of four listed input-output models, but will allow applicant to us any model that successfully calculates the economic benefit that the proposed project will bring to the State of New Jersey. The Board will assess the net economic benefit, with a “particular emphasis” on in-state manufacturing employment, as well as the net environmental benefit of the project in terms of anticipated reductions in carbon dioxide and air emissions. The rules also allow the Board to perform its own net benefit analysis, which may result in additional conditions of approval.
Separately, even before the Board issued its rules, Fishermen’s Energy of New Jersey, LLC filed an application for the first phase of its proposed 300MW project offshore Atlantic City.
GE Energy Acquires Wind Tower Systems
On Friday, GE Energy announced the acquisition of new tower construction and erection technology from Utah based Wind Tower Systems, LLC. Wind Tower Systems has developed a space frame tower design to accommodate tower heights of over 100 meters that can be installed without the use of heavy lift cranes during construction.
“We see great potential in the addition of this technology to our portfolio not only for our customers but also for the wind industry as a whole,” said Victor Abate, vice president-renewable energy for GE Power & Water. “Taller towers are an essential complement to longer blades. Longer blades capture more energy and in turn improve return on investment for wind farm developers.”
“The taller space frame towers and integrated lifting system concepts, developed with the support of the U.S. DOE and California Energy Commission, have been designed to drive lower wind energy costs,” said Thomas Conroy, CEO of Wind Tower Systems. ”We are delighted that the development of the company’s products will be completed and commercialized by GE.”
FERC Finds an Interconnection Facility Requires an OATT
Update by Sara Bergan and Jason Johns
The Federal Energy Regulatory Commission (FERC) recently issued an order rejecting a Common Facilities Agreement (CFA) under section 205 of the Federal Power Act (FPA) and related request for waiver from open access requirements. The CFA between Sky River and Windstar Energy involved a 9-mile, 230 kV generator tie-line in California known as the Wilderness Line. Sky River owns and operates a 77 MW wind facility and has an interest in the Wilderness Line along with several other Qualifying Facilities (QFs).
Windstar is developing a 60 MW wind facility for which it already has a generator interconnection agreement with SoCal Edison and the California ISO. Sky River entered into the CFA with Windstar to license a portion of Sky River’s interest in the Wilderness Line to enable the output from Windstar’s wind facility to reach the point of interconnection with SoCal Edison. In other words, the CFA served to support Windstar’s interconnection with SoCal Edison. Sky River sought approval of the CFA and the open access waivers on the basis that the gen-tie line is not an integrated component of the grid and was designed solely as an interconnection line.
FERC did not accept the CFA or the waiver from the open access transmission tariff (OATT) filing requirement. FERC determined that the CFA was an “attempt to govern transmission service for an unaffiliated third party over the Wilderness Line outside the context of an OATT, with all its attendant rights and obligations.” Further FERC noted that waiver of obligation to file an OATT applies only until such time as a request for transmission service is made and that any transmission over the Wilderness Line for non-owners must be made pursuant to an OATT.
LexisNexis Nominates Renewable + Law Blog for Top 50 Environmental Law Blogs of 2011 Award
We recently learned that LexisNexis has nominated the Stoel Rives Renewable + Law Blog for its Top 50 Environmental Law & Climate Change Blogs for 2011 award. In the nomination, LexisNexis praised Renewable + Law Blog for its “passion for solar energy, wind energy, biofuels, ocean and hydrokinetic energy, biomass, waste-to-energy, geothermal and other clean technologies,” adding that “the posts are frequent, the topics are interesting and cutting edge, and the writing is top notch.”
If you would like to support our nomination, LexisNexis has a comment period until February 14. To do so, you will need to logon to LexisNexis’ free web center account. Once you're registered and logged in, scroll to the bottom of the LexisNexis nomination page, fill in your name, type your comment in the box and press "Add."
Thanks to all our readers who make regular use of Renewable + Law Blog and those who nominated us for this award. We're very honored and inspired, and we plan to keep those Blogs and letters coming.
National Offshore Wind Strategy Announced
On Monday February 7, 2011, the DOE issued an ambitious plan to spur development of offshore wind facilities in federal and state waters off the eastern seaboard. The report identifies the key challenges to widespread development are reducing both the cost and the timeline of project development. It estimates that the current cost of offshore facilities must be cut by more than half from the current installed capital cost of $4,250 per kW in order to achieve the report’s goal of 54 GW of offshore power by 2030.
In an effort to drive this massive effort forward, the DOE offers $50.5 million in grants for the development of tools and hardware in wind turbine factories, market studies and research on electrical infrastructure and funding for research into next-generation wind-turbine drive trains. Perhaps more importantly, the report designates four “Wind Energy Areas” for expedited approval evaluation and possible lease offerings by the end of 2011 or in early 2012. The report promises that this “Smart from the Start” program will accelerate the leasing process by cutting the current approval timeline of 7 to 10 year in half.
Most notably, the National Offshore Wind Strategy presents the eastern United States with tremendous potential to generate significant economic activity through the installation of facilities that will produce clean, renewable energy. The industry will benefit from the program outlined in this report, particularly if it is followed by an extension of tax credits applicable to these types of renewable energy projects.
Click here for the complete National Offshore Wind Strategy: Creating an Offshore Wind Industry in the United States.
Click here for more information on the Smart from the Start Initiative.
Click here for a map of the mid-Atlantic WEA’s.
More information is available at: http://www.boemre.gov/offshore/RenewableEnergy/index.htm andwww.windandwater.energy.gov.
Idaho Temporarily Reduced the Availability of Published Avoided Cost Rates for Wind and Solar. Now What?
On February 7, 2011, less than two weeks after hearing oral arguments on the issue, the Idaho Public Utilities Commission (“IPUC”) issued Order No. 32176 (the "Order"), temporarily reducing the published avoided cost rate eligibility cap for wind and solar qualifying facilities (“QF”) from 10 aMW to 100 kW. The reduction applies to wind and solar projects only, and was given a retroactive effective date of December 14, 2010.
The Order is the latest in the Joint Petition docket filed by Idaho Power, Avista Corporation and PacifiCorp d/b/a Rocky Mountain Power (the “Utilities”), whereby the Utilities petitioned the IPUC “to investigate and address various avoided cost and other related issues” regarding QFs under the Public Utilities Regulatory Policies Act of 1978 (“PURPA”). Joint Petition at 1. In particular, the Utilities requested a reduction in the eligibility cap from 10 aMW to 100 kW for all resources, “to be effective immediately.” Joint Petition at 7. The Utilities focused specifically on the need to address the “excessive” number of wind QFs currently requesting contracts under the published 10 aMW avoided cost rate, and the disaggregation of wind resources (i.e., dividing large wind projects into multiple 10 aMW projects to qualify for the avoided cost rate), arguing that the Utilities’ ability to continue to accept the QF energy without negatively impacting the electric system and their customer’s is at risk.
In the Order, the IPUC found that “a convincing case has been made to temporarily reduce the eligibility cap . . . for wind and solar only,” but the IPUC maintained the current 10 aMW cap for other QF projects including biomass, small hydro, cogeneration, geothermal, and waste-to-energy facilities. Order at 9.
The IPUC was careful to note that it is “supportive of all small power producers contemplated by PURPA, including wind and solar, and it is not the Commission’s intent to push small wind and solar QF projects out of the market.” Order at 11. The IPUC is instituting additional proceedings specifically to investigate an avoided-cost rate structure that “(1) allows small wind and solar QFs to avail themselves of published rates for projects producing 10 aMW or less; and (2) prevents large QFs from disaggregating in order to obtain a published avoided cost rate that exceeds the utility’s avoided cost.” Order at 11. During the temporary eligibility cap reduction, the Utilities are still required to purchase power produced by wind and solar QFs, but projects larger than 100 kW must individually negotiate avoided cost rates.
So, now what?
Continue Reading...Will California's Best Management Practices and Guidance Manual help streamline renewable energy permitting in the California deserts?
The California Renewable Energy Action Team's (REAT) final Best Management Practices and Guidance Manual for Desert Renewable Energy Projects is now available. The Manual was adopted by the California Energy Commission on December 15, 2010. The final version posted online last week includes the minor additions from the December 15 meeting.
The REAT is made up of the California Energy Commission, California Department of Fish and Game, U.S. Fish and Wildlife Service, and the U.S. Department of Interior Bureau of Land Management. The REAT has the task of helping accelerate the permitting of renewable energy facilities in the California Mojave and Colorado Deserts, while minimizing environmental impacts and conserving natural resources in these areas. This will facilitate California’s larger goals of generating 33% of the state’s electricity from renewable sources by 2020. For more background information on the REAT and Executive Order S-14-08, creating the Team, see our previous legal alert.
The REAT is preparing a Desert Renewable Energy Conservation Plan for the California Mojave and Colorado Deserts ecological areas. The Best Management Practices and Guidance Manual provides interim guidance to facilitate renewable energy during preparation of the comprehensive Conservation Plan. The Manual is designed to provide guidance to renewable energy developers on designing and siting renewable energy projects in these desert areas. The Manual’s stated goals also include assisting agencies in reviewing and permitting renewable energy projects and accelerating environmental review of renewable energy projects, though there is less practical material on these goals.
The Manual mainly details actions that should be taken prior to filing an application for a renewable energy project to streamline the permitting process. Many of the recommendations, though, are what savvy developers would strive for in any project: start coordinating early with agencies with long permitting lead times and provide them with complete materials so the process is not delayed, design and site your project to lessen environmental impacts and make sure it is not in conflict with local requirements, plans, or zoning, and complete your long-lead items in the environmental review process, like season-specific surveys, early. In fact, the Manual states “if the majority of the actions are not addressed it is likely that environmental review and decision-making will take additional time.” While it isn’t groundbreaking advice, it is useful for developers new to California or to serve as a checklist. The Manual, disappointingly (but perhaps not surprisingly) doesn’t provide agencies with any new means to shortcut the laborious permitting process. The main pre-filing recommendations are:
Continue Reading...Bill Holmes Selected to Law360's 2011 Energy Editorial Advisory Board
Business law publisher Law360 recently announced that Bill Holmes, Partner in the firm’s Energy Development practice, has been selected to serve as a member of Law360’s 2011 ENERGY Editorial Advisory Board. Holmes was one of 12 board members selected from over 1,000 attorney candidates. The board will review feedback from readers of the Energy Law360 publication and discuss topics for future coverage.
Read the Law360 press release (subscription required)
Ninth Circuit Decision Further Dismantles an Already Weakened Federal Transmission Siting Authority
Congress’ experiment with establishing federal siting authority for transmission lines suffered another setback after a Ninth Circuit Court of Appeals decision issued yesterday, February 1, 2011, vacated the Department of Energy’s (“DOE”) 2007 Transmission Congestion Study that had designated national interest electric transmission corridors in mid-Atlantic and Southwestern states. This ruling is the latest of three court and agency decisions that have limited or undermined the federal siting authority established at Federal Power Act section 216 by the Energy Policy Act of 2005.
Congress created section 216 to confront concerns that states were acting too slowly in siting new transmission lines needed to address growing reliability and congestion problems. In part, section 216 directs the DOE to study transmission congestion in consultation with the states, and designate certain transmission-constrained areas as national interest electric transmission corridors (“NIETCs”). Section 216 also grants the Federal Energy Regulatory Commission authority to issue permits to construct transmission facilities in these NIETCs under certain circumstances. Congress also provided that an applicant who receives a permit to construct transmission in a NIETC would be granted with the authority to acquire rights-of-way by eminent domain. In sum, section 216 had the potential to uncork the transmission bottleneck, but that potential has not materialized.
Here Comes the Sun! PG&E Issues RFO for Solar PV
Today, Pacific Gas and Electric ("PG&E") issued its 2011 Photovoltaic Program Power Purchase Agreement Request for Offers (the "RFO"). PG&E is looking to execute 20-year power purchase agreements for a total of 50 MW of new solar PV resources. Eligible facilities will be new facilities between 1 MW and 20 MW located within PG&E's service territory, and interconnected to its electric system. This RFO represents the first round of acquisitions to achieve PG&E's larger goal of adding 250 MW of new solar PV in the next five years.
PG&E will host a bidder's conference next Tuesday, February 8, from 9:00 a.m. to 3:00 p.m. in the auditorium of PG&E's headquarters at 245 Market Street in San Francisco. Participation is limited to two people per bidding company. Registration is required and is due by 5:00 p.m. TODAY, February 2nd. The registration form can be found here and may be submitted to PVProgram@pge.com.
Environmental Leader: Best Practices for Renewable Energy, Carbon Offset Claims
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The online newspaper Environmental Leader recently published a column by Stoel Rives' Joseph Eckhardt, addressing rules in the FTC's proposed Green Guides that address green energy and carbon offset certification, entitled "New Green Guides Suggest Best Practices for Renewable Energy, Carbon Offset Claims."
The article explains: "The FTC's proposed, revised Guides for the Use of Environmental Marketing Claims . . . for the first time address the issue of marketing green energy and carbon offsets. Producers, resellers, and consumers of 'green' certificates and credits should take notice."
Read the full column here.
ALJ Releases Ruling Setting Briefing Schedule for CPUC Implementation of Amendments to CA Feed In Tariff Program
From our colleage Seth Hilton:
In 2006, Assembly Bill (AB) 1969 ushered in the era of the Feed In Tariff (FIT) in California. AB 1969 added section 399.20 to the Public Utilities Code, which allowed for tariffs and standardized contracts for eligible renewable resources up to 1.5MW owned by, and located on, public water and wastewater treatment facilities. In 2007, the California Public Utilities Commission (CPUC) expanded the program to all utility customers. In 2008, Senate Bill (SB) 380 established a standard tariff for all utility customers and applied that tariff to San Diego Gas & Electric (SDG&E) in addition to Pacific Gas & Electric (PG&E) and Southern California Edison (SCE).
Also in 2008, the CPUC adopted the final tariff structure and standardized contracts. The pricing for the tariffs was set at the market price referent (MPR), as adjusted by time of use (TOU) factors. A more detailed description, and the MPR and TOU tables, is available here. The total cap of the program is currently 500MW divided between SCE, PG&E, and SDG&E.
In 2009, SB 32 was signed into law, which, among other things, increased the eligible project size to 3MW. SB 32 went into effect on January 1, 2010. However, the CPUC has not yet fully implemented these amendments to the FIT program.
On January 27, 2011, Administrative Law Judge (ALJ) Anne E. Simon released a ruling setting the briefing schedule in response to the CPUC’s implementation of SB 32. The ruling states that respondents must, and other parties may, file briefs on such issues as eligibility, program size and requirements, and the setting of the tariff price, or any other issue they believe to be “relevant to the Commission’s implementation of SB 32.”
ALJ Simon’s ruling further stated that parties may also file, as a separate action in their brief, a request for any “further activities” they believe should be conducted (i.e., workshops, hearings, etc.).
Filed briefs must be no more than 50 pages and must be filed and served by respondents, and may be filed and served by other parties, no later than March 4, 2011. Reply briefs, which can be no more than 25 pages, must be filed by served no later than March 22, 2011.
Texas Moves Ahead With New Transmission to Support Renewable Energy
From our colleague David Hattery:
In its year-end report, the Electric Reliability Council of Texas (ERCOT) outlined its program for an unprecedented build-out of high voltage lines to serve renewable energy projects. ERCOT will be overseeing the design and construction of more than 2,000 miles of new 345-kV transmission to serve additional wind capacity in remote areas of the ERCOT service area. The new projects are part of the Competitive Renewable Energy Zone (CREZ) program enacted by the Texas Legislature in 2005. The CREZ projects, which are expected to cost an estimated $4.9 billion, will provide access to deliver 18,500 MW of additional wind-generated power from the panhandle and west Texas to load centers in Dallas, Austin and San Antonio. In conjunction with the transmission projects, ERCOT recently completed the CREZ Reactive Power Study that recommends additional improvements necessary to control, condition, and route the additional renewable energy through the grid. Many of these projects are currently under construction and the entire CREZ program is scheduled to be complete by the close of 2013.
