BPA and several other parties filed requests for rehearing of the ER Order. FERC’s procedural rules provide that if FERC does not act on a rehearing request within 30 days of the filing, the request for rehearing is deemed denied. Earlier this week, FERC issued an order (the “Rehearing Order”) granting rehearing in order to give itself more time to consider the matters raised in the requests for rehearing.  Notwithstanding the Rehearing Order, BPA must still submit its compliance filing on the initial ER Order no later than March 6.

In preparation for its March 6 compliance filing, BPA released for comment its Draft Oversupply Protocol.  In a nutshell, BPA proposes to provide approximately 50 percent compensation to operating wind generators in order to continue its ER policy of (i) curtailing wind generators during periods of high water, and (ii) using the wind generators’ reserved transmission capacity to deliver federal hydropower.

Under BPA’s Draft Oversupply Protocol, BPA would compensate wind generators for the costs of displacing wind curtailed during ER events. The displacement costs include the production tax credits and renewable energy credits the generators would have earned had their generation not been curtailed. However, for wind projects that reach commercial operation before March 6, 2012, approximately 50 percent of the displacement costs would be recovered from the wind generators through a new rate. BPA would allocate the other 50 percent of the costs to the users of the Federal Base System. Wind generators with a commercial operation date after March 6, 2012 have the choice of (i) avoiding the new rate by being redispatched without compensation or (ii) receiving partial compensation for the ER curtailments and sharing in the costs.  BPA proposes to conduct a rate case to determine how it will recover the displacement costs (i.e. what percentage of the costs it will collect from the wind generators and what percentage of the costs it will collect from users of the Federal Base System).

BPA is accepting comments on the proposal until noon on February 21, and will host a workshop on the proposal on February 14, from 9 am to noon. Click here for information on the workshop and how to submit comments.  

January 24, 2011, 8 a.m. – 5 p.m., Workshop

January 25, 2011, 7 a.m. – 5:15 p.m., Conference

January 26, 2011, 9 a.m. – 11:45 a.m., Conference

As the Workshop Chair, I would like to extend you an invitation to the Wind & Solar Integration Summit, presented by Infocast. Join me and my colleagues in sunny Scottsdale, Arizona as we gather with industry experts—federal and state regulators, representatives from ISOs, independent power producers, and pioneers in energy storage—to discuss the challenges posed by renewable energy integration and the opportunities for businesses that make the necessary adjustments to prepare for the 21st century grid. We will be kicking off the conference with a keynote address by FERC Chairman, Jon Wellinghoff.

This 3-day event will include a pre-conference workshop on the fundamentals of integrating variable energy resources and electric energy storage (EES), and will feature a presentation by Stoel Rives partner and Conference Chair, Stephen Hall. The conference will address issues and recent developments in integration, including market solutions and investments to facilitate renewable energy integration, changes to the regulatory landscape, and the role of EES in enabling increased renewables integration. Stoel Rives partners Ed Einowski, Bill Holmes, and Jennifer Martin will present on managing the risks associated with curtailment and integration issues in PPAs. 

In case you need another good excuse to get to Arizona in January, Stoel Rives is currently offering a discount on registration. For more event details and registration information, please see: http://www.stoel.com/showevent.aspx?Show=7277. 

1. The use of and rate treatment for storage facilities, including when it is appropriate to classify a storage facility as a transmission asset.

2. The mechanisms by which a storage project that is used for multiple purposes may be compensated. Specifically, FERC seeks comment on whether a storage project may be compensated as transmission (e.g. for supporting unbundled transmission service by supplying reactive power) and also be compensated for providing ancillary services or for enhancing the value of merchant generation (e.g. by shifting output from an off-peak period to an on-peak period).

3. The possibility of creating a stand-alone contract storage service and whether the storage provider would provide the service of electricity storage, enabling its customers to determine how to use their contracted share of the storage.

4. Whether new accounting and reporting requirements should be created in order to facilitate cost of service or other rate policies for new storage technologies, such as chemical batteries and flywheels.

In addition to the issues outlined above and other specific questions posed by FERC in its Request for Comments, FERC invites comments on other related aspects of the storage issues not specifically addressed by FERC in the above-referenced document.  Comments are due on Monday, August 9, 2010 and should reference Docket No. AD10-13-000.     

On March 24, 2010, four conservation groups filed a complaint against Kauai’s electric utility, Kauai Island Utility Co-op (“KIUC”), alleging that KIUC’s power lines, utility facilities, and street lights “take” threatened Newell’s Townsend’s shearwaters (Puffinus Auricularis Newelli) (“Newell’s shearwaters”) and/or endangered Hawaiian petrels in violation of the Endangered Species Act (“ESA”). The civil complaint, filed in the U.S. District Court for the District of Hawaii, alleges that KIUC has failed to secure the necessary ESA incidental take permits and, despite years of promises, has failed to implement protective measures that are needed to prevent the “take” of the listed birds.

These cases illustrate two points relevant to any industry dealing with potential impacts to species protected by the ESA or MBTA. First is that the filing of a citizen suit under the ESA, as occurred here, often raises the profile of a situation and can lead to pressure on the U.S. Fish and Wildlife Service to exercise its independent authorities under the ESA and MBTA. The MBTA does not allow citizen suits, but the filing of a civil ESA citizen suit can lead to criminal charges being brought by the United States under both the ESA and the MBTA. Second, these cases demonstrate that there is a threshold beyond which the United States will invoke its authority to seek criminal indictments under these laws. The allegations in both cases acknowledge that KIUC had engaged in discussions and agreements with the U.S. Fish and Wildlife Service about obtaining permits, but when progress was not made on the agreed to timelines, the United States invoked its most severe authority. This should serve to remind everyone that ignoring risks and liability under the ESA and MBTA can have serious consequences.

On December 7, 2009 the U.S. Patent and Trademark Office ("USPTO") announced the launch of a pilot program to accelerate the examination of certain green technology patent applications.

Under the Green Technology Pilot Program, patent applications pertaining to environmental quality, energy conservation, development of renewable energy, or greenhouse gas emissions reduction will be advanced out of turn for examination without meeting all of the current requirements of the accelerated examination program (e.g., examination support document). The catch: the USPTO will accept only the first 3,000 petitions to make special, and the petitions must be filed before December 8, 2010 (unless the program is extended). For further details click here.
 

An update on intellectual property issues from my colleague, John Rafter:

Having previously moved to stay proceedings in the Tafas v. Doll case pending the induction of David Kappos as the new Director of the U.S. Patent and Trademark Office (“USPTO”), the USPTO announced on October 8, 2009 that it will join with plaintiff GlaxoSmithKline to file a motion dismiss the lawsuit related to regulations affecting the ability to secure patent protection for inventions.

The USPTO attempted to institute these new regulations to reduce the backlog of pending patent applications by lessening the USPTO’s prosecution burden and improving prosecution speed of patent applications. The rules attempted to shift some of the prosecution burden to patent applicants and also attempted to limit the number of patent claims and continuation applications that an applicant could file.

For technology companies, provided the case is dismissed as expected, this announcement means that the prosecution of patents at the USPTO will proceed as usual.  However, the new USPTO Director Kappos still has the task of how to get the pendency of patents under control; it now takes at least 2-3 years to get a patent from filing to issue, and that time frame is getting longer.  For more information, see http://www.stoel.com/showalert.aspx?Show=5928.

The Interim Report identifies three key components to its comprehensive ocean and coastal strategy: (1) a national policy, (2) a robust governance structure, and (3) categories for action. The Interim Report’s national policy proposal is premised on the stewardship of the ocean, coasts, and Great Lakes as being “intrinsically and intimately linked” to human health, environmental sustainability, economic prosperity, security, foreign policy, social justice, and adaptation to climate change. With respect to the robust governance structure, the Interim Report calls for increased coordination among government agencies. To this end, the Interim Report proposes an interagency National Ocean Council to facilitate interagency coordination on ocean-related issues and implement the National Ocean Policy. The Interim Report also prioritizes nine categories for action in order to address the main challenges currently confronting our oceans, coasts and Great Lakes, including ecosystem-based management, improved observing systems and data collection, coastal and marine spatial planning, and regional ecosystem protection and restoration.

There is a 30-day window for submitting written comments on the Interim Report. The Task Force is also holding several regional public meetings to brief the public and accept comments on the Interim Report, and to obtain input on developing a framework for coastal and marine spatial planning. The Task Force has until December 9, 2009 to submit its proposed coastal and marine spatial planning framework to President Obama. The final Task Force report will also be issued later this year.

On July 10, 2009, the Animal Welfare Institute and others (”Plaintiffs”) filed a motion for a preliminary injunction to halt construction of the Beech Ridge wind project in Greenbrier County, West Virginia (the “Project”). The Plaintiffs seek the injunction to prevent unavoidable harms that they allege the Project will cause to the Indiana bat, a species listed as endangered under the Endangered Species Act (“ESA”). The Plaintiffs’ injunction request follows closely on the heels of the complaint the Plaintiffs filed in the Federal District Court for the District of Maryland (Civ. No. 09-1519), which alleges that the Project will unlawfully “take” Indiana bats in violation of Section 9 of the ESA. In their complaint and request for an injunction, the Plaintiffs assert that the Project cannot lawfully move forward without an incidental take permit (“ITP”) issued under Section 10 of the ESA. Judge Titus recently ordered that the hearing on the Plaintiffs’ motion for a preliminary injunction will be addressed in conjunction with the trial on the merits of the case, currently scheduled for October 2009.

Section 7 of the ESA requires federal action agencies to consult with either the United States Fish and Wildlife Service (“FWS”) or the National Marine Fisheries Service to ensure that “federal actions” are not likely to jeopardize protected species or adversely affect the critical habitat of those species. Typically, a “federal action” is an action that requires a federal permit, but it may also include actions that receive federal funding and are subject to a certain level of federal control. A Section 7 consultation normally results in the issuance of a biological opinion. The biological opinion may include an ITS, which authorizes the permittee to incidentally take a specified number of listed animals.

Alternatively, a project proponent may obtain incidental take authorization through the issuance of an ITP under Section 10 of the ESA. Section 10 provides an exception to Section 9’s take prohibition, in which an applicant can apply for a permit authorizing a take if such taking is “incidental to, and not the purpose of, carrying out an otherwise lawful activity.” A project need not have a “federal nexus” to receive Section 10 take authorization. Significantly, an ITP must be accompanied by a habitat conservation plan (“HCP”) that is completed by the permit applicant and approved by FWS. The process for developing and completing an HCP can be time consuming and, as a general matter, project proponents opt for the issuance of an ITS under Section 7 instead of engaging in the Section 10 process.

Like many wind projects, the Beech Ridge project required no federal permits and does not have a federal nexus. Thus, any incidental take caused by the project would need to be authorized by a Section 10 permit to avoid a violation of the ESA. In the lawsuit, the Plaintiffs seek to require the project proponents to obtain the Section 10 ITP before engaging in any further development of the project. The Plaintiffs have taken the more urgent step of requesting a preliminary injunction because, as alleged by the Plaintiffs, the Defendants “have proceeded with construction activities at a precipitous pace, despite plaintiffs’ repeated and detailed notice prior to construction that these activities constitute violations of the ESA.” The Defendants generally deny the Plaintiffs claims and assert that pre-project studies demonstrate that no Indiana bats occupy the areas in or near the Project’s location.

Wind project proponents may face similar challenges for projects sited in or near areas occupied by a species listed under the ESA. For projects that may incidentally take listed species, project proponents may be faced with the option of obtaining an ITP under Section 10 of the ESA or obtaining an ITS through a Section 7 consultation. As indicated above, the latter is generally a more efficient process; however, many wind projects have no federal nexus and thus no Section 7 “trigger.” Project proponents should carefully examine their project to determine whether or not there is, in fact, a Section 7 trigger. If not, the project proponent should consider other options such as negotiating a Section 10 HCP/ITP process with the FWS that allows the project to move forward in a timely fashion or incorporating the use of Avian and Bat Protection Plans.
 

SCE Solar PV Program:

Back in June, the California Public Utilities Commission (“CPUC”) issued a decision authorizing Southern California Edison (“SCE”) to execute contracts for up to 250 MW of generation from solar PV facilities owned and operated by independent power producers through a competitive solicitation process. The CPUC decision required SCE to file an advice letter outlining the criteria for selection of bids and containing a draft standard power purchase agreement (“PPA”).

SCE recently filed the requisite advice letter requesting approval of its proposed competitive solicitation process and criteria and a draft standard PPA. Anyone may file protests or responses to SCE’s advice letter. Protests are due on August 10, 2009. For more information, as well as a link to SCE’s draft standard PPA, go to the CPUC website.

CPUC Panel on Feed-in Tariffs:

The CPUC announced that it will host an interactive panel discussion on feed-in tariffs for renewable energy on August 27, 2009. The panel will feature international experts from Germany, Spain, the United States, and elsewhere with experience in the global solar power market. The panelists will offer their insights on the global solar market, the role of feed-in tariffs and other mechanisms for advancing renewable energy development, and California’s role in facilitating wholesale renewable distributed generation.

The panel will be held from 1-2:30 PM at the CPUC Auditorium, 505 Van Ness Ave., San Francisco, CA.

The United States and China signed a memorandum of understanding (“MOU”) on July 28, 2009, detailing the partnership between the two countries on climate change, energy, and the environment. The MOU commits both countries to reaching a successful international agreement that will address climate and energy issues. It also provides for cooperation in confronting climate change and developing, promoting, and implementing energy efficiency, renewable energy, smart grid technologies, electric vehicles, and other energy technologies.

The United States and China will have ongoing conversations on what each nation is doing to reduce greenhouse gas emissions and to further international climate negotiations in preparation for the United Nations Climate Change Conference in Copenhagen this December.

Steven Chu, Secretary of Energy, remarked at the signing ceremony, “Both of our countries understand the importance of clean energy for our economies and for our security. Both of us understand the imperative of fighting climate change. What the U.S. and China do in the coming decades will help shape the fate of the world . . . . Today’s agreement should send a clear signal that the United States and China are ready to work together on clean energy and climate change.”

Read the complete remarks at the signing ceremony here: http://www.state.gov/secretary/rm/2009a/july/126575.htm. For a funding opportunity on the U.S.-China climate and energy partnership, go here: http://www.stoel.com/showalert.aspx?Show=5653.

Tom Henley, a spokesman for Xcel, described the fee as necessary to prevent solar customers from getting a windfall, as they currently do not pay to use the grid as a backup. However, solar energy advocates countered that the proposed fee overlooks the benefits that the net-metered customers provide: namely, generating clean, renewable energy that can be fed into the grid. One net-metered Xcel customer noted that the solar panels on his roof generate enough electricity to power five or six houses around him.

The proposed fee would go into effect in April 2010 and apply to customers who purchase solar panels on or after the effective date. The 2.6 cent per kilowatt-hour fee would be based on the largest amount of electricity per month that a solar customer has extracted from the grid during the last year. Henley estimates that the fee would amount to an additional $1.90 per month for a person adding a 4.5 kilowatt solar array to his or her home.

The Colorado Public Utilities Commission is holding a public hearing on the proposed rate increase on August 5th. 

Secretary Chu’s funding announcement was coupled with the release of the Department of Energy’s 2008 Wind Technologies Market Report. As detailed in the report, the U.S. wind industry continues to reach impressive milestones. For the fourth year in a row, the U.S. boasted the fastest-growing wind power market. Also for the fourth consecutive year, wind power was the second largest new resource added to the electrical grid, contributing 42 percent of all new U.S. electrical generating capacity in 2008. As a result of increased demand for wind, the share of domestically manufactured wind turbine components increased dramatically in the last three years, with about 50 percent of these components now being manufactured in the U.S. In 2008, approximately 8,400 new domestic manufacturing jobs were added in the wind sector. Given these statistics, it is no wonder that cultivating a strong domestic wind industry is one of the keys to meeting the Obama Administration’s clean energy and economic recovery goals. 

Today, the Department of Energy announced more than $141 million in Recovery Act funding to six states and territories under its State Energy Program (“SEP”). Here is how the funds will be used in Hawaii, Maine, Nebraska, New Mexico, the Northern Mariana Islands, and Texas:

Maine will use its SEP funds to improve energy efficiency across multiple sectors. The funds will facilitate the establishment of more energy-efficient building codes, as well as the expansion of programs that aim to improve the energy efficiency of businesses and homes. After demonstrating success in the execution of its plan, Maine will receive additional funds of more than $13 million, for a total of over $27 million.

Nebraska will use its SEP funds to promote energy efficiency and renewable energy. The state will establish more efficient building energy codes, offer energy efficiency training, and fund programs that offer low-interest loans to the commercial and industrial sector. After demonstrating success in the execution of its plan, Nebraska will receive additional funds of more than $15 million, for a total of over $30 million.

New Mexico will use its SEP funds to offer financial incentives for the purchase of fuel-efficient vehicles, alternative fuels, and investments in related infrastructure. The state will also fund building retrofits, energy audits, the establishment of energy codes, and the expansion of the Weatherization Assistance Program. After demonstrating success in the execution of its plan, New Mexico will receive additional funds of nearly $16 million, for a total of almost $32 million.

The Northern Mariana Islands will use its SEP funds to improve the energy efficiency of its buildings, establish energy efficiency policies, and educate the public about energy efficiency. After demonstrating success in the execution of its plan, the territory will receive additional funds of more than $9 million, for a total of over $18 million.

Texas will use its SEP funds to establish a revolving loan program for improving energy efficiency at public facilities and to offer competitive grants to state agencies, schools, hospitals, and communities for the implementation of renewable energy technologies. Texas will also use its funds to provide training for green jobs and to launch an educational campaign designed to teach the public about the link between energy conservation, reduced emissions, and job creation. After demonstrating success in the execution of its plan, Texas will receive additional funds of $109 million, for a total of almost $219 million.

As described in the MOU, FERC and Washington have pledged to collaborate in the following ways:  (1) notifying each other of potential applicants for a preliminary permit, pilot project license, or license; (2) agreeing upon a schedule for processing license applications that will include milestones and encourage collaboration among various stakeholders; (3) coordinating the environmental reviews of projects proposed in Washington state waters and consulting with stakeholders on the design of applicable studies; and (4) agreeing that if Washington prepares a comprehensive plan with respect to the siting of hydrokinetic projects, in determining whether to approve a project license, FERC will consider whether the project is consistent with the state plan.  Notably, the MOU recognizes that Washington may submit an amendment to its coastal zone management plan to the National Oceanic and Atmospheric Administration (“NOAA”) for approval, and that such a plan may identify a limited number of areas within Washington state waters where hydrokinetic projects may be initially located.  Whether NOAA would approve such a plan is unclear. 

Secretary of Interior (DOI) Ken Salazar and Acting Chairman of the Federal Energy Regulatory Commission (FERC) Jon Wellinghoff have announced an agreement describing how the two agencies will work together to facilitate permitting renewable energy – particularly ocean wave and current projects – on the outer continental shelf (OCS). The announcement indicates that DOI’s Minerals Management Service (MMS) will retain leasing authority for ocean wave and current projects on the OCS, but that FERC will have the “primary responsibility to manage the licensing of such projects” pursuant to the Federal Power Act (FPA) hydropower licensing provisions. FERC has long asserted that the FPA gives it concurrent jurisdiction with MMS’s leasing authority. The announcement indicates that the agencies will sign a more detailed Memorandum of Understanding describing how the agencies will coordinating their licensing and leasing processes for offshore projects.

This announcement comes just as Secretary Salazar, FERC Commissioner Philip Moeller and others were to testify before the Senate Committee on Energy and Natural Resources on offshore renewable energy, including the jurisdictional debate between MMS and FERC.

Finally, Secretary Salazar has announced more detailed information on the four regional offshore renewable energy meetings he plans to hold April 6-16 in Atlantic City, New Orleans, Anchorage and San Francisco. For detailed information, see Secretary Salazar’s Invitation to Regional Meetings on Offshore Energy Development.
 

On March 5th, DOE’s EERE Industrial Technologies Program (“ITP”) released a Notice of Intent to issue funding for technologies that increase the energy efficiency of server-based information and communication technology (“ICT”) systems housed in data centers and telecommunications central offices. The solicitation seeks proposals for projects that would increase the efficiency of IT equipment, software, power systems, and cooling systems. The solicitation also extends to the demonstration and field-testing of pre-commercial technologies in these areas, as well as in distributed generation or alternative power technologies used to power ICT systems. ITP intends to release the solicitation sometime this month. 

DOE also recently announced its intention to issue a Funding Opportunity Announcement (“FOA”) for smart grid demonstrations. In addition, DOE issued two FOAs for enhanced geothermal systems (“EGS”). The EGS FOAs offer up to $84 million over six years, including $20 million for the 2009 fiscal year. Check out our recent Energy Law Alert for more information on DOE funding for smart grid demonstrations and enhanced geothermal systems.   

Because of the relatively short window for responding to FOAs, DOE recommends that prospective applicants complete several one-time pre-application steps. Information on submitting applications is available at www.grants.gov.