Julia Pettit
Julia Pettit is a member of the firm's Business Services Group and focuses her practice in the area of renewable energy finance and acquisition transactions, and the negotiation of core agreements for renewable energy projects. Ms. Pettit also has broad experience representing creditors, debtors and other parties-in-interest in general corporate restructuring and insolvency-related matters. Ms. Pettit's has diverse industry experience in biofuels project finance and development; wind energy development; construction of waste-to-energy facilities; aluminum smelters; sports arenas; real estate; and technology. Prior to joining Stoel Rives, Ms. Pettit gained a wide range of experience in complex commercial litigation matters.
Projects & Money 2011
As we approach the beginning of a new year, financing options for energy projects (both conventional and renewable) under the current economic conditions continue to be a challenge and a focal point for the energy industry. In order to gear up for financing opportunities in 2011, I, along with my colleagues Marcus Wood, Graham Noyes and Adam Kobos, will be heading to the Big Easy for Projects & Money 2011. Stoel Rives is proud to be a Gold Sponsor at this engaging conference, where Capital Providers, Project Developers and other dealmakers in the financing community will gather together to share information, discuss deal leads and capitalize on new market opportunities.
Projects & Money incorporates its comprehensive market updates with networking opportunities, introductions to new project developments, and interactive multimedia components. Presentations from industry professionals provide an inside look at some of the most ground-breaking deals of 2010, examine the trends they reveal, and provide a better understanding of what it takes to make deals happen.
Stoel Rives attorney Graham Noyes will present "DOE's Loan Guarantee Program: Crucial Financing Mechanism or a Costly Distraction?" on Tuesday, January 11, at 1:30 p.m. during the Pre-Summit Briefing.
On Wednesday, January 12, Partner Marcus Wood will moderate the discussion panel, "Transmission Outlook," at 2:15 p.m. during Track II: Project Sector Outlooks.
Hope to see you there!
To learn more about the conference or to register online, please visit: http://www.infocastinc.com/index.php/conference/416
Projects & Money
When: January 11-13, 2011
Where: Harrah's New Orleans – New Orleans, LA
Utah Energy Initiative Task Force Issues Draft Plan
On June 8, 2010, Utah Governor Gary Herbert launched a formal planning process for the Utah Energy Initiative. Over the past several months the members of the Utah Energy Initiative Task Force and various subcommittees have conducted public hearings and a series of meetings to gather input for purposes of drafting a 10-year strategic energy plan. The Energy Initiative Task Force issued a draft report on November 3, 2010. Written comments on the draft report are due by November 10, 2010 and should be submitted to abuchholz@utah.gov. A public hearing at which public comment will be accepted will be held on November 10, 2010 from 5:00 to 7:00 p.m., at the Senate Building (State Capitol complex east building), Room 215, Salt Lake City, Utah.
The energy plan outlined in the report contains the following themes:
- Economic Development and Energy Jobs
- Energy Development and Environment
- Energy Efficiency, Conservation and Demand-Response
- Transportation and Air Quality
- Transmission, Infrastructure and Transportation
- Developing and Applying Technology and Science
Continue Reading...
Clean Energy Jobs Focus of New Manufacturing Solicitation Issued by the DOE
On August 12, 2010, Energy Secretary Steven Chu announced a new loan guarantee solicitation for renewable energy manufacturing projects. The Commercial Technology Renewable Energy Manufacturing Projects solicitation (the "Solicitation") is supported by the American Recovery and Reinvestment Act (the "Recovery Act") through Section 1705 of the Loan Guarantee Program and is focused primarily on providing new green energy jobs and the deployment of renewable energy technologies that reduce greenhouse gas emissions.
The solicitation specifically identified "Eligible Projects" to include renewable energy manufacturing projects or facilities located in the United States that:
- Manufactures Commercial Technology products that support the generation of electricity or thermal energy from renewable resources;
- Has Project Costs greater than seventy-five million dollars ($75,000,000);
- Is able to obtain a credit rating equivalent of "BB" or better from Standard & Poor's or Fitch, or "Ba2" or better from Moody's, as evaluated without the benefit of any DOE guarantee or any other credit support;
- Will create or retain jobs in the United States; and
- Otherwise meets all applicable requirements of Title XVII, including Section 1705, the Solicitation, including all attachments and all applicable requirements of the Recovery Act.
The Solicitation also provided, for illustrative purposes, examples of the types of Eligible Projects that may qualify, which include the following:
- wind energy component or systems manufacturing facilities;
- solar photovoltaic (PV) component or system manufacturing facilities;
- concentrated solar power component or system manufacturing facilities;
- hydropower component or system manufacturing facilities;
- geothermal component or system manufacturing facilities;
- other geothermal power cycle component or system manufacturing facilities; or
- ocean wave, tidal, and river current (e.g. hydrokinetic) component or system manufacturing facilities
Colorado Public Utilities Commission Proposes New Rules Governing Transmission Planning
On July 28, 2010, the Colorado Public Utilities Commission (the "Commission") issued a Notice of Proposed Rulemaking ("NOPR") regarding rules related to electric transmission facilities planning (the "Proposed Rules"). The Proposed Rules are based, in large part, on the input provided by all interested parties in the workshops and written comments in connection with Docket Nos. 08I-227E and 09M-616E and in response to certain legislative and policy changes impacting transmission planning significantly. In response to these legislative and policy changes, some of the key issues that need to be addressed in transmission planning include transmission-related challenges to satisfying State of Colorado's renewable energy portfolio standard for electricity generation, distributed generation set-asides, and requirements that the Commission give the fullest possible consideration to cost-effective implementation of new clean energy and energy efficient technologies. In implementing the Proposed Rules, the Commission recognizes that "both state-wide coordinated transmission planning and a meaningful involvement in such planning by stakeholders and the Commission are essential." NOPR at 2-3. In addition, the Commission concluded that "an effective transmission planning approach needs to be long-term and pro-active rather than just-in-time and reactive."
Under the Proposed Rules, the Commission will rely on the Colorado Coordinated Planning Group ("CCPG") as the primary means by which jurisdictional electric utilities will develop the ten-year transmission plans and the twenty-year conceptual plans contemplated under the rules, in consultation with other CCPG members and stakeholders. Overall, the Proposed Rules set forth the general objectives associated with the biennial filing of the following:
Continue Reading...Geothermal Projects Recent Beneficiaries of DOE's Loan Guarantee Programs
U.S. Energy Secretary Steven Chu recently announced conditional commitments to provide loan guarantees in connection with two geothermal projects located in Oregon and Nevada. Specifically, on June 10, 2010, Secretary Chu announced that the Department of Energy offered a $102 million conditional commitment for a loan guarantee to U.S. Geothermal, Inc. to construct a 22 megawatt geothermal power project in Malheur County in southeastern Oregon. The project is slated to use an improved technology to extract energy from rock and fluids in the earth's crust more efficiently. In addition, U.S. Geothermal estimated that the planned project will create 150 jobs during the 20-month construction period and employ 10 skilled full-time workers when it begins operating in 2012.
On June 15, 2010, Secretary Chu announced that the Department of Energy offered a conditional commitment to provide a partial guarantee for a $98.5 million loan by John Hancock Financial Services to the Nevada Geothermal Power Company ("NGP") for a 49.5 megawatt geothermal project in Humboldt County in northwestern Nevada (the "Blue Mountain Project"). This conditional commitment is the first access to a loan guarantee through the Financial Institution Partnership Program ("FIPP"), which was launched by the Department of Energy on October 7, 2009. Under a FIPP financing, the Department of Energy provides a guarantee for up to 80 percent of a loan provided by qualified financial institutions to a renewable energy project utilizing commercial technologies. In connection with the loan guarantee for the Blue Mountain Project, John Hancock Financial Services was the lender-applicant and lead lender. The Blue Mountain Project "consists of a geothermal well field, fluid collection and injection systems that enable energy to be extracted from rock and fluid below the Earth's surface, and a power plant that converts geothermal energy into electricity." The electricity generated by the project will be sold to Nevada Power Company under a 20-year power purchase agreement.
Release of the "Western Wind and Solar Integration Study"
The National Renewable Energy Laboratory ("NREL") recently announced the release of the "Western Wind and Solar Integration Study" (the "WWSIS"), which investigated the operational impact of up to 35% energy penetration of wind, photovoltaic, and concentrating solar power on the power system operated by the WestConnect group of utilities in Arizona, Colorado, Nevada, New Mexico and Wyoming. The WestConnect group includes the following: Arizona Public Service, El Paso Electric Co., NV Energy, Public Service of New Mexico, Salt River Project, Tri-State Generation and Transmission Cooperative, Tucson Electric Power, Western Area Power Administration, and Xcel Energy.
The WWSIS was prepared by GE Energy and conducted over two and a half years by a team or researchers in wind power, solar power, and utility operations. The WWSIS was designed to answer questions that utilities, Public Utility Commissions, developers, and regional planning organizations had about renewable energy use in the West, such as:
- What is the operating impact of up to 35% renewable energy penetration and how can this be accommodated?
- How does geographic diversity help to mitigate variability?
- How do local resources compare to remote, higher quality resources delivered by long distance transmission?
- Can balancing area cooperation mitigate variability?
- How should reserve requirements be modified to account for the variability in wind and solar?
- What is the benefit of integrating wind and solar forecasting into grid operations?
- How can hydro generation help with integration of renewables?
Continue Reading...
Utah's Salt Lake County Will Announce a Solar Project RFP on May 14, 2010
On May 14, 2010, Salt Lake County, Utah will be releasing a Request for Proposals (“RFP”) for a 1 MW solar project. If your company is interested in receiving the RFP as soon as it is released, you should register with BidSync (registration is free).
About the Solar Project:
It is anticipated that the initial solar project will include three County facilities (Salt Palace Convention Center, Environmental Health, and the Riverton Senior Center) with solar installations totaling approximately 1 MW. This solar project will utilize a power purchase agreement (“PPA”) financing model. It will also employ public and private capital, Federal grants, and public/private subsidized bonds that are able to work together efficiently because of the recent Stimulus Bill. The project also makes use of recent changes to Federal tax rules, and the recent re-awakening of private capital markets that make a significant public-private partnership possible. The County is working to coordinate these financial resources to make them easily accessible. More details will be available in the RFP. Longer term, Salt Lake County Mayor Peter Corroon has set a goal to install 10 MW of solar on as many county-owned facilities as possible.
PPAs and Third-Party Financing Now an Option in Utah:
In 2010, with the passage of HB 145 – Renewable Energy Financing Provisions, Utah enabled third-party financing of renewable energy systems for the following entities: a county, municipality, city, town, other political subdivision, local district, special service district, state institution of higher education, school district, charter school, or any entity within the state system of public education; an entity qualifying as a charitable organization under 26 U.S.C. Sec. 501(c)(3) operated for religious, charitable, or educational purposes that is exempt from federal income tax and able to demonstrate its tax-exempt status. Significantly, this recent legislation clarified that certain third-party financing arrangements are exempt from regulation by the Utah Public Service Commission, which is consistent with how these arrangements are viewed in several other states across the country. This clarification will now open the door for more innovative financing for renewable energy technologies, which has the ability to remove the upfront cost hurdles of capital intensive investments and offer an attractive bundle of services, including: design, installation, financing (including monetizing tax benefits), permitting and interconnection, maintenance, etc.
Solar Development Guidelines Released by Arizona Game and Fish Department
On March 12, 2010, the Arizona Game and Fish Department ("AGFD") released finalized guidelines for solar development in Arizona ("Solar Guidelines"), the objective of which "is to assist energy developers in identifying potential impacts to wildlife and wildlife habitats from their proposed development and potential alternatives to avoid, minimize, and/or mitigate for these negative impacts." The AGFD encourages local governments and permitting authorities to integrate the recommended study proposals described in the Solar Guidelines. The document is organized around five basic project development steps:
- Wildlife Protection Regulations
- AGFD Regulations and Review
- Gather preliminary information and conduct site screening
- Identify potential impacts to wildlife
- Mitigation
The Solar Guidelines were compiled by the AGFD employees and have not undergone any external public review or input from the solar energy industry. It should be noted that some of the information contained in the Solar Guidelines was taken from the AGFD's wind guidelines. In light of the fact that county officials often defer to the AGFD in matters of wildlife concerns, special attention should be given to the section of the Solar Guidelines focused on "Avoiding or Minimizing Impacts" and the recommendations contained therein.
Continue Reading...Optimizing Tax Benefits in Financing Renewable Energy Projects
Federal tax benefits, such as the Section 1603 Grant, investment tax credits and production tax credits, continue to be an important driver in financing renewable energy projects. Several of my colleagues will be discussing these tax benefits and other incentives related to project financing in a webinar hosted by Infocast on Wednesday, March 31, 2010 at 1:00 p.m. Eastern. Here is full description of the topics that will be discussed, the speakers and a link to the Infocast website for registration:
The section 1603 grant program created by the American Recovery and Reinvestment Act of 2009 recently entered its second year. Section 1603 has transformed the renewable energy industry from one in the doldrums to an industry revitalized. But what does the future hold for section 1603 and will recent legislative efforts to limit the grant program create a new uncertainty in renewable energy financing?
Unfortunately, section 1603 is set to expire at the end of 2010, except for projects that have commenced construction. Recently, the prospects for extending section 1603 were dimmed when Senator Charles E. Schumer (N.Y.), and three other Democratic senators, sponsored a bill that would place limitations on receipt of the grant. Developers, lenders, investors and their counsel all need to know whether and how they can fit under section 1603 and, if they can, how to optimize their deal structures, including the interface between the section 1603 grant and the Department of Energy Loan Guarantee Programs and any related NEPA compliance issues. Those who, for whatever reason, cannot qualify for section 1603 need to understand what comes next: PTCs, ITCs, or maybe some variation on 1603, and how those transactions should be designed.
Please join Infocast and Stoel Rives for a 90-minute webinar and panel discussion on project financing of renewable energy projects to maximize the benefit of tax and other incentives that may be available. Stoel Rives is a Chambers-rated leader in renewable energy law.
Moderator:
Edward Einowski, Partner, STOEL RIVES LLP
Panelists:
Erica Egan, Senior Vice President, Corporate Finance, HELABA
LANDESBANK HESSEN-THURINGEN
Gregory Jenner, Partner, STOEL RIVES LLP
Kevin Pearson, Partner, STOEL RIVES LLP
Gary Barnum, Partner, STOEL RIVES LLP
Registration: http://www.infocastinc.com/index.php/conference/287
Colorado Division of Property Taxation Considers Proposed Tax Treatment of Transmission Lines
The Colorado Division of Property Taxation will hold an important open public meeting Thursday, January 14, 2010, to discuss the "tax treatment of transmission lines". Details of the proposed options will be posted on the Division's website under the "state assessed tab." In the notice provided by the Division, the agenda for the meeting will include addressing the following questions:
- Is the value of the transmission lines accounted for anywhere using the current valuation methodology?
- If not, how should this be accounted for?
- Pick up locally.
- Add to the value of the renewable energy facility determined by the state.
- Increase the capital cost threshold to account for the transmission line.
While the details of the proposed tax treatment have not been disclosed publicly, it is currently unclear how this will impact new and existing transmission lines, including gen-tie lines from renewable energy projects. The Division has provided a remote access opportunity to participate in the meeting. For those interested in attending in person, the meeting will be held at the Division of Property Taxation Office, 1313 Sherman Street, Room 419, Denver, Colorado 80203. It is anticipated that key parties involved in the development of renewable energy projects will be in attendance, along with representatives from the Interwest Energy Alliance.
To the degree that the proposed change in tax treatment increases the taxes borne by existing facilities--most of which have already entered into power purchase agreements--the experience underscores a topic that developers ought to consider when negotiating long term PPA's: if a tax or other charge imposed after the PPA's effective date materially increases a project's cost burden, does the developer have the right under the PPA to pass any or all of the costs onto the buyer? If not, does the developer have any right to renegotiate or terminate the PPA so as to reprice it to account for the unexpected tax burden? Or must the developer absorb the cost for its own account?
Utility pro forma PPAs rarely allow the developer to pass such "change of cost" risks through to the buyer, but the Seller should nonetheless carefully consider such risks (e.g., changes in taxes or integration charges) and its willingness to absorb all of those risks over the life of a long term PPA--it is sometimes possible to negotiate a sharing of unexpected costs that arise after the effective date of the PPA, especially if the utility offtaker is in a position to resist the imposition of such costs.
