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

The energy plan outlined in the report contains the following themes:

1. Economic Development and Energy Jobs
2. Energy Development and Environment
3. Energy Efficiency, Conservation and Demand-Response
4. Transportation and Air Quality
5. Transmission, Infrastructure and Transportation
6. Developing and Applying Technology and Science

• Economic Development and Energy Jobs:
  • Conventional energy and mineral resources have historically served as the backbone of Utah's energy production -- however, Utah also possesses an array of renewable resources
  • The study raises both a concern and an opportunity:  energy-focused counties, and by extension the state, need to have strategies in place to adequately balance their reliance on energy as an economic and employment driver
  • As the cost of renewable energy continues to decline, regulatory reforms which encourage renewable energy development and use, once the cost tipping point is reached, will grow Utah's economy
  • Utah must show an unwavering commitment to the future energy economy that includes balancing fossil fuel development with development of renewable and alternative energy
• Energy Development and Environment:
  • Utah's energy portfolio should include fossil fuels, alternative fuels, renewable resources, and energy efficiency
  • Future energy projections place significant demands on natural gas production in Utah and may require importation of additional natural gas supplies from neighboring states
  • Electricity generation in Utah is undergoing a transition from predominantly coal-fired generation to a more diverse portfolio of natural gas and renewable resources
  • Utah has vast untapped renewable energy potential, but policy, economic, and regulatory barriers currently impede widespread market adoption
  • Nuclear power generation deserves additional evaluation, but will not be available for electricity generation in this 10-year strategic plan
  • Energy development can occur in concert with protection of our air, land, water, and wildlife resources
• Energy Efficiency, Conservation and Demand-Response:
  • Models and studies recognize energy efficiency as a cost-effective energy resource
  • Constructing buildings to current or above energy code standards reduces the occupant's energy costs and puts downward pressure on utility rates by deferring investment in new energy generation that would otherwise be needed to meet rising demand
  • A barrier to widespread adoption of energy efficiency and conservation is the lack of public awareness and understanding about energy, energy-efficiency technologies, practices and programs
  • In many situations, incentives are sufficient to encourage businesses and residential consumers to pursue individual energy-efficiency measures, but barriers remain for obtaining significant energy savings on a whole-house or whole-building basis
  • New home and new commercial building design and construction should be energy efficient
  • Strategies are needed to advance energy efficiency in Utah's industrial sector
  • Utah's regulatory framework is most effective in focusing its efforts on reducing overall energy consumption, managing peak loads through best practices, and supporting energy-efficiency and demand-response programs, consumer education, and utility rate design to promote energy efficiency and conservation
• Transportation and Air Quality:
  • Utah needs to improve vehicle technology/efficiency and alternative fuels (refueling) infrastructure
  • Fuel consumption and air pollution can be reduced through more efficient traffic flow, using engineering and technology to effectively manage all modes of traffic and maximizing the effectiveness of our transportation systems
  • Changing behavior is difficult, but communication strategies and tactics that provide awareness and education, supported by incentives, marketing and promotions can succeed in reducing unnecessary travel, particularly the number and duration of solo-driver trips
  • Assist communities in choosing land-use options that reduce per-capita energy consumption, improved air quality, and make it easier for people to get from one place to another
  • Changes in fuel prices can change behavior
  • A better balance of regional travel choices between auto, public transit, bicycling and walking is imperative
• Transmission, Infrastructure and Transportation
  • Electric and natural gas transmission is a key part of any state's overall energy policy, but it is the most difficult component of the energy delivery system to construct
  • The current lack of transmission capacity in Utah could prevent the state from reaping the economic and environmental advantages of developing renewable energy projects within our borders
  • With the projected increase in travel and population, there is a need to expand the state transportation system, as defined in the Utah Long Range Plan
  • Need to develop a state level position to propose alternatives to current regulation and funding sources to encourage transmission line and pipeline construction in areas that promote economic development or renewable resource development
  • The state needs a clear process for siting and permitting transmission infrastructure projects as part of its State Energy Plan
  • Various linear infrastructure projects create competition for scarce corridors that creates a greater impact on citizens
  • Public interest multiple infrastructure corridors cannot be secured without funding and right-of-way acquisition
  • Infrastructure should be built in a way to minimize environmental and social impacts
  • Encourage strong energy efficiency, demand-side management measures and distributed generation to minimize the need to build additional transmission
• Developing and Applying Technology and Science:
  • Enhance the state's energy research facilities and continue to attract world-class researchers to the state
  • Align the state's main research universities - University of Utah (U of U), Utah State (USU) and Brigham Young University (BYU) -- into a powerful energy research and development triangle
  • Connect this "research triangle" with industry, national laboratories and regional universities to effectively commercialize new energy technologies and develop Utah's conventional, alternative and renewable energy resources
  • Empower Utah's education system to expand its ability to train, attract and retain the skilled talent necessary to grow Utah's energy economy
  • Utah's energy industry research and development leads in such fields as geomechanics, new material technology and clean coal technologies
  • The eight Utah College of Applied Technology (UCAT) campuses, community colleges, and other higher education institutions offering energy-related technical training, fill an essential role in developing and maintaining a technically-trained Utah workforce

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

It should be noted that the DOE recently implemented a number of improvements to its loan guarantee program that will help facilitate a more efficient application process through the launch of a "user-friendly" online application portal.  The application portal can be accessed directly from the DOE's loan guarantee program website.  According to the DOE, this on-line application system is designed to:

• guide the applicant through the development and submission of a loan or loan guarantee application;
• assist the applicant in determining basic program eligibility;
• assist the applicant in preparing an application suitable for DOE review;
• highlight areas of the applicant’s proposal that may require additional information;  and
• provide the applicant with guidance on how to prepare a stronger application.

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:  

At its core, a ten-year transmission plan is required to be:

1. consistent with the single-system planning concept, defined as a collective use of the existing transmission system and making the appropriate additions, upgrades and enhancements to the system as if the transmission system were owned by a single entity;
2. coordinated with all transmission providers in Colorado; and
3. developed in conjunction with the CCPG, a formal subregional transmission planning organization recognized by the Western Electricity Coordinating Council ("WECC"), in a manner consistent with its charter and with the Federal Energy Regulatory Commission ("FERC") regulations regarding transmission planning.

Under the Proposed Rules, it is expected that the jurisdictional utilities will file their first transmission plan in February 2011.  In addition, it is anticipated that there will be an interaction between the biennial tranmission planning process, the "Certificate of Public Convenience and Necessity" ("CPCN") proceedings, electric resource planning and the Senate Bill 100 processes.  One specific intent of the Proposed Rules is to provide useful information to stakeholders and the Commission in CPCN proceedings in terms of identifying how a proposed transmission facility fits into a larger state-wide transmission plan -- this is particularly important in facilitating the integration of location-constrained renewable energy resources.

Finally, the Commission found that the state-wide coordinated transmission planning must be open to all stakeholders and address both reliability and economic considerations in order for the process to be effective.  The Commission noted that while the CCPG charter provides that CCPG meetings and membership are open to all interested stakeholders, the Proposed Rules also provide that in connection with the biennial filings, the utilities are required to demonstrate the outreach to interested stakeholders that occurred in the development of the ten and twenty year transmission plans.

For those interested in commenting on the Proposed Rules, here is an overview of dates/deadlines set forth in the NOPR:

• Pre-filed comments must be submitted by August 25, 2010
• Reply comments must be submitted by September 1, 2010
• A hearing on the Proposed Rules will be held before Hearing Commissioner James Tarpey on Thursday, September 9, 2010 at 9:00 a.m. in Commission Hearing Room A, 1560 Broadway, Suite 250, Denver, Colorado.

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.    

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?

• Substantially increase balancing area cooperation or consolidation, real or virtual;
• Increase the use of sub-hourly scheduling for generation and interchanges;
• Increase utilization of transmission;
• Enable coordinated commitment and economic dispatch of generation over wider regions;
• Incorporate state-of-the-art wind and solar forecasts in unit commitment and grid operations;
• Increase the flexibility of dispatchable generation where appropriate (e.g., reduce minimum generation levels, increase ramp rates, reduce start/stop costs or minimum down time);
• Commit additional operating reserves as appropriate;
• Build transmission as appropriate to accommodate renewable energy expansion;
• Target new or existing demand response programs (load participation) to accommodate increased variability and uncertainty;
• Require wind plants to provide down reserves.

Finally, the WWIS also identified a number of areas where further study is warranted:

• Characterization of the capabilities of the non-renewable generation portfolio in greater detail (e.g., minimum turndown, ramp rates, cost of additional wear and tear);
• Changes in non-renewable generation portfolio (e.g., impact of retirements, characteristics, and value of possible fleet additions or upgrades);
• Reserve requirements and strategies (e.g., off-line reserves, reserves from non-generation resources);
• Load participation or demand response (e.g., functionality, market structures, PHEV);
• Fuel sensitivies (e.g., price, carbon taxes, gas contracts and storage, hydro constraints and strategies);
• Forecasting (e.g., calibration of forecasting using field experience, strategies for use of short-term forecasting);
• Rolling unit commitment (e.g., scheduling units more frequently than once on a day-ahead basis);
• Transmission planning and reliability analyses (e.g., transient stability, voltage stability, protection and control, intra-area constraints and challenges);
• Hydro flexibility (e.g., calibration of hydro models with plant performance).

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.

1. Wildlife Protection Regulations
2. AGFD Regulations and Review
3. Gather preliminary information and conduct site screening
4. Identify potential impacts to wildlife
5. 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.

• Determine the "effective footprint" of utility-scale solar development so mitigation strategies can be implemented at the spatial extent of the impact.
  • Need to determine the potential effects of a proposed solar project on the demographics of select wildlife species.
• Evaluate the alteration of vegetation and micro-climate adjacent to solar facilities.
• Identify the impact that utility-scale solar development has on wildlife corridors.
  • Evaluate the movement and behavior patterns of select wildlife species (e.g., ungulates, grassland passerines, raptors) pre- and post-construction.
• Examine the impacts to migratory birds and bats.
• Develop mitigation strategies to reduce the impacts of water impoundments associated with solar facilities.

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

• 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.

In a nutshell, the amendments to the regulations outlined in the final rule are designed to:

• provide flexibility in the determination of an appropriate collateral package to secure the guaranteed loan obligations;
• eliminate the requirement that the Secretary receive a first priority lien on all project assets as a condition for obtaining the loan guarantee;
• facilitate collateral sharing and related intercreditor arrangements with other project lenders; and
• provide a more workable interpretation of certain statutory provisions regarding DOE's treatment of collateral that is more consistent with the intent and purposes of Title XVII.

• that the Joint Revenue Committee comprehensively study the issues surrounding taxation of the wind energy industry;
• any proposed new tax be imposed in a way so as to encourage the diversification of Wyoming's economy and so as not to force the wind energy industry out of Wyoming;
• any tax should be designed to encourage the development of employment opportunities for Wyoming's people and to encourage the development of businesses ancillary to the wind energy industry;
• that the Legislature conduct a careful examination of all burdens placed on wind energy producers and weigh those burdens against any benefits the producers realize by harnessing Wyoming's high quality resources; and
• any tax burden proposed be calculated to maintain some competitive advantage for Wyoming's wind energy producers as they deliver electricity to distance markets where a demand for their product exists.

On a final note, although the proposed tax bills did not pass out of Committee, individual legislators can still attempt to gain introduction votes for such legislation during the February 2010 legislative session.  However, since the 2010 legislative session is a budget session, introduction of such bills would require a two-thirds vote, which appears unlikely given the current economy.  It is important to point out that the taxation debate in Wyoming (and perhaps other states) is a signal to wind energy developers that they may want to revisit or consider the "change of law" risk under a long term power purchase agreement and whether the levy of a generation tax could be passed on to the purchaser under those contracts.

• Whether the third-party is a public utility under Utah law;
• Whether the third-party is a public utility under Utah law when arrangements are entered into primarily as a financing mechanism for distributed renewable energy generation systems whereby a third-party owns the renewable generation equipment, which is installed on a utility customer's premises, there is a long-term contract with the customer to supply a portion of that customer's electricity use, and payments are based on kilowatt-hours;
• Whether the third-party is a public utility under Utah law when (i) there is a single relationship between the third-party owner of the generation and a customer or (ii) there are multiple customers taking power from the same third party;
• Whether the third-party is a public utility under Utah law when arrangements involve the leasing of distributed generation equipment from non-utility lessors to lessees that are also retail customers of utilities.

Comments and/or legal briefs regarding the above issues must be filed with the PSC by November 16, 2009.  A technical conference to discuss the specific terms and conditions surrounding third-party financing arrangements and other issues will be held on November 23, 2009, at 1:30 p.m. to 4:00 p.m., Fourth Floor Hearing Room Room 401, Heber M. Wells State Office Building, 160 East 300  South, Salt Lake City, Utah.

Here is a summary of how the monies will be used by each of the states and territories:

• Alabama has been awarded $22,228,000 in federal stimulus funds.  Alabama will utilize the Recovery Act  SEP funding to promote energy efficiency of businesses (with a particular focus on the automotive supplier industry), schools, and correctional facilities and the development of renewable energy resources in the state.  The state will also use funds to create a new "energy revolving loan fund" to stimulate the creation and retention of jobs and increase the generation of renewable energy by providing low-interest loans for new and existing industries in the state.  The loans will be used for the installation of renewable energy systems and the implementation of energy efficiency measures.  After demonstrating successful implementation of its plan, Alabama will receive nearly $28 million in additional funding, for a total of more than $55 million.  Click here for more information regarding Alabama's state energy program and use of Recovery Act funds.
• American Samoa was awarded $7,420,000 in federal stimulus funds.  American Samoa will utilize the Recovery Act SEP funding to expand the use of renewable energy across the territory, as well as to supplement weatherization funds to improve home energy efficiency for low-income residents.  Specifically, the territory will install a 1,000 kW photovoltaic solar-energy array near the Tafuna Power Station, 19 smaller 28 kW solar arrays on the roofs of government and other buildings, and a solar water heating system at the LBJ Tropical Medical Center.  American Samoa is also interested in expanding its use of wind power, and will use Recovery Act funds to set up eight anemometers to measure and quantify the territory's wind potential.  After demonstrating successful implementation of its plan, the territory will receive more than $9 million in additional funding, for a total of $18 million.

Here is a summary of how the funds will be used in Georgia, Illinois, and New York:

Georgia will use its funds to weatherize more than 13,600 homes over three years, with priority given to homes occupied by elderly residents and elderly residents with disabilities. After demonstrating success in the execution of its plan, Georgia will receive $62 million in additional funds, for a total of almost $125 million.

Illinois will use its funds to weatherize nearly 27,000 homes over three years. The state will provide sub-grants to existing local agencies that have effectively provided energy audits and home weatherization in the past, followed by final inspections of weatherized homes. In addition, Illinois will expand its training and certification program to prepare its workforce for the weatherization assistance program. After demonstrating success in the execution of its plan, Illinois will receive over $121 million in additional funds, for a total of more than $242.5 million.

New York will use its funds to weatherize more than 45,000 homes over three years. The state plans to coordinate its weatherization program with other state agencies to maximize benefits to low-income clients. The state will also encourage weatherization assistance to be rendered along with services provided by non-federal sources, like utilities and the Red Cross. After demonstrating success in the execution of its plan, New York will receive $197 million in additional funds, for a total of more than $394 million.

Here is a summary of how the monies will be used in Minnesota, South Carolina and South Dakota:

Minnesota has been awarded $21.7 million in federal stimulus funds for retrofitting existing public buildings and homes, renewable energy and energy efficiency programs and to develop new training opportunities. Minnesota’s SEP will award grants to small, medium, and large businesses to help provide for the design, financing and installation of various energy efficiency improvements and retrofits.  The state will also administer grants to work with utilities to develop programs that leverage ARRA funds to promote energy efficiency with customers, such as low-interest loans and grants. After demonstrating successful implementation of its plan, Minnesota will receive more than $27 million in additional funding, for a total of more than $54 million. This money is in addition to the $132 million the state will receive for weatherization grants for low-income households.

South Carolina  has been awarded $20.2 million in federal stimulus funds. South Carolina’s SEP will utilize the funding to provide grants and loans to improve energy efficiency in public school districts, public colleges and universities, and state agencies to reduce the burden of energy bills for taxpayers, while creating jobs and reducing greenhouse gas emissions.  South Carolina also intends to provide financial assistance to various industrial, commercial and small business entities to support energy efficiency and renewable energy projects.  This financial assistance, along with education and training programs included in the SEP, will help create clean energy jobs in the state and make business and industry more economically stable. After demonstrating successful implementation of its plan, the state will receive more than $25 million in additional funding, for a total of over $50 million.

South Dakota has been awarded $9.5 million in federal stimulus funds. South Dakota’s SEP will use its funding to support the Energy Efficient Government program and to provide revolving energy loans to state institutions. The programs will promote energy efficiency efforts while reducing energy costs in state owned buildings, which will directly benefit state residents.  The state’s energy office will administer the funds, provide technical guidance, and assure accountability and transparency for the state institutions who apply for the two programs.  These programs coordinate with South Dakota’s energy goals to promote and encourage energy conservation, energy efficiency, renewable energy and alternative fuels. After demonstrating successful implementation of its plan, the state will receive more than $11 million in additional funding, for a total of more than $23 million.

My colleagues have blogged on the other seven states that received funds including:  Florida, Idaho, Kansas, Utah, Connecticut, Washington and Arizona.

• Loss of 1/2 of the Northern polar ice cap in the last 10 years
• Sea level rise
• 40% of the British Columbia pine is dead
• Extreme water stress in the Western United States (with exception to the Pacific Northwest) as a result of decreased snow pack and changing weather patterns

Secretary Chu was particularly concerned with the continued melting of the permafrost in the Northern Hemisphere, which he predicted could have "runaway effects" due to the massive release of CO2 and methane from the biomass that has accumulated over time. 

President of the World Bank, Robert B. Zoellick, also participated in the discussion on climate change, indicating that the rule making that will be necessary for implementing climate change policies will stay with us for decades and will be some of the "toughest negotiations" he has ever seen.  Mr. Zoellick stressed the importance of having the Governors plugged into the rule making process since this will be the framework that the states will have to live with.  There was also an acknowledgment among the group that the farmers and ranchers are skeptical about climate change, but that this is a key stakeholder group that needs to be part of the equation.  Governor Bill Richardson commented that the key will be the creation of a carbon offset market that will  work.  Secretary of Agriculture, Tom Vilsack, concurred indicating that a carbon offset market will be critical to the survival of rural communities. 

• China and the U.S. have used each other as reasons not to commit to climate change policies
• China believes the U.S. and other developed countries should lead the way in implementing climate change policies
• While there is an opportunity for increased relations between the U.S. and China, we could also see China balk due to suspicions that the U.S. is trying to slowdown the Chinese economy
• Both countries have domestic policies that will need to be managed
• Some of China's provincial governments prefer to concentrate on economic growth versus policies that will slow that growth
• China is trying to bring 1 billion people out of poverty

Despite these challenges, the key in achieving success with China will be to understand and build on China's motivations, which include, among others, resolving local water and air pollution issues that have given rise to health concerns and China's desire to be the world leader in green technology development.

Eric Heitz debunked the myth that "China is not doing anything on clean energy or climate change" by demonstrating that China has already adopted an ambitious suite of clean energy policies.  According to Mr. Heitz:

• China made a $12 billion investment in renewable energy in 2007
• In 2005, China initiated a renewable portfolio standard that resulted in doubling installed wind capacity in 2006, and which doubled again in 2007
• China has initiated its own "green stimulus" package by commiting $221 billion (which of 5% of China's 2008 GDP) in furthering "green technology"
• China is positioning itself to be a competitor in the world auto market through the manufacture of electric vehicle

During this discussion, the Western Governors identified a WGA initiative aimed at working with the Chinese provincial governments and an organized trip to China to engage in those efforts.  President Obama's appointment of Governor Jon Huntsman as the ambassador to China, will certainly be instrumental in setting the ground work for the WGA's work in China.

On a final note, the Western Governors adopted two important policy resolutions aimed Global Climate Change Policies:

• Western Governors' Association Policy Resolution 09-2 (Supporting the Integration of Climate Change Adaptation Science in the West)
• Western Governors' Association Policy Resolution 09-3 (Regional and National Policies Regarding Global Climate Change)

The morning session on Monday, June 15, 2009, was kicked off with the unveiling of the Western Renewable Energy Zones-Phase 1 Report, which was a product of a joint initiative between the WGA and the U.S. Department of Energy (the "WREZ Initiative").  The intention of the WREZ Initiative is twofold:  (1) to identify Western Renewable Energy Zones in the Western Interconnection and (2) to facilitate the development of high voltage transmission to those areas with abundant high-quality renewable resources and low environmental impacts.  Governor Schweitzer provided an overview of the WREZ Phase I report, which included a summary of the process for obtaining feedback from a diverse group of stakeholders to provide the analysis and tools for constructing a plan to facilitate the construction of new, utility scale renewable energy facilities and any needed transmission to deliver that energy across the Western Interconnection.  The WREZ Initiative has developed a modeling tool for evaluating the relative economic attractiveness of costs of delivered renewable energy, including transmission costs, from specific renewable resource areas delivered to specific load centers. 

Governor Freudenthal indicated that from his perspective, there were several major challenges to building transmission in the West, but that the largest hurdle was permitting transmission lines or other renewable energy projects on federal lands.  Another issue of concern for Governor Freudenthal was in "right sizing" the transmission lines and how Stimulus monies could be used to jumpstart the process of transmission upgrades.  Secretary of Interior Ken Salazar responded that the Department of Interior will be establishing renewable energy offices throughout the West, including one in Wyoming, that will be staffed by employees familiar with renewable energy project development.  The goal is to be able to fast track renewable energy applications and to obtain quick decision making.  Secretary of Energy Chu indicated that the Department of Energy would be announcing funding opportunities related to transmission, including:

• $80 Million for Regional and Interconnection Transmission Analysis and Planning
• $50 Million for Assistance to State Electricity Regulators
• Approximately $40 Million to Support Energy Assurance Capabilities for States

Secretary Chu also indicated that several of the federal agencies under his watch, including WAPA and BPA, are not moving in a timely manner in facilitating funding opportunities for renewable energy and transmission development.  Secretary Chu expressly requested that the Governors contact him directly if any of these agencies are taking actions that will deter private investment in renewable energy and related transmission projects so that he can address these potential impacts immediately.

Overall, the presence of the three cabinet members from the Obama Administration, along with FERC Chairman Jon Wellinghof and Council on Environmental Quality Chairwoman Nancy Sutley at this conference was a strong indication of the Administration's desire to partner with the Western Governors to address the country's long-term energy challenges, create jobs, and to cut the country's carbon emissions by unlocking the enormous potential for renewable energy in the Western United States.  The Western Governors passed Policy Resolution 09-1 (Energy Policy, Renewable Energy and Transmission for the West) with directives to WGA staff:

• To work with Congress, the Administration, and other appropriate entities to implement the policies contained in the resolution;
• To continue to implement the Western Renewable Energy Zones initiative and to report on the progress of the initiative at the next scheduled meeting;
• To work with the federal government as necessary to create and implement a long-term, comprehensive-energy policy that ensures that the WGA moves toward affordable and environmentally responsible energy security and independence;
• To work with WECC to establish future transmission scenarios;
• To work with Congress to extend the duration and amount of the U.S. Department of Energy (DOE) existing federal loan guarantee program and to expedite the issuance of loan guarantees in all energy sectors. 

On June 14, 2009, there will be a panel discussion on policies and technologies to address water use in an era of declining water supplies due to climate change.  Panelists include:  Dr. Peter H. Gleick, co-founder and president of the Pacific Institute; Professor Eilon Adar, Zuckerberg Institute for Water Resources, Ben-Gurion University of the Negev; Doug Miell, Principal, Miell Consulting; Cameron J. Brooks, Ph.D., Director of Solutions and Business Development for IBM Corporation's Big Green Innovations initiative.

On June 15, 2009, Secretary of Agriculture Tom Vilsack, Secretary of the Interior Ken Salazar, Secretary of Energy Steven Chu and FERC Chairman Jon Wellinghoff will provide their perspectives on developing large amounts of clean energy in the West and the transmission lines needed to bring it to market.  Following their remarks, they and the Governors will have the opportunity to discuss what cooperation is needed between states and the federal government to accelerate progress.  An outline of discussion points that might be expected from the Governors during this session could include topics addressed in the letter dated May 1, 2009 from the WGA to the Senate Energy & Natural Resources Committee.

On June 16, 2009, Susan Shirk, Director of the University of California Institute on Global Conflict and Cooperation, University of California, San Diego, will be a Keynote speaker, followed by a panel discussion on ways national and subnational governments can cooperate to expedite the deployment of new technologies and policies to address energy and climate change.  Panelists include:  Eric Heitz, President of The Energy Foundation; Susan Shirk, Director of the University of California Institute on Global Conflict and Cooperation; Charles Freeman, Freeman Chair in China Studies at the Center for Strategic and International Studies. 

The meeting is being hosted by Utah Governor and Western Governors' Association Chairman Jon M. Huntsman, Jr., and his wife Mary Kaye and Lt. Governor Gary Herbert.   Expected at the meeting are eleven Western Governors and three Western Canadian Premiers and 500 attendees including Obama Administration officials, other VIPs and industry and non-governmental leaders from around the West, across the country and around the world.