Renewable + Law : Renewable Energy Lawyer & Attorneys : Stoel Rives Law Firm : Climate Change, Emissions, Carbon Markets, Wind, Solar, Biofuels : Western United States

In the wake of the extension of the production tax credit, my colleague Ed Einowski has analyzed a key challenge – the relative scarcity of available utility-scale power purchase agreement RFPs. Having a PUC-approved PPA in place is generally a prerequisite for securing financing for utility-scale wind projects. Here’s what he has to say:

The extension of the production tax credit (PTC) allows the wind energy industry to move forward with projects in 2013. But the last few years – especially 2012 – have seen relatively few utility-scale wind power purchase agreements executed. Without the assured revenue source of a power purchase agreement (PPA), wind projects will generally find third-party financing – whether debt, tax equity or cash equity – unavailable. And few developers – even those with the financial resources to do so – will likely be willing to risk proceeding with project construction in the absence of a financeable PPA. As a consequence, for most developers the PTC extension presents the immediate challenge of securing a financeable PPA to enable the PTCs to be secured. Given the time it generally takes to negotiate and finalize a utility-scale wind PPA as well as pursue other key items such as turbine supply agreements and engineering, procurement and construction contracts, it will be necessary to move expeditiously.

For a more detailed discussion of the issues involved, read the full article.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Last year, we reported on the resolution of a longstanding dispute between Xcel Energy and 46 renewable energy generators about the ownership of Renewable Energy Credits (RECs) when the Power Purchase Agreement (PPA) is silent. In an Order released September 9, 2010, the Minnesota Public Utilities Commission decided that 1) generators own the RECs produced under PPAs signed under the 1978 federal Public Utilities Regulatory Policy Act (PURPA) and 2) Xcel owns the RECs produced under PPAs signed under Minnesota’s 1994 wind and biomass mandates, unless the generator could demonstrate that the PPA was not silent. Today, the Commission released an Order offering more clarity to PPAs in the latter category.

Following the September 2010 Order, two generators (St. Paul Cogeneration LLC and Mission Funding Zeta) with contracts under the wind and biomass mandates sought to demonstrate to the Commission that their PPAs were not silent on REC ownership. Both PPAs at issue contained language allocating to the generator the benefit of “any tax credits, allowances or other credits” related to the generation facility. In today’s order, the Commission determined that this language unambiguously includes RECs. As a result, the Commission found that St. Paul Cogeneration and Mission Funding Zeta own the RECs under the terms of their PPAs.  The Commission also found that Xcel owns the RECs under any remaining unsettled wind and biomass mandate PPAs, unless the generator demonstrates that the PPA is not silent within 30 days.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Idaho Public Utilities Commission (PUC) has issued a straw man proposal that lays out plans to revise the surrogate avoided resource (SAR) methodology used to calculate avoided cost rates for wind generators.  The "avoided cost" is the price paid to Qualifying Facilities that are selling power to Idaho utilities under the Public Utility Regulatory Policies Act (PURPA).   

The PUC included six cost categories in the wind SAR:  capital costs; fixed and variable O&M costs, transmission costs; tax credits; wind integration; and forecasting costs.  The PUC assumed transmission costs of $1.90/kw-month, production tax credits at $0.021/kWh, a $0.00 REC premium, and wind integration at $6.50/MWh.  With those inputs and others, the PUC arrived at 20-year levelized wind rates for a 2010 project as follows:

The PUC proposed that where the Wind SAR is higher than the Gas SAR, a wind developer may choose whether to sell power at the wind or gas rate.  If the wind developer opts for the latter, it retains ownership of RECs.  If the wind developer opts for the former, RECs go to the utility.  However, when the Gas SAR is higher than the wind SAR, wind developers would only be eligible for the wind SAR, meaning that the utility would automatically receive RECs under a PPA.  Non-wind projects would be entitled to the gas SAR when the gas rate is higher, and RECs would remain with developers.

The PUC is accepting written comments on the straw man proposal until November 23, 2010.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Last week, the Minnesota Public Utilities Commission resolved a longstanding dispute over who owns Renewable Energy Credits (RECs) when the Power Purchase Agreement (PPA) is silent.  Following the establishment of an REC tracking system for Minnesota, Xcel Energy asked the Commission to clarify ownership of RECs associated with 46 wind, biomass, hydro, and landfill gas facilities totaling 467.5 MW.  These PPAs were written before the concept of RECs existed. 

On August 17, 2010, the Commission resolved the dispute partially in favor of Xcel and partially in favor of the generators.  The Commission divided the disputed PPAs into two categories: 1) PPAs signed under 1978 federal Public Utilities Regulatory Policy Act (PURPA) and 2) PPAs signed under Minnesota’s 1994 wind and biomass mandates (Minn. Stat. §§216B.2423 and 216B.2424).

For the PURPA contracts, the Commission decided that the generators are the rightful owners of RECs because they had only been paid avoided cost with no premium for the electricity being from renewable sources.

For the wind and biomass mandate PPAs, the Commission favored Xcel and decided that the utility had acquired ownership of the RECs, unless the generator can make a showing that the PPA is not silent on REC ownership.  For this category, the Commission reasoned that Xcel had contracted to buy electricity that would meet specific renewable mandates.  Without the RECs, the electricity would not satisfy the renewable mandates.

The Commission exempted two PPAs close to being privately settled from its decision as well as 13 PPAs that were already privately settled.

Filings related to the "silent PPAs" dispute can be found by searching for Docket No. E-002/08-440 in Minnesota’s eDocket system.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On October 12, 2009, the Public Service Commission of Utah ("PSC") joined the ranks of several other states in the west, including  Oregon, when it established a docket to investigate whether, and the extent to which, certain third-party arrangements for renewable energy generation are subject to the PSC's jurisdiction.   www.psc.utah.gov/utilities/misc/miscindx/0999912indx.html,  Pursuant to the notice, the PSC may consider the following issues:

• 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.

• Email This
• Print
• Comments
• Trackbacks
• Share Link