A wind farm company with out-of-date turbines that wildlife biologists blame for the deaths of scores of raptors on the Altamont Pass has agreed after years of squawking from environmentalists and regulators to replace the bird-killing blades.Altamont Winds Inc. closed down its turbines for the season, and wrote in a letter to the U.S. Fish & Wildlife Service that it had decided to “permanently shut down and cease operations” of all 828 of the power generators. The Tracy company has applied with Alameda County for a permit to replace the old equipment with 33 larger, state-of-the-art turbines that kill far fewer birds.“The reduction of avian impacts was a primary factor that influenced our decision to discontinue operating our Altamont wind farms,” wrote Bill Damon, vice president of Altamont Winds.The move was touted by environmental organizations as a big victory in the battle to protect golden eagles, other raptors, birds and bats, thousands of which are pulverized every year by the spinning blades that are visible to drivers in the hills between Tracy and Livermore.Declaring victory“It is a victory because this company is probably the most egregious actor in the Altamont,” said Cindy Margulis, the executive director of the Golden Gate Audubon Society, who said 67 golden eagles were killed by Altamont Winds turbines between 2004 and 2014. “We’re thrilled they are going to stop running the old turbines and that those turbines won’t be killing birds anymore.”All wind farm operations on the Altamont are required to shut down operations between Nov. 1 and Feb. 15 as part of a 2007 settlement agreement with the Audubon Society in an attempt to reduce the death toll.Rick Koebbe, president of the company, did not return phone calls. The East County Board of Zoning Adjustments is expected to decide Nov. 19 whether to approve the company’s replacement plan.Altamont Pass, just east of Livermore, is both the birthplace of the modern wind power movement and the deadliest spot in the United States for eagles and other birds, according to wildlife biologists.The wind turbines, which spin on many different parcels and are owned by a variety of companies, were first built in the wake of the energy crisis in the 1970s. At their peak, there were nearly 6,000 turbines in operation. The machines, the tips of which reach speeds of 179 mph, killed about 10,000 birds, including 2,000 raptors, every year.Unusual adversariesThe pass now contains about 3,000 turbines — representing about a third of California’s wind power and producing enough power to light San Francisco. It has been the epicenter of a long-running battle between two green movements that make for unusual adversaries — renewable energy and wildlife conservation.“It’s all about trying to strike that balance,” said Sandra Rivera, the assistant planning director for the Alameda County Planning Department.The number of eagles killed by windmills is decidedly out of balance, according to wildlife advocates. Researchers say the problem is that eagles are so intent on finding prey, and are so programmed by evolution, that they simply cannot see the spinning blades.But eagles aren’t the only flying predators that get nailed by windmills. Burrowing owls, red-tailed hawks, American kestrels and bats are also killed. The problem is particularly acute during the winter, when huge numbers of birds migrate to the area. About 35 golden eagles are killed annually in the Altamont Pass, which has one of the densest nesting populations of big raptors in the world.Greater efficiencyThe new turbines stand as tall as 430 feet and produce as much energy as 23 of the old ones, which were lower to the ground. Where they are installed within the contours of the hills is also important, and a team of researchers has been working on a chart that wind farm operators can use to better position their turbines to avoid raptor flight paths.The safety measures appear to be working. A recent study suggests that the number of raptors killed at Altamont each year has fallen about 50 percent since 2005. In 2014, bird mortality in general decreased by 25 to 40 percent, biologists say.But the 828 turbines operated by Altamont Winds were between 30 and 40 years old, making them less efficient power generators and more efficient bird killers. The Fish and Wildlife Service said 31 golden eagles have been killed by the company’s turbines since 2010.‘The sooner … the better’Still, the company got permission from the county in 2005 to continue operating its turbines in the Altamont until 2015, as long as they began replacing them. And despite heavy opposition, including from county staff, the Alameda County Board of Supervisors this spring extended the company’s deadline, this time until 2018.With Altamont Winds’ new application, Rivera said, all the current operators in Altamont have either replaced their old equipment or have submitted applications for repowering projects. Once the old turbines are remove
Greenfield Wind and NorthWestern Energy have asked the Montana PSC to reconsider its rejection of a power purchase agreement for the output from Greenfield’s 25-MW wind project, which is under construction near Fairfield, Mont.
By a 3-2 vote, the PSC in December refused to approve the contract, even though most parties in the case supported the deal and none opposed it [Docket No. D2014.4.43].
“This motion presents a critical question of whether the commission will approve a reasonable long-term avoided cost negotiated between a large QF and NorthWestern, or whether the commission will subject the parties, and quite possibly the commission itself, to further litigation,” Greenfield said in its Jan. 8 filing, which called the decision “unlawful, unjust and unreasonable.”
The decision was made during a Dec. 16 commission work session after considerable discussion of the perceived pros and cons of the 25-year deal, which included a net rate of about $50.49/MWh if the developer paid NorthWestern for wind integration, or $53.99/MWh if Greenfield delivered a wind-integrated product.
During settlement discussions with NorthWestern, Greenfield agreed to delay the commercial on-line date for the full contract rate until 2016, in light of the utility’s near-term long position It would receive $19.99/MWh, minus integration costs, for any generation delivered in 2015; its currently scheduled on-line date is Oct. 15, 2015.
NorthWestern initially asked the commission in April 2014 to set terms and conditions of the PPA because it was not selected through an all-source solicitation, as required under a commission rule that FERC previously determined was inconsistent with PURPA regulations (CU No. 1639 ).
“NorthWestern is in the untenable position of being constrained by an administrative rule that FERC has found to be inconsistent with federal law,” the utility said.
The rates and terms in the stipulation “are consistent with, and likely significantly below, any reasonable current estimate of NorthWestern’s actual avoided costs,” Greenfield said in its Jan. 8 petition.
MPSC staff’s projections indicated the settlement rate would save NorthWestern’s customers between $5.9 million and $10.6 million over the life of the project, compared to the two most reasonable alternative avoided-cost benchmarks, Greenfield also said in its filing—and pointed out that the rates were lower than all five of the benchmark rates staff used in its evaluation.
In fact, the market prices underlying the negotiated rate and staff’s benchmarking analysis came from NorthWestern’s 2013 least-cost plan, and are the same prices used to evaluate whether the utility’s recent acquisition of PPL Montana’s hydro resources was a least-cost resource, Greenfield said.
Commissioner Travis Kavulla, who voted to approve the stipulation, said during the Dec. 16 work session that commission staff used more analysis in reviewing the Greenfield deal than NorthWestern did to assess the value of its $870-million purchase of PPL Montana’s hydro portfolio (CU No. 1662 ), under which power is priced at about $57/MWh.
That acquisition was also approved outside of an all-source solicitation, Greenfield’s filing noted.
Rejection of the negotiated rate will “launch the parties and the commission back into unnecessary and costly litigation,” Greenfield said, and could result in rates that are significantly higher than those included in the stipulation.
Greenfield also said the apparent rationale for rejection of the unopposed stipulation “rests upon unlawful discrimination against QF projects, which combined with other recent events would constitute an actionable violation of federal and state law if allowed to stand.”
The notice of commission action denying the settlement did not articulate the commission’s reasons for denial, NorthWestern pointed out in its filing in support of Greenfield’s petition. Besides reconsideration, NorthWestern asked the commission to provide the rationale for its decision.
Chair Bill Gallagher led the opposition to the settlement during the commission’s work session.
“I am dissatisfied that this stipulation is fair and reasonable,” Gallagher said during the meeting. “I like stipulations to come after hearings.”
Gallagher added that the record was insufficient and went on to criticize FERC’s PURPA regulations, likening them to a program that would provide unskilled people with incentives to become housepainters and then require homeowners to purchase their services over those of more qualified painters.
Gallagher also warned that if the PSC approved the settlement, there would be a line of developers down the hall applying for QF status. “What are you going to do with the ones that follow? NorthWestern would end up selling this unneeded power at a loss,” he said, adding that “these new QFs will come in and offset our native power.”
Gallagher has since retired from the commission and was replaced in January by Brad Johnson, who was elected in November 2014.
Greenfield is hoping the change in chair may result in a different outcome.
“Any commissioner that is going to obey federal and state law and be responsive to recent FERC and state court rulings and has the interest of Montana ratepayers will vote in favor of this—there is no other vote,” Greenfield spokesman Marty Wilde told Clearing Up.
“This is a clear case of where federal and state law—and the Montana commission’s own rulings—dictate what the decision needs to be.”
Then there’s the economics, Wilde said—the commission approved the PPL Hydro purchase at about $58/MWh, and “we’re looking at $50.49/MWh.
“We’re pretty hopeful that once they reconsider, maybe with the fresh eyes of Brad Johnson, they’ll be clear on what the right decision is.”
Montana PSC attorney Jason Brown said staff will likely waive the requirement for action on the motion within 10 days of filing—otherwise the petition would be automatically deemed denied—so the commission can take it up later this month.
If the commission rejects the petition and settlement, there’s a good chance the case will be continued and heard on its merits, Brown said.
The PSC could also agree to reconsideration and then issue an order approving the settlement [Jude Noland].
Copyright © 2015, Energy NewsData Corporation
Clearing Up • January 16, 2015 • No. 1680 • Page 11
Greenfield Wind and Northwestern Energy file Unopposed Joint Motion to Settle Before the Montana PSC
Greenfield Wind, LLC and NorthWestern Energy presented an unopposed joint settlement to the Montana PSC for approval in November 2014, and although there was not opposition at the hearing on December 1st, the settlement was inexplicably denied in mid December by an 11th hour surprising reversal ruling.
The December 16th Decision denying the Unopposed Stipulation appeared to result from past commission chairman Gallagher, who did not attend the December hearing, placing his personal opinion and politics ahead of Federal and State law and ahead of the best interests of Montana rate payers.
In response, on January 8th, Greenfield Wind filed a Motion for Reconsideration, which is currently before the Montana Public Service Commission and presents a critical question of whether the Commission will approve of a Qualifying Facility negotiating with NorthWestern to obtain reasonable long-term avoided cost rates as directed by PURPA and supported by recent rulings from FERC and Montana State Courts, or whether the Commission will subject the parties, and quite possibly the Commission itself, to further litigation.
After eight months of work on the contested case and the settlement, the December 16th last minute reversal decision to deny the unopposed settlement was not only surprising but unlawful, unjust, and unreasonable, and should thus be reconsidered for the following reasons:
- First, the record abundantly supports a conclusion that the rates and terms contained in the Stipulation are consistent with, and likely significantly below, any reasonable current estimate of NorthWestern’s actual avoided costs. The Commission Staff’s analysis demonstrated that the Settlement rate would save between $5.9 and $10.6 million over the life of the project compared to the two most reasonable alternative avoided cost benchmarks. Rejection of the Unopposed Settlement unreasonably deprives NorthWestern’s customers of the benefits of these favorable rates.
- Second, Greenfield Wind submits that the avoided cost rates will be significantly higher if Greenfield is forced to fully litigate its claim to a legally enforceable obligation (“LEO”) at the Commission and any subsequently necessary judicial proceedings – thus subjecting NorthWestern’s customers to higher rates than those offered in the Unopposed Stipulation.
- Third, the apparent rationale for rejection of the Unopposed Stipulation rests upon unlawful discrimination against QF projects, which combined with other recent events would constitute an actionable violation of federal and state law if allowed to stand.
- Fourth, the rejection of the negotiated rate between NorthWestern and Greenfield will launch the parties and the Commission back into unnecessary and costly litigation.
If a state chooses to regulate electric utilities, it must implement the Federal Energy Regulatory Commission’s (“FERC”) regulations under the Public Utility Regulatory Policies Act of 1978 (“PURPA”) (16 USC § 824a–3(f)(1); FERC v. Mississippi, 456 U.S. 742, 751, 102 S.Ct. 2126, 2133 (1982)).
FERC’s regulations, which are adopted by ARM 38.5.1902(1), require state commissions to implement PURPA in a way that requires a utility to purchase energy and capacity from QFs at the full avoided costs of the purchasing utility (Amer. Paper Institute, Inc. v. Amer. Elect. Power Serv. Corp., 461 U.S. 402, 415-18 (1983)).
The Montana Supreme Court has explained: “PURPA requires large utilities to purchase energy from smaller qualifying facilities at rates that allow the small facilities to become and remain viable suppliers of electricity.” (Whitehall Wind, LLC v. Montana Pub. Serv. Comm’n., 355 Mont. 15, 16-17, 223 P.3d 907, 908-09 (2009)).
FERC’s regulations also permit a QF and an electric utility to enter into a contract containing agreed-to rates, terms, or conditions. 18 C.F.R. § 292.301(b). FERC has explained that “a contracted-for-rate would never exceed true avoided costs and would thus be consistent with PURPA.” (Cedar Creek Wind LLC, 137 FERC ¶ 61,006, at n. 73 (2011) (citing Order No. 69, 45 Fed. Reg. 12,214 (1980))).
This rule “recognizes that the ability of a qualifying cogenerator or small power producer to negotiate with an electric utility is buttressed by the existence of the rights and protections of [FERC’s] rules.” (45 Fed. Reg. at 12,217)
FERC has rejected state implementation schemes that stand as an impediment to such amicable contract formation (Grouse Creek Wind Park, LLC, 142 FERC ¶ 61,187, at P 40 (2013)) and some courts have reversed state commission decisions rejecting agreed-to PURPA rates (Pub. Util. Commn. Of Texas v. Gulf States Utilities Co., 809 S.W.2d 201, 208-09 (Texas 1991)).
Montana’s “mini-PURPA” further instructs the Montana PSC. It declares: “Long-term contracts for the purchase of electricity by the utility from a qualifying small power production facility must be encouraged in order to enhance the economic feasibility of qualifying small power production facilities.” (M.C.A § 69-3-604(2) (emphasis added)).
The Commission’s own rules provide, “Each utility shall purchase available power from any qualifying facility at either the standard rate determined by the commission to be appropriate for the utility, or at a rate which is a negotiated term of the contract between the utility and the qualifying facility.” (ARM 38.5.1905(2)).
However, the MPSC has also implemented a rule that requires QFs sized over 3 megawatts (“MW”) to prevail in an all-source competitive solicitation to obtain a long-term contract (ARM 38.5.1902(5)). Because NorthWestern has not been compelled to regularly hold such solicitations, FERC declared this rule constitutes a failure to implement PURPA’s bare minimum requirement to make long-term avoided cost rates available to QFs (Hydrodynamics, 146 FERC ¶ 61,193, PP 32-35 (2014)).
The Montana courts have likewise faulted the Commission for failure to provide reasonable avoided cost rates to QFs (See Whitehall Wind, LLC, 355 Mont. at 18, 223 P.3d at 909 (reversing rate determination where “the PSC’s own staff economist contradicted the PSC’s rate determination”)); (Whitehall Wind, LLC v. Montana Pub. Serv. Comm’n, Cause No. DV-03-10080, Remand Order (Mont. 5th Dist., May 21, 2014) (again reversing the MPSC’s subsequent order)).
PROCEDURAL AND FACTUAL BACKGROUND
Greenfield has been seeking a long-term contract under PURPA with NorthWestern since 2010. It has spent substantial sums of time and money to develop its wind project in reliance on federal and state law. But those efforts have been stymied since at least 2010 by the Commission’s rules prohibiting such long-term contracts for projects over the eligibility cap for standard rates and outside of the 50-MW cap for wind projects.
NorthWestern states that it filed the original Petition in this case at the PSC because the Commission has not authorized it to enter into long-term contracts outside of an all-source solicitation. In the absence of a Commission-approved methodology to calculate long-term rates for Greenfield Wind’s project, the parties engaged in extensive and costly discovery and contested proceedings over the most appropriate methodology.
Through the Commission’s proceedings and discovery processes, Greenfield was able to review NorthWestern’s data and calculations. In doing so, Greenfield recognized that with some concessions on Greenfield’s part the gap between the rate proposed by NorthWestern and the rate proposed by Greenfield could largely be bridged. Additionally, a contested transmission cost issue became moot when Gaelectric’s senior transmission requests were withdrawn and removed from the transmission queue – further bridging the gap between the parties.
Thus, Greenfield and NorthWestern were able to negotiate a rate that was derived using NorthWestern’s method of estimating the avoided costs. The net Stipulation/Settlement rate is approximately $50.49/MWh if Greenfield pays NorthWestern for integration, or $53.99/MWh if Greenfield delivers a wind integrated product. Due to NorthWestern’s near-term long position, Greenfield agreed to delay the commercial online date for the full contract rate until 2016, and will only be paid $19.99/MWh (minus integration costs) for any generation delivered in 2015.
In light of the fact that NorthWestern is a regulated utility and the Commission has approved no methodology to calculate large QF rates, such approval is necessary for the project to move forward without further delay.
On December 1, 2014, the Commission held an evidentiary hearing on the Stipulation. Multiple rounds of testimony from Greenfield and NorthWestern and all data requests were admitted into the record for purposes of evaluating the Stipulation. All of NorthWestern and Greenfield’s witnesses were made available for live or telephonic cross examination. The Montana Consumer Counsel (“MCC”) and LEO Wind, Inc. both attended the Stipulation hearing. Neither of them opposed the Stipulation or requested post-hearing briefing to challenge its terms.
On December 16, 2014, the Commission held its work session on the Stipulation.
The Commission’s Staff presented a memorandum summarizing the terms of the Stipulation, including five market benchmarks against which to compare the Stipulation rate. Each of Staff’s five benchmark rates were higher than the Greenfield Wind rate. Thus, Commission Staff recommended approval of the Stipulation.
The PSC Commission’s Staff explained: The reasons to approve, would be that the rate appears to reasonably approximate avoided costs. It would avoid expenditure of further resources by all parties, including the Commission, on this matter. It would signal that NorthWestern can negotiate with large QFs, and that the PSC will implement rates for large QFs.
In fact, the Commission’s Staff explained that its portfolio comparison benchmark analysis, using the same inputs used to model the PPL Montana Hydroelectric Projects (“PPL Hydros”), demonstrated that “having Greenfield energy as part of the portfolio saves the portfolio costs.” But the Commission voted to reject the Stipulation by vote of three to two.
Former Commissioner Gallagher, as well as Commissioners Koopman and Bushman voted against the Stipulation, while Commissioners Kavulla and Lake supported approving the settlement.
==January 12, 2015
Marty Wilde, WINData LLC
In a 378-46 vote on Wednesday, the U.S. House of Representatives passed a bill that would extend over 50 lapsed tax breaks that expired at the end of 2013, including the wind production tax credit (PTC). However, if enacted, the legislation would offer an extension only through the end of 2014, giving wind developers about three weeks left to start construction in order to qualify for the PTC.
The retroactive one-year renewal falls short of a two-year deal the U.S. wind industry had been pushing for, and the American Wind Energy Association (AWEA) has deemed the proposed extension virtually meaningless.
The House bill, H.R.5771, has now been sent to the U.S. Senate.
Earlier this year, the Senate voted on its own tax extenders package, but bipartisan feuding stalled the legislation. Known as the EXPIRE Act, the bill would have extended the PTC and a slew of other tax breaks through 2015.
Following the November elections, Congress vowed to again work on passing a tax extenders deal, and members from both chambers worked out a tentative agreement to extend the tax benefits for two years. The deal quickly unraveled, though, after the White House warned that President Barack Obama would veto the package. According to reports, the White House thought the deal was too heavily weighted toward corporate benefits and did not include enough relief for individuals.
House Ways and Means Committee Chairman Dave Camp, R-Mich., who introduced H.R.5771, claimed the potential veto forced the House to take “a different and less effective approach” and propose the one-year retroactive extension.
In a statement about the legislation, he explained, “With the end of the year and a new tax filing season rapidly approaching, we need to act. The IRS has been clear that unless Congress acts quickly, it will be forced to delay the start of the tax filing season.”
Nevertheless, U.S. wind industry stakeholders have warned that a one-year retroactive PTC extension would do little to help the sector and likely cause harm. After all, a wind developer would have to have started construction on a project by year-end in order to cash in on the incentive, which provides a $0.023 tax credit for every kilowatt-hour produced.
As Keith Martin, co-head of the project finance group at Chadbourne & Parke, explains, there are two ways to “start construction” under current PTC rules: One is to incur at least 5% of the project cost, and the other is to begin significant physical work. Martin admits, however, that unless a wind developer has already taken one of those necessary steps, qualifying for the PTC at this point would not be a very realistic goal.
An AWEA blog – titled “Keeping Score: Why Is a Three-Week PTC Extension Worthless?” – echoes that sentiment.
In it, Michael Goggin, AWEA’s director of research, writes, “AWEA has spoken with the leading construction companies that build wind projects, and they’ve explained that it is virtually impossible for a three-week extension to drive new wind development. There’s simply not enough time for any substantial number of new projects to physically begin construction before the end of the year.”
Mickey Leibner, government affairs advisor at Mayer Brown, agrees that a one-year extension would not provide enough certainty for the wind industry.
“Short-term fixes like this one are quite difficult for the industry. Like any other industry, wind producers depend on financial and regulatory certainty when planning for future projects,” he says. “Wind projects require particular planning, including years of permitting and study.
“No company, whether they are in the wind business or the widget business, can commit to a multimillion-dollar project years in advance without a clue as to whether a key tax credit will even be in place.”
Tom Kiernan, CEO of the AWEA, recently warned, “A three-week extension kills jobs and provides businesses little ability to create the jobs we want to create.”
According to AWEA, “When the PTC expired in 2013, new wind installations came to a halt, resulting in a 92 percent drop in new wind projects compared to 2012 and a $23 billion drop in private investment in the U.S. economy. Nearly 30,000 American jobs were lost. Similar job losses would be expected to occur unless an extension through at least 2015 is passed.”
So, what are the odds that the Senate will pass the House bill? Although wind champions, such as Sen. Chuck Grassley, R-Iowa, and Senate Finance Committee Chairman Ron Wyden, D-Ore., vowed to fight for the EXPIRE Act and a two-year PTC extension during the lame-duck session, the Senate may simply have to accept the short-term fix before Congress adjourns in the next couple of weeks.
“All signs this morning were that the effort to get a two-year extension is collapsing in the Senate,” says Martin.
In fact, a Wyden spokesperson has suggested that the Senator, who spearheaded the EXPIRE Act, no longer foresees a possible two-year extension this session.
According to a POLITICO report, the spokesperson said, “We are disappointed that, at this point, there doesn’t appear to be a procedural path forward.”
“The Senate’s next moves will depend, in large part, on how much those who supported the EXPIRE Act want to push,” notes Leibner. “Most folks on Capitol Hill rightfully have one eye toward the Republican takeover of the Senate in just a few weeks, and I wouldn’t be surprised if most Senate Republicans – even those who were supporters of the EXPIRE Act – will ultimately be fine with addressing all these tax issues in a more comprehensive manner next year, when they have control of both chambers.”
If the Senate passes the bill, it would be sent to President Obama’s desk. According to reports, the president has indicated that he would sign a one-year tax extenders package into law.
Chief IT Systems Architect
MS Chemical Engineering
LeBlanc is a Masters level chemical engineer and has over 10 years experience in the real-time data software industry and over 17 years of IT experience. He worked for OSIsoft for nearly 10 years and has worked with utility, petrochemical, refining, chemical, and pharmaceutical companies to develop software solution architectures that suited their needs. Le Blanc has worked with WINData since early 2008 and is the co-architect of WINDataNOW Technologies.
Marty Wilde brings a long-term seasoned technical, scientific and utility business perspective on the wind industry. Mr. Wilde’s strategic thinking and engineering expertise, dating back to 1991, is highly respected by major utilities, investors and wind energy experts. Mr. Wilde is Principal Engineer and CEO of WINData and provides leadership to the WINData team in all areas of met tower design, siting, installation and wind data analysis. Mr. Wilde launched his wind energy business in 1991 to develop commercial wind projects and provide development services to the growing wind industry. He has worked as a project developer, managing engineer and scientist for numerous commercial and government teams since 1984 and has extensive experience supporting both public and private sector organizations.