Archive for the ‘Public Utilities’ Category

Judge Pulls Spikes Off TransCanada’s Pipeline Tracks

via Wikimedia Commons

via Wikimedia Commons

TransCanada’s Keystone XL pipeline has been hurtling along and blowing through opposition like a runaway train. Opponents of the pipeline haven’t exactly been meek and mild but TransCanada has been able to roll right over them without so much as a bump.

Most of the opposition to the pipeline has focused on its obvious ecological demerits; the dirty fuel’s filthy extraction at the source in Alberta, the near certainty of a rupture, the consequences of fuel spills in the  Ogallala Aquifer, and the increase in global emissions. Those concerns have given way like wet Kleenex in the face of TransCanada’s political and financial clout. The State Department’s recent report on the pipeline’s impact certainly doesn’t look like it will produce much friction – its conclusion that pushing ahead with the project won’t have any significant impact on global emissions or the rate of oil sand extraction is hardly calculated to put the brakes on the project.

While TransCanada has been able to sweep the nation’s environmental groups aside, a single judge in Nebraska has succeeded in taking the sheen off the company’s aura of  invincibility. The Nebraska legislature, in its wisdom, recently passed a law placing the state’s power of eminent domain at TransCanada’s disposal. In effect, it forced landowners to sell their property to TransCanada by transferring the power to force such sales from the Nebraska Public Service Commission – where it had resided for more than a century – to Governor Dave Heineman.

Late last month, District Judge Stephanie F. Stacy took a long hard look at that law and decided to drag it out behind the barn and put a bullet in its head. The law, she said, was unconstitutional and void in that it divested the PSC of authority and bestowed upon the governor the ability to wield the power of eminent domain without the possibility of judicial review. In other words, it allowed the governor to grab Nebraskans’ land and give it to a foreign company for that company’s profit.

Nebraskans are an ornery and independent lot, and some of the ranchers over whose land the pipeline is slated to run didn’t take kindly to having the governor  snatch their property up in such an imperious fashion. Three landowners whose property was in the path of the pipeline filed suit. The judge’s decision went over very well with them. The attorney who handled their case had reason to crow, saying, “They thought the governor would be a rubber stamp and he was.”

For the time being, TransCanada will have to negotiate with every individual landowner along the pipeline’s route, a prospect that must not fill the company’s directors with delight; the ranchers in the pipeline’s path haven’t been sending TansCanada Valentine cards. The issue will surely be fed into the appeals system where it will grind along. But the delay won’t do the company any favors either. The administration is unlikely to act on the State Department report while the court’s clear this issue off the tracks – the delay is a perfect excuse not to act. And Nebraska isn’t the only state gumming up the works. The Texas Supreme Court recently handed pipeline opponents a major victory in ruling that TransCanada couldn’t avail itself of the right of eminent domain under the state’s “common carrier” regulations. “We’re thrilled,” said one of the plaintiffs fighting TransCanada’s land grab, “because the Supreme Court has finally ruled in favor of us—the little guys—and against a foreign oil giant.”

Nobody likes the idea of having their property taken and handed over to a foreign company so that company can make money off the property. The misuse of eminent domain has been a volatile issue ever since the Supreme Court’s Kelo v. City of New London opinion upholding a city’s use decision to use eminent domain to take property from one private owner for the gain of another private owner.

If Keystone is running into a buzz saw over the issue in deep red, oil-friendly states like Nebraska and Texas, it’s got more trouble on its hands than it might have reckoned with. TransCanada’s train may be running at full throttle, but the tracks might not be stable.

Still Not Gone

Via Wikimedia Commons

Via Wikimedia Commons

I hate to keep beating the proverbial dead horse, but Fukushima is the gift that keeps on giving. Or the problem from hell.

Last week I wrote about how the Fukushima disaster had re-entered the news cycle, and not in a good way. After largely vanishing from public consciousness, the stricken reactors had emerged from the memory hole after Tepco, the plants’ operator, announced that massive amounts of radioactive water had escaped from temporary holding tanks and was headed for the open seas. In that post, I described Tepco’s response to the disaster from the get-go as hapless. That adjective hardly seems sufficient to describe the Inspector Clouseau of energy companies.

Following hard on the heels of last week’s announcement that, its prior multiple protestations notwithstanding, the situation at the devastated plants was not contained (and notwithstanding its hallucinatory plan to freeze the ground to prevent contaminated water from leaching into the ocean) comes word that the situation at the stricken plants is even worse than Tepco has ever let on. Or, more to the point, ever knew.

All along, Tepco has reported that the radiation emitted by the leaking water was around 100 millisieverts an hour. Well, the equipment the company was relying on to make those readings could only measure up to 100 milisieverts.  So, apparently, they took that as the actual reading of the radiation level.  Turns out the actual amount of radiation is 1,800 millisieverts an hour.  Garbage in, as they say, gives garbage out.

And how much is that? Enough to prove lethal in a mere four hours. Pause a moment to think of the workers who have been struggling to contain those leaking tanks.

You have to wonder where Tepco got their Geiger counters. Army surplus? Did Tepco simply not have the equipment to accurately measure the radiation? Did it know the amount and hope to keep mum about it? At this point, it scarcely matters. The company, the devastated plants, and Japan at large seem destined to stumble from one appalling revelation to another. Please join me in hoping I don’t have to post about Fukushima next week.

The Challenges to Offshore Wind

Photo by Rob Farrow, some rights reserved.

Mother Jones has a succinct piece on the challenges facing offshore wind projects, challenges that explain why the U.S. still doesn’t have a single offshore wind turbine. The UK has 870, and Germany has 416, for comparison. Now that has Congress extended the wind Production Tax Credit (after a long battle detailed here and here) and outgoing Interior Secretary Ken Salazar said he is optimistic that the Cape Wind project in Nantucket Sound will begin construction in 2013, it is a good time to look at the roadblocks that remain.

Though offshore projects benefit from the Production Tax Credit, worth $1 billion a year, and the Incentive Tax Credit, which pays 30% of wind projects’ constructions, higher construction and transmission costs make electricity from offshore turbines twice the price of electricity from more traditional sources. While in the U.S., states and utilities are understandably hesitant to embrace it, Germany, for example, fully subsidizes the offshore wind system.

The opponents of offshore wind that have gotten the most press are “stakeholders” in areas near potential projects, those who organize groups like the Alliance for Nantucket Sound in opposition to the Cape Wind project, which to date has fought a dozen lawsuits over the turbines’ effect on interfering with boat traffic, desecrating sacred sites, and harming avian and marine life (the GM has covered this here and here). Not surprisingly, these wildlife worries have been hijacked by waterfront homeowners; meanwhile, the National Wildlife Federation, Greenpeace, and the Sierra Club are all in favor of the project.

The strangest problem offshore wind is facing is a 1920 law requiring ships sailing between ports in the U.S. to be U.S.-flagged. This is apparently a problem because the small fleet of ships capable of installing a 400-foot turbine in the ocean floor is based mostly in Europe – and once one of those ships installs the foundation for a turbine, it qualifies as a ‘port,’ and cannot proceed to dock in the U.S. A shipbuilder in New Jersey is building a turbine-installation ship, but until its completion at earliest in 2014, the cost of bringing in ships from abroad can be prohibitive.

Finally, our beloved federal system of government means that states award utility contracts, while the Interior Department manages the deep water where wind turbines can be built. Developers worry that even if they get a contract with a state to buy their power, Interior could award the ‘land’ rights to someone else.

Expiring Wind PTC: Who Stands Where?

Photo by Francesco Gola. Some rights reserved.

In the intensifying battle over the extension of the wind energy production tax credit, a new tactic has emerged. The main lobby for extension, the American Wind Energy Association, on Wednesday announced its support for a middle ground solution. AWEA recommends a one-year extension, followed by a five-year gradual decrease in the PTC until it goes away completely. If gradually reduced until 2019, according to industry analysis, the PTC could be eliminated and a minimally viable industry could exist and be able to continue achieving cost reductions.

Our friends at Grist worry that this tactic essentially admits that the PTC is not actually needed, and that other renewable energy sources whose production tax credits expire soon, like solar, are left in a weaker position.

The tax credit, originally passed in 1992, has been extended three times. But now 17 days remain until its expiration, and the stakes are high for both sides.

Conservative groups argued in a letter to lawmakers Wednesday that the credit “essentially transfers taxpayer dollars from your constituents and subsidizes the states with such mandates.” The states without renewable electricity standards, mostly in the Southeast, Appalachia, and the Gulf Coast, generally have less installed wind power.

In addition, Republicans have pointed to the credit as a way to help close the deficit, as it will cost $12.1 billion over ten years. Not all Republicans are convinced, though. Joining many Democrats in voicing support for the extension are Republicans whose districts house more than 80% of wind installations.

Separately, the Department of Energy has offered some good news to the wind industry. DOE announced that seven projects will receive up to $4 million in grants to complete engineering, design, and permitting processes, and three of these will be selected to receive up to $47 million over four years with a target opening of 2017.

For readers to whom the above means anything, it is probably needless to say that DOE is optimistic about the energy potential from offshore wind generation. Data suggest that 4,000 GW of energy could be tapped in state and federal waters, which is four times the capacity of all existing US electric power plants.

Cape Wind Gets FAA Approval, Again.

The Cape Wind turbines won’t be this close. Photo by Morten A. Mitchell Larød, some rights reserved.

The FAA announced Wednesday that the 130-turbine Cape Wind project off the Massachusetts coast posed no danger to air travel. The FAA’s approval means that Cape Wind is fully permitted, with federal and state approval, a commercial lease and construction and operations plans, and power purchase agreements with utilities in Massachusetts – the only offshore wind farm so close to construction. Massachusetts, then, is about to add to its fast-growing use of renewables.

The approval does not come without controversy, however. Republican lawmakers want to investigate the possibility that the Obama administration put pressure on the agency to approve the project despite safety concerns. Even with that threat looming, the project is the subject of numerous legal challenges.

Last year, the Alliance to Protect Nantucket Sound challenged the FAA’s previous approval of the project, and the DC Circuit overturned that approval, ordering the agency to review its findings. Cape Wind must also set aside $15 million to address any issues with the radar systems used to locate aircraft in the area, but because the turbines, at 440 feet, are below a 500-foot threshold, the FAA does not expect them to obstruct pilots. Boston.com has the story here.

For those of us who might have been following this story since the George W. Bush administration, this storyline might sound familiar. That’s because this is actually the FAA’s fourth no-hazard determination, an approval that must be reviewed if construction does not begin within 18 months. Maybe the fourth time is the charm on the high seas of Nantucket Sound.

Massachusetts Whooshes Ahead With Wind and Other Renewables

 

Photo by Oast House Archive. Some rights reserved.

Following in its own footsteps, Massachusetts again made moves to advance the use of renewables such as wind and solar in the Bay State. Late last week ML Strategies (a consulting affiliate of law firm Mintz Levin) wrote in depth about Massachusetts Governor Patrick signing into law Senate Bill 2395, An Act relative to competitively priced electricity in the Commonwealth. The bill aims toprotect Massachusetts ratepayers while providing greater reliability and energy independence for all residents of the Commonwealth,” according to a press release from the Governor’s office, through the use of expanded incentives and opportunities for renewable energy companies.

Specifically, the bill:

  • Extends long-term contracts between the utilities and renewable energy companies;
  • Raises the cap on net metering, allowing customers to run their meters backwards and sell power back to the distribution company for credits;
  • Allows for long term contracts as an incentive for companies that purchase coal-fired power plants, and transition them to gas-fired generators, so long as they agree to completely remediate the site;
  • Enables more municipalities to install solar panels on community landfills;
  • Requires electric companies to file for rate cases every five years and gas companies to file every ten years;
  • Requires EEA’s agencies to complete a number of studies to analyze further steps in energy efficiency as well as the exploration of other renewable energy sources;
  • Establishes a three-year energy efficiency rebate pilot program for the five largest gas and electric users in each service territory;
  • And more! For more details, don’t forget to check out ML Strategies’ overview.

The Wind May Keep Blowing, Just Not From Congress

Image by Chris Winters. Some rights reserved.

The American wind energy industry has long relied on a production tax credit (PTC) that returns 2.3 cents per kilowatt-hour produced as a tax credit to investors. Following the PTC’s expirations in 1999, 2001, and 2003, the industry’s installed capacity fell each time by three-quarters or more. In the past few months as the industry lobbied Congress to pass an extension to 2016 – the year the solar PTC expires – it has presented two arguments.

First, the industry has increasingly turned to domestic manufacturing for its components, sourcing 60% of its parts from American manufacturers in 2011 compared to 25% at the time the PTC was allowed to lapse at the turn of the century. Second, the industry is at such a scale that the cost of wind energy is decreasing, and a PTC effective through the 2013-2016 window would allow the industry to “finish the job,” in the words of American Wind Energy Association Denise Bode, quoted in a Greentechmedia article.

But Congress left the PTC, which had been tucked away in the payroll tax cut bill, out of the final version of the legislation. A standalone bill to extend the PTC is unlikely to pass, but some expect a lame-duck Congress to pass an extension after November’s elections. For now, it is a race for developers to get their turbines up and running before year’s end, when the tax credit ends.

The industry expects to see frantic building in anticipation of the deadline, but for construction to stall after the summer as uncertainty over the credit’s future intensifies. Business leaders say many projects that cannot be accelerated to completion in 2012 will have to be cancelled or delayed as land leases, interconnection agreements, and other permits expires. Inexpensive natural gas in addition to generally weak demand for electricity is prompting manufacturers to look to areas with strong government support for business, including Southeast Asia, Turkey, and much of Latin America.

This does not paint a rosy picture for the industry. Where can wind look for hope? To the states, for now, perhaps. On the same day that Congress appeared to leave the wind industry to its fate, Massachusetts governor Deval Patrick announced a major step forward for Cape Wind, which is aiming to be the first offshore wind project in the United States. Massachusetts utility NSTAR agreed to purchase 27.5% of the proposed project’s capacity. In December, New England utility National Grid, agreed to a power purchase agreement for 50% of Cape Wind’s capacity.

With the Massachusetts Supreme Judicial Court’s acceptance of the Department of Public Utilities’ approved price, the project can begin financing for its estimated $2.6 billion cost. The turbines will be five to thirteen miles off Cape Cod in Nantucket Sound, and construction will take 2.5 years. By then, who knows how the wind industry will look.

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