Tag: Energy Law

Watt's New? Michigan Energy News – September 2013

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Still Getting Ready to Make Good Energy Decisions

After reviewing and analyzing the submissions from seven public forums and from the 114 questions posted on the web for feedback, Energy Office Director Steve Bakkal and MPSC Chairman John Quackenbush will be issuing four reports on the following schedule:

■ Renewable Energy: Draft report release for comments – 9/20/13

Due date for public comments – 10/11/13

Release final report – 11/4/13

■ Additional Areas: Draft report release for comments – 10/1/13

Due date for public comments – 10/22/13

Release final report – 11/15/13

■ Electric Choice: Draft report release for comments – 10/15/13

Due date for public comments – 11/1/13

Release final report – 11/20/13

■ Energy Efficiency: Draft report release for comments – 10/22/13

Due date for public comments – 11/6/13

Release final report – 11/26/13

All this material will be posted at: www.michigan.gov/energy

Net Metering Participation Increases

The Michigan Public Service Commission issues an annual report on electric customers participating in the statewide net metering program required under the Clean, Renewable, and Efficient Energy Act of 2008. [Under net metering, when a customer produces electric energy in excess of its needs, energy is provided back to the serving utility and the customer receives a credit.] In 2012 the size of the net metering program increased 55 percent to 9,583 kW. The number of net metering customers has gone from 53 in 2008 to 1,330 in 2012. While most of the recent increase was due to new solar installations, a 535 kW methane digester in Great Lakes Energy Cooperative’s service territory is Michigan’s first Category 3 (methane digester up to 550 kW) modified net metering project.

Methane-to-Methanol Plant Operational

Oil wells also produce natural gas. When there is no way to get the natural gas to market it is usually “flared”. Now Gas Technologies LLC of Walloon Lake has demonstrated its 25-foot, portable, singlestep, gas-to-liquids plant in a Kalkaska County oil field. This first in the industry process can monetize stranded natural gas, biogas, coal mine methane, and landfill gas. www.gastechno.com

Adopt-A-Watt Helps Library

Dearborn’s Henry Ford Centennial Library has installed 25 energy efficient street lights and an electric vehicle charging station under the national Adopt-A-Watt program. Modeled on the AdoptA-Highway program, sponsorships are sold to fund new, energy-efficient equipment, alternative fuel vehicles and other green technologies for financially challenged public agencies. The agencies then realize the cost savings into the future.

Restrictive Wind Zoning Struck Down by Michigan Court

Forest Hill Energy recently won a court order striking down alleged “police power” ordinances passed by townships attempting to regulate the construction and operation of wind turbines. The Clinton County Zoning Ordinance already had extensive wind energy provisions. Nonetheless, three townships passed ordinances that were more restrictive to wind energy development than the county zoning. The additional restrictions related to height, noise, setbacks, and shadow flicker. Forest Hill Energy brought suit seeking a declaration that the townships’ “police power” actions were really zoning ordinances in disguise. The Clinton County Circuit Court ruled that since the townships were subject to the county’s zoning, the township ordinances were invalid because they were inconsistent with the county’s zoning plan—the townships could not get a “second bite at the zoning apple.” Forest Hill Energy had already obtained a special use permit for the construction of a 39 turbine project in January of 2012, and now expects to move forward with construction in late 2013.

More Wind Farms to Commence Construction in 2013

NextEra’s 150 MW Pheasant Run Wind projects are commencing construction this fall, with the energy to be sold to DTE Electric Company. The two projects will be located in Brookfield, Fairhaven, Grant, Oliver, Sebewaing and Winsor townships, all in Huron County. The Michigan Public Service Commission approved a 20 MW power purchase agreement (PPA) for DTE Electric Company with Big Turtle Wind Farm, LLC. The twenty year PPA has estimated pricing of up to 5.3 cents per kilowatt-hour. The project will have more than 50 percent Michigan-sourced content, and brings the DTE renewable energy portfolio to 9.8 percent. Consumers Energy will begin construction on its 105 MW Cross Winds Energy Park in Akron and Columbia townships in Tuscola County before the end of the year.

Michigan Shorts

ΩΩ Bay City Electric, Light & Power has signed a 20-year contract to purchase 4.8 MW of energy from the Beebe Community Wind Farm at a price starting at 4.5¢/kWh and increasing to 7.2¢/kWh Ω Revolution Lighting Technologies has acquired Relume Technologies, a Michigan manufacturer of LED lighting products and control systems Ω The City of Ypsilanti has set a goal to have 1000 solar roofs within the city limits by 2020 Ω DTE Energy is offering its customers the opportunity to buy BioGreenGas derived from the Sauk Trail Hills Landfill in Canton Ω Lansing Board of Water & Light has announced it will purchase energy from eight wind turbines in Gratiot County under a power purchase agreement with Exelon Wind ΩΩ

Virtual Solar Engineering Center Meeting with Success

GreenLancer.com, a Detroit-based solar energy technology company, has announced its initial $500,000 in funding. The company, launched in 2011, combines state-of-the-art cloud computing with a national network of green energy engineering freelancers (“greenlancers”). Their goal is to reduce the soft costs associated with solar energy projects. Initial investors include Bizdom (Detroit), Start Garden (Grand Rapids), Blue Water Angels (Midland), Northern Michigan Angels (Traverse City), and a private investor. The company has projects in 33 states and six foreign countries.

Converting Corn Stalks into Biofuel

Using a fungus and E. coli bacteria, University of Michigan researchers have turned inedible waste plant material into isobutanol. The waste used in the initial work was corn stalks and leaves. Isobutanol has 82 percent of the energy in gasoline, whereas ethanol has only 67 percent. It also has the added advantage over ethanol of not mixing easily (or absorbing) water. So it is a viable candidate to replace ethanol as a gasoline additive. The fungi turns the plant roughage into sugars that are then converted by escherichia coli to isobutanol. Through bioengineering the researchers believe they can produce a variety of petroleum-based chemicals through this same process.

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Argentina Legal Highlights (Volume II, 2013)

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Latin American Region Enviromental Report, Second Quarter, 2013

Packaging Waste Management Bill Introduced in Chamber of Deputies

On April 11, 2013, a bill (No. 1859-D-2013; the “Bill”) was introduced in the Chamber of Deputies that would create a national, comprehensive packaging-waste management system. The Bill would apply to most packaging and packaging waste, and would regulate most entities that are involved with the packaging of products, the marketing of packaged goods, or the recycling or recovery of packaging waste. (Arts. 2, 7) A covered entity could comply with its responsibilities through one of two methods. (Art. 9) One option would allow it to pay a fee and participate in a provincially or municipally administered Packaging-Waste Management Program (Programa de Gestión de Residuos de Envases), which would set requirements for collection, transportation, temporary storage, processing, and recovery of packaging waste. (Arts. 10-23) Alternatively, a covered entity could administer its own government-approved Deposit and Return System (Sistema de Depósito, Devolución y Retorno). (Arts. 24-26) The Bill was referred to the committees on Industry, Natural Resources and Conservation of the Human Environment, and Budget and Finance.

Reference Sources (in Spanish):

Battery Waste Bill Introduced in Chamber of Deputies

On April 25, 2013, a battery waste management bill (No. 1859-D-2013; the “Bill”) was introduced in the Chamber of Deputies. The Bill would cover nearly all batteries, with the exception of industrial and car batteries. (Art. 2) Most of the obligations established by the Bill would fall on battery producers: i.e., manufacturers, importers, brand owners, and resellers. These companies would be responsible for collection and management of battery waste and required to implement one of the following waste-management options: (a) establishing their own Individual Battery Waste Management System (Sistema de Gestión Individual de Residuos de Pilas y Acumuladores ); (b) participate in an Integrated Battery Waste Management System (Sistema Integrado de Gestión de Residuos de Pilas y Acumuladores); or (c) establish a deposit-and-return system. (Art. 5) Regardless of the option chosen, approval of the Secretariat of Environment and Sustainable Development (Secretaría de Ambiente y Desarrollo Sustentable) would be required. (Arts. 6-8) The Bill would also set standards for battery collection, treatment, recycling, and disposal (Arts. 9-10), impose labeling requirements (Art. 15), and require equipment manufacturers to make battery removal easy (Art. 16). Under the Bill, as under current Argentine law, used batteries would be deemed hazardous by definition, and thereby subject to Argentina’s extensive restrictions on transport, storage and handling of hazardous wastes. (Art. 3)

Reference Sources (in Spanish):

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Watt’s New? Michigan Energy Law News – August 2013

Varnum LLP

Natural Gas Power Plant Approval Case Gets Started

The first hearing at the Michigan Public Service Commission (MPSC) regarding the application of Consumers Energy to build a 700 MW natural gas-fired power plant (Case U-17429) occurred August 19. Twelve intervenors were granted party status: the Michigan Energy Innovation Business Council; Energy Michigan; Attorney General for the State of Michigan; Association of Businesses Advocating Tariff Equity (ABATE); Midland Cogeneration Venture Limited Partnership; Renaissance Power LLC; New Covert Generating Company LLC; Interstate Gas Supply, Inc.; First Energy Solutions Corp.; Michigan State Utility Workers Council; Sierra Club; National Resources Defense Fund; and Michigan of Environmental Council.  Potential issues to be raised by the interveners include the assumptions in the filed Integrated Resource Plan on:

  • alternative and renewable energy generation availability and costs;
  • the limitations of the customer choice program;
  • the closure of seven coal plants with a total capacity of 950 MW; and
  • the impact of energy optimization and conservation on future load demand.

ABATE has indicated it will be filing a Motion for Summary Judgment seeking the dismissal of the application, asserting that Consumers Energy has not properly shown a need for a new power plant. Assuming the case is not dismissed, a schedule has been set calling for cross examination of witnesses the second week of December, and a decision by the MPSC on or before the 8th of April, the statutory deadline for a decision on the Certificate of Necessity request. See www.tinyurl.com/mpsc-conDeep Water Offshore Floating Wind Turbines Showcased On August 15 Detroit-based Charles Nordstrom, P.E. of Glosten Associates Inc. (naval architects and marine engineers out of Seattle) presented the latest design and deployment plans for the Pelastar floating wind turbine system at the Michigan Alternative and Renewable Energy Center in Muskegon.

Emphasizing the opportunity to locate near load demand, Nordstrom explained the system avoids the difficulties of offshore construction and assembly by allowing the floating platform to be build dockside, with tower, nacelle and blades attached by a land-based crane. The entire assembly is then floated to its location and tethered to the lake or sea bed. The first 6 MW demonstration project, supported by Alstom Wind, NREL, BP, Rolls-Royce, Shell, Caterpillar, and others is targeted for offshore at Cornwall, England, in late 2015. Cost of energy estimates for first generation offshore wind farms is $0.170 per kWh, and below $0.13 in the second generation design for 10 MW wind turbines. The floating platform must be in at least 50m of water depth, and can be deployed at up to 500m depth.

Cellulosic Ethanol Plant Loses Partner

Mascoma Corporation has lost a major funding source in its efforts to build a 20 million gallon ethanol plant in Kinross. Valero Energy Crop has pulled its $50 million investment in the project. An IPO for Mascoma that would have raised $100 million has been placed on hold. The company has stated it will not proceed with the project until all funding is secured.  The total cost for the facility, which has $120 million in public funding pledged, is $232 million.

Anaerobic Digester Opens at MSU

Michigan State University has commissioned an anaerobic digester to create energy for its East Lansing campus. The digester will utilize about 17,000 tons of organic waste to generate 2.8 million kilowatt hours of electricity per year. The organic material used by the system includes cow manure, food waste from several campus dining halls; fruit and vegetable waste from the Meijer Distribution Center in Lansing; and fat, oils and grease from local restaurants. It will take 20 to 30 days to digest the material in the 450,000 gallon tanks. Total cost of the project was about $5 million, and is expected to pay for itself in less than 15 years. MSU is also involved in a similar project in Costa Rica. that will provide power to a local village.

MIchigan Shorts

Orisol Energy US, Inc. of Ann Arbor has been named as one of eight wind developers eligible to participate in the upcoming lease sale of 112,8000 acres of offshore Virginia for commercial wind energy leasing  Ω  DTE Energy plans to construct a 502 kw ground-mounted solar installation in Sigel Township on farm acreage as part of its 15 MW utility-owned solar initiative  NextEnergy has its MATch (Michigan Accelerating Technologies) Energy Grant program to provide matching funds for federal gudning of advanced energy research, development, and demonstration programs

University of Michigan has received a National Science Foundation four-year, $2 Million grant to determine what combinations of algae make the most efficient fuel source Lights Out at Detroit’s Municipal Utility? The Detroit Public Lighting Department (PLD) currently serves 115 customers, including: Detroit Public Schools; Joe Louis Arena; Cobo Hall; the Detroit Institute of Arts; Wayne State University; McNamara Building Federal Building; and the city’s traffic signal system (almost 1300 intersections).

The Detroit Emergency Manager recently notified DTE Energy Company that PLD will be winding down its electricity distribution and transmission services and requested that DTE provide service to PLD’s customers. The switchover will take five to seven years, as DTE will replace the PLD grid over time. How DTE will recover the costs of the transfer and upgrades has become an issue to be decided by the MPSC in Case No. U-17427. See www.tinyurl.com/mpsc-pld

The Incredible Shrinking Renewable Energy Surcharge

Consumers Energy is asking to eliminate its authorized renewable energy surcharge beginning in July 2014. The residential charge under PA 295, was initially pegged at $2.50/month, then lowered twice to its current $0.52/month charge. Meanwhile DTE Energy has asked the Michigan Public Service Commission to lower its monthly residential renewable energy surcharge from $3/month to $0.43/month. Commercial and industrial surcharge reductions are also being requested by both utilities.

Made in Michigan Microgrid Under Development

In 2006, NextEnergy in Detroit was contracted by TARDEC and the Defense Logistics Agency to develop equipment to provide US-grid quality power in remote locations using renewable and conventional power sources. Although the project was successfully tested, it was too large and too heavy to be deployed in the field, as it required a 20-foot long container for shipping. But the concept of an intelligent management for remote power systems had been proven and the Tactical Modular Mobile Microgrid was born. TM3 Systems of Royal Oak is now working to reduce the size and commercialize the concept. The building blocks for its system are four-foot cubes capable of managing up to 360 kW of generation. By metering and controlling both inputs (generators, solar panels, and battery banks), and outputs (downstream loads), this “microgrid,” is more reliable, efficient, configurable, and controllable than a typical remote power system. It can use dissimilar power sources (fossil fuel generators, solar arrays, and batteries) to reduce fuel consumption while supplying uninterrupted power to critical assets in remote location.

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Federal Energy Regulatory Commission (FERC) Initial Decision Lowers Return on Equity (ROEs) for New England Transmission Owners

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On August 6, 2013, FERC Administrative Law Judge Michael J. Cianci issued an initial decision on the complaint filed against the New England Transmission Owners (NETOs) seeking to reduce their currently effective 11.14% base return on equity (ROE) (FERC Docket Nos. EL11-66-000, et al.). Applying FERC’s traditional discounted cash flow (DCF) analysis to financial data largely for the period May 2012 – October 2012, Judge Cianci would require the NETOs to use a 10.6% base ROE to make refunds for transmission service provided between October 1, 2011 and December 31, 2012. Applying the same DCF analysis to financial data largely for the period October 2012 – March 2013, Judge Cianci would allow the NETOs a 9.7% ROE that would apply prospectively once FERC ultimately issues its order in the case (assuming FERC sustains Judge Cianci’s rulings; see PP* 544, 559-560). These rulings undoubtedly are disappointing both to the NETOs, who opposed any reduction in the 11.14% base ROE, and the complainants, who advocated substantially lower ROEs (8.3% to 8.9%) than Judge Cianci would allow.

On the positive side for the NETOs, Judge Cianci found that reducing utility ROEs below 10% for a prolonged period could be harmful to the industry (P 576). He also resolved virtually all conventional DCF methodological issues in the NETOs’ favor and his 10.6% and 9.7% ROEs were the ROEs developed in the NETOs’ conventional DCF analysis (PP 551, 552, 557). This would suggest that the 10.6% and 9.7% ROEs represent the maximum possible ROEs given the financial market data and the constraints of FERC precedent.

Judge Cianci expressly declined to rule on an issue that was hotly contested by both the NETOs and the complainants. The issue is whether post-2007 financial market conditions cause the DCF method to understate ROE costs and require modification of FERC’s conventional DCF analysis by use of alternative ROE methodologies (e.g., CAPM) to determine the NETOs’ actual common equity costs. A related issue, also hotly disputed by the parties, is whether the billions of dollars of required new transmission investment should also impact the ROE calculus.

The NETOs and the complainants are free to dispute all aspects of Judge Cianci’s decision through the FERC appeal process. The initial appellate briefs (known as briefs on exceptions) are due September 20, 2013, and briefs opposing exceptions are due October 24, 2013. The ultimate FERC ruling in this case will clarify and/or modify FERC’s ROE policy and is likely to be of extreme importance not only to the NETOs and their customers but to all utilities who charge or pay FERC jurisdictional transmission rates.

Two elements of Judge Cianci’s decision merit additional comment.

First, his decision concerned the NETOs collectively with the result that the ROE benchmark was the so-called “mid-point” of the zone of reasonableness (the mid-point is the average of the highest and lowest returns within the zone). The benchmark for an individual utility would be the “median” (the median is the point within the zone of reasonableness where half the returns are higher and half the returns are lower). Under current conditions, the median would be somewhat lower than the midpoint. Thus, other things being equal (they never are), a hypothetical Judge Cianci decision in an individual utility rate case would result in somewhat lower ROEs.

Second, due to the statutory fifteen-month limitation on retroactive refunds, the NETOs will not be required to make Docket No. EL11-66-000 refunds for the period between January 1, 2013 and the issuance date of the final FERC order. However, FERC has not yet acted on a second ROE complaint currently pending against the NETOs (Docket No. EL13-33-000). Although FERC would need to make new ROE findings in the new docket, this second complaint could close the Docket No. EL11-66-000 gap, and expose the NETOs to “back-to-back” ROE refunds for a 15-month period beginning January 1, 2013.

The initial decision is available here.

* “P” refers to the relevant numbered paragraph in the initial decision.

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Federal Energy Regulatory Commission (FERC) Requires Filing of Additional Oil Pipeline Rate Base Information

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On July 18th, the Federal Energy Regulatory Commission (“FERC”) approved a final rule that makes substantive changes to the components of FERC Form 6, which interstate oil pipelines are required to file each year.[1] The rule requires additional reporting of the figures underlying pipelines’ rates of return and is intended to make it easier for both FERC and oil pipeline shippers to evaluate whether a given transportation rate complies with the law.

The new rule pertains to page 700 of Form 6, which provides information designed to show the pipeline’s cost of service, including O&M expenses, rate base, rate of return, total cost of service, revenues, and throughput. The purpose of this reporting is to provide a preliminary screen for determining whether a pipeline’s rates are “just and reasonable” as required by the Interstate Commerce Act.

In the final rule, FERC added new fields to page 700 that are intended to allow shippers to more easily calculate an oil pipeline’s actual rate of return on equity. The new required information, which FERC anticipates is already being developed in the preparation of the rate base and rate of return information required on existing page 700, is outlined briefly and at a high level below.

Interestingly, the Commission was asked by commenters to include additional changes to Form 6 in this rulemaking, including requiring companies that file Form 6 for multiple oil pipeline systems to file separate page 700s for each segment, service, or rate schedule. The Commission declined to do so in this proceeding as it was beyond the scope, but it should be noted that the consolidated Form 6’s and page 700’s that many companies currently file are alleged to mask the cost of service and rate of return for individual pipelines and services, and the comments in this proceeding suggest that shippers may continue to press FERC to require individualized page 700 filings in the future.

The changes to page 700 will take effect for the annual Form 6 filing for calendar year 2013, which is due April 18, 2014. These changes could enable new scrutiny of pipeline rates and complaints and challenges both to existing rates and to proposed annual rate increases under FERC regulations in the near future.

Outline of Page 700 Changes:

– Rate Base: While current page 700 requires the pipeline to report its rate base for each year, the revised page 700 will require this number to be broken out into three new components: Depreciated Original Cost; Unamortized Starting Rate Base Write-Up; and Accumulated Net Deferred Earnings.  The sum of these three components will equal the rate base number that was already required.

– Rate of Return: The existing rate of return percentage reported on page 700 is a weighted cost of capital; the new page 700 will require reporting of the cost of equity, costs of debt, and capital structure supporting the rate of return.

– Return on Rate Base: Currently, page 700 requires reporting of the return on rate base, combining the real return on equity and the portion of the return allocated to paying the pipeline’s cost of debt.  The revised page 700 requires breaking the return of rate base into separate debt and equity components.

– Composite Tax Rate: The revised page 700 will require pipelines to report the adjusted sum of the pipeline’s applicable state and federal income tax rates.

The stated purpose of the page 700 changes is to better enable the calculation of the actual return on equity of the pipeline, as adjusted for taxes, inflation and depreciation.  The final rule states that this calculation “is particularly useful information when using page 700 as a preliminary screen to evaluate whether additional proceedings may be necessary to challenge rates.”[2]

[1] Revisions to Page 700 of FERC Form No. 6, 144 FERC ¶ 61,049 (2013).

[2] Id. at P 36

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Federal Energy Regulatory Commission (FERC) Orders $435 Million Civil Penalty to Barclays Bank and $1-15 Million to Four Traders

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On July 16, 2013, the Federal Energy Regulatory Commission ordered Barclays Bank PLC to pay one of the largest civil penalties in its history — $435 million, 144 FERC ¶ 61.041 (2013). Four traders were also assessed penalties — $15M for trader Scott Connelly, and $1M each to traders Daniel Brin, Karen Levine and Ryan Smith. The Commission also found that Barclays should disgorge $34.9M, plus interest, in unjust profits. Barclays and the traders had elected FERC procedures that require FERC to assess the penalty without formal administrative adjudication, and then pursue enforcement of its assessment in an action in federal district court. The district court action includes a de novo review of the Commission’s findings. Early reports indicate that Barclays will fight the penalty in court.

These penalties were issued after FERC found that Barclays and its traders violated the Commission’s Anti-Manipulation Rule, 18 CFR §1c.2 (2012). The Commission found that Barclays and the traders manipulated California energy markets from November 2006 to December 2008 at the four most liquid trading points in the western U.S. — Mid-Columbia, Palo Verne, North Path 15 and South Path 15, Order at 2. Specifically, the Commission found that Barclays and the traders built a “significant volume of monthly index or fixed-price physical products” at a trading point “in a direction — long or short — opposite to fixed-for-floating financial swaps they held at that point.” The Commission noted that establishing these positions “had the effect of creating physical delivery or receipt obligations which Barclays was unable to meet in actual practice,” and that Barclays and the traders were able to “flatten” these positions (“achieve zero net physical obligations”) at the end of each day through the use of next-day fixed-price or cash physical products traded on the Intercontinental Exchange platform. FERC found that the trading activity at issue was “intended to move the Index rather than respond to market fundamentals and was generally uneconomic.” Order at 4.

The Commission further concluded that Barclays and the traders not only engaged in this manipulative trading scheme, but “they did so with the intent to commit fraud.” The Commission identified seven facts found during its investigation to support its conclusions:

  1. Barclays’ and the traders’ consistent pattern of building substantial positions directionally opposite their large swap positions and the subsequent flattening which would tend to move prices to benefit those swap positions;
  2. how the trading behavior in the “Manipulation Months” differed from months where there was no alleged manipulation;
  3. traders’ communications which discuss and describe the fraudulent scheme;
  4. Barclays and the traders responding to certain allegations, but completely failing to respond to FERC Office of Enforcement staff allegations regarding the building of positions as a manipulative scheme;
  5. the uneconomic nature of the trading;
  6. inconsistency in trader testimony and trader explanations presented in submissions;
  7. the failure of economic, statistical and legal analysis provided by Barclays and the traders to otherwise explain or defend the positions, swaps or trading.

In addition, FERC noted that it “considered various evidence to reach its conclusion concerning intent,” and provided examples of some of the compelling “speaking” evidence that it found demonstrates that the traders understood that they were making the trades to “drive price,” “protect” their positions and ”move” or “affect the Index.”

The parties have 30 days to pay the civil penalties assessed after which, the Commission can pursue enforcement of its assessment in federal district court. The parties continue to have the opportunity to settle the matter with the Commission. Absent a settlement, and unlike the DC Circuit’s decision in Hunter v. FERC, 711 F.3d 155 (D.C. Cir. 2013), this case may produce the first fully-adjudicated case on the merits of the Commission’s market manipulation theories.

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Watt’s New? Michigan Energy Newsletter – May 2013

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New DTE Electric PPAs for Wind Energy

Two 20-year power purchase agreements (PPAs) between DTE Electric and Pheasant Run Wind, LLC and Pheasant Run Wind II, LLC received ex parte approval from the Michigan Public Service Commission (MPSC) on May 15, 2013. Each PPA is for 74.8 MW of wind energy for projects in Michigan’s Thumb region. Also approved was an option agreement wherein DTE Electric can purchase the Pheasant Run Wind II project. This option expires on March 31, 2014. These contracts resulted from unsolicited proposals from Next Era Resources on a timetable which would qualify for production tax credit benefits. The price in each PPA is “up to” $49.25 per MW hour (4.925¢ kWh). The average net capacity factor is estimated to be 43%. Geronimo Energy LLC attempted to intervene at the MPSC, arguing that its 100 MW Apple Blossom Wind Project in Huron County was a competing proposal that would pass through the same tax benefit. Its request that DTE Electric be made to undertake a competitive bidding process was rejected and its petition was denied.

Five Ethanol Plants in Michigan

Michigan has five corn ethanol refineries. In 2008 it appeared there would be six more, but ultimately the demand for ethanol in Michigan did not justify 11 facilities. The operating plants are in Riga Township, Albion, Caro, Marysville, and Lake Odessa. Generally they have 40-50 employees, each with a capacity between 50-60 million gallons per year. Total ethanol production in the state is approximately 240 million gallons per year.

Offshore Team Sails to Cleveland

Muskegon-based Andrie Inc. has been hired to assist in the development of an offshore wind energy project in Lake Erie. The company’s 90’ by 50’ jack-up barge recently traveled to Cleveland to assist in lake bottom sediment testing seven to nine miles offshore. A jack-up barge is a floating platform with long poles in each of the four corners that can be lowered into the water down to the lake bottom to secure the platform above the water surface. LEEDCo, a public-private partnership, is developing a 27 MW, five to nine turbine offshore project.

Energy Forum Update

Initial review and gap analysis of the information presented at the seven energy forums and on line is now being conducted. It is expected that the gap analysis will be complete by the end of May. The month of June will see an effort to fill in the gaps. By the end of June it is expected everything needed for reports will be in hand. Draft reports are targeted for the end of September, with public comment beginning as early as mid-October.

Nuclear Plant Off-Line Again

The Palisades Nuclear Power Plant in Covert has been shut down due to a water leakage issue in the Safety Injection Refueling Water Tank. The leak was estimated to be 34 gallons per day, with 79 gallons of slightly radioactive water having drained into Lake Michigan. A half-inch crack about the width of a thumbnail is believed to have been the source of the leak. Entergy Corporation, a New Orleans-based company, owns and operates the Palisades facility and has a 15-year power purchase agreement with Consumers Energy that will expire in 2021.

43 Degrees North @ Muskegon

The Michigan Energy and Technology Center has been formed by a consortium of companies to generate economic activity in the state. The founding members of the group include Consumers Energy, Energetx Composites LLC, Rockford Berge, Sand Products Co., and Verplank Dock Co. Initial affiliate members are Astraeus Wind Energy Inc. and Ventower Industries. The group will initially focus on two projects. The first is to enhance the infrastructure at the Port of Muskegon, the only deep water port on the Michigan side of Lake Michigan. In support of this project, Consumers Energy has made a commitment to allow access to its coal port at the Cobb generating plant, which will be idled within the next three years. The second project is a pilot program by Michigan State University to develop a virtual clean technology and logistics research center [MTEC @ MSU] to assist in developing clean energy technology, scaling up manufacturing, and transporting products.

Michigan Energy Fair Returns

The Great Lakes Renewable Energy Association will conduct the 13th annual Michigan Energy Fair in Ludington on June 7-8. The event will take place at the Mason County Fairgrounds. The program on Friday is intended for energy professionals, facility managers, and educators and will run from noon to 5 p.m. There is a $25 charge for the workshops. The Saturday events begin at 9 a.m., will be more oriented toward the general public, and are free. Energy Fair exhibits will provide information on solar, wind, energy efficiency, and other energy related topics.

Michigan Shorts

NextEra has ordered 59 1.7 MW wind turbines from General Electric for its Tuscola II project scheduled to be complete by the end of the year.  Tecogen has purchased the proprietary 5300 permanent magnet generation line as part of the liquidation of Danotek Motion Technologies of Canton.  The Great Lakes Renewable Energy Association has been awarded a $33,304 grant from the Michigan Energy Office to conduct a feasibility study of community solar in Michigan.  Ornicept, a startup with technology to study bird migration issues associated with wind turbines, has relocated to Ann Arbor.  Muskegon’s Wastewater Management System director has reported that six months of meteorological testing by Gamea Energy has confirmed average wind speeds are sufficient to support a viable wind energy project Ω The Michigan Public Service Commission has approved an opt out option for residential smart meters consisting of an initial fee of $67.20 and a $9.80 monthly fee.  NextEra has selected General Electric’s new 1.7-100 brillant wind turbine for its new Michigan wind farm project.  WindTronics LLC of Muskegon has ceased manufacturing its gearless wind turbine and ended operations.  Nexteers Sunsteer solar tracking system is manufactured in Michigan with 90 percent U.S. content and 50 percent Michigan content.

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Energy and Environment Update, February 19, 2012

Recently published in The National Law Review was an article by David J. Leiter and Sarah Litke of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. regarding a Compilation of Energy and Evironment Updates:

Energy and Climate Debate

President Obama on February 13 sent Congress a $3.8 trillion budget request for fiscal year 2013 that, after a week of hearings and analysis, is likely to continue fueling debates over spending and taxes through the end of the year. One of the most interesting highlights of the budget includes the president’s varied ways of encouraging clean energy and infrastructure spending this year as the country works to boost the economy and create jobs.

In line with his State of the Union call for an all of the above energy strategy, the president’s budget request calls for an elimination of $4 billion in fossil fuel subsidies and a shift in funding from decreasing military actions in Iraq and Afghanistan to infrastructure projects. Though numerous entire department budgets remain relatively static, clean energy, climate, and environment issues are important components and priorities of the request, which encourages developing new clean energy, advancing research and development funding for clean energy, and promoting advanced manufacturing and jobs.

On the tax front, the administration proposes extending the production tax credit for wind facilities and the investment tax credit for wind facility properties to properties placed in service in 2013; the budget would also provide an additional $5 billion for the Advanced Energy Manufacturing Tax Credit (48C). The request would expand the tax credit for plug-in electric vehicles and remove the cap on the number of vehicles per manufacturer that can receive the credit, while also proposing a new tax credit for medium and heavy duty vehicles.

The emphasis on clean energy funding in the Department of Energy’s overall $27.2 billion funding request is high. Last Monday, the president proposed spending $2.3 billion, a 29 percent increase, on renewable energy and energy efficiency programs in the agency’s FY2013 budget. The request also includes increased support for advanced manufacturing (up 150 percent from $115.6 million to $290 million) and the department’s Advanced Research Projects Agency – Energy initiative, and at the same time, the agency is not seeking further loan authority or credit subsidies for its loan guarantee program.

President Obama proposed trimming the Environmental Protection Agency’s fiscal 2013 budget by $105 million, marking the third time the administration has sought to cut the agency’s funding to compensate for rising deficit. The request would give the agency $8.3 billion, a 1.2 decrease from the $8.4 billion Congress provided in its omnibus spending package last year. The largest cuts would come from the Drinking Water and Clean Water State Revolving Funds.

The FY2013 budget proposal for the Agriculture Department provides $6.1 billion in direct loans, for energy initiatives, through the Rural Utilities Service program. Up to $2 billion would be used to help reduce carbon dioxide emissions from fossil fuel power plants, with the balance being used to support rural renewable energy generation, transmission, and distribution.

Though approval of any budget may need to wait until the lame duck session at the end of the year Senate Majority Leader Harry Reid (D-NV) has told Senate appropriators to be ready with fiscal year 2013 bills soon, as he may have to fill floor time this summer with funding or Law of the Sea Treaty debates.

In addition to the budget, the other big piece of congressional action last week occurred February 17 when both houses voted to pass legislation extending a 2 percentage point cut in the employee side of the payroll tax cut through the end of 2012 and repealing billions of dollars in recent changes to corporate estimated tax payments. The House voted 293-132 to pass the bill (H.R. 3630), and the Senate followed soon thereafter to approve the measure on a 60-36 vote. The bill’s passage is particularly significant because lawmakers on both sides of the aisle were forced to accept that it would be politically impossible to find $93.2 billion in acceptable offsets to pay for the payroll tax portion of the bill before the March 1 expiration. The bill also extends federal unemployment insurance benefits and the doc fix, but does not include extensions of any other popular expired or expiring tax breaks, including the 1603 grants in lieu of tax credits program or the production tax credit.

In other news, Speaker of the House John Boehner announced last week that he would delay a vote on the $260 billion energy and transportation bill until after the Presidents’ Day recess. Part of the delay is in the need to find new offsets, as the payroll tax cut deal uses the reduction in pension benefits that was in the highway bill. Speaker Boehner also acknowledged that some members of his caucus have concerns with the plan, and with few Democrats likely to support the legislation, Republicans might not have had the votes. On the other hand, the House passed a plan, 237-187, February 16 to approve the Keystone XL pipeline and expand drilling offshore and in ANWR. Acting on one portion of the much larger transportation and infrastructure strategy, the House also approved amendments directing 80 percent of Clean Water Act citations over the BP oil spill to Gulf restoration efforts, approving a geothermal exploration project, and quickening environmental reviews for renewable energy projects on public lands. Despite roadblocks, including the introduction of many amendments, Senate Democrats vowed last week to finish work on their highway bill (the Moving Ahead for Progress in the 21st Century Act, S. 1813) after they return from the Presidents’ Day recess.

Congress

Solyndra Subpoenas

After spending the last week threatening to subpoena senior White House officials as part of an investigation of loan guarantees for Solyndra, House Republicans cancelled a February 17 Energy and Commerce Subcommittee on Oversight and Investigations vote to authorize the subpoenas. The group reached a deal to have some of the officials answer questions instead.

CES Forthcoming

Senate Energy and Natural Resources Chairman Jeff Bingaman (D-NM) will introduce legislation setting a national clean energy standard during the week of February 27. The senator is also likely to introduce at some point this session an industrial energy efficiency bill similar to legislation (S. 1639) that he has previously introduced.

Senators Send Energy Tax Letter

Senators Olympia Snowe (R-ME), Jeff Bingaman (D-NM), Dianne Feinstein (D-CA), John Kerry (D-MA), Maria Cantwell (D-WA), and Tom Carper (D-DE) sent a letter to Treasury Secretary Tim Geithner and Acting Director of the Office of Management and Budget Jeffrey Zients February 10 encouraging them to advance tax policies that improve energy efficiency and support clean energy incentives. Specifically, the senators asked the administration to include a performance based residential energy efficiency tax credit, an extension of the new energy efficient homes tax credit, and the simplification of the energy efficient commercial building deduction in the president’s budget request for fiscal year 2013. The group also asked that the administration work with them to develop a set of policies that offers long-term support to the clean energy and energy efficiency sectors, are fiscally responsible, and maintain clean energy jobs in the US.

Inquiry Into Solyndra Aspects of Prologis Conditional Loan Guarantee

On February 17, House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Rep. Cliff Stearns (R-FL), head of the oversight subcommittee, are launching an inquiry into the conditional approval of Prologis Inc.’s $1.4 billion loan guarantee for its Project Amp which involved installing Solyndra solar panels, despite concerns of Solyndra’s viability.DOE then issued a statement defending the Prologis loan guarantee.

Legislation Introduced

Senator David Vitter (R-LA) introduced legislation (S. 2100) February 13 to suspend sales of petroleum products from the Strategic Petroleum Reserve until certain conditions are met.

Congressman Charlie Bass (R-NH) introduced the Smart Energy Act (H.R. 4017) February 15 to spur innovations in energy efficiency technology by targeting the federal government’s energy usage and by providing more opportunities for private industry to use energy efficient technologies and systems.

The same day, Representative Ed Markey introduced three pieces of legislation (H.R. 4024, H.R. 4025, and H.R. 4026) to suspend approval of liquefied natural gas export terminals; allow the Secretary of Interior to accept bids on new oil and gas leases on Federal lands only from bidders certifying that all natural gas produced pursuant from such leases be offered for sale in the United States; and to reauthorize the Low-Income Home Energy Assistance Program for fiscal years 2013 through 2016.

Administration

Chinese VP Visit

President Obama and Vice President Joe Biden met with Chinese Vice President Xi Jinping February 14 to discuss a wide range of issues the two countries share. Speaking at a lunch at the State Department, the vice president praised cooperation taking place between the two countries, but also added that it can only be “mutually beneficial if the game is fair,” listing areas of tension in the relationship including intellectual property rights, trade, Chinese currency manipulation, technology transfer, and an uneven competitive playing field.

Department of Agriculture

Ethanol Production

Agriculture Secretary Tom Vilsack told the Senate Agriculture, Nutrition, and Forestry Committee February 15 that domestic production of corn ethanol is fast approaching the 15 billion gallon annual gap set by the 2007 renewable fuel standard, but that achieving an even larger quota for non-corn-based advanced biofuels will require a concerted federal effort. He said that without significant progress on the advanced biofuels, it will be impossible to reach the 36 billion gallon total biofuel requirement by 2022. Secretary Vilsack also reiterated that the United States has the potential to produce more than a billion tons of biomass each year to be used for fuel, electricity generation, and other energy applications by mid-century without harming farm and forestry products, and a billion tons of biomass contains energy equal to 30 percent of current annual domestic petroleum consumption. The USDA is hoping to hasten advances in non-ethanol biofuels through programs such as the Biomass Research and Development Initiative, which funds studies on harvesting, transporting, and storing raw feedstock for later conversion to biofuels.

Crop Insurance Cuts Defended

Agriculture Secretary Tom Vilsack appeared before the Senate Agriculture Committee February 15 for the first of several farm bill hearings this year. During the hearing, he defended proposed cuts to crop insurance, saying they were necessary to preserve nutrition funding. The committee will hold its next farm bill hearing February 28 to focus on conservation programs.

Ethanol Group Asks for Tax Provisions in Farm Bill

In a February 14 letter to Senators Debbie Stabenow (D-MI) and Pat Roberts (R-KS), chairwoman and ranking member of the Senate Committee on Agriculture, the Advanced Ethanol Council asked that the farm bill for 2012 include an extension of both the Cellulosic Biofuels Producer Tax Credit and the Special Depreciation Allowance for Cellulosic Biofuel Plant Property. The letter was sent as the committee continues work on a farm bill and a hearing specifically on farm bill related energy issues.

Department of Commerce

Satellites Top Priority

National Oceanic and Atmospheric Administrator Jane Lubchenco said February 16 that satellites to monitor weather and climate are the highest administration funding priority for fiscal year 2013. About $1.8 billion of the agency’s $5 billion budget would be used for polar orbiting and geostationary weather satellite systems as well as satellite systems for measuring sea level and potentially damaging storms. A portion of the agency’s more than $500 million research and development budget would fund Arctic research on climate change projections as well as marine sensor technologies to monitor and address algal blooms and ocean acidification.

Department of Defense

Army Corps to Streamline Renewable Permitting Structure

On February 21, in a scheduled Federal Register notice, the U.S. Army Corps of Engineers will issue two new nationwide permits, NWP 51 and NWP 52, authorizing land- and water-based renewable energy projects while also reissuing 48 existing permits. The permits will reduce the number of renewable energy generation projects that need Section 404 individual permits, with NWP 51 covering all components of land-based generation and NWP 52 covering water-based hydrokinetic and wind projects.

Department of Energy

$6.5 Million for Tribal Energy

On February 16, Energy Secretary Steven Chu awarded $6.5 million to 19 tribal clean energy projects as part of the administration’s commitment to strengthening partnerships with Tribal Nations and supporting tribal energy development. The competitively selected projects will allow tribes to advance clean energy within their communities by assessing local energy resources, developing renewable energy projects, and deploying clean energy technologies while saving money and creating new jobs.

Water Heater Plant Opens

The Department of Energy applauded the opening of General Electric Appliance’s new revitalized manufacturing facility in Louisville, KY, February 15, that will produce its highly efficient new water heaters. The company moved the operation from China, where it had been producing a former version of the appliance, to the newly opened plant – the first to open in the Appliance Park in over 50 years. The plant revitalization was partially funded through a $24.8 million manufacturing tax credit.

Efficient Lighting Standards

The Department of Energy’s Commercial Building Energy Alliances announced February 15 new voluntary energy-saving specifications for lighting troffers – rectangular overhead fixtures used in commercial buildings – and parking lot and structure lighting. The specification provides minimum performance levels for LED and fluorescent troffers used in commercial buildings, delivering energy savings of 15 to 45 percent. It also sets an optional section on lighting controls, which can increase savings up to 75 percent.

$1.3 Million for Efficiency Training

The Energy Department and the Department of Commerce’s National Institute of Standards and Technology Manufacturing Partnership Program announced February 16 up to $1.3 million for training programs to provide commercial building professionals with critical skills needed to optimize building efficiency, reduce waste, and save money. The programs will help to reach the Better Buildings Initiative goal of improving energy efficiency nationwide in commercial and industrial buildings by 20% by 2020. Applications are due March 30.

Efficiency Data Centers Webcast

The Department of Energy’s Federal Energy Management Program will present a live webcast March 1 titled Achieving Energy Efficient Data Centers with New ASHRAE Thermal Guidelines. The session will benefit professionals interested in operating data centers at wider environmental ranges and greater efficiencies to reduce energy, capital, and maintenance costs.

Department of Interior

Budget Request Defended

During a February 15 hearing before the House Natural Resources Committee, Interior Secretary Ken Salazar defended the agency’s energy regulations and efforts to balance development of energy and water resources. The agency’s strategy would prepare for new rules on oil and gas drilling, less oil shale leasing, and ecosystem conservation plans.

Department of State

Short Lived Pollutants Coalition

Secretary of State Hillary Clinton announced February 16 that she would joint with Environmental Protection Administrator Lisa Jackson and ministers from Bangladesh, Canada, Mexico, Sweden, and Ghana to announce a coalition dedicated to reducing short-lived climate pollutants. These pollutants include methane, hydrofluorocarbons, and black carbon. Studies have shown that inexpensive controls on methane, HFCs and black carbon could cut half a degree Celsius from the projected global temperature increase by 2030 and avoid millions of deaths annually during the same time frame. The head of the United Nations Environmental Programme will serve as the secretariat for the coalition – and other nations will have the opportunity to join at the next meeting of UNEP on April 23 in Stockholm. The Climate and Clean Air Coalition to Reduce Short Lived Climate Pollutants will have a first year budget of $5 million, and the U.S. has committed to contributing $12 million over the first two years of the effort. The coalition will seek to raise public awareness of short-lived climate pollutants and drive increased public and private mitigation efforts.

Environmental Protection Agency

E15 Progresses

Bringing it one step closer to legal domestic distribution, he Environmental Protection Agency announced February 17 that it had found that E15 caused no significant health effects. The agency approved the fuel for use in late model vehicles last year but has not yet completed final registration of the fuel as required under the Clean Air Act. The agency’s finding comes less than two weeks after the House Science, Space, and Technology Committee voted to require an additional 18 month study by the National Academy of Sciences before it could register the fuel blend for use in vehicles.

Comments to Backup Generating Engines Proposal

An Environmental Protection Agency proposal aimed at resolving a 2010 legal challenge brought by EnerNOC Inc. and EnergyConnect Inc. received numerous comments last week concluding that the plan to allow stationary engines generating electricity to quadruple their annual operations would increase air pollution and skew competition in electricity markets. Under the proposed settlement agreement, the agency would revise air toxics standards to allow reciprocating internal combustion engines to increase their demand response operations to 60 hours a year, up from 15 hours.

Mercury Standards

The Environmental Protection Agency published final mercury and air toxics standards for power plants February 16, and industry groups and states are expected to challenge the “appropriate and necessary” finding. Lawsuits must be filed in the U.S. Court of Appeals for the District of Columbia Circuit by April 16. Three suits were filed against the agency of the first day, by the National Mining Association, the National Black Chamber of Commerce, and White Stallion Energy Center. Additionally, Senator James Inhofe (R-OK) filed a disapproval resolution nullifying the agency’s mercury rule on February 16.

Comments on Vehicle Emission Rules

In comments received to proposals from the Environmental Protection Agency and the National Highway Traffic Safety Administration to set greenhouse gas emissions and fuel economy standards for model year 2017 through 2025, car manufacturers have expressed support for the rule, but expressed concern that they will not be able to sell the more expensive vehicles, and also suggested that the two agencies consider additional, periodic technical evaluations of the standards in addition to the planned midterm review. The final rules are expected in August.

Ethanol Exemption Arguments Heard

The U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments February 13 in lawsuits challenging an Environmental Protection Agency rule exempting some ethanol facilities from a requirement to demonstrate that they reduce lifecycle greenhouse gases. A coalition of meat industry groups argued that removing the exemption would force some plants to close, reducing the demand for corn used to feed livestock. The Energy Independence and Security Act of 2007 only intended to exempt gas and biomass fired ethanol plants built between 2008 and 2009 from the 20 percent lifecycle standard for those two years, but the agency’s March 2010 rule implementing the renewable fuel standard made the exemption permanent.

Revised Recycling Rates

The Environmental Protection Agency revised last week its 2010 study of municipal solid waste generation, recycling, and disposal, using a more consistent methodology that brought the recycling rate of PET containers up from 21 to 29.2 percent and increased the national recycling rate to 34.1 percent. According to the revised analysis, the recycling rate of selected consumer electronics also fell from 26.6 percent to 19.6 percent.

Superfund Budget Request

The Environmental Protection Agency’s fiscal year 2013 budget request included a proposed $33 million cut, down to $532 million, for the remedial superfund program. This cut would halt new cleanups, create a backlog of 35 new construction projects, and hamper EPA’s ability to reach its goal of completing 93,400 superfund remedial site assessments by 2015. EPA requested $1.176 billion, $38 million less than last year, for the entire superfund program, including administration, research and technology development.

Activists File Suit Against EPA on Particulate Rule

On February 14, the American Lung Association and the National Parks Conservation Association filed a suit in the U.S. District Court for the District of Columbia seeking to compel the Environmental Protection Agency to conduct a five-year review of the national ambient air quality standards for fine particulate matter in line with existing deadlines. The rule setsthe standard for fine particles, 2.5 microns in diameter and smaller, and this challenge follows a similar suit recently filed by a coalition of 11 states. The suit asks for an order compelling EPA to complete the required review no later than Oct. 15, 2012.

Briefing Seeks to Vacate CSAPR

On February 14, the San Miguel Electric Cooperative Inc., along with Industrial Energy Consumers of America, the Southeastern Legal Foundation Inc., and Putnam County, GA, filed a brief asking the U.S. Court of Appeals for the District of Columbia Circuitto vacate the Environmental Protection Agency’s Cross-State Air Pollution Rule on the grounds that the agency has done an insufficient evaluation of how various power plant emissions regulations will affect compliance options. The briefing argues that EPA did not address the effects of an unreliable electric grid on communities’ health and welfare.

Navistar to Appeal Heavy Duty Diesel Engine Ruling

On February 17, Navistar Inc., filing in the U.S. Court of Appeals for the District of Columbia Circuit, appealed a federal court’s dismissal of Navistar’s suit seeking to compel the Environmental Protection Agency to recall certain heavy-duty diesel engines from model-year 2010.

Nuclear Regulatory Commission

Challenge to Plant Approval Dismissed

On February 17, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit dismissed a petition by the Blue Ridge Environmental Defense League asking that the court review internal documents related to the Nuclear Regulatory Commission’s decision to reinstate construction permits for the Tennessee Valley Authority’s Bellefonte Units 1 and 2 in Alabama. The court said it did not have the authority to review internal documents related to the NRC approving TVA’s request to reinstate the plants’ construction permits in March 2009. Based on current economic conditions and new EPA regulations, TVA decided to resume building the 1,260 MW Bellefonte Unit 1 at a cost of $4.9 billion and an estimated completion date sometime between 2018 and 2020.

States

NY Fracking Bills

The New York State Legislature is considering bills to limit fracking in natural gas drilling while the Department of Environmental Conservation prepares to issue final rules to control the practice. More than two dozen bills on fracking have been introduced in the current legislative session, including measures to ban or place a temporary moratorium on fracking, grant local governments authority to prohibit fracking, and permit fracking waste to be classified as hazardous.

CA Office Supports Cap and Trade

The California Legislative Analyst’s Office released a report February 9 supporting the design of the state’s economywide greenhouse gas emissions trading program while offering suggestions to improve the operation of the program. The report concluded that in designing the program, the California Air Resources Board made a reasonable effort to balance the policy tradeoffs inherent in programs involving emissions leakage, offset credits, enforcement, and market volatility and oversight, and recommended changes that would shift the liability for failed offset credits from users to producers of the offset projects and eliminate holding limits on allocations.

Cape Wind PPA

On February 15, as part of the proposed merger agreement between utility companies Northeast Utilities and NSTAR, the Massachusetts government is requiring the merged entity to enter into a 15-year contract to purchase 27.5% of the proposed Cape Wind’s electricity. The whole agreement must be approved by the Massachusetts and Connecticut governments, with decisions expected in April, and the merger’s Cape Wind provision is contingent on the project breaking ground by 2016. The 130-turbine project is expected to produce up to 468MW of energy once fully operational.

State Renewable Portfolio Standards Driving Industry

On February 15, panelists participating in a webinar hosted by the American Council on Renewable Energy concluded that state renewable portfolio standards were currently driving the renewable energy industry, but even that may be insufficient to ensure the industry’s survival in the next decades in the face of expiring tax provisions at the federal level and the loss of Treasury’s cash grant program.

International

EU ETS Aviation List Updated

The European Commission published an updated list February 11 of airlines and aviation companies subject to the European Union’s Emissions Trading System for greenhouse gases. The new list includes Norway and Iceland as program participants. On February 16, the Commission found that the revisions would be considered only if European Union member states indicate that they are likely to back the changes.

 UN Secretary General Urges Focus on Sustainability in Business

On February 14, U.N. Secretary-General Ban Ki-moon, in a speech at the opening of a three-day global summit of business leaders preparing for theRio+20conference in Brazil in June, asked that the world’s business community should do more to promote sustainability and to work with U.N. programs of that nature like the Global Compact corporate responsibility initiative. He also suggested that as many representatives of the business community as possible join the Corporate Sustainability Forum, to be held on the sidelines of Rio+20, exploring innovative public-private sustainability partnerships. 

EU Ship Fuel Standards

On February 16, the European Parliament’s environment committee voted 48–15 to follow the United State’s example and surpass International Maritime Organization standards by only permitting ships using fuel with very low levels of sulfur. Since January 2012, the IMO has restricted sulfur in marine fuel to 3.5%, with the limit scheduled to decrease to 0.1% for sensitive “sulfur emission control areas” (SECAs) in 2015 and to 0.5% for all areas in 2020. Under this proposal, the EU would pursue the same strategy as the US, which has surpassed the IMO regulations by designating most of the water within 200 miles of the national shoreline as SECA. The committee approved the draft legislation, proposed by the Commission in July 2011, and it will become final once the European Parliament, scheduled to vote on the measure in May, and the EU Council agree on the regulations.

Mexican Climate Initiatives

Mexican President Felipe Calderón’s administration, via a 2007 climate change strategy and 2009’s Special Climate Change Program, is working to meet its 2020 target for a 30% reduction of carbon dioxide emissions from baseline projections. Mexico has minimum goals in place to cut 50 million metric tons annually in greenhouse gas emissions starting in 2012. Mexico is also aiming to increase its renewable power capacity to 5,700MW by 2017.

Miscellaneous

CCS Making GHG Progress

The Center for Climate and Energy Solutions released a study February 14 finding that projects that capture and store carbon dioxide emitted by coal-fired power plants and industrial processes are slowly making a dent in greenhouse gas emissions. The report, A Greenhouse Gas Accounting Framework for Carbon Capture and Storage Projects, concluded that the 15 large projects now either in operation or under construction around the world have the capacity to store more than 35 million tons of CO2 annually, and the center touted the report as the first comprehensive framework for calculating the degree to which such projects can actually reduce global emissions.

KPMG Report on Environmental Costs of Business

On February 14, KPMG released Expect the Unexpected: Building Business Value in a Changing World arguing that external environmental costs in 11 surveyed sectors rose from $566 billion in 2002 to $846 billion in 2010and those costs are doubling every 14 years. Climate change, water and energy scarcity, and volatile fuel prices will all drive up the cost of doing business while providing new business opportunities, according to the report.

Pacific Northwest Transportation & Climate Change Report

On February 3, the Region X Northwest Transportation Consortium released the report Climate Change Impact Assessment for Surface Transportation in the Pacific Northwest and Alaska evaluating potential impacts on Alaska and the Pacific Northwest’s transportation infrastructure from climate change, and suggesting possible adaption responses. The Consortium consists of the Alaska Department of Transportation & Public Facilities, Idaho Transportation Department, Oregon DOT, and Washington state DOT, as well as the University of Alaska Transportation Center, National Institute for Advanced Transportation Technology, OTREC, and TransNow. The report analyzed 5 pilot projects sponsored by the Federal Highway Administration that explore infrastructure vulnerability and risk assessment as well as a case study designed to identify Alaska, Idaho, Oregon, and Washington’s critical road, rail, and airport infrastructure.

ACEEE Study of Ratepayer Funding

The American Council for an Energy-Efficient Economy released a report called A National Survey of State Policies and Practices for the Evaluation of Ratepayer-Funded Energy Efficiency Programs analyzing the oversight of utilities’ ratepayer-funded energy efficiency programs in 44 states and the District of Columbia. Utilities oversee 37% of the programs, utilities and the utility regulatory commission together monitor the programs in 36% of the states, and the government or a third-party are responsible in the remaining 27%. Independent contractors or consultants conduct evaluation studies in 79% of the states, with the remaining 21% using utility or government agency staff. Among the surveyed states, 45% have statutory requirements for the evaluation of programs, with the same number relying on orders from regulatory commissions, and 10% have no formal policy requirement. The report also shows a range of 6 to 15 cents per kilowatt-hour for adding new electricity supply, but only a 1.6 to 3.3 cent per kilowatt-hour cost range for efficiency improvements. Per capita, Vermont and Massachusetts spend the most on energy efficiency at $58 per capita, whereas California spends $40, Connecticut $39, and Minnesota $38. The report called for evaluation and reporting guidelines and greater transparency, while stopping short of recommending a national standard given concerns about implementation, among other things.

University of Texas Fracking Study

On February 16, the Energy Institute at the University of Texas at Austin released a study finding that hydraulic fracturing has no direct connection to groundwater contamination and that many reports claiming fracking-related contamination involve the mishandling of fracking wastewater or above-ground spills. The Energy Institute had assistance from the Environmental Defense Fund in developing the study’s scope of work and methodology, but the study did not examine Environmental Protection Agency data related to a natural gas field in Pavillion, WY whose fracking activities the agency says is responsible for groundwater contamination.

©1994-2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

EPA Proposes Changes to Underground Storage Tank Regulations

Posted in the National Law Review an article by attorneys Julie A. Fournier, Michael J. Hughes and Lisa S. Zebovitz of Neal, Gerber & Eisenberg LLP about the EPA’s porposed changes to the underground storage tanks:

 

For the first time since federal regulations regarding underground storage tanks (USTs) were first promulgated in 1988, the United States Environmental Protection Agency (EPA) is proposing significant changes and additions to these regulations. The proposed rulemaking, found at 76 FR 71708, includes new requirements for USTs primarily focusing on proper operation and maintenance and spill prevention. EPA asserts that the revisions will improve the detection and prevention of UST releases leading to increased protection of human health and the environment.

Newly added requirements include secondary containment for new and replaced USTs, operator training programs, and periodic operation and maintenance requirements for UST systems, such as monthly inspections of spill prevention and release detection equipment, yearly testing of spill prevention equipment, and the testing of overfill prevention and certain secondary containment equipment every three years. In addition, deferrals for certain types of tanks will be eliminated. These requirements are intended to reflect significant technological advances made in the last two decades.

The proposed changes may be significant to the commercial and manufacturing sectors if they become effective. From a practical standpoint, owners and operators of tanks in the vast majority of states with approved UST programs may ultimately see changes in state regulations. States currently operating under an approved UST program will have three years to submit a revised program approval package to conform to the new regulations. Therefore, if the proposed regulations become effective, owners and operators of USTs should monitor changes to state programs closely. Owners and operators located in one of the few remaining states that do not have an approved UST program may be required under the new regulations to notify EPA when bringing a UST system into use or following a change in ownership.

Documents related to the proposed changes identified above, including a comparison of the current and proposed regulations and a Regulatory Impact Analysis, are available on EPA’s Web site. Comments to the proposed rule must be received by EPA on or before Feb. 16, 2012.

© 2011 Neal, Gerber & Eisenberg LLP.

U.S. Department of State to Delay Decision on Keystone XL Pipeline in Order to Assess Different Pathway Through Nebraska

Recently published in the National Law Review an article by attorney Ivan T. Sumner of Greenberg Traurig, LLP regarding an update on the Keystone XL oil pipeline:  

 

GT Law

 

 

On November 10, 2011, the U.S. State Department announced during a press briefing that it was delaying its decision on the proposed Keystone XL oil pipeline in order to assess other pathways through Nebraska. The 1700 mile crude oil pipeline which would run from the Alberta Oil Sands region in Canada and ultimately terminate at refineries along the Texas Gulf Coast would also traverse over the shallow water Ogallala aquifer in Nebraska’s Sand Hills region.

While the State Department released the final Environmental Impact Statement for the proposed oil pipeline on August 26, 2011, since that time opposition to the proposed route has expanded including Nebraska Governor Dave Heineman (R) due to the proposed route over the Ogallala aquifer. The Nebraska Governor had already called a special session of the Nebraska legislature for the crafting of pipeline siting/approval legislation that will be further vetted during the week of November 14th. The State Department is now to be looking at alternative routes of the Keystone pipeline that would avoid or minimize impacts to the Nebraska Sand Hills region. The alternative pipeline route review will be conducted as a supplemental environmental impact statement and the State Department’s final decision on the proposed pipeline is estimated to conclude sometime following the 2012 presidential election.

©2011 Greenberg Traurig, LLP. All rights reserved.