Will Ohio rollback BigWind’s mandates???????

The Ohio House Public Utilities Committee was greeted by fifty witnesses wishing to testify on Am. Sub. S. B. 310 yesterday.  The group was a mixture of both supporters and opponents and only a small number were able to be heard.  Many were asked to hold over until next week.  Among those who were not heard were the wind developers.  Copies of all testimony submitted can be obtained on the Committee website at http://www.ohiohouse.gov/committee/public-utilities.  

Iberdrola rests its support for the renewable mandate on climate change and the idea that the fuel   – wind – is free. Iberdrola objects to how renewables are characterized:   “The Energy Mandate Study Committee’s foregone conclusion is telegraphed in the legislation that creates the committee and uses terms like unreliable, unaffordable and unrealistic.” Ominously, Iberdrola warns that “If you proceed with passage of SB 310, you are jeopardizing the viability of two additional investments in Ohio we are planning that would total about 250 MWs of generation capacity…”   These two unannounced projects are in addition to Blue Creek Dog Creek and Leipsic Wind.  We have no idea where the two new projects are targeted to be.

EDPR, developer of Timber Road in Paulding County, testified that project was the “direct result” of the mandate. Like Iberdrola, EDPR has unknown projects of 400 MW’s in the very early stages of planning.  Where?

Everpower’s Michael Speerscheider gives testimony  indicating his belief that tax abatement through the PILOT is a foregone conclusion because he states the amount the company will be paying for Buckeye I, Buckeye II and Scioto Ridge.  Everpower acknowledges “The investments that EverPower has made in the state have been made possible by the policies that the Ohio General Assembly put in place.”   (That policy is an unconstitutional mandate to build in-state renewable energy.)  Speerschneider cites numerous industry sponsored research papers to support the notion that renewables do not increase costs and that the subsidies they receive are far less than what other companies receive.   In saying this, Everpower tries to equate tax credits and tax abatement with oil depletion allowances or investment tax credits available to any company as part of the tax code.  This is a phony argument but, remarkably, he goes on to say “Denouncing wind energy because it relies on some level of government incentives is intellectually and ideologically dishonest.”

While not testifying, the American Wind Energy Association’s  (AWEA) lobbyist Dayna Baird filed a comment on yesterday’s story in the Cleveland Plain Dealer saying: “ First, AWEA is supportive of a compromise amendment to SB 310 that makes significant changes to the renewable energy standards .”    We do not know what the proposed “compromise” amendment might be but we are pretty sure it would eliminate the two-year freeze on the mandate while the Committee undertakes its review of Ohio’s mandates.

 Amidst all of the cheerleading for why the energy efficiency and renewable mandates are good for Ohioans and good for business, the annual survey of 500 Chief Executives was announced showing that Ohio has dropped five spots to number 26 as the best place in America to do business.  Regulations and taxes put us in the bottom half of the country with places like New York and California while our neighbor Indiana, with no energy mandates, was rated 6th best in the country.  Hmmmmmm…..

Twenty-nine states and the District of Colombia have passed renewable energy mandates that require consumers and businesses to consume minimum amounts of wind, solar, and other green energy. A handful of states have also enacted laws that require states to reduce their total energy consumption. These mandates have increased energy prices, causing many legislatures to reexamine their value.

While legislative efforts began and stalled in a handful of Republican states like North Carolina and Kansas, Ohio is positioning itself to be the first state to rollback its mandate, known as a Renewable Portfolio Standard RPS, and energy reduction program. As is generally the case, the mandate begins small and relatively painless but quickly ramps up, requiring utilities to use more and more renewable energy….

A study by the Manhattan Institute’s Robert Brycerevealed that, “in 2010, the average price of residential electricity in RPS states was 31.9 percent higher than it was in non-RPS states. Commercial electricity rates were 27.4 percent higher, and industrial rates were 30.7 percent higher.” Indeed, “in the ten-year period between 2001 and 2010—the period during which most of the states enacted their RPS mandates—residential and commercial electricity prices in RPS states increased at faster rates than those in non-RPS states.”…

Since Ohio is part of the multi-state PJM power market, any reduced energy prices resulting from reduced energy usage are spread throughout the entire PJM system while being financed entirely by Ohio ratepayers. Dr. Jonathan Lesser quantifies it this way:

80% of the price suppression “benefits,” to the extent they might exist, flow to customers outside Ohio and customers of Ohio municipal utilities and cooperatives, which are exempt from the electricity usage reduction mandate and the mandate tax. Thus, 80% of the alleged benefits accrue to “free riders” who do not pay for those benefits.

If left unchanged, the Ohio energy reduction mandate has actually created a situation where residential consumers could pay close to $4.00 extra per month for a retail reduction benefit of only $0.37 cents per month, according to Dr. Lesser….

via Ohio Moves to Rollback Costly Green Energy Mandates – Forbes.

Illinois wind project foreclosure has similarities to Buckeye Wind in Ohio

 The 240 MW Big Sky project (Illinois) is in trouble as Edison Mission is unable to repay the loan on the wind development made by the turbine manufacturer, Suzlon.  This is an important story about another wind project in the PJM grid system which also serves Ohio

Big Sky does not have a long term power purchase agreement and sells on the spot market where it has been unable, despite grants and subsidies, to earn a sufficient return.  Please note the red highlights below. There are similarities here between Big Sky and Everpower’s Buckeye and Scioto Ridge projects.  Right now, we understand that Everpower does not have a long term power purchase agreement, does not have federal subsidies, probably does not have an investor and the spot market apparently can’t provide an attractive return in the PJM system.    For these and other reasons, we believe Jason Dagger provided mulitple (delayed) start date options for Buckeye Wind in the Springfield News Sun article yesterday.  

And, finally, please add “ouch!” in your head as you read the prices stated below that are necessary to meet the minimum acceptable rate of return for the investors. That is a HUGE electricity rate increase for consumers!!!

Suzlon Energy Ltd. (SUEL), the Indian wind-turbine maker in default on $209 million of bonds, may take over one of Illinois’ biggest wind farms if it’s unable to collect a loan it made for the project….

The plant doesn’t have a long-term buyer for its power and sells at spot prices into the regional U.S. electricity market. It may not earn a minimum acceptable rate of return at current wholesale electricity prices, said Amy Grace, a New York-based wind analyst for Bloomberg New Energy Finance….

Most wind farms sign 20-year power sale agreements with a utility to lock in prices and secure revenue streams. Big Sky doesn’t have one and sells its output on the spot market in the 13-state PJM Interconnection LLC grid, Edison Mission spokesman Douglas McFarlan said in a Feb. 18 e-mail.

 

The average 24-hour price near Big Sky last year was about $35 a megawatt-hour, according to data compiled by Bloomberg. Including tax credits and a government clean-energy cash grant, Big Sky may have earned an average of $67 a megawatt-hour last year, BNEF’s Grace estimated.

 The project probably needs to earn $80 a megawatt-hour on average over its lifetime to meet a 10 percent hurdle rate, or the minimum acceptable rate of return for an investor, she said…

via Suzlon Considers Foreclosure on Illinois Wind Farm – Bloomberg.

Buckeye Wind pauses to enjoy spring?

Please read the next blog posting…The Ohio Power Siting Board approved amendments to the Buckeye I project as expected.  But as Logan County’s Tom Stacy says; ““From my perspective it’s not what you get, it’s what you gave away.”    The PILOT is about 20% to 25% of what would be paid without the PILOT.  As we have said before, if you are going to sell your county, don’t leave money on the table.  And for goodness sake, don’t take it from the residents who will have to live with the project. 

As UNU’s attorney says in the story, “Concerns about safety and noise for neighboring homeowners should also be considered first, regardless of potential revenue for the county, said Jack Van Kley, an attorney for UNU who has argued against the project. “No amount of money is going to compensate people for the loss of comfort in their own homes,” Van Kley said.  Yesterday’s fire in Benton County, Indiana brings that message home in a  truly frightening way. In Ohio, our setbacks are so small, this fireball could have been just a little over 1000 feet from a home or school. Reports from Indiana noted the relief from citizens that their fire did not happen during the dry season- and it was one MILE away from town!…

So, why could Buckeye Wind be “pausing”? Read the next blog please…

Developers of the Buckeye Wind Project are trying to determine if construction could begin this year after members of the Ohio Power Siting Board approved changes to portions of the first phase of the project….

However, now that those changes have been approved, Dagger said company officials are reviewing possible timelines for the project. Construction could start this year, although no decisions have been made.

I think we’re trying to weigh that as we work into spring here,” Dagger said.

If construction does begin this year, it would likely not be until fall. The company could also wait to see what happens with the project’s second phase before beginning construction….

Earlier this month, county officials in Van Wert and Paulding Counties received the first PILOT payment from Iberdrola Renewables as part of the separate Blue Creek Wind Project in northern Ohio. In that case, Van Wert County Auditor Nancy Dixon said her county received about $2,070,000, which was split between schools and other taxing entities, including about $230,000 for that county’s general fund.

“From my perspective it’s not what you get, it’s what you gave away,” Stacy said.

However, without the PILOT, proponents of the wind farm have repeatedly said it could make the project too expensive to move forward.

Concerns about safety and noise for neighboring homeowners should also be considered first, regardless of potential revenue for the county, said Jack Van Kley, an attorney for UNU who has argued against the project.

“No amount of money is going to compensate people for the loss of comfort in their own homes,” Van Kley said.

via Champaign turbine project could start | www.springfieldnewssun.com.