Yarmouth, Maine considers dam removal, other options

Monday, October 31, 2011

The town of Yarmouth, Maine is holding a meeting on November 1, 2011 about the future of two town-owned dams on the lower Royal River.

The Royal River flows nearly 40 miles across Maine, from Sabbathday Pond in New Gloucester to meet Casco Bay in the town of Yarmouth.  Along this course, the Royal River falls about 300 feet, much of which forms a series of old dams and falls in its lower reaches.  The village of Yarmouth formed around several of these dam sites, which provided mechanical power to mills and businesses in the village.  Today, dams remain on the Royal River.  A non-hydropower dam spans the river near East Elm Street, while the Sparhawk Mill dam hosts hydroelectric generating facilities near Bridge Street.

The Sparhawk Mill dam was originally built to provide mechanical power, but hydroelectric generating facilities were installed in 1984.  Now, the Sparhawk project can produce 270 kilowatts of power, and operates under a licensing exemption issued by the Federal Energy Regulatory Commission in 1985.

Today the town of Yarmouth owns the dams, and is considering their future.  The Sparhawk dam is reportedly not producing much -- if any -- revenue for the town, while both dams may need maintenance and repairs.  Some community members suggest dam removal for reasons ranging from municipal fiscal policy to enhancing fish passage along the Royal River.  Others point to value of the Royal River's continuing ability to produce renewable hydroelectricity, and urge that the dams be maintained.  The East Elm Street dam could even have electric generation facilities installed, either traditional hydroelectric or hydrokinetic devices.

The community forum starts at 7 p.m. on November 1 at Yarmouth Town Hall.

Keystone XL pipeline explained

Thursday, October 27, 2011

The proposed Keystone XL oil pipeline is drawing significant public attention.  What is the Keystone XL project, and why is it controversial?

What is Keystone XL?
The Keystone XL project is a proposed extension of an existing crude oil pipeline.  The $7 billion project would run from the Canadian province of Alberta to Texas, cutting across Saskatchewan, Montana, South Dakota, Nebraska, Kansas, and Oklahoma along the way.  TransCanada Corporation proposes Keystone XL to expand its existing Keystone pipeline network, a former natural gas pipeline repurposed to ship crude oil south to meet U.S. demand.

What is the controversy?
The U.S. is a major consumer of oil and petroleum-derived products.  

All major linear infrastructure projects tend to draw interest.  Significant projects, whether a pipeline for natural gas or oil, electric transmission line, or highway, often affect interests across a wide geographic range.  Relatively local siting concerns, like finding the best route for a given project and minimizing its direct environmental impacts, are common when planning any major infrastructure development.

In Keystone XL's case, project opponents point to additional concerns about the project's broader environmental impacts.  Some decry the proposal as increasing dependence on foreign oil, and believe the U.S. already has sufficient Canadian oil import capacity.  Others note that the oil to be shipped south over Keystone XL will be largely derived from Alberta's "tar sands" or "oil sands", and that extraction and production of crude oil from these sources involves greater greenhouse gas emissions or other environmental impacts.

What is happening now?
Concerns over the Keystone XL project are manifesting in multiple forms.  Protests have led to more than 1,000 arrests, including high-profile protestors like actress Darryl Hannah and NASA scientist James Hansen.  States affected by the pipeline proposal are moving cautiously; next week the Nebraska Legislature will meet at the request of Governor Dave Heineman to address concerns over Keystone XL.

To develop the project, TransCanada must secure a presidential permit to import oil across the national border.  While that permitting process initially appeared to be on track, 14 members of Congress have asked for a delay to allow an investigation into how the State Department performed its environmental review of the project.

The fate of the Keystone XL project depends on a number of factors, including whether it can secure a  presidential permit as well as how states react.  Part of the project's financing hinges on contracts to deliver crude oil as soon as 2014, and TransCanada is reportedly concerned that delay would jeopardize that financing structure.

How price predictions affect heating oil supply contracts

Wednesday, October 26, 2011

Nearly half the households in the northeastern region of the United States use heating oil to provide part or all of their space heating needs.  While natural gas fuels furnaces in many homes in other regions of the country, New England is a significant consumer of heating oil.  According to the U.S. Energy Information Administration, about 80% of U.S. households that use heating oil are located in the Northeast.

Those of us managing households in the Northeast know that heating oil companies typically offer customers different ways to buy oil.  The most basic approach is to buy oil on the spot market.  Under this approach, when a customer wants a delivery of oil, the customer can call around and select a supplier for a single delivery.  This approach lets customers benefit when prices go down, but leaves customers exposed to the market risk that prices may go up.

One alternative some customers prefer is locking in heating oil prices through a supply contract with a single supplier.  According to the EIA, customers' taste for this alternative changes based on predictions about future fuel prices.  In the middle of the last decade, about one-third of Northeast homeowners chose contracts; that number approached half of homeowners in 2008 in response to anticipated high fuel prices.  As it turned out, petroleum prices fell sharply in the second half of 2008; the fraction of homeowners with supply contracts fell to about 25% in both 2009 and 2010.  Now, the EIA reports that heating oil associations in the Northeast are predicting that even fewer customers will lock prices in this year.

Vermont wind project contested

Monday, October 24, 2011

A wind energy project in northern Vermont is the focus of significant controversy.  Utility Green Mountain Power is currently developing the Kingdom Community Wind project on Lowell Mountain near the town of Lowell in Vermont's Northeast Kingdom.  The 63 MW project is the first large-scale generation facility proposed by one of Vermont's investor-owned regulated utilities since the Searsburg wind project was approved in 1996. 

In May 2010, Green Mountain Power Corporation, Vermont Electric Cooperative, Inc and Vermont Electric Power Company, Inc. filed a petition with the Vermont Public Service Board seeking approval to build up to a 63MW wind generation facility, and to install or upgrade about 17 miles of transmission line and associated substations.

A year later, the Vermont Public Service Board issued its final order and certificate of public good approving the project (182 page PDF).  In the order, the Board found that "the proposed project will promote the general good of the state".  Among the factors supporting the Board's decision was the fact that the project would produce energy without greenhouse gas emissions, and would thus support the goals of the Regional Greenhouse Gas Initiative (RGGI).  The Board also noted that the project would help the state meet its goals of promoting new renewable generation as required in Vermont's SPEED, or Sustainably Priced Energy Enterprise Development Program.  SPEED requires that, by 2012, at least 10% of the state's electric load be served by new sources of renewable energy.  The Board also noted economic development benefits from the project, including job creation and tax revenues as well as the benefits of providing the developing utilities a long-term source of stably priced power.

The project drew opposition from a variety of sources, including those who oppose mountaintop wind development generically as well as those opposing development of this particular site.  Now, while Green Mountain Power is preparing the site for construction, a group of protesters has set up a camp near the ridgeline.  Abutting landowners have also asked a court to delay blasting and other work, claiming that they own part of the land where the blasting will occur.

What will happen to the Lowell Mountain project?  Green Mountain Power planned to complete the project by December 3, 2011.  As the Burlington Free Press has noted, the company has argued that delay is costly, and that too much delay would be fatal: Green Mountain Power must have project up and running by December 31, 2012 to qualify for $48 million in federal tax credit that are part of the project's overall financing plan.

Maine hydrokinetic energy project seeks pilot license

Friday, October 21, 2011

Hydrokinetic power plants can produce usable power from the energy contained in moving water into electricity.  Tidal currents, ocean waves, or water flowing through rivers can all be used to produce hydrokinetic energy.  (To learn more, check out my summary of what's happening with hydrokinetics across the country.)

Hydrokinetic energy development is generally regulated by the Federal Energy Regulatory Commission.  To be able to install and operate a hydrokinetic project at a given site, the developer typically goes through a multi-step regulatory process.  This usually includes securing a preliminary permit granting the exclusive right to study the site for several years, followed by the FERC license application process.

Maine is home to a number of issued preliminary permits for proposed hydrokinetic energy projects.  This month, one of those projects -- the Cobscook Bay Tidal Energy Project -- took a step forward, as its application for a pilot license was accepted by the Commission.

The Cobscook Bay project is proposed by ORPC Maine, LLC, a subsidiary of Ocean Renewable Power Company.  ORPC proposes to deploy its proprietary scalable tidal energy power system in Cobscook Bay near the city of Eastport and the town of Lubec, Maine.  Cobscook Bay's tidal energy resource has drawn interest for nearly 100 years, with proposals like the Passamaquoddy Power Project coming and going in that time.  Hydrokinetic technologies are enabling renewed interest in the bay's tidal energy resources.

ORPC's pilot license application envisions two phases of project development.  First, ORPC will test a single TidGen unit for one year.  Next, ORPC would add four more TidGen units to create a linked project.  Each TidGen unit has a maximum design capacity of 180 kilowatts, but is anticipated to produce only 60 kW during typical operations.  Electricity produced by the project would be brought ashore via a 3,600-foot underwater cable, where it would be conditioned and interconnected with the grid owned by Bangor Hydro Electric Company.

FERC gave notice that it accepted ORPC's application for processing on October 6, 2011.  Because ORPC is using the Commission's new pilot license process, the regulatory steps are more streamlined than for traditional hydropower licenses, and many of the deadlines are accelerated.  Comments, recommendations, motions to intervene or protests are due within 30 days from that notice of acceptance.

Bye-bye BOEMRE, hello BOEM and BSEE

Monday, October 17, 2011

The federal agency with prime responsibility for ocean energy development has been shuffled yet again.  After just over a year of operations BOEMRE - the former Bureau of Ocean Energy Management, Regulation and Enforcement - has been replaced by two offices: the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE).

This reshuffling is the latest organizational change to the federal oversight of ocean energy development, but it is not the first.  Until 2010, the Minerals Management Service (MMS) regulated both conventional oil and gas production and renewable energy activity.  In the wake of the Deepwater Horizon oil spill incident, and criticism of how MMS operated, U.S. Secretary of the Interior Ken Salazar restructured MMS into BOEMRE.

Now, BOEMRE has been split in two, with the division occurring along functional lines.  BOEM describesitself as “responsible for managing environmentally and economicallyresponsible development of the nation’s offshore resources”.  BOEM’s functions include offshore leasing, resource evaluation, review and administration of oil and gas exploration and development plans, renewable energy development, National Environmental Policy Act (NEPA) analysis and environmental studies.

Under the new paradigm, BSEE is responsible for safety andenvironmental oversight of offshore oil and gas operations, includingpermitting and inspections, of offshore oil and gas operations.  BSEE exercises functions including the development and enforcement of safety and environmental regulations, permitting offshore exploration, development and production, inspections, offshore regulatory programs, oil spill response and newly formed training and environmental compliance programs.

Feds decide not to delegate more transmission authority

Wednesday, October 12, 2011

Yesterday, I wrote about the Department of Energy's proposal to delegate increased electric transmission siting authority to the Federal Energy Regulatory Commission. Since the enactment of the Energy Policy Act of 2005, the Department has had the authority to study congestion on the transmission system, and designate national interest electric transmission corridors where it believes more transmission facilities are needed.  The act also gave the Commission “backstop” authority to approve transmission line routes when states fail to issue approvals within a year.

Until yesterday, Secretary Chu was considering whether to delegate the Department's congestion study and corridor designation functions to the Commission.   Supporters of the increased delegation said it would facilitate the development of new transmission facilities needed both for future load growth and to connect renewable energy resources to customers.  Opponents, including congressional leaders, noted that Congress had specifically divided the functions for good reasons, while states' rights advocates objected to increased consolidation in the Commission of power over transmission line siting -- traditionally a prerogative of each state.

Now, the Department and the Commission have issued a joint statement that transmission backstop siting authority will not be delegated.  Instead, the joint statement proclaims "enhanced cooperation" as an alternative to delegating additional authority to the Commission, along with process improvements within the Department to allow more expeditious transmission siting.

Federal authority over transmission siting may be reshuffled

Tuesday, October 11, 2011

U.S. Department of Energy Secretary Chu is considering a policy change that will affect how electricity transmission lines are sited and built.  Since the dawn of the electric power industry, states have had the authority over whether the siting of a given transmission facility should be permitted within their boundaries.  That traditional states’ right may be shifting away to the federal level.

Since the Energy Policy Act of 2005, the Department has had “backstop” authority to approve transmission line routes when states fail to issue approvals.  In 2007, the Department of Energy used this authority to designate corridors of highly congested transmission lines in the mid-Atlantic area (parts of Delaware, Ohio, Maryland, New Jersey, New York, Pennsylvania, Virginia, West Virginia, and the District of Columbia) and the southwest (parts of southern California and western Arizona).   

Proposed new transmission facilities located within these designated National Interest Electric Transmission Corridors can apply to the Federal Energy Regulatory Commission for siting approval if a host state does not approve the project within one year.  This could happen if a state regulatory proceeding drags on for longer than a year, or if state regulators condition project approvals in a manner that is not “economically feasible” – both results more likely to happen in connection with larger and more controversial transmission line projects.  While the Commission initially approved some transmission line siting applications that had been denied by state regulators, a federal appeals court held that the Commission lacked authority to approve a project in the face of a state’s affirmative denial (as opposed to mere regulatory delay).

At issue now is whether the Department of Energy should delegate its corridor designation function to the Federal Energy Regulatory Commission.  Proponents of the measure point to the need for increased transmission development, citing the growth of renewable resources located far from customer loads as well as transmission congestion; they believe the Commission will be better suited to the task of studying congestion and designating national corridors than the Department is.  Others oppose this proposed delegation, noting that Congress specifically divided the corridor designation and project approval functions between the Department and the Commission, and that states retain the ultimate rights to deny a siting application.  A number of comments have been submitted to the Department on this proposed delegation.

Department of Energy loan guarantee program ends

Wednesday, October 5, 2011

In recent years, the U.S. Department of Energy has operated three loan-based programs designed to help finance innovative energy projects.  One of these DOE loan guarantee programs backstopped a total of $16 billion in loans for 28 projects, ended last week.  Projects supported by the loan program ranged from nuclear power to solar, wind to transmission, biofuels to energy efficiency.  Continued funding for the loan guarantee program for 2011 was called into doubt in the spring of 2011, and Congress ultimately continued the program's stimulus funding only through September 30, 2011.  While many of the projects financed through the program have drawn praise, the first guarantee issued -- $535 million in guarantees for solar panel maker Solyndra LLC -- has been called into question by some observers after Solyndra ceased operations last month.

On the DOE loan program's last day of operation, the Department of Energy finalized nearly $5 billion in loan guarantees to four solar projects.  Three of the solar projects are located in California (as are a number of other large-scale solar projects funded through the DOE loan guarantees), while the fourth is an innovative rooftop  solar project distributed across 750 existing rooftops owned and managed by Prologis in up to 28 states and the District of Columbia.

The hard deadline of last Friday means that other projects whose loan guarantee issuance process was nearly complete did not receive funding.  Will these projects find another way to be financed and built?  What impact will the end of the loan guarantee program have?  Congress appears to have intended the shuttered program to be a short-term stimulus program to help get the ball rolling on project development.  Because the projects financed through the program generally have long construction periods, it may be some time before we can have solid data on the value of the DOE loan guarantee program.

Offshore wind energy proposed off New York

Monday, October 3, 2011

The New York Power Authority - the public power organization for the state of New York - is pursuing the development of a utility-scale offshore wind farm in federal waters at least 13 miles south of New York City and the western tip of Long Island.  NYPA intends to hold a competitive solicitation to select a developer for the project, which is expected to have up to 700 megawatts of nameplate capacity.

Sunset over Five Islands harbor, Georgetown Island, Maine.

The Long Island project is not NYPA's first foray into offshore wind.  Until last month, NYPA was conducting a competitive process to select a developer for a project in the Great Lakes.  NYPA shut down its Great Lakes Offshore Wind (GLOW) program at the end of September 2011.