Ms Cindy Sage of Sage Associates (USA) is the author of the "Summary for the public" that is written in an alarmist and emotive language and whose arguments have no scientific support from well-conducted EMF research. She is also the author of five more chapters (with a total of 6 out of 17 chapters) and the co-author of the final key chapter on policy recommendations.

There is a lack of balance in the report; no mention is made in fact of reports that do not concur with authors’ statements and conclusions. The results and conclusions are very different from those of recent national and international reviews on this topic (see Annex 1 and 2).

It’s only been about three months since TransCanada Power Marketing Ltd. sued the Massachusetts Department of Public Utilities (DPU), its commissioners, and several other Commonwealth agencies, claiming that Section 83 of the Green Communities Act discriminates against out-of-state renewable energy projects in violation of the U.S. Constitution, but the case has already scored a win for TransCanada.

This week, the DPU issued an emergency rule eliminating the in-state requirement from the regulation that mandates electric utilities buy their renewable energy from projects installed in Massachusetts or off-shore wind in the Cape Cod area.  The emergency rule came just 9 days after TransCanada filed a notice of dismissal “with prejudice” to drop its lawsuit against the three named individual commissioners of the DPU.

Renewable energy industry insiders were buzzing with talk about this case at the 17^th Annual New England Energy Conference in Providence, RI, Monday and Tuesday.  Rumors had it that Commonwealth lawyers and officials were anxious to settle with TransCanada to make this case go away.  And so the emergency rule issued on June 9^th takes a major step in that direction.  In fact, the Boston Herald observed this week that the Legislature apparently suspected this provision was unconstitutional when the Green Communities Act was enacted two years ago because the act allowed the DPU to specifically strike down the provision in the event of legal action to challenge it.

Without a court decision on the merits of the TransCanada case, however, the question remains how far a state can go in promoting in-state installations of renewable energy projects without running afoul of the Dormant Commerce Clause of the U.S. Constitution. Can a state survive a constitutional attack if it mandates in-state renewable installations in exchange for in-state qualifying renewable energy certificates?

While it’s possible the federal court in Massachusetts might get a chance to decide this issue as part of TransCanada’s pending motion for a preliminary injunction, I expect that the rest of the case will get settled quickly as well and the court will not get a chance to issue a decision on the merits.  We will likely have to wait another day for the courts to answer the constitutional questions presented by renewable carve-out provisions.

On Monday night on the last day of May we will make our way home from our various Memorial Day activities and on Tuesday welcome the 2010 Atlantic hurricane season.  It looks ominous.  The National Oceanic and Atmospheric Administration reports that this year could be “one of the more active on record.”  A few things form the basis for this prognostication.

First, wind shear in the upper atmosphere is deadly for hurricanes.  In 2009 El Niño in the eastern Pacific was strong, and so was the wind shear it generated.  This year El Niño has dissipated.  Second, sea surface temperatures are higher than average.  Low wind shear and high sea surface temperature support hurricane formation.  Third, favorable wind flows off the west coast of Africa are expected.  Scientists refer to the pattern of warm waters and favorable winds over decades as the “tropical multi-decadal signal.”  A component of the tropical multi-decadal signal is the “Atlantic multi-decadal oscillation” or AMO, which is primarily identified with Atlantic sea surface temperatures.  The current state of the oscillation favors the formation of hurricanes and began in 1995.

It is worth noting that the AMO arises independently of climate change.  The IPCC includes a discussion of the AMO in its 2007 report.  The language is dense but the graphs are not and I commend them to you. Click here.  To even a lay reader like myself, it is quite apparent that something is cycling and that, whatever it is, we are in the middle of the hot portion.

So the interesting question is whether the AMO and climate change together will lead to more severe and more frequent hurricanes.  A working group of the World Meteorological Organization addressed this question in a statement published in 2006. Click here.  To quote the WMO:  “The scientific debate … is not as to whether global warming can cause a trend in tropical cyclone intensities. The more relevant question is how large a change:  a relatively small one several decades into the future or large changes occurring today?”

This is no small question.  If climate change will increase the severity and frequency of hurricanes today, then many of the steps society is taking right now may be inadequate.  Building codes, zoning decisions, and emergency response planning are all based on the likely scenarios to be encountered.  But it just may be that we don’t know the likely scenarios.  By the same token, if the climate change effect will not be noticed for decades, strategies for adaptation can be successful.

The WMO working group meets again at the end of hurricane season in November.  For planning purposes, let’s hope they can provide more guidance.  In the meantime, maybe a trip to Kansas is in order.

Several European countries already have offshore wind farms, including Denmark, Ireland, the Netherlands, Sweden, and the United Kingdom.  Earlier this year, China completed the installation of its Shanghai Donghai Bridge offshore wind farm project, which has a total installed capacity of 102 MW (enough to power 200,000 Shanghai homes) and is the first large scale offshore wind farm constructed outside Europe.  As for the United States, the Department of Interior (DOI) had issued a report last April which noted (in part) that 28 of the contiguous states have a coastal boundary (including the Great Lakes), 78% percent of the electricity demand in the United States is from the coastal states, and offshore wind has the potential to meet a large proportion of that demand.  As analyzed by the National Renewable Energy Lab, over 1,000 gigawatts (GW) of wind potential exists off the Atlantic Coast and over 900 GW of wind potential exists off the Pacific Coast.  Despite the great potential for offshore wind in the United States, not one offshore wind project has been approved for construction in the United States…until now.  On Wednesday, April 28, 2010, Secretary Salazar approved the Cape Wind project to be constructed on the intercontinental shelf off of Massachusetts.  The regulatory tide is turning… 

Approval of the Cape Wind offshore wind project despite contentious opposition by certain groups provides regulatory support for offshore wind and provides some guidance for several other offshore projects that have been proposed in the last few years.  The development of wind projects in the United States, which are (by all accounts) capital-intensive, has been hampered by concerns about the financial markets, the overall economic downturn, regulatory uncertainty as to the future role for renewables in energy policy, and environmental issues.  While Congress has yet to pass comprehensive climate and energy legislation, the approval of the Cape Wind project signals that large scale renewable energy development can play a role in economic recovery and in energy independence and that opposition by those who believe offshore wind farms are unsightly will not prevail when other factors align in favor of the development.  

The process for the Cape Wind project began in 2001, when Cape Wind Associates, LLC, submitted an application to the United States Army Corps of Engineers (the Corps) for a permit to construct an offshore wind power facility in Nantucket Sound.  Public review and opposition followed.  According to the DOI, the proposed Cape Wind project is expected to meet 75% of the electricity demand for Cape Cod, Martha’s Vineyard, and Nantucket combined and cut carbon dioxide emissions from traditional power plants by 700,000 tons per year.  The Cape Wind facility will occupy a 25-square-mile section of Nantucket Sound and produce enough energy to serve more than 200,000 homes in Massachusetts.  The maximum energy output of Cape Wind is 468 MW, with an average anticipated output of 182 MW.  The project includes a 66.5-mile buried submarine transmission cable system, an electric service platform, and two 115-kV lines connecting to the mainland power grid.

Success begets success.  And so, even though the United States is not the first country to approve the construction of an offshore wind farm, this is very encouraging for wind energy developers, the construction industry, and financial investors who were waiting to see whether the 9-year old Cape Wind proposal would pass regulatory - and especially environmental - muster and then survive the aesthetic opposition raised by some.       

Movie production or distribution is not something I get to do every day.  Or even at all.  But this opportunity is proving hard to pass up.  What happens when a windmill fails?  Let’s watch what happened in Denmark in February 2008.  http://www.windaction.org/videos/14294.  Can you get insurance for this?  And what about other problems that wind farm owners and operators might face? 

This is not of obscure interest.  Last night Interior Secretary Salazar made a decision on whether the Cape Wind wind farm project in Nantucket Sound can move forward:  he approved it.  Proponents assert this is the harbinger of a $270 billion industry and can be the source of 75% of the energy needed by Cape Cod, Nantucket and Martha’s Vineyard.  Critics point to desecration of Native American sites and rituals, as well as the destruction of unique and beautiful views.  (It seems hard to believe that nine years have passed since the project was announced. But that is due process. In the end the Secretary’s decision coincided with the views of Mass Audubon, the NRDC, the Conservation Law Foundation, the governors of Maryland, New Jersey, Massachusetts, Rhode Island, Delaware and New York, national policy and national opinion polls.).

But let’s return to our exploding wind turbine.  It goes without saying that there must be insurance for these projects.  The key is in identifying the risks and recognizing what can be insured, what requires indemnification or hold harmless agreements, and what risks must be minimized because they cannot be eliminated or transferred.  This is no more than the usual risk management paradigm.

A failed wind turbine is an obvious risk and we can be confident that our Danish wind entrepreneurs procured property insurance.  The description accompanying the video identifies high winds during a storm and a failed braking mechanism as the cause of the calamity. Two technicians barely managed to escape. Debris was hurled 500 meters. While the cause of the loss might seem obvious (high winds and covered), one can be sure the applicable policy was reviewed closely to ensure a "wear and tear" exclusion was not applicable or an anti-concurrent causation clause did not apply.

Less certain is the scope of business interruption insurance available.  While certainly the output of one turbine is now absent, is that enough to trigger business interruption coverage, which often requires a “necessary interruption” of one’s business?  Perhaps more significantly, who bears the risk if the wind does not blow, or the design is not as efficient or productive as anticipated.  Similarly, what are the implications for promises of startup by a certain date or contractual obligations to deliver a certain quantity of power or that certain tax credits will be available. 

Another side of the operation is liability exposure.  Are individuals or property likely to be injured by a failure?  What is the kind of injury?  Again, it is highly unlikely the Danes did not obtain coverage for an individual or vehicle injured or damaged by the failing structure (whether it was the turbine, the blades or the mast).  Other issues are not so obvious.  In England claims have been asserted that infrasonic waves are dangerous.  Low frequency noise complaints or “strobe effects” are claimed to cause injury.  We may expect assertions of loss of property values when windmills disturb high-priced views.  Will a general liability policy pick up these claims? 

In the past, we've explored the importance of regulatory certainty and the challenges posed by regulatory uncertainty.  Whether financing clean tech and renewable energy projects or deciding which states provide the best incentives for manufacturers and developers of such emerging technologies and renewable projects, a state's regulatory environment plays a critical role.  This is why recent actions by some governors to move money out of the budgets designated for clean tech and renewable energy or energy efficiency projects for use in closing budget gaps raises a concern. 

As known to readers of our climatelawyers blog, the Regional Greenhouse Gas Initiative (RGGI) was the first mandatory regional cooperative in North America through which ten signatory states in the northeast have committed to cap and then reduce carbon dioxide emissions by setting carbon emission limits on the power industry.  The compliance period began in 2009.  As discussed in a blog entry from September 2009 just after the results of the 5th auction were announced, we posited that the drop in auction prices from the 3rd Auction to the 5th auction may be attributable to the regulatory uncertainty then-apparent as to the future of RGGI in light of the draft climate and energy legislation that was working its way through Congress at the time.  To the extent that the regulatory programs in place provide market signals and some certainty as to the commitment of the RGGI member states to promoting clean tech, renewable energy, and energy efficiency measures, the raiding of these funds creates the opposite effect: it dilutes the efficacy of the regional cap and trade program and sends mixed signals to the very industries that RGGI was intended to encourage.
 
Revenues from the RGGI auctions were specifically designed to help the member states further the goals of the regional cap and trade program and to encourage new clean tech industries to settle in these states, create more jobs in the green and clean tech space, implement greenhouse gas emission reduction and energy efficiency measures, and help customers struggling with energy bills.  As indicated in a press release issued by Governor Paterson in December 2008 following New York's participation in the RGGI auction process, "[t]he RGGI regulations require that the New York State Energy Research and Development Authority (NYSERDA) use the proceeds for energy efficiency, renewable energy, programs to reduce greenhouse gas emissions in other sectors of the economy and other initiatives."  In the spring of 2009, NYSERDA approved a plan to invest the RGGI funds.  In December, the New York legislature approved New York's Governor Paterson's proposal to raid the RGGI auction fund, moving $90 million of New York's then-share of the RGGI money (which, at the time comprised half of the total $180 million allocated to New York from the auction proceeds) to the State's general fund to cover the State's budget shortfall.  Following suit, just last week, New Jersey's Governor Christie decided to move $65 million raised through the RGGI auctions (the full amount allocated to New Jersey from the RGGI auctions to date) from the Global Warming Solutions Fund to the general fund to help address the State's deficit.  Connecticut is now contemplating moving money from funds reserved for energy programs to help address its budget shortfall.  In contrast, Rhode Island announced last week that it will not shift RGGI money to fill that state's budget shortfall, noting that state law prevents the governor from moving the nearly $9.3 million received by Rhode Island through the RGGI auctions away from the intended purpose of energy efficiency and renewable energy projects. 
 
No one disputes the reality that the current economy forces states to make difficult decisions.  However, raiding funds that were created through state and regional programs specifically to encourage energy efficiency, renewable energy, and clean tech initiatives creates further regulatory uncertainty when developers and entrepreneurs in these fields require reduction of regulatory risk in order to commit to enter a state and compete in this still-emerging market.  It also sets a troubling precedent and casts a cloud over the potential efficacy of future cap and trade programs proposed on a federal level absent, of course, measures incorporated into such pending federal legislation that prohibits such behavior.  So, while some may think that only environmentalists are opposed to the recent efforts by certain states to address their budget shortfalls by raiding energy efficiency, clean tech and renewable energy funds, there is another significant sector adversely impacted by this behavior: the very industries and entrepreneurs who are looking for regulatory signals that encourage such companies to enter the marketplace and compete globally in the renewable energy, efficiency, and clean tech sectors.

It has only been a month since an organization called the Coalition for Responsible Regulation, Inc. filed suit in the U.S. Court of Appeals for the District of Columbia Circuit challenging the U.S. Environmental Protection Agency’s endangerment finding and, already, 16 states have lined up with the EPA, seeking to intervene in support of the challenged regulation.

The challenged regulation, entitled “Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act” (the “Final Rule”), was published in the Federal Register on December 15, 2009 and was issued by the EPA in response to the U.S. Supreme Court’s landmark decision in Massachusetts v. EPA, 549 U.S. 497 (2007).  The rules regulate emissions of greenhouse gases from new motor vehicles and engines. 

In the Final Rule, the Administrator finds that “the body of scientific evidence compellingly supports” her conclusion that “greenhouse gases in the atmosphere may reasonably be anticipated both to endanger public health and to endanger public welfare.” She defines the resulting air pollution referred to in Section 202(a) of the Clean Air Act to be “the mix of six long-lived and directly-emitted greenhouse gases: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O)), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfer hexafluoride (SF₆).”  The Administrator concluded that the mix of greenhouse gases from transportation sources contribute to the climate change problem, which is reasonably anticipated to endanger public health and welfare.

The Final Rule triggers the EPA’s statutory duty to promulgate regulations establishing emissions standards for motor vehicles covered by Section 202(a)of the Clean Air Act.

Noting that the Court’s action on the petition for review will affect the public health and welfare of their residents and will also affect a host of global warming impacts that the proposed intervenors are suffering, the following states seek to intervene in support of the EPA: Commonwealth of Massachusetts and the States of Arizona, California, Connecticut, Delaware, Iowa, Illinois, Maine, Maryland, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington.  The City of New York also filed in support of the EPA.

Notably absent from the Motion for Leave to Intervene as Respondents is the State of New Jersey, from which EPA Administrator Lisa Jackson came as the prior Commissioner of the New Jersey Department of Environmental Protection. New Jersey, which just last week inaugurated new Republican Governor Chris Christie, who unseated Democrat Jon Corzine, formerly supported climate change litigation and was among the states challenging the EPA in Massachusetts v. EPA.  The following states were not in the Massachusetts v. EPA case but joined the fight now in support of the regulations: Arizona, Delaware, Iowa, Maryland and New Hampshire.

As the legislative season heats up again in Connecticut, with a session scheduled to commence in early February, some energy industry lawyers, policymakers and leading Legislators themselves have been talking over the last few weeks about what Connecticut should do to improve the deployment of renewables generally and solar in particular.  There seems to be more recognition that, for Connecticut to achieve its broad greenhouse gas emission reduction strategies and climate change mitigation goals, more needs to be done to promote investment in renewables in the state and, if green jobs can be created along the way, all the better.

A question that keeps coming up in Connecticut is how New Jersey, which has a similar climate and is not even in the top-ten list among states with respect to the intensity of sunshine, could achieve status as the state with the second largest quantity of installed solar photovoltaic capacity, second only to California.  If you look at per-square-mile or per-capita statistics, New Jersey can even boast that it has the most installed solar projects in the U.S.

So what has New Jersey done to promote solar PV?

After implementing one of the more aggressive renewable portfolio standards (RPS) in the country as part of the Energy Master Plan, with its mandate that 22.5% of the energy supply be generated from renewable sources by 2021, the NJ RPS also contains a solar “carve out” of 2.12% by 2021.  This is the amount of energy supply required to come from solar PV.  The state also decided to wean itself from the grant-based program except for residential and small commercial on-site solar P/V installers, because the available grant funds alone would not support the growth needed to achieve the RPS and solar carve-out.  And so, the New Jersey Board of Public Utilities adopted a rule that instituted a massive increase in the “alternative compliance payment,” or ACP, for solar from $350 (the amount for other renewables) to initially $711 per megawatt hour.  This is the amount that has to be paid into the fund if load-serving entities do not have enough solar energy in their portfolios.  And hence, the solar renewable energy certificate, or SREC, was given a massive increase in valuation.  Since SRECs typically trade at 75% to 80% of the ACP, market values for SRECs rose to the $600 to $650 range.

Especially when these state incentives are combined with the federal renewable energy investment tax credit and accelerated depreciation allowed, the market signals sent in New Jersey to the solar industry have attracted business investment on a grand scale, created green jobs and market-based renewable investments along the way.

In my view, Connecticut needs to take similar steps.  The following strategies would help Connecticut facilitate deployment of solar photovoltaic installations in a market-based approach that reduces the reliance on direct governmental grants, promote the creation of green jobs, and attract private capital investments.  Here’s my Top-10 List:

1.      Create a Solar PV Carve-out within the Class I RPS to mandate separate solar RPS.

2.      Create separately-recognized solar renewable energy certificates, or SRECs.

3.      Substantially increase the alternative compliance payment amount for solar PV.

4.      Allow electric distribution companys (EDCs) to conduct auctions or otherwise conduct a process to acquire long-term SREC contracts (+/- 15 years), but mandate transparent pricing to send market signals in real time.

5.      Allow EDCs and capacity and peaking generation contractors to install on-site solar (with reasonable size limits to protect viability of non-utility market for projects) and recover project costs through rate base.  (For private wholesale generation sites, this can be done through a cost of service contract for differences with an EDC.)

6.      Establish one-stop-shopping with the Connecticut Department of Public Utility Control or other capable agency to certify completion and verify qualifying amounts of SRECs generated by a solar project installed in Connecticut with transparent market prices to facilitate open trading of SRECs.

7.      Authorize Connecticut to negotiate a compact or memorandum of understanding  with New Jersey and other states with similar programs to allow for the cross-border recognition and free trade of SRECs (at least through other states that comprise the Regional Greenhouse Gas Initiative (RGGI) or Northeast regional transmission organizations (i.e., ISO New England, ISO-NY, and PJM) with comparable GIS tracking systems).

8.      Adjust real and personal property tax law to ensure that solar improvements are not taxed.

9.      Revise zoning law to define solar as a beneficial use such that solar projects cannot be denied without substantial evidence in a written record finding that a solar project is not a beneficial use in a specific case.  Consider establishing exclusive jurisdiction for larger scale solar PV projects with the Connecticut Siting Council for projects equal to or greater than 1MW to expedite siting by petition for declaratory ruling.

10.  Allow for unlimited size of net metered solar projects behind customer meters provided that system size cannot be greater than customer’s on-site electricity requirements, subject to standard interconnection agreement with EDC following EDC confirmation of no adverse impact on distribution system. 

Please write in on this blog and let me know what would be on your wish list to help facilitate the deployment of solar and other renewables in Connecticut.

By Shawn Smith

McCarter & English, Hartford Office

The New Jersey Board of Public Utilities (BPU) recently proposed an amendment to its net metering rule that will create an even greater economic incentive for utility customers to develop on-site renewable energy, especially solar energy systems.

The proposed amendment would eliminate the 2 megawatt (MW) limit on the size of renewable energy systems eligible for net metering, which would lift an obstacle for large-scale solar projects.  This gives customers the opportunity to develop larger renewable energy systems to generate renewable energy and offset their electric bills.  By developing new systems or expanding upon existing ones, customers can take advantage of the economic and environmental benefits of net metering.

The net metering rules allow customers which generate on-site electricity using Class I renewable energy sources, such as solar, to connect with the local electric distribution company (EDC) and generate electricity on the customer’s side of (or “behind”) the meter.  The net meter virtually “spins both ways,” meaning that the EDC will either charge the customer for electricity supplied in excess of that generated on site by the renewable project, or credit the customer for purchases resulting from excess energy generated by the renewable energy source.  Under the existing net metering rules, a renewable energy system cannot (1) generate more than 2 MW of electricity, or (2) exceed the annual amount of “electricity supplied by the electric power supplier or basic generation service provider to the customer.”  The 2 MW restriction created a ceiling that limited the ability for larger commercial customers to take advantage of net metering.

By proposing to lift the ceiling, the BPU is inviting customers (or third-party developers using power purchase agreements, for example) to invest in larger renewable energy systems that generate more than 2 MW of electricity.  Such a policy shift helps the state to achieve its ambitious objectives set forth in the Energy Master Plan of  achieving 22.5% of renewables, including a renewable portfolio standard target of 2.12% of all energy sold in NJ coming from solar generation.

Despite arguments from some owners of large warehouses and developers seeking to build utility-scale solar projects on vacant property sites, the BPU rejected calls to revise the second net metering condition, which requires that a renewable energy system’s generating capacity be equal to or less than the average amount of electricity consumed by that customer on site either from that supplied annually by an electric power supplier or the EDC in the form of basic generation service.  Nevertheless, the potential economic payoff for customers investing in renewable energy projects is clear--the larger the renewable energy system, the lower their electric bill.

When the net metering rule is combined with other New Jersey regulatory incentives that promote solar projects, especially as the available federal investment tax credits and accelerated depreciation credits provide enhanced opportunities to support solar projects, the solar industry is expected to continue to focus its business development efforts on NJ and larger-scale sites can expect the solar industry to come knocking. 

The proposed amendment provides a particularly significant opportunity for commercial customers to develop or expand upon solar energy systems to take advantage of the substantial market incentives for solar that exist in New Jersey.  New Jersey has encouraged the development of solar energy through its Energy Master Plan (EMP) and the market for Solar Renewable Energy Certificates (SRECs). New Jersey’s solar market, which is the second-largest in the United States (second only to California), continues to grow as a result of these efforts. 

The BPU is soliciting comments on the proposed amendment to the net metering rule through March 5.  Anyone interested in submitting comments is free to do so.

Another notable proposal of the BPU concerns New Jersey’s “Prevailing Wage Law,” which requires the BPU to adopt regulations to ensure that the prevailing wage rate be paid to workers “employed in the performance of certain contracts for construction undertaken in connection with board [BPU] financial assistance.”  Renewable energy projects constructed with BPU’s financial assistance will soon be subject to the prevailing wage requirements if the BPU proposal is adopted.  The BPU is soliciting comments on the prevailing wage law through March 5.  Anyone interested in submitting comments is free to do so.

Finally, in yet another effort to expand renewables, the BPU opened the door for renewable energy projects located outside of New Jersey, other than solar, to qualify for New Jersey RECs.  Previously, only on-site renewable energy facilities directly connected to a New Jersey EDC’s distribution system could qualify for RECs.  Now, pursuant to the new regulation adopted recently, the BPU is allowing qualifying renewable projects located outside of New Jersey, except solar, to obtain New Jersey RECs provided these projects are connected to the PJM Interconnection, L.L.C.’s (PJM) generator information system for tracking renewable energy.  PJM is a non-profit regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia, including Pennsylvania, New Jersey and Maryland.