Well, it's been quite a while since I've done a blog post. As it turns out, life DOES happen after Clean Line. It has taken over four years to get to this point, but I can now definitively say that the Arkansas portion of the Plains and Eastern project is, in fact, DEAD. Why do I say this?
Shortly after the Department of Energy and Clean Line mutually agreed to part ways, Mr. Skelly attempted to sew the seeds of doubt in landowners, investors, and anyone else who would listen to his bluster that the project was not, in fact, dead... rather, it was "on a much slower track in Arkansas and Tennessee." We all knew better, but some egos (*coughSKELLYcough*) don't allow the acceptance of failure. The facts always come out in the end.
Not only has the Department of Energy nullified their contract with Clean Line, recently there has been some word that Clean Line is abandoning it's easement options in Arkansas. In addition to that, this past Friday (7/13/18), Clean Line's Dave Berry submitted a letter to the Tennessee Regulatory Authority (TRA) requesting that their Certificate of Convenience and Necessity be nullified in that state. Here's that letter:
And, just like that, it was over. After more than four years, many thousands of dollars, countless hours of research, writing, Facebooking, talking to people, meetings and booths, sleepless nights, strain on relationships and future plans, and pretty much everything in-between: it is OVER.
Congratulations, Arkansas landowners! For me, personally, it is difficult not to be bitter. But I won't be. As with all experiences in life, valuable lessons are learned, new and amazing friends are made, and you just have to try to do what you can to protect what's yours and grow from the experience. It has been a really wild ride, no doubt. This is likely the last blog post on this subject I will make, as I will probably leave it up to the other professionals I have met along the way to unearth the rest of the Clean Line saga... it promises to get interesting very soon.
Thank you to each and every one of you who have read and provided support to us along the way. I would hope that the blog that Alison and I have created together chronicling our experience with Clean Line Energy Partners, LLC, will serve as an illustration of exactly the WRONG way to develop infrastructure in this country... "clean" or otherwise. Potential developers take note.
See the smoldering ruins behind Michael Skelly over there? The twisted steel and scorched concrete trailing behind him? Those are the bridges he burned in Arkansas. Well, rhetorically, of course... because Michael Skelly never actually built anything here, except a list of enemies. There’s a difference between innovation and hubris, reality and fantasyland. Maybe you need a bit of both to pull off the project of Skelly’s dreams, but somewhere along the line… between attempting to circumvent state authority and bluffing about local tax payments, Clean Line Energy Partners, LLC, managed to make their project so toxic no one seems to want anything to do with them. To recap the events of recent weeks: Plains & Eastern, Clean Line’s regulatory crown jewel and the only of its projects to be fully (if questionably) permitted, is DEAD in Arkansas. Hallelujah. Don't take our word for it, though. Let's look at a little evidence:
Clean Line Withdraws from TVA's Interconnection Queue: Just a little background: Clean Line has three points of interconnection for it's project - at Southwest Power Pool (SPP) in Oklahoma for its proposed converter station at the beginning of the line, at Midcontinent Independent System Operator (MISO) for its proposed converter station in Pope County, Arkansas, and at Tennessee Valley Authority (TVA) for its proposed converter station in Shelby County, Tennessee. All three are vital to the Project's ultimate success. As you can see in the following screenshot, Clean Line has withdrawn its position in TVA's interconnection queue.
What's missing from the second screenshot (TVA's current interconnection queue)? #219 and #220 (Clean Line). Now, Skelly will likely attempt to say that the position can simply be revived later, but that's not really how the process works according to TVA:
3.5 Withdrawal. The Interconnection Customer may withdraw its Interconnection Request at any time by written notice of such withdrawal to TVA. In addition, if the Interconnection Customer fails to adhere to all requirements of this LGIP, except as provided in Section 13.5 (Disputes), TVA shall deem the Interconnection Request to be withdrawn and shall provide written notice to the Interconnection Customer of the deemed withdrawal and an explanation of the reasons for such deemed withdrawal. Upon receipt of such written notice, the Interconnection Customer shall have fifteen (15) Business Days in which to either respond with information or actions that cure the deficiency or to notify TVA of its intent to pursue Dispute Resolution. Withdrawal shall result in the loss of the Interconnection Customer’s Queue Position. If an Interconnection Customer disputes the withdrawal and loss of its Queue Position, then during Dispute Resolution, the Interconnection Customer's Interconnection Request is eliminated from the queue until such time that the outcome of Dispute Resolution would restore its Queue Position. An Interconnection Customer that withdraws or is deemed to have withdrawn its Interconnection Request shall pay to TVA all costs that TVA prudently incurs with respect to that Interconnection Request prior to TVA’s receipt of notice described above. The Interconnection Customer must pay all monies due to TVA before it is allowed to obtain any Interconnection Study data or results. TVA shall (i) update the OASIS Queue Position posting and (ii) refund to the Interconnection Customer any portion of the Interconnection Customer's deposit or study payments that exceed the costs that TVA has incurred. In the event of such withdrawal, TVA, subject to the confidentiality provisions of Section 13.1, shall provide, at Interconnection Customer's request, all information that TVA developed for any completed study conducted up to the date of withdrawal of the Interconnection Request.
There goes Clean Line's proposed end point. Clean Line Withdraws from MISO's Interconnection Queue: This is the one we've been waiting for. A withdrawal from MISO's interconnection queue removes the Project's midpoint (the Pope County, Arkansas, converter station connection point) from the equation. Go here and search for "J319." The evidence:
There goes Clean Line's proposed mid-point. Long story short: No connection point in Tennessee and no connection point in Arkansas = NO PROJECT IN ARKANSAS. This is fantastic news, Arkansas landowners. The multi-year fight has been unnecessarily taxing and expensive, but this is looking good for you. In spite of Skelly’s many, many protestations, the simple fact is, absent the Oklahoma portion of the line, whatever Frankenmonster he intends to “someday” cobble together is NOT Plains & Eastern. The Project, as pitched, hyped, and sold to the U.S. Department of Energy, no longer exists, whether or not Skelly believes he could somehow manage to get back into line at the TVA or MISO.
Do Skelly, et al, (meaning those few scraps of leadership left in his company) really not comprehend what they’ve done by selling Oklahoma to NextEra? Who gave this man their investment money? And for goodness sake, why?
Why a company that had the hubris to assume they could jump the appellate queue all the way to the Illinois Supreme Court… a company that never misses a chance to appeal an unfavorable decision, would assume dedicated landowners would stop with a district court ruling is beyond us. This company spent years, YEARS, holding Arkansans hostage. You think we’re going to let the first judge be the end all? Not likely, princess.
No, Mr. Skelly, you will not be allowed to sit in Houston and twiddle your thumbs until a magic buyer comes along. You will not be allowed to hold onto your “permit” with one hand while selling off pieces of your company with the other. You will not be allowed to fail to file updates with regulatory agencies and simultaneously claim the project is still alive. You will not be allowed to do that to so many Arkansans. Now, the ten-ton elephant in the room falls on NextEra: What about our good friends in Oklahoma? What are your intentions there, NextEra? We think you owe Oklahomans an explanation about what your true intentions are. Are you actually proposing a different transmission line? Maybe to compete with AEP's "Wind Catcher" project? If so, where might that project stop in Oklahoma? Again, these landowners deserve an explanation from you... sooner, rather than later. And what about the reporters who continue to give this company so much deference? Don't you feel like it's time to do a little bit more digging and put this to bed for landowners in Arkansas and Oklahoma? It's time for you to stop handling these guys with kid gloves, isn't it?
So, go back to your firehouse, Michael Skelly… maybe do a little more glory hounding and dream up your next snake-oil scheme. With the exception of greeniacs like Dr. Smith (BTW, I’m sure Bill Johnson is shaking in his boots. *eyeroll*), everyone can see right through you.
Michael Skelly is now living in a world filled with hubris and fantasy. We'll update you again with more when we know more.
Well, it’s happened. Clean Line doesn’t love Arkansas anymore. “The markets have shifted," Mario says. First, we got friend-zoned (remember when they were just going to use us as an doormat for their extension cord to Tennessee?), then loved us no matter how much we didn’t want it (baby, I’m gonna give you all the taxes-not-really-taxes-voluntary-payments and jobs you can handle), and now Clean Line is moving on and trying to sell (kind of like multiple interested parties always said they would) this debacle of a project to American Electric Power (AEP) to "help" facilitate their proposed "Wind Catcher" project. We could go on for a while about what exactly "Wind Catcher" is, but this article by Jeffery Tomich of E&E News very effectively summarizes what it is and gives a brief summary of what Clean Line is now seeking:
Clean Line did disclose an unusual offer to a potential customer last week in an Oklahoma regulatory filing.
In testimony filed at the Oklahoma Corporation Commission, the company suggested that the Plains and Eastern project provide the transmission for Public Service Co. of Oklahoma's piece of American Electric Power Co.'s Wind Catcher project.
The $4.5 billion AEP project would be able to provide wind energy to its utility customers in Arkansas, Louisiana, Oklahoma and Texas from a 2,000-MW wind farm being developed in Oklahoma and 350-mile high-voltage transmission line (Energywire, July 27).
Clean Line supports the Wind Catcher project and its ambitions to bring utility customers access to low-cost wind energy in the same way that utilities such as Xcel Energy Inc. and MidAmerican Energy Co. are doing, Hurtado said.
"It just happens that we're a number of years ahead on our project compared with the [transmission line] that they proposed back in July," he said. "We think our project can provide a lower risk and ultimately a lower-cost option to move that power that they want to serve their customers."
Clean Line, which has been an evangelist for the benefits of DC technology for long-haul transmission projects, even said it's willing to use alternating-current technology if that's what AEP wants to do.
"We didn't want the discussion about the benefits that this project brings to be focused on a technology discussion of AC versus DC," Hurtado said.
So far, Clean Line's very general proposal to play a part in Wind Catcher is just that.
Readthat again. One more time. I had to read it four times to grasp exactly what Mario was saying here. And then I did a little research because I like to know what Mario and crew are up to. ;) In my search, I was able to locate the Wind Catcher docket at the Oklahoma Corporation Commission (OCC). By the way, OCC, you really should update your system so it can be more easily searched. Here's a small tutorial about how to view the whole docket:
3) Viola! You now have access to the Wind Catcher docket at the OCC. I'm a pretty simple person, but this took me a decent amount of time. It shouldn't have, OCC. You should be able to search for terms such as "Clean Line" or "AEP" to bring up results. If the case number is unavailable or difficult to find, the "Search" function is pretty much useless.
Now that your chin is on the floor and you've learned how to access the Wind Catcher docket: click here and read. It is, at times, vomit-and-laughter inducing, but it's also revealing. Let's examine a little bit of that testimony, shall we? It's really important.
1) The "market has changed" and there is currently no demand for the Plains and Eastern project east of Oklahoma:
Translation: Clean Line STILL has no customers. This is something we've been trying to say for a long time, but it's pretty satisfying to see it finally coming from the horse's mouth directly. Something else is also revealed:
2) Clean Line is more than willing to re-route the project away from its current route and terminate the project at Tulsa. A "second phase could be built at a later date if market demands warrant such action."
Let that sink in for a moment. This has always been about HVDC, how great that technology is, and how this project is designed to "deliver the best wind energy to the mid-south and southeast" through a converter station in Pope county, Arkansas, and Shelby county, Tennessee. It's almost like Mario would have you believe everything that's happened for the last seven years didn't actually happen. Now, Mario is essentially saying: "Arkansas and the southeast United States, PSSSSH!, this thing is GREAT for Oklahoma. Did I mention this is GREAT for Oklahoma? We will do anything if you'll just get this thing off our hands, AEP. Please - BUY THIS. No, but seriously, we'll do ANYTHING. We'll even change it to AC, move the route so it stops at Tulsa, and we don't even care if we own it. In fact, we'd probably just rather sell it":
This is a fundamental change, folks. New territory. In fact, Mario made it sound so much like the project was pre-designed and destined for Oklahoma that he mentioned the word "Oklahoma" 119 times in his testimony. Arkansas got the short end of the stick with 2 mentions. You're hurting our feelings over here, guys. I could go on and on, but there are a couple key things to take away from this:
1) Clean Line is proposing to do something altogether different than it has been for the past 7+ years with its Plains and Eastern project. It should be both frightening, as well as reassuring that Clean Line will literally do ANYTHING at this point to salvage something out of this project. Their desperation is becoming harder and harder to hide.
2) If you are a landowner that has been impacted by this debacle and are interested about where it is going, it is imperative that you follow the Wind Catcher docket at the OCC. Why? Because AEP is scheduled to respond by the 22nd of this month. We'll find out very soon if this is some off-the-wall proposal by Clean Line to AEP that will be laughed away, or if AEP is actually seriously considering Mario's sales pitch... which could almost completely re-write the route of this project and what it intends to accomplish.
If someone at AEP is reading this, I can give you a simple analogy about what Clean Line represents:
I am a car guy. Clean Line is what I would call a "fifty foot car." If you've ever purchased a used car before, you can relate. Let's say you are driving along the road, and you see a car for sale that catches your eye. It looked GREAT when you drove by. So, you decide to turn around and have a look. When you start looking it over, you notice that the paint is nice and shiny, but there's hail damage on the roof. You look at the tires and they're worn out. You climb underneath and notice that there are oil leaks everywhere, and it's obvious that things have been leaking for a long time. You open the doors and look inside, and the interior looks pretty nice, but there are cigarette burns on the seats and it smells like someone just smoked a pack of cigarettes in it. Then you look at the odometer and it reads 200k miles... just right at that point where, if you don't spend a lot of money replacing some core things, you're going to HAVE to spend more money changing those things later, likely after it's left you stranded on the side of the road in the bad part of town somewhere a couple hundred miles from home.
Now, let's say you make it past all of that because the current owner is offering you a killer deal. So, you decide to take her for a test ride! You start it up and it has a rough idle and it smokes a little bit. You put it in reverse and the differential makes a loud "click." You put it in drive and take off and the transmission doesn't shift properly. It's making a lot of noise, and the steering doesn't feel right. You make it back to where you started and you have to make a fundamental decision: Do I really want this car? Is the amount of work and money I am going to have to put into this car going to be worth what I am paying for it? Am I ready to accept all of the problems that it has, despite my better judgement telling me to RUN? You get the point.
AEP: Clean Line Energy Partners is a "Fifty Foot Car." She looks pretty good at fifty feet away but, upon closer inspection, she's really just an eight year old car that is rife with problems... past, present, and future. It would probably be a better decision to buy a newer model because this one is worn out. And, on top of all that, she's been owned by a few jerks her whole life. We'll all find out within the next few days if AEP is considering taking Clean Line for a test drive, or maybe deciding to RUN and look for a newer model. Unless, of course, the case is dismissed altogether as the Oklahoma AG has requested. Only time will tell.
Clean Line: Arkansas has been wanting to break up with you for a loooooong time now. We're beyond ready to call you an "ex."
Mario Hurtado: Here's what I (and many other landowners) think of your quote...
Furthermore, the Plains and Eastern team has received many questions from landowners and other
stakeholders in Oklahoma about the Wind Catcher project. The team has been asked if Plains and
Eastern can be involved or assist in the Wind Catcher project given that Plains and Eastern has a
construction-ready, long-haul transmission project that runs from the Oklahoma Panhandle to the
east and has acquired easements on more than 750 parcels in Oklahoma.
On September 25, 2017, the Arkansas Congressional delegation, composed of U.S. Senators John Boozman (R-AR) and Tom Cotton (R-AR) and U.S. Representatives Rick Crawford (AR-01), French Hill (AR-02), Steve Womack (AR-03) and Bruce Westerman (AR-04), met with Secretary Rick Perry of the U.S. Department of Energy to discuss the preservation of states’ rights as they pertain to transmission line development and to the federal review of Clean Line Energy Partners’ proposed Plains and Eastern Clean Line Project. Senator Boozman’s press release on the meeting can be found here:
Golden Bridge, LLC, would like to thank each member of Arkansas Delegation once again for their continued attention to the issues surrounding Section 1222 of the 2005 Energy Policy Act.
As an organization, we believe the process by which the Department of Energy determined to participate with Clean Line Energy Partners was flawed, and that the participation itself is built on a faulty premise that the State of Arkansas lacks authority to review Clean Line’s proposals.
Arkansas maintains robust procedures for the siting and development of transmission lines. Procedures that ensure the protection of local communities and their residents, and provide impacted individuals with a legally recognized process.
We appreciate the Arkansas delegation’s recognition that Section 1222 does not provide the same level of protection for landowners or the state. The ability to submit comments on an application does not provide due process for Arkansas landowners whose property may be taken in a scheme to use federal eminent domain for Clean Line’s gain.
Golden Bridge, along with Downwind, LLC, filed a legal challenge against Department of Energy to address these concerns. The organizations are committed to the cause and will continue their pursuit of these issues in each and every available forum.
“The balance between federalism and states’ rights is a delicate one, even though it’s often generalized and politicized,” said Alison Millsaps, a founding member of Golden Bridge, LLC. “We believe there are serious and valid issues of overreach in this instance. The Arkansas Public Service Commission denied Clean Line’s application for utility status in 2011, and invited Clean Line to return to the Commission when it revised its plans. The federal government should not exist simply as a vehicle to override established state decisions and statutory requirements. Clean Line often purports to have an interest in caring for the landowners and communities they want to put their line through. However, Clean Line’s attempt to go around Arkansas’s regulatory body speaks volumes regarding its true intentions.
Three strikes and Clean Line’s OUT in Missouri? For our friends up there, we hope so.
Investors: We hope you’re getting as weary as we think you should be.
Remember back in March when we explained that things weren’t looking good for Clean Line in Missouri? Yesterday, in a devastating (but not wholly unexpected) blow, the Missouri Public Service Commission unanimously denied Clean Line’s application for its’ proposed “Grain Belt Express” transmission project.
The landowners and others who organized to protect property rights in Missouri are amazing! Two different projects with two different sets of landowners unexpectedly came together to help deliver a voice to rural landowners (and a message to special interests) across the country. Let their dedication and hard work be an example for what can be accomplished if you work together and NEVER give up.
We’re going to keep this pretty simple today, because we are absolutely sick and tired of dealing with these “folks." That’s the nicest label Ali and I could come up with… we had others in mind. Let us sum up in the simplest terms possible:
1) Projects must benefit local communities. Not in a vague “taxes, jobs, economic development” kind of way, but in a substantial way that encourages the enthusiastic blessing of the people most directly affected by any project. The experience a company such as Clean Line has with landowners is directly proportional to the respect those landowners are given. Maybe that’s a hint about why you’ve found so much opposition to your projects?
2) You can’t force landowners to participate in venture-capitalist schemes. You just can’t. It is not our job to make you money. We don’t owe you our sweat equity. We’re already productive members of society and many of us have made sacrifices to infrastructure that you wouldn’t tolerate in the backyard of your McMansions. We don’t care about your investors, or their return on their investment. We just. Don’t. Care. It’s not our fault they made a bad investment in you. People make bad investments every single day. Maybe the Ziffs will take one less ride in their private jet this year, or buy one less yacht or “summer home.” Cry us a long and winding river.
3) Whining doesn’t help.
"We absolutely want to do the project," said Mark Lawlor, development director for Grain Belt Express. But he added: "Unfortunately, the message that we're getting from Missouri is that investments of these kind might be better spent in other places."
and:
Lawlor said the four commissioners' belief that the project was worthwhile but not approvable under state law "makes for an interesting argument" if Clean Line decides to instead seek federal permission to proceed.
And, what’s up with the hollow threat (again) to get the feds involved? Another multi-year-long, ~$100 million process? Doubtful. If you feel like you’re up to that challenge, we’re ready and willing to share our experience(s) and knowledge with our friends in Missouri.
Maybe that's why you've spent $750k on lobbyists in DC in the first half of this year, eh? (One such lobbyist being Arkansas Governor Asa Hutchinson's former Chief of Staff... but, more on that later.) I guess his newfound "opportunity" included being a lobbyist for Clean Line. Revolving-door politics is everywhere.
What really matters:
Despite the bluff and bluster coming from Clean Line, the positive things the Commission said about Grain Belt Express (in what seems like as much C-Y-A as it does genuine praise), and the "Blame Game" going around between Clean Line, the Commissioners, and the environmental groups... at the end of the day, only ONEfact remains:
YOU LOST, Clean Line. You can try to spin it however you like, but you still can’t build that transmission line in Missouri. Do not pass go, do not collect $200. Case closed.
In what is shaping up to be an incredibly rough couple months for Clean Line Energy Partners, several major blows have been dealt to the speculative development company:
Arkansas Full Congressional Delegation Comes Out Swinging
1) Arkansas' Full Federal Delegation Re-Introduces the APPROVAL Act (03/06/17)
On Monday afternoon, Senators John Boozman and Tom Cotton, along with Representatives Steve Womack, Bruce Westerman, Rick Crawford, and French Hill, re-filed S.529, the Assuring Private Property Rights Over Vast Access to Land ("APPROVAL") Act. The Act would amend Section 1222 of the 2005 Energy Policy Act to allow a state's governor and public service commission chair the opportunity to reject a federal transmission project if they don't feel like the project is in their state's best interest.
2) Arkansas' Delegation Sends Opposition Letter to Secretary Perry (03/07/17)
Alison wrote about this earlier, so I will just leave the letter here for everyone to see. It's a beauty.
3) Senator Boozman Makes Comments on Talk Business Arkansas (3/12/17)
Senator Boozman made comments during an interview with Talk Business Arkansas' Roby Brock further explaining the delegation's position that the use of Section 1222 of the 2005 EPAct by Clean Line is inappropriate:
In his comments, Mr. Boozman also brought further doubt about need for Clean Line's "product" at Tennessee Valley Authority (We know, Mr. Skelly, this is "bigger than TVA," we know. Whatever.), which brings us to:
Things Don't Look Great for Clean Line at TVA
1) TVA Winter Board Meeting (02/16/17)
It all started at TVA's February 16 board meeting. As you may have read in our January 2017 update, Clean Line and a couple environmental groups have been lobbying the Tennessee Valley Authority to sign a contract for a sizable chunk of wind energy from the Oklahoma panhandle and use Clean Line's proposed Plains and Eastern transmission line to deliver it to them. We explained to you that, if TVA were to sign a contract, the prime time to have done so would have been by December 31, 2016. That date has come and gone, and there was no publicly available contract on January 1, and as of today there still is not.
In past TVA board meetings (specifically August 2016 and November 2016), Clean Line sent their revolving door DOE star, Jimmy Glotfelty, to lobby (*read - "beg") TVA to make a commitment to use their transmission line. At the most recent board meeting held February 16, however, there was a specific lack of anyone representing Clean Line. The only person that showed up (and, she always does) to lobby for them was Chris Lunghino of the Southern Alliance for Clean Energy.
Why do we say that things don't look good for Clean Line at TVA? We have a couple key pieces of evidence. The first involves a presentation Mr. Bill Johnson, President and CEO of TVA, gave during his update at the board meeting. Take a look at the following slide:
Do you see what I see? If not, look a little closer... specifically at the amount of wind and solar energy TVA receives in 2017, and is projected to receive in 2026. They remain unchanged at 3%. What does that mean? Well, it would appear that it means TVA has no plans to purchase capacity for a large chunk of wind energy between now and 2026. You can infer from that what you will. Again, we know, Mr. Skelly, this project is "bigger than TVA." But, where are the other customers? We reported earlier that Georgia Power (GP) is likely out for Clean Line, and that still stands. Georgia Power is only allowed to contract 300 mW of wind power through its REDI program, and the in-service dates for GP's don't mesh with Clean Line's fantasy in-service date.
2) Senator Alexander (R-TN) Reaffirms TVA Doubts on the Senate Floor (03/22/17)
It must be really difficult for Clean Line and its' investors to see the senior senator from Tennessee say this on the Senate floor:
Senator Alexander: If you are watching, we would like to give our thanks to you for making these comments!
Oklahoma State Legislature Moving to Eliminate Wind Tax Credits
1) Oklahoma House of Representatives Passes Legislation to Eliminate State-Level Production Tax Credit for Wind Energy (03/10/17)
As we reported in our January update, the Oklahoma legislature is apparently serious about attempting to fix their nearly $900 million budget deficit. The Oklahoma House made the first move to eliminate early the state "Zero Emissions Credit" for wind energy. Without going into many details, the credit amounts to millions of dollars per year that come out of the state's coffers (paid for by Oklahoma taxpayers) to support companies that are mostly out-of-state (or country, in some instances).
Oklahoma gets a decent-sized chunk of its electricity from wind energy produced in state. Much of the energy produced by newer generators is exported out of the state, therefore Oklahomans are subsidizing wind energy companies for producing energy that largely has little-to-no benefit to the citizens of their own state... aside from the royalties landowners receive for voluntarily hosting the turbines on their property.
Meanwhile, Clean Line would like to potentially use (for the first time) federal eminent domain to force a swath 720 miles long of Oklahoma and Arkansas landowners to give up their property rights to construct its' for-profit transmission venture that could also require Oklahoma taxpayers to subsidize an additional ~2,000 wind turbines with zero in-state benefit... again, except to the landowners who voluntarily host the turbines on their property.
Does that seem fair to you? To me, it doesn't.
2) Oklahoma Senate Panel Approves Rolling Back Wind Tax Credit (03/29/17)
OKLAHOMA CITY – Legislation that rolls back a state tax credit for the wind energy industry has been approved by an Oklahoma Senate panel.
The Senate Committee on Appropriations on Wednesday voted 34-6 for the House-passed measure and sent it to the full Senate for consideration.
The bill modifies the tax credit for electricity generated by zero-emission facilities like wind turbines. It says facilities must be in operation by July 1 in order to qualify for the credit, instead of the current deadline of Jan. 1, 2021.
Gov. Mary Fallin has proposed eliminating the credit to increase revenue amid a projected $868 million budget shortfall next year. The tax credit will cost $40 million this year and will average $60 million a year over the next 15 years.
The legislation appears to be poised to pass. We will see if the Oklahoma Senate is as serious about it as the House in the coming days. If the Senate passes the bill, it will be delivered to Governor Fallon for signature.
3) Mario Hurtado says: "No Big Deal" to Losing Oklahoma PTC (03/29/17)
In his typical blustery and arrogant (disconnected?) fashion, Clean Line's Mario Hurtado said the following in a recent article:
Hurtado said HB 2298 should have little impact on a $2 billion high-voltage transmission line that will carry wind energy across Oklahoma and Arkansas to Mid-South and Southeast markets. The Plains and Eastern Clean Line transmission line, a 700-mile project that has been in the works since 2010, will have the capacity to deliver 3,500 megawatts of wind-generated electricity from the Oklahoma and Texas panhandles.
Terminating the tax credits this year, if the bill becomes law, could have an impact on where those wind farms are sited. Hurtado said the companies that will build the more than 2,000 wind turbines needed to feed current through Clean Line’s transmission line base siting decisions on a number of factors, and tax policy is one of those factors.
“It may change the amount of wind energy that connects to us ... (from) Texas versus Oklahoma — the Oklahoma Panhandle is not that wide (and) the wind doesn’t pay attention to state lines,” Hurtado said. “Unfortunately, that would mean less investment in Oklahoma and the school districts there — that could be a change, and that is certainly something we have made people aware of.”
There you have it, Oklahoma. Whatever, Mario.
4) Mario Hurtado says: "Foundations for generators are being dug and poured in the Oklahoma panhandle right now" (3/25/17)
In another recent article that is full of bluster likely targeted at the Missouri Public Service Commission and Clean Line's investors, Hurtado said the following:
Foundations for generators are being dug and poured in the Oklahoma panhandle right now, Hurtado said. General Electric — which will build converter stations located near Guymon, in Arkansas and near Memphis, Tenn. — has done a lot of engineering work ahead of building the stations, he said.
Pictures or it didn't happen, Mario. Today (03/29/17), you said that if the Oklahoma legislature repeals the in-state PTC, wind developers will just build generators to energize your line in Texas instead of in Oklahoma.
But, just four days ago, you said "foundations for generators are being dug and poured in the Oklahoma panhandle right now." What gives, Mario?
My analysis? Foundations for wind generators are most definitely being "dug and poured" in the Oklahoma panhandle, but they're not being "dug and poured" to supply Clean Line's proposedtransmission line. For Mario to imply otherwise is disingenuous, deceptive, and pretty desperate, if you ask me.
You have to have customers for all that stuff to happen, Mario. To date, Clean Line has yet to release a single, legally bound, contractual customer on either the generation or end-use side of its proposed speculative transmission line. Unless and until a sizeable portion of their capacity is subscribed, everything Hurtado and Skelly say is bluster.
Things Don't Look Super Great for Clean Line in Missouri
1) Hearings Held on Clean Line's (latest) Grain Belt Express Application
As you may know, Clean Line had its week-long round of evidentiary hearings at the Missouri Public Service Commission last week. If you're interested about how the hearings went, I will leave that explanation to my friend, Keryn Newman. She wrote an excellent blog post summarizing the events.
In a nutshell, Staff at the MOPSC recommended that: 1) Commissioners deny Clean Line's application, or 2) Commissioners condition Clean Line's CCN with the requirement that they receive assent from all impacted counties. I'll leave you with Keryn's blog post about this decision, which explains how it could affect Clean Line's proposed "Grain Belt Express" line.
Due to State Action, Clean Line's "Rock Island" Project is Effectively Dead
House File 603, which Rep. Bobby Kaufmann, R-Wilton, called a “long-awaited bill protecting private property rights,” was approved by the House 93-0.
The bill addresses what he labeled the state’s “largest blight,” the Rock Island Clean Line, an electric transmission line that would affect 1,500 Iowa landowners, as well the development of a reservoir in Clarke County and property owners displaced by Department of Transportation projects.
“It should be hard to condemn private property, it should not be possible to condemn private property for personal profit, it should be illegal to condemn private property for anything other than public use,” Kaufmann said.
We're with you, Representative Kaufmann. Iowa landowners are lucky to have you.
In Closing
This is already far too long. So if you have made it this far, I really appreciate you reading it. I hope it has been informative and maybe, just maybe, it gives you a little bit of hope in what can feel like a helpless situation.
I just have to close by asking Clean Line's investors: When does enough become enough for you guys? When do you come to the realization that someone else has spent upwards of $200 million of your money and, after nearly a decade, those people haven't produced a single cent of revenue in return for you? And there's really no return in sight, is there? When do you say to yourselves: "We've harassed these people enough. It's time to throw in the towel"?
Maybe that's why you're holding on for so long. I get it. You've spent a lot of money. But, it doesn't make it right for the harassment to continue.
I think the time is (or should be) fast approaching. If you have any sense of decency about yourselves, you should realize how many thousands of people you have negatively affected for the last many years. Have you no conscience? Do you think things are just magically going to get better?
We sincerely hope you had a wonderful, Clean Line-free holiday season. Unfortunately, with the holidays coming to a close, we all have to remain informed and vigilant. Remember, while many of you only found out about this project in late 2014, Michael Skelly and crew have been actively attempting to execute this boondoggle since 2009... maybe earlier. It's hard to say with certainty exactly when the idea for this first arose. As we have written about before, Jimmy Glotfelty (cofounder of Clean Line) lobbied Congress in 2003 during his stint at the Department of Energy (DOE) in support of the very same provisions (Section 1221 & 1222) that his company is attempting to utilize now. We thought we would take this opportunity to provide you with an update, as well as a few things you should be paying attention to as we move through 2017:
Donald Trump, Scott Pruitt, and Rick Perry
Donald Trump:
As a rule, we keep politics out of this issue. It is not a political issue. It is a private property and states' rights issue. However, as all of us are aware, we had an election last year. Hate it or love it: Donald Trump was sworn in as President of the United States of America on January 20. Elections have consequences. As a good friend of ours stated a couple days after the election: "I'll bet Clean Line woke up and sh*t their pants on November 9." We tend to agree. To say the results of the election were anything less than unexpected would be an understatement. Jimmy Glotfelty has already attempted to set the stage for a change in conversation at the TVA board:
"Election Day was a big sea change in America," Jimmy Glotfelty, executive vice president for Clean Line Energy Partners, told the TVA board last week. "But we believe that just because we've gone from Democrats to Republicans (in the White House) that does not change the need for jobs and low-cost energy in America and we believe we will provide that. We've been before this board for the past seven years and our project dynamics have not changed."
But the truth is that no one can say right now what the Trump presidency means for Clean Line, which is due in part to the very nature of the project. Yes, it represents private investment in infrastructure, but it also represents an example of gross federal overreach in which the Department of Energy virtually ignored not only state law, but an established state PSC ruling.
With past comments like these, it will be interesting to see what his position is:
Scott Pruitt:
As some of you may remember, Scott Pruitt is the Oklahoma Attorney General. During the comment periods for both the NEPA review and the Section 1222 "review", his office issued scathing comments in landowners' and states' favor in opposition to the process being used to advance this project.
Why is that important? Because Scott Pruitt has been nominated to become the next EPA Administrator. He has been a staunch opponent of the "Clean Power Plan" (CPP). The CPP has been a primary justification by Clean Line for the "necessity" of their line. Under a Trump administration, the CPP will likely be nullified. Love it or hate it, it is what it is.
If you're interested in viewing Mr. Pruitt's confirmation hearing, you can do so here (Part 1):
Why is former Texas Governor Rick Perry involved in this? Because he has been nominated to be the next Secretary of the Department of Energy. He is sort of a wild card. While he is mostly an oil and gas person, he also supported the so-called "Competitive Renewable Energy Zone" (CREZ) transmission expansion for wind energy in Texas. Many environmental-types seem to see this as a positive attribute in Perry for renewable energy. Others see this support as having been less about wind energy, and more about an economic opportunity for Texas. The CREZ lines were concocted and approved IN Texas, FOR Texas. Whether or not support for larger projects like Clean Line's translates to support from Mr. Perry at the federal level remains to be seen. He is known for being a staunch states-rights advocate. In fact, Mr. Perry wrote in a 2009 blog post:
The Founding Fathers understood that a one-size-fits-all approach just doesn’t work, especially in a country the size of America, and it certainly doesn’t work for Texas. Our economic strength, compared to the federal budget mess and other states’ troubles, is evidence that Texans know what’s best for Texas.
The Constitution simply does not empower the federal government to override state laws without restraint.
I agree with Texas’ 7th governor, Sam Houston, who once said, “Texas has yet to learn submission to any oppression, come from what source it may.”
We didn’t like oppression then and we certainly don’t like it now. Unfortunately, pressure is increasing from a federal government that is growing increasingly oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state.
In his book, he sets out a view that the founders intended a federal system that allowed “people of like mind” in the states to make their own decisions about how to live, while the national government’s role was properly focused on national security. “From marriage to prayer, from zoning laws to tax policy, from our school systems to health care, and everything in between,” he wrote, “it is essential to our liberty that we be allowed to live as we see fit through the democratic process at the local and state level.”
While we don't have much indication as to which side Mr. Perry will ultimately fall on RE: Clean Line, we are paying attention. We stand ready to work with the new DOE Secretary (whether Perry or someone else) on this important issue. We are hopeful Mr. Perry, if confirmed, will bring the same respect and zeal for states' rights to the Department of Energy.
If you're interested in listening to Mr. Perry's confirmation hearing, it can be viewed here:
Tax Credits for the Wind Industry
Federal Production Tax Credit Down 20% in 2017:
As you may know, Congress passed an extension to the Production Tax Credit (PTC) for the wind industry in late 2015. However, a year-over-year PTC reduction will occur until the end of 2019:
The tax credit is phased down for wind facilities and expires for other technologies commencing construction after December 31, 2016. The phase-down for wind facilities is described as a percentage reduction in the tax credit amount described above:
For wind facilities commencing construction in 2017, the PTC amount is reduced by 20%
For wind facilities commencing construction in 2018, the PTC amount is reduced by 40%
For wind facilities commencing construction in 2019, the PTC amount is reduced by 60%
Oklahoma's Budget Deficit and In-State Wind Tax Credits:
As many of our readers may know (Oklahoma's, especially), Oklahoma has, by state standards, a massive budget deficit. From a recent article:
(Reuters) - Oklahoma's budget deficit will be $868 million next year, higher than recent estimates as sustained low oil prices, tax cuts and corporate tax credits continue to weigh on the state's finances, the Oklahoman newspaper reported on Tuesday.
Governor Mary Fallin estimated just days ago that the state would face a $600 million gap for the 2018 fiscal budget year, but Finance Secretary Preston Doerflinger told reporters at a news conference on Tuesday that the hole will be deeper. A $900 million budget shortfall would represent nearly 15 percent of its expected $6 billion in spending power.
With less money to spend, state lawmakers could choose to make cuts to government services like education and health care or raise taxes.
"I think it's important for everybody to realize you're not cutting your way out of this situation," Doerflinger said. "We have to have a serious conversation about revenue."
One of the "corporate tax credits" weighing on Oklahoma's budget is a state tax credit for wind energy. Tax credits paid by taxpayers to (mostly out-of-state) wind companies have ballooned in the past few years:
"Oklahoma is bankrupt and unable to pay its bills because of $1 billion worth of tax cuts, hundreds of millions of dollars in gross production tax giveaways to the oil and gas industry, and $2 billion worth of tax credits and exemptions to wealthy corporations, all of which this governor supported," said House Democratic leader Rep. Scott Inman, of Oklahoma City. "That's the reason we're in this mess. To get out of it, we need to roll back those irresponsible tax plans, not raise taxes on working families."
Another likely target for revenue will be some of those hundreds of millions of dollars in incentives Inman spoke of — specifically a credit for the production of wind energy that an independent consulting group has recommended be capped or ended. Payments under that program have skyrocketed from $3.7 million in 2010 to morethan $113 million in 2014.
Numbers were not available for 2015 and 2016, but many, many more wind turbines have been constructed in Oklahoma in those two years. That number would have to be much higher for 2016. What do you think the 2,000 additional wind turbines Clean Line would like to see constructed in the Oklahoma panhandle would do to that figure? Our opinion: since wind tax credits account for at least 15% of Oklahoma's budget deficit, lawmakers in that state are going to be required to get serious about capping or eliminating them in the 2017 session. Will they wind up with a result that is fair to Oklahoma taxpayers? Who knows. In this age of "pay-to-play" politics, we would say that nothing would be surprising.
Relation to Clean Line:
So, how does this relate to the Plains and Eastern (P&E) project? Quite simply, as the years progress, Clean Line's "delivered product" becomes more expensive and less financially appealing to end-use utilities. The price of delivered energy on P&E to an end-use utility (such as TVA, Georgia Power, etc) is composed of the price a wind generator can produce the energy for, added to the cost of delivery Clean Line will charge to deliver the electricity to the TVA system, plus whatever TVA would charge to wheel that electricity through their system to them. If the cost of the electricity rises on the generation end, the cost of the electricity on the receiving end rises, as well. So, how does this relate to the TVA?
Clean Line and the Tennessee Valley Authority
As discussed above, the "prime time" to sign up for capacity on Clean Line's proposed transmission line was by the end of last year. And, Clean Line and others have parsed no words in attempting to push TVA to sign a contract for electricity on Plains and Eastern. Take, for example, this fluffy article from Dave Flessner that seemed to imply that TVA was right on the brink of signing a contract with Clean Line before year's end:
The Tennessee Valley Authority is studying whether to contract this year to buy into what would be one of the biggest wind energy projects in the country.
Despite last week's election of a new president who has pledged his support for more fossil fuel power generation, TVA President Bill Johnson said the utility is still studying whether to ink a deal in the next six weeks to buy at least some of the wind-generated power windmills a Houston group is trying to transfer across the middle of America.
Clean Line Energy Partners LLC is planning to build high-voltage, long-distance transmission lines to carry power generated by windmills in Texas and Oklahoma to the Tennessee Valley. The development group wants to reach a deal with TVA to buy its power before the end of this year to take advantage of maximum federal tax incentives for wind generation that will not be as generous after this year.
Or, this earlier article by Mr. Flessner with an equal amount of fluff (there seems to be a pattern with him):
Jimmy Glotfelty, executive vice president for Clean Line Energy Partners, told the TVA board last week that it could deliver wind-generated power from Oklahoma and Texas up to 60 percent of the time at around 3 to 3.5 cents per kilowatt-hour, which is cheaper than some of TVA's other energy costs. Such wind-generated power could be available in two to three years after new wind turbines are erected in Oklahoma and Texas, where the wind blows more steadily than in the Southeast, and after Clean Line builds its proposed 700-mile line from the panhandle of Texas to Memphis.
The cost will be cheaper this year because the maximum federal production tax credits, worth the equivalent of 2.2 cents per kilowatt-hour, will begin to decrease after Jan. 1."We continue to have strong discussion with utilities in the Southeast and we continue to have productive talks with TVA because we believe this is a very competitive source of clean energy which we think would add value to their portfolio," Glotfelty said.
(If you're interested in watching Mr. Glotfelty plead as an ordinary citizen for TVA to purchase their "product" before the end of 2016 at their August 2016 board meeting, click here and fast forward to minute 138:00 or 2:18:00, or at their November 2016 board meeting by clicking here and fast forwarding to minute 35:00 or 0:35:00.)
Environmental groups have also been lobbying TVA hard to sign a contract with Clean Line by the end of 2016. Back in August, Dr. Stephen Smith of the "Southern Alliance for Clean Energy" even went so far as attempting to offer the Plains and Eastern transmission project as a potential aid in the solution to the Zika virus (it's hard to make this stuff up, folks). In November, Allie Brown (also of SACE) had this to say:
Clean Line’s transmission project is a no-brainer for TVA and other Southern electric companies to buy into. It will help diversify our energy mix, create tens of thousands of jobs, protect natural resources, and provide health benefits by decreasing pollution from fossil-fuel generation in our region.
Critical deadlines regarding the federal production tax credit for wind power are fast approaching. Fortunately, contracts for wind power can be signed today, but can take delivery as late as December 2020, and still qualify for the important tax incentive. We strongly encourage TVA’s board of directors to immediately contract for at least 1,000 megawatts of wind power on the Plains and Eastern Clean Line. We need your help to urge TVA to buy wind power from Clean Line today:
This guy even threw his hat into the ring with an op-ed entitled: "Tennessee Valley Authority should get into wind power". Leaving out the obvious fact that TVA is already "into wind power," the opinion piece seemed to be neatly crafted with all of Clean Line's dead-horse talking points. Accident? Probably not. The op-ed was printed after December 31, however, so it's doubtful anyone at TVA actually read it.
Clean Line STILL Has No Publicly Available Contracts:
Despite all the fluff and bluster, Clean Line has still yet to release a single publicly available contract for transmission capacity on Plains and Eastern from TVA or anyone else. As with any business, customers draw more customers, so it seems highly unlikely that Clean Line wouldn't have released information about a major contract with TVA. As we have become accustomed, it seems incredibly hard for them to keep positive news on the proverbial "down low". It would also seem unlikely, with credits being reduced, that a rising "delivered product" price for Clean Line would provide increased incentive for an end-user contract in 2017.
But what do we know? We're just "misinformed" landowners.
Drink up! It's free, and Dave Berry has been handing it out without restraint in Georgia recently. Full disclosure: this post is long and nerdy. I am completely convinced that no normal person would want to read this stuff.
Introduction
Many of you are aware: Clean Line (and all of us, unfortunately) has a long road ahead of them with their "Plains and Eastern" project. Landowners oppose the project in record numbers, the entire Arkansas federal congressional delegation supports us (thank you!), and they have quite a few hurdles to jump before any shovels hit the ground. After the Department of Energy's recent approval, one of the biggest hurdles Clean Line has to jump over is obtaining customers. Not "letters of intent" or the like, but REAL, firm, and enforceable contracts for capacity on their line.
They need customers, customers, customers... like, yesterday. Customers are the butter for their bread. Without them, they can't use eminent domain against us, the DOE won't help them with landowner negotiations, they can't get financing, the line becomes financially unfeasible, and it doesn't get built. Period. As frustrating as it is... in this case, time is our friend.
These things being said, I would just like to say that being as immersed as we have been in this process and opposition for going on three years now, it is a spectacular emotional (and physical) roller coaster. There is constant worry, and you're always trying to find something, anything, to ease your mind a bit. If there's anything we've learned about Clean Line, there are two sides to them: There is the public, rosy aura that they want you to perceive, and then there are the things that are going on behind the scenes to accomplish their goals. Sometimes it takes a bit of digging to get the full picture. I hope you enjoy.
Clean Line Needs Customers
Really, Clean Line has just has about three options when it comes to subscription:
Large utilities such as the TVA, Southern Company and it's subsidiaries, Entergy Arkansas/Louisiana, etc, can buy large chunks of their capacity. One would have to assume that this option would be preferable to CLEP because it is the easiest for them.
Smaller municipal electricity co-ops throughout the "midsouth and southeast" can sign much smaller capacity contracts in the 25-50mW range. It takes a LOT of those to fill the capacity of a 4,000mW line.
There are some corporations that want to "green" their image. Imagine the scenario where a few private, for-profit "Fortune 500" companies are alright with other another private, for-profit company seizing land from private landowners to aid in their quest to make themselves look good. Yeah, that's the point we've gotten to in this country. Here's evidence:
Enjoy your Corn Flakes, folks!
One of the potential customers Clean Line has been courting (or attempting to strong-arm, depending on your perspective) is Georgia Power (GP). Now, for a little bit of clarity and perspective, GP is a subsidiary of Southern Company, and here is their service territory:
Georgia Power is an electric utility headquartered in Atlanta, Georgia, United States. It was established as the Georgia Railway and Power Company and began operations in 1902 running streetcars in Atlanta as a successor to the Atlanta Consolidated Street Railway Company.
Georgia Power is the largest of the four electric utilities that are owned and operated by Southern Company. Georgia Power is an investor-owned, tax-paying public utility that serves more than 2.25 million customers in all but four of Georgia's 159 counties. It employs approximately 9,000 workers throughout the state.
The Georgia Power Building, its primary corporate office building, is located at 241 Ralph McGill Boulevard in downtown Atlanta.
Unlike Clean Line, they're a serious utility, much like Entergy within the state of Arkansas. They're also leading the way in the southeast for emissions reductions, apparently now without Clean Line. Why do I say this? Let me explain:
Back in January, Georgia Power released their latest proposed Integrated Resource Plan (IRP), in which they lay out their generation requirements for the next twenty years. Here's the full docket. Where Clean Line enters this IRP mix is directly tied to their "REDI" program which is nested within their broader IRP on page 10-106:
As part of its continued effort to responsibly grow the renewable generation market in Georgia
and provide energy benefits to all customers, the Company is proposing the procurement of an
additional 525 MW of renewable capacity through 2019 if such procurement can be obtained
below the Company’s projected avoided costs. In order to provide the maximum amount of
benefit to customers, the Company is proposing to procure this energy through three distinct
programs: (1) RFPs from renewable developers with utility scale projects to fulfill an annual
portfolio capacity target; (2) RFPs from developers with smaller, distributed scale projects to
fulfill an annual portfolio capacity; and, (3) smaller, distributed scale solar purchase offerings
from Georgia Power customer-sited projects.
Where Clean Line's part would come in:
Under the utility scale portion of the REDI RFPs, Georgia Power proposes to purchase energy
from up to 425 MW of renewable generation scheduled to achieve commercial operation no later
than December 31, 2019. The Company will file a detailed RFP schedule in September 2016
that will outline the timeline for the 425 MW RFP. The Company will accept proposals for
solar, wind, and biomass projects with 2018 or 2019 commercial operation dates (“COD”) based
on transmission impacts and overall value. The Company will take ownership of all Renewable
Energy Credits (“RECs”) produced by these facilities. Third-party proposals that allow for
Georgia Power ownership will be considered.
For utility scale resource bids, the Company will accept proposals for projects that are greater
than 3 MW in size, but no larger than 210 MW in size that can attain commercial operation in
2018. The Company will also accept proposals for projects greater than 3 MW in size but no
larger than 215 MW in size that can attain commercial operation in 2019. Consistent with the
ASI-Prime utility scale RFP, the PPAs will be for a term of up to 30 years.
For all renewable resources bids, the Company will accept both “as delivered” proposals and
“firm block” proposals. The cost of upgrades on Southern Company’s electric system to deliver
to Southern Balancing Authority Area load, if required, will be imputed into the total bid costs.
However, for renewable resources located outside of the Southern Balancing Authority Area,
proposals must bear all transmission delivery cost and risk to the point of delivery at the
Southern Balancing Authority Area interface. The Company will accept proposals for delivery
to the Southern Balancing Authority Area interface across high voltage direct current (“HVDC”)
lines.
That sounds good for Clean Line, right? Georgia Power accepting proposals from HVDC would be a great thing for them. There's only one problem with it: Those pesky in-service dates. See, Clean Line is pushing the idea that their transmission line will be energized by 2020. My opinion is, even if everything goes exactly as planned for them, there's less than a snowball's chance of that, but that's another post entirely (I think GP knows that, too). The problem with GP's IRP for Clean Line revolves around their proposed "Request for Proposals" (RFP). In the original IRP, the RFP is laid out to be executed as follows:
For utility scale resource bids, the Company will accept proposals for projects that are greater
than 3 MW in size, but no larger than 210 MW in size that can attain commercial operation in
2018. The Company will also accept proposals for projects greater than 3 MW in size but no
larger than 215 MW in size that can attain commercial operation in 2019. Consistent with the
ASI-Prime utility scale RFP, the PPAs will be for a term of up to 30 years.
Clean Line really wants Georgia Power as a transmission customer. REALLY wants them. Where the "Clean Line whine" enters the picture is with their own David Berry's intervention into the docket to approve Georgia Power's 2016 IRP. See, Clean Line wants everyone in the southeast to have renewable energy as quickly as possible, unless it's not Clean Line's renewable energy. When it turns out that it might not be Clean Line's renewable energy that will enter Georgia Power's mix via their REDI program, they send one of their top guys to try to get the Georgia PSC to maybe persuade GP to change their IRP a little bit to help them out:
Authorize and direct the procurement of additional renewables beyond the 525
MW currently identified in the IRP so long as the resources are below Georgia
Power’s avoided cost. Georgia Power currently proposes initiating a Renewable
Energy Development Initiative (“REDI”), which includes plans to procure an
additional 525 MW of renewable capacity through a REDI Request for Proposal
(“RFP”). As identified in the IRP on page 10-104, Table 2: Components by
Resource Type- Wind & Biomass, integrating wind resources results in significant
benefits due to avoided fuel and purchased power costs, avoided operations and
maintenance costs, avoided environmental compliance costs, and avoided
capacity costs. The Commission should authorize and direct Georgia Power to
procure more than 525 MW of renewables if additional proposals are received
that have a higher benefit to Georgia Power ratepayers than cost, which will result
in downward pressure in rates.
Maintain the RFP’s flexibility across technologies. Renewable energy
technologies, particularly wind and solar, are complementary resources. Wind
energy is typically the lowest cost resource, produces more energy per megawatt
(“MW”) installed, contributes substantially to meeting winter peak demand and
provides for economic development opportunities in the supply chain. Solar
energy contributes substantially to meeting summer peak demand and provides for local construction job opportunities. The two resources also complement one
another on a time of day basis, and a portfolio of both wind and solar produces
less system variability. By increasing the size of the RFP, there will be substantial
opportunities to include both cost-effective wind and solar generation into
Georgia Power’s supply portfolio.
Accelerate the timing of the RFP to align with the wind Production Tax Credit
phase out, resulting in lower costs of wind generation. The REDI RFP should
begin as soon as possible to ensure that the wind proposals received capture the
full value of the Production Tax Credit (“PTC”). 2016 will be the last year that
new wind project construction will be eligible for the full value of the PTC. Wind
generators can preserve this value by incurring 5% of the total cost, or starting
construction, of the facility during 2016.However, without firm commercial
commitments from Georgia Power, wind generation companies are unlikely to
invest the significant capital needed to qualify wind farms for the full PTC value
in order to supply the lowest cost wind power. Delaying the start of the RFP until
late this year, or until 2017, will result in wind generation proposals that are more
expensive due to a lower PTC value.
Allow proposals commencing operations as late as 2021 if they offer higher net
benefits to customers. The current construct of the RFP proposes procuring 210
MW of utility scale renewable projects that can attain commercial operation in
2018 and 215 MW of utility scale renewable projects that can attain commercial
operation in 2019. This does not provide sufficient time for wind generators using
Plains & Eastern or other new transmission lines to come online. Clean Line
believes that the lowest-cost renewable resource available to Georgia Power is
Oklahoma Panhandle wind power delivered via Plains & Eastern, which will
begin delivering energy to the Southeast in 2020. Closing the RFP to such a
resource would likely increase costs for Georgia Power customers.
Encourage Georgia Power to evaluate ownership of wind assets. Finally, the RFP
should consider the additional benefits to ratepayers if Georgia Power were to
own the wind facilities. Clean Line supports the following statement from pg. 10-
106 of the IRP: “third-party proposals that allow for Georgia Power ownership will be considered.” Investments in wind will likely result in a lower delivered
cost of energy than the same resource procured via a power purchase agreement,
due to Georgia Power’s low cost of capital and efficient use of tax credits.
Also:
Q. Please explain how specifying required online dates may limit the responses received in the REDI RFP
A.The current construct of the RFP proposes procuring 210 MW of utility scale renewable projects that can attain commercial operation in 2018 and 215 MW of utility scale renewable projects that can attain commercial operation in 2019. The lowest cost wind resource available to Georgia Power is likely to be Oklahoma Panhandle wind delivered via Plains & Eastern, which will begin delivering energy to the Southeast in 2020. Clean Line plans to allocate a majority of the 4,000 MW of transmission capacity to the Southeast to generator-shippers in 2016 and early 2017. This finite resource will not be available if Georgia Power waits until the next IRP cycle in 2019 to evaluate delivered Plains & Eastern wind, and maintaining a 2018 or 2019 required online date may preclude these resources from competing in the proposed REDI RFP.
It would be incredibly convenient for Clean Line if the Georgia PSC directed Georgia Power to adopt these recommendations, wouldn't it?
So, did Mr. Berry get what he wanted? It doesn't appear like he will. Georgia Power did, in fact, increase the amount of renewable energy they'd procure. It also appears that they added a stipulation that only 300mW of energy procured through REDI could be wind. That doesn't help. Did they bend their RFP dates for the sole benefit of including Clean Line? No. Did they say they would consider projects with an in-service date in 2020-2021 in their 2017 RFP? No. Doesn't do a lot to help them:
3. The Renewable Energy Development Initiative ("REDI") is approved and shall be increased such that it will procure 1,200 MW (150 MW of Distributed Generation ("DG") and 1,050 MW of utility scale resources.) Utility scale procurement shall take place through two separate Requests For Proposals ("RFP"). The first RFP will be issued to the marketplace in 2016 and will seek 525 MW of renewables with in service dates of 2018 and 2019. The second RFP will be issued to the marketplace in 2019 and will seek 525 MW of renewables with in service dates of 2020 and 2021. No more than a total of 300 MW of wind resources shall be procured through REDI...
Conclusion: There's a good chance we can cross out Georgia Power from Clean Line's list of potential customers (at least until 2019). It's good news.
Time Is Our Friend
Mr. Berry outlines perfectly on page 19 the reason their project's success is related directly to the Production Tax Credit (PTC). Any pesky delays from landowners or other entities makes their project increasingly less financially feasible as the clock ticks:
V. The REDI RFP should begin as soon as possible, and should allow proposals for delivery
later than 2018.
Q. How will the timing of the REDI RFP affect the wind prices that are received?
A. The timing of the RFP will have a large effect on the wind proposals received, as the
Production Tax Credit will begin a multi-year phase out in 2017. The Consolidated
Appropriations Act of 2015 extended the Section 45 PTC for electricity produced from
wind generation retroactively to January 1, 2015, and prospectively through the end of
2019. After 2016, the credit will be reduced by 20% for projects that begin construction
in 2017, by 40% for projects that begin construction in 2018, and by 60% for projects that
begin in 2019. The wind PTC would expire for projects that begin construction on or
after January 1, 2020.
Under guidance previously issued by the IRS interpreting the “beginning of
construction” rule for qualified renewable power facilities there are two methods that a
taxpayer may use to establish that construction of a qualified facility has begun:
1.A taxpayer may establish the beginning of construction by: (a) starting physical
work of a significant nature (Physical Work Test) and (b) thereafter maintaining a
continuous program of construction.
2.Under the second method, a taxpayer may establish the beginning of construction
by meeting the so-called “5% safe harbor,” which provides that construction of a
facility will be considered as having begun if (1) a taxpayer pays or incurs five percent or more of the total cost of the facility before the applicable expiration
date, and (2) thereafter, the taxpayer makes continuous efforts to advance towards
completion of the facility.
Wind generators need certainty of offtake arrangements prior to incurring five percent of
the total cost of the facility or commencing construction. Georgia Power currently plans
to file a detailed RFP schedule with the Commission in September 2016, which would
lead to the issuance of the RFP likely in early 2017. This timing would eliminate the
potential for wind proposals that include the full value of the PTC. Georgia Power should
release the RFP as soon as possible.
This declining PTC value means that the lowest cost wind will be procured in
2016, and the cost of wind energy will rise between 2016 and 2020 as the tax credit is
phased out. Improvements in wind turbine technology have significantly increased the
capacity factor of wind, thereby lowering the delivered cost of energy, but near-term
improvements in turbine technology will not be sufficient to compensate for this lost PTC
value.
Thanks for that description, Mr. Berry. I haven't been able to find a better one anywhere else.
Plains and Eastern is Not "Clean" Anymore
Not only that, but David Berry also admits something that we've known all along, but Clean Line says nothing about: Clean Line is no longer a "clean" line anymore, either. This is found on page 13 of the testimony linked at the top of this section:
Q: Are there any additional value components associated with transmission service
across Plains & Eastern that should be evaluated during the renewable RFP
process?
A.Yes. In addition to transferring low cost wind, transmission capacity on Plains & Eastern
can be used to deliver bulk power from the SPP system during the hours when wind
generation is not using the entire capacity of Plains & Eastern. Clean Line has estimated
that the ability to deliver SPP market power could save Georgia ratepayers approximately
$9 million dollars a year. This calculation assumes that Georgia Power or a wind
generator has obtained enough transmission service across Plains & Eastern to deliver
1000 MW to the Southern system.
So, translation: As we all know, the wind doesn't blow all the time. What Mr. Berry is saying here is that, when wind generation isn't supplying full capacity on the line, that extra available capacity could very well be filled with coal-generated power from the bulk SPP system. While Clean Line has been portraying this line as the "green" way to go, it turns out that isn't the whole truth. Who would have thought, right? All of us.
What say you Glen Hooks and Bob Allen?
Conclusions
Clean Line needs customers, they seem borderline desperate, and Georgia Power is not likely to be one of those customers anytime soon.
In this case, time is our friend.
The Plains and Eastern "clean line" isn't quite as clean as it has been portrayed. It's turning into a regular old transmission line.
