Monday, December 24, 2012

How Will Article 10 Work?

On Aug. 4, 2011, New York restored and updated its long-expired Article 10, which governs in-state siting of new, repowered or modified electric generating facilities over 25 MW.

The new Article 10, like its predecessor, centralizes siting authority in the New York State Board on Electric Generation Siting and the Environment and is intended to guarantee developers a streamlined, time-certain permitting process.

By lowering the size threshold from 80 to 25 MW, Article 10 permits more wind, solar and other renewable projects to use its streamlined process while continuing to recognize the authority of local interests over smaller projects that have more local impacts.

Implementing regulations were proposed this spring, with comments due by the end of May.

Noteworthy provisions of the proposed regulations are:

Disclosure of sensitive, detailed capital cost estimates. Not appearing to be required by Article 10, Section 1001.14 of the regulations requires applicants to provide detailed capital cost estimates, along with supporting work papers. The proposed disclosures would require developers to air competitively sensitive commercial information; fear of which could discourage developers from siting new projects or risk distorting a fully competitive market by permitting market participants to influence competitive bid processes like the New York State Energy Research and Development Authority solicitations.

Minor design revisions trigger substantial scrutiny. Certain minor project design changes such as shifting collection lines, interconnection lines or access roads could trigger more scrutiny and fees if such change is deemed a “revision” under Section 1000.2(ak) rather than a “modification” under section 1000.2(x). This

High bar for ignoring local laws. Section 1001.31(e) requires that before asking the siting board to find that a compliance with a local law would be unreasonably burdensome, applicants must show it is technically impractical to comply with the local requirement or the costs to consumers of the applicant’s doing so would outweigh its benefits. In comparison, Article 10 gives the siting board discretion to overrule local laws that pose an unduly burdensome barrier. Arguably, then the implementing regulations adopt a more onerous standard than that contemplated in the actual legislation.

Low bar for forcing administrative hearings. Section 1000.12 allows parties, including those seeking to challenge or delay a project, to force an administrative hearing upon a showing of material and relevant concerns. This could expose developers to costly litigation of potentially frivolous issues. Article 10 does not codify a higher standard but would permit the siting board to impose a substantive and significant standard, which would prevent litigation concerns.

Long lead time for public involvement program (PIP) plan. Section 1000.4(d) requires applicants to submit a PIP plan at least 150 days before the preliminary scoping statement. Added to the three-month pre-application (1000.5(c)) and yearlong application, this five-month wait appears to extend the certification time line to 20 months—nearly twice the duration proposed in the notice of proposed rulemaking.

Costly detail for preliminary design drawings, noise and vibration studies, and site studies. The requirement discourages applicants from improving the design once it has been submitted for fear such changes might be deemed “revisions” under the law.

These studies depend on variables that cannot be known at the application stage, and the specificity sought adds costly layers of complexity without achieving any corresponding benefit.
Section 1001.21 requires construction-level detail of site geology, seismology and soils, which would impose a potentially large cost at the application stage.

Early-stage site safety response plans and New York State Division of Homeland Security and Emergency Services review. Section 1001.18(d) requires applicants to ask the New York State Division of Homeland Security and Emergency Services to review plans, seeming unnecessary for relatively small projects, especially small renewable resources.

Study radius of groundwater analysis and storm water plans. Section 1001.23 requires detailed groundwater analysis and storm water plans.

The proposed regulations highlight some potential early-stage obstacles the siting board could impose on in-state developers.

Taken together, these obstacles would seem to undercut the objective and limit the effectiveness of Article 10, as well as frustrate the desire of developers and consumers that the legislation streamline permitting. (Electric Light & Power, by Frederick R. Fucci and Daniel A. Broderick, Dickstein Shapiro LLP, 9/1/2012)

Tuesday, December 18, 2012

LIPA Turmoil

Michael Hervey, who has been the acting CEO the Long Island Power Authority since Gov. Andrew M. Cuomo took office. He is leaving at the end of the year. National Grid has operational control of the system. Until last week, LIPA's 15-member board of trustees had seven vacancies and enough internal turmoil to create uncertainty over whether it could find a quorum to perform routine business.

Cuomo still has to find a few more board members with the skills most needed now. In the past, we have said a 15-member board was too unwieldy.

The new CEO must oversee the intricacies of switching the management of the electrical system from National Grid to PSEG of  New Jersey, which won the contract to begin operating the system in 2014. As part of that process, the LIPA chief will have to determine who from Grid should stay on, what equipment and other property belongs to LIPA and who will keep track of that inventory.

Some challenges:

With no automated outage notification system likely to be in place anytime soon, how will LIPA know who has lost power in another major storm?

When LIPA establishes a timeline for restoration, who will communicate it? And how? There isn't anyone there capable of doing more than writing a simple press release.

Does LIPA know how many of the restorations made after Sandy are not permanent ones? In many cases, it will only be able to calculate what was done and who performed the work when it gets detailed bills from the out-of-state utilities. That's many months away.

LIPA is now a public authority that owns its transmission and distribution system but contracts its operation to a private utility, currently National Grid. The other options are finding an incredibly creative way to deal with LIPA's debt and sell the system to a private operator -- or devising yet another public-private hybrid that can be more effective than a public authority to provide reliable power and stable rates.  (Long Island Newsday, 12/14/2012)

Monday, December 17, 2012

In the aftermath of Hurricane Sandy, Consolidated Edison (ConEd) is evaluating whether to underground the entirety of its distribution network, an undertaking that would cost $40 billion.

ConEd is also speaking with the New York Public Service Commission (PSC) about increasing its $2bn annual investment in electric, gas and steam infrastructure.

Sandy took out one-third of ConEd's service territory, or about 1 million customers, quintupling the number of outages the company had seen in recent years from the worst storms, typically Nor'easters.

The majority of the utility's distribution cable is already underground – 94,000 miles of more than 130,000 miles total. To take the rest of the system underground – more than 37,000 miles of overhead lines and 49,000 transformers – would also require taking telecom and cable lines underground, for an additional $20bn, bringing the total cost of undergrounding the infrastructure to $60bn.

A ConEd study two or three years ago evaluated the cost of undergrounding the distribution network in Westchester County and Staten Island in New York. IT was estimated it could triple people's rates to put things underground. The Sandy recovery costs have provided a point of comparison between preventive and reactive measures. Sandy narrowed the gap between the cost of recovery and prevention.

New York Gov. Andrew Cuomo on Dec. 3 requested $42 bilion from the federal government for Hurricane Sandy recovery.  The estimated economic toll is $60 billion just for New York – that doesn't include New Jersey.

ConEd has so far committed to spend $250 million to reinforce its system for flood prevention, but has not yet identified exactly what measures it will take. The company has so far spent $330m on Sandy recovery costs, and expects that number to rise to between $350m and $450m. ConEd has estimated it would cost $800m for substation reinforcement – elevating equipment or building flood walls around substations that are near the waterfront. Ten substations are vulnerable to a major hurricane or storm.  (Energy Biz, 12/16/2012)

Monday, December 3, 2012

Millenium Pipeline Minisink New York Compressor Station

FERC Order Issuing Certificate

Issue July 17, 2012

Minisink Compressor Station
On July 14, 2011, Millennium Pipeline Company, L.L.C. (Millennium) filed an application pursuant to section 7(c) of the Natural Gas Act (NGA) and Part 157 of the Commission’s regulations for a certificate of public convenience and necessity authorizing it to construct and operate a new compressor station and related facilities in the Town of Minisink, Orange County, New York (Minisink Compressor Project). Millennium states that the proposed Minisink Compressor Project will enable it to transport an additional 225,000 dekatherms (Dth) per day to its interconnection with Algonquin Gas Transmission, LLC (Algonquin) at Ramapo, New York. For the reasons discussed below, the Commission granted Millennium’s requested authorization, with appropriate conditions.

The Federal Energy Regulatory Commission (FERC) approved the project by a 3 to 2 vote by Commissioners. A rehearing is currently being considered by FERC, and if it’s denied Minisink will  move on to Federal Court, however residents are prevented from doing so by a FERC-issued tolling order. In the meantime, Millennium is fully underway with the project, despite local opposition, and lack of a final legal determination. (FERC, Stop The Minisink Compressor Station)