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Posts Tagged ‘FERC Review Team’

MendoCoastCurrent from Platts Energy Podium, February 12, 2009

The recently approved Economic Stimulus Plan includes expanding the US electric transmission grid and this may be the just the start of what will be a costly effort to improve reliability and deliver renewable energy to consumers from remote locations, Federal Energy Regulatory Commission (FERC) Acting Chairman Jon Wellinghoff told the Platts Energy Podium on February 12, 2009.

Wellinghoff defines the Stimulus energy funds as “seed money. But it really isn’t [enough] money to make huge advances in the overall backbone grid that we’re talking about to integrate substantial amounts of wind.”

While details of the plan compromises are unclear, the measure could provide $10 billion or more to transmission upgrades. Wellinghoff said backbone transmission projects could cost more than $200 billion. “And I think we’ll see that money coming from the private sector,” based on proposals already submitted to FERC.

Wellinghoff’s focused on Congress strengthening federal authority to site interstate high-voltage electric transmission lines to carry wind power to metropolitan areas and expects FERC to be heavily involved in formulation of either a comprehensive energy bill or a series of bills meant to address obstacles to increasing renewable wind, solar and geothermal energy, and other matters that fall within FERC’s purview. 

FERC plays a critical role “given the authorities we’ve been given in the 2005 and 2007 acts and our capabilities with respect to policy and implementation of energy infrastructure.”

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SUSAN CHAMBERS, The World, February 3, 2009

Coos Bay — The announcement came as a surprise to everyone.

beachpThe Federal Energy Regulatory Commission’s Thursday order issuing a preliminary permit for a 200- to 400-buoy wave energy project off of Newport shocked Ocean Power Technologies leaders as well as the public.

“It’s a project, a site that is not on our priority list right now,” OPT spokesman Len Bergstein said. “It was a little bit of a surprise to us in terms of timing.”

What’s different about this project is that FERC’s approval stirs up a hornet’s nest at the time OPT is trying to work with residents on the South Coast for community approval of two sites: a 10-buoy project off of Gardiner and a 200-buoy project off of the North Spit.

It also calls into question FERC’s intentions of adhering to a memorandum of understanding previously negotiated with Oregon to give the state greater siting power over wave energy projects in the territorial sea.

The approval also seems to be designed for FERC to flex authority over territory traditionally overseen by the U.S. Department of Interior’s Minerals Management Service. Both agencies have claimed the area outside of Oregon’s territorial sea, beyond three nautical miles.

Mixed Messages

As the FERC notice of approval hit residents’ e-mail inboxes late Thursday, outrage began to build.

“My concern is this sends the wrong message,” said Lincoln County District Attorney Rob Bovett. “This is high-value crab grounds, about as valuable as you get.”

OPT applied for the permit in November 2006, but let the application slide. The jurisdictional battle meant the application was going nowhere fast. OPT decided to concentrate its work on the Gardiner and Coos Bay sites, both of which are inside the territorial sea.

Bergstein said as soon as he found out about the approval, he immediately called Lincoln County Commissioner Terry Thompson and other Lincoln County folks, particularly those involved with the Fishermen Involved in Natural Energy group.

“Clearly, we have not been prompting FERC,” Bergstein said.

Bovett, who was involved in the commenting on the original OPT application, said Fishermen Involved has been working with wave energy companies to determine the best sites for development that would have the least impact on the fishing industry and local communities. This, though, was different.

“FINE wasn’t involved in the selection of this box,” Bovett said.

State vs. FERC?

Bovett’s first question was: Does the memorandum of understanding not mean anything?

In March 2008, FERC and Oregon signed a memorandum designed to “coordinate the procedures and schedules for review of wave energy projects.”

Bovett just chuckled.  According to the deal, he said, FERC wasn’t going to issue permits willy nilly. 

Some of the discrepancy over the decision to issue a preliminary permit — which allows OPT to only study the area for feasibility — may be because Oregon hasn’t finished updating its territorial sea plan. The Ocean Policy Advisory Council and the state have been working on it, but the marine reserves issue has dominated the council’s time over the past year.

“This will obviously get everybody’s attention,” Southern Oregon Ocean Resource Coalition Chairman Nick Furman said of FERC’s decision.

That’s putting it lightly.

Whereas the Reedsport and Coos Bay sites are considered by some to be ground zero as far as local communities negotiating with wave energy developers, the Newport site could be ground zero for state vs. federal and agency vs. agency jurisdiction and siting battles.

However, Bovett said, OPT holds the key right now.

The New Jersey-based wave energy developer should withdraw from  the site, he said. Otherwise, years of litigation seem likely — and courts ultimately would have the final say over which agency should be in charge of alternative energy.

“OPT can fix this,” Bovett said. “It’s exactly what they should do.”

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Editors Note:  On May 11, 2009, PG&E pulled-out of Mendocino WaveConnect, read it here: http://tinyurl.com/qwlbg6 . The remains of the $6M are now solely allocated to Humboldt WaveConnect.

MendoCoastCurrent, January 29, 2009

wave-ocean-blue-sea-water-white-foam-photoPG&E caught a major renewable energy wave today as the California Public Utilities Commission approved $4.8 million in funding their centerpiece wave energy project, WaveConnect. The program also received an additional $1.2 million in matching funds from the Department of Energy. PG&E’s WaveConnect, a project already two years in the making, launches with a $6M kitty.

WaveConnect is chartered with exploring wave energy development off the coasts of Mendocino and Humboldt counties in Northern California. The stakeholders in this region are dyed-in-the-wool political activists, living in environmentally-centric coastal communities and have reacted protectively, sounding alarms that PG&E and the Federal government’s wave energy plans may foul, diminish and destroy the Pacific Ocean and marine life.

Over the two years that PG&E and the Federal Energy Regulatory Commission (FERC) advanced WaveConnect, only recently have environmental concerns and study become part of the discussion. The opportunity for Mendocino and Humboldt coastal communities and local governments to embrace wave energy development and connect with WaveConnect has not gone well, especially as the Federal Energy Regulatory Commission (FERC) has disallowed the City of Fort Bragg and local fishermen to be party in the WaveConnect FERC Preliminary Permitting.

Jonathan Marshall, publisher of Next100, a PG&E blog, wrote “PG&E’s first step will be to conduct meetings with local stakeholders and agencies to learn about their issues and concerns. After completing appropriate environmental reviews and permit applications, which could take a couple of years, PG&E then plans to build an undersea infrastructure, including power transmission cables, to support wave energy demonstration projects. The utility will then invite manufacturers of wave energy devices to install them offshore for testing and comparison.”

“The anticipated cost of wave power compares favorably to the early days of solar and wind,” says William Toman, WaveConnect project manager at PG&E. “It will take several stages of design evolution to lower costs and increase reliability.” The CPUC and the DOE are betting on this evolution as in this funding scenario engineered by PG&E, the CPUC awards $4.8M in ratepayer funds while the DOE $1.2M is a matching grant.

Wave energy may become a key source of renewable energy in California. It’s proposed that the 745-mile coastline could produce 1/5th of California’s energy needs if, admittedly a big if, economic, environmental, land use and grid connection issues — and community issues — don’t stand in the way.

Marshall wrote in closing “Making ocean power technology work reliably and at a competitive price will be the first big challenge. Serving offshore installations with power transmission lines will be another economic and engineering hurdle. Finally, ocean power developers must also convince local communities and government regulators that their installations will not destroy marine life, cause boating collisions or navigational hazards, or degrade ocean views.”

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MendoCoastCurrent, January 7, 2009

Federal Energy Regulatory Commission Chairman Joseph T. Kelliher today issued the following statement:

Today I announce my intention to step down as chairman of the Federal Energy Regulatory Commission (FERC), effective January 20, 2009. Although my term as commissioner does not end until 2012, I will also immediately begin to recuse myself from FERC business, as I explore other career opportunities.  

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GERRY NORLANDER, Pulp Network, November 25, 2008

President-elect Obama has named Dr. Susan Tierney and Rose McKinney-James to his transition team for the U.S. Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC), which is organizationally within DOE.

Both appointees, former state utility commissioners of Massachusetts and Nevada, respectively, have a record of supporting electricity industry deregulation, or, as it is euphemistically named, “restructuring.” 

Thirty five states did not restructure, no state has restructured since 2000, and several states halted plans to adopt it when they saw its results in states like California and New York. 

The “restructuring” model strips the power generation function away from state-regulated utilities under the premise that the generation function can be deregulated if it is structured to be competitive. An implicit assumption of restructuring, which we reject, is that if the market price of a utility service is “competitive” it will then necessarily satisfy the legal requirement of being “just and reasonable.”

This regulatory fad peaked in the last decade of the last century when it was lavishly promoted by Enron’s Ken Lay, embraced by some state regulators, accepted by both the Clinton and Bush administrations, and pushed by FERC. FERC’s regime now lacks consumer support and confidence. 

To bring about functionally deregulated wholesale electricity markets without statutory authorization, FERC administratively morphed the Federal Power Act system of filed rate regulation into one of unfiled, unreviewable, and unrefundable wholesale market rates. The FERC system is now built upon “organized” spot markets for wholesale electricity such as those run by the NYISO and other Regional Transmission Organizations (RTOs), where energy is sold by sellers with “market-based rates.”

The FERC system has its greatest impact in restructured states that allowed utilities to sell off power plants whose output had been priced based on the cost of production, requiring most electricity to be bought at wholesale “market-based rates” eventually passed through to retail customers.   

Mathematical game theory, economics lab simulations, and experience demonstrate that the wholesale electricity spot markets that are at the heart of restructuring can be gamed and manipulated to drive prices well above competitive levels beyond the capacity or will of FERC to correct.

Even for those who would conflate the notions of competitiveness and reasonableness, the generation function is increasingly dominated by fewer large companies as the industry consolidates, undercutting the notion that many sellers will someday make electricity a buyer’s market and preclude the need for rate regulation. 

According to Duke Power CEO James Rogers, in light of the recent financial market developments,

“I think within 18 months you’ll see either consolidation or acquisition of all of [the major independent power producers].”

“The case for consolidation in our industry is more compelling today than it’s been in my 20-year career as CEO because of what’s going on in capital markets, because of the economy we’re in and no growth….”

Although most consumer groups are disappointed by the results of restructuring, major utility holding companies formed as a result of restructuring and the repeal of PUHCA, investment banking institutions, energy producers and wholesale traders, deregulated retail sells and the energy derivatives industry still push hard for preservation and expansion of the restructuring model.

Proponents of deregulation such as EPSA and the NYISO occasionally announce reports or studies purporting to show advantages of deregulation. Typically, these reports and studies have loopy methodologies, fail to address how the ISO/RTO markets actually affect consumer prices, and fail to pass any reasonable test of academic rigor. Stated John Kwoka, Northeastern University, in his findings, there is no “reliable and convincing evidence that consumers are better off as a result of the restructuring of the U.S. electric power industry.”

The Obama FERC Transition Team

Dr. Susan Tierney
Dr. Tierney, a consultant with the Analysis Group, has also been mentioned in the trade press as a possible candidate for FERC Chairman. With Cornell degrees in regional planning, she has a long, extensive and varied background in energy issues, including work for the Department of Energy in the Clinton administration. Her biography indicates that in recent years a significant part of her consulting work has been on behalf of electric utilities and industry stakeholders in defense of electric industry deregulation or “restructuring.” 

Rose McKinney-James 
According to Obama’s Change.gov web site, another transition team member, apparently overseeing the FERC appointments, is Rose McKinney-James:  

Rose McKinney-James is the Managing Principal of Energy Works Consulting. Previously she served as the President and CEO of the Corporation for Solar Technology and Renewable Resources (CSTRR) and Chair of the Nevada Renewable Energy Task Force. Past positions also include Commissioner with the Nevada Public Service Commission, Director of the Nevada Department of Business and Industry, Chief of Staff for the City of Las Vegas and Project Manager for the Nevada Economic Development Corporation. McKinney-James serves on the Board of Directors of MGM-Mirage, Employers Insurance Group, Toyota Financial Savings Bank, the Energy Foundation, the American Council for an Energy Efficient Economy (ACEEE), and the Nature Conservancy. She is the Board Chair for Nevada Partners.

According to Politico,

Rose McKinney-James single-handedly will lead the review on Federal Regulation and Oversight of Energy. She has a strong background in renewable energy and is currently the managing principal of Energy Works Consulting. She previously served as president and CEO of the Corporation for Solar Technology and Renewable Resources.

James was formerly a Nevada utility regulator. After the Western states experienced the results of market manipulation, she, along with numerous former state utility commissioners from restructured states, signed onto a 2003 Declaration of Consumer Benefits from Wholesale Power Markets, a statement indicating support for the restructuring model.  Since then, however, James appears not to have been actively involved in the continued promotion of restructuring and she reportedly has a keen interest in renewable energy. 

Conclusion

We would certainly be more hopeful of change in the interests of consumers if the DOE/FERC transition team more reflected the judgment of most states not to restructure, and better realized the experience of consumers in the states that did. Nevertheless, it cannot be assumed that Obama transition team members will recommend candidates for key positions who would continue the relentless restructuring efforts of past administrations without reflection upon the results to date and without heeding consumer concerns. 

Perhaps it is a hopeful sign of change that the latest rumored candidate for a FERC position is John H. Norris,  Chairman of the Iowa Utilities Board. Iowa, a state that once considered but did not adopt restructuring.

Update, December 4, 2008

The Longview Washington Daily News, in a story about the controversial Bradwood LNG terminal project for the Columbia River, states:

Obama also could reshape FERC itself.

Terms of the four FERC commissioners who voted in favor of the Bradwood project will expire during Obama’s first term, starting in 2009, Tamara Young-Allen, a spokeswoman for the agency, said in an e-mail. The other three commissioners’ terms expire in 2010, 2011 and 2012. (Commissioners serve five-year terms.)

Obama can also appoint a new FERC chairman. That would shift the current chairman, Joseph Kelliher, into a regular commissioner seat. It’s unclear whether Kelliher would finish out his term, which lasts through 2012, if he is removed from the chairman’s position.

When asked about his plans, Young-Allen noted, Kelliher has said, “When I have something to announce, I will tell you.”

VandenHeuvel, of Riverkeeper, speculated that Obama will appoint Jon Wellinghoff as the new chairman. Wellinghoff is a Nevada Democrat who was the only FERC member to oppose the Bradwood terminal in the September vote.

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KEVIN FERGUSON, The Information Week, November 24, 2008

1739725132_460c52d56dWhere is President-elect Barack Obama headed with environmental protection and renewable energy? The answer lies not so much in the encouraging but ultimately self-serving video posted on the transition team’s Web site, but rather on links elsewhere on the page. In particular, look at the appointment of senior transition official Rose McKinney-James as FERC Review Team Lead.

Unless you live in California or Nevada, you may not be familiar with the Federal Energy Regulatory Commission.  FERC — a relatively tiny agency that requested only $273.4 million and 1,465 full-time employees in its FY 2009 budget — regulates the country’s natural gas industry, hydroelectric projects, oil pipelines, and wholesale rates for electricity. You may recall that public advocacy groups excoriated FERC for its role in the deregulation of the wholesale electricity market in California and subsequent power crisis in 2000 and 2001.

So, what’s the significance of this recent appointment? McKinney-James, managing principal of Energy Works Consulting, has been championing renewable energy for decades, as the president and CEO of the public Corporation for Solar Technology and Renewable Resources (CSTRR), chair of the Nevada Renewable Energy Task Force, commissioner with the Nevada Public Service Commission, and other pubic posts.

Her efforts also have included renewable energy advocacy in the private sector — and in some rather unexpected places. The most visible of those places is MGM Mirage’s  Protech CityCenter in Las Vegas. McKinney-James sits on the MGM board.

The $7 billion development was recently awarded a Leadership in Energy and Environmental Design (LEED) certification by the U.S. Green Building Council. Project CityCenter includes a 4,000-room hotel-casino, two 400-room boutique hotels, more than 500,000 square feet of retail space, and 2,900 residential units on 66 acres between the Bellagio and Monte Carlo.

Perhaps McKinney-James can accelerate what has been a slow accommodation of renewable energy sources into FERC’s mix.

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MendoCoastCurrent, November 17, 2008

Announcements and short biographies of Obama’s Team Leads that oversee renewable energy policy development and associated agencies.

Energy and Natural Resources Team Lead
David J. Hayes is a member of the Obama-Biden Transition Project’s Agency Review Working Group responsible for the energy and natural resources agencies. He is former Global Chair of the Environment, Land and Resources Department at Latham & Watkins, an international law firm. He is a Senior Fellow at the World Wildlife Fund, advising the President of WWF on climate change matters, and he is a Senior Fellow at the Progressive Policy Institute, specializing on energy matters. Mr. Hayes is the Vice-Chairman of the national conservation group, American Rivers, and he is the former Chairman of the Board of the Environmental Law Institute. Mr. Hayes was the Deputy Secretary of the Interior during the Clinton Administration. During the 2007-2008 academic year, Hayes was a Consulting Professor at Stanford University’s Woods Institute for the Environment.

Department of Energy Review Team Leads
Elgie Holstein was a Senior Energy Policy Advisor to the Obama for America Presidential Campaign. Under President Clinton, he was Assistant Secretary of Commerce for the National Oceanic and Atmospheric Administration; Associate Director for Natural Resources, Energy and Science at the Office of Management & Budget; Chief of Staff at the Department of Energy; and Special Assistant to the President for Economic Policy at the National Economic Council. He was also Director of State-Federal Relations for energy and environmental programs for the National Conference of State Legislatures, and worked as a congressional aide.

Elizabeth Montoya is currently a Consultant with Sealaska Corporation in Juneau Alaska where she is an expert in human resource management and strategic planning and advises the CEO and COO. Previously, she was Associate Director of Presidential Personnel in the White House, Deputy Chief of Staff at the Department of Energy, and Associate Director of Management and Administration at the Small Business Administration.

Sue Tierney is a Managing Principal and expert on economics, regulation and policy in the electric and gas industries at Analysis Group. She previously served as Assistant Secretary for Policy at the Department of Energy, under President Clinton; Secretary of Environmental Affairs in Massachusetts under Governor Weld; and Commissioner at the Massachusetts Department of Public Utilities under Governor Dukakis.

EPA Review Team Leads
Cecilia V. Estolano is the Chief Executive Officer of the Community Redevelopment Agency of Los Angeles. Prior to joining CRA/LA, Estolano practiced land use and environmental law at Gibson, Dunn & Crutcher. She has served as a Special Assistant to the City Attorney in the Los Angeles City Attorney’s Office, a Senior Policy Advisor to the Assistant Administrator for Air and Radiation at the U.S. Environmental Protection Agency and a member of the California Coastal Commission.

Lisa Jackson was appointed in 2006 by Governor Jon Corzine to lead New Jersey’s Department of Environmental Protection (DEP). Her past experience includes management responsibilities at the Environmental Protection Agency.

Robert Sussman is a Senior Fellow at the Center for American Progress (CAP). During the Clinton Administration, Sussman served as Deputy Administrator of the Environmental Protection Agency, where he played a leading role on Superfund, global warming, science policy and the North American Free Trade Agreement.

FERC Review Team Lead
Rose McKinney-James is the Managing Principal of Energy Works Consulting. Previously she served as the President and CEO of the Corporation for Solar Technology and Renewable Resources (CSTRR) and Chair of the Nevada Renewable Energy Task Force. Past positions also include Commissioner with the Nevada Public Service Commission, Director of the Nevada Department of Business and Industry, Chief of Staff for the City of Las Vegas and Project Manager for the Nevada Economic Development Corporation. McKinney-James serves on the Board of Directors of MGM-Mirage, Employers Insurance Group, Toyota Financial Savings Bank, the Energy Foundation, the American Council for an Energy Efficient Economy (ACEEE), and the Nature Conservancy. She is the Board Chair for Nevada Partners.

Department of the Interior Review Team Leads
John Leshy is a professor of law at the University of California, Hastings College of the Law in San Francisco. Previously he was Solicitor (General Counsel) of the U.S. Department of the Interior; Special Counsel to Chairman George Miller of the Resources Committee, U.S. House of Representatives; professor of law at Arizona State University in Tempe, Arizona; Associate Solicitor of Interior for Energy & Resources; and with the Natural Resources Defense Council (NRDC) in California and the Civil Rights Division of the U.S. Department of Justice in Washington.

Robert Anderson is a professor at the University of Washington School of Law and is the Director of the School’s Native American Law Center. After working for 12 years for the Native American Rights Fund, he was the associate solicitor for Indian affairs and Counselor to Interior Secretary Bruce Babbitt. He is a member of the Bois Forte Band of the Minnesota Chippewa Tribe.

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