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Monday, January 27, 2014

Court to decide if solar energy installer is infringing on utilities' rights

Court to decide if solar energy installer is infringing on utilities' rights

Jan. 22, 2014   |  
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Written by
Grant Rodgers

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Barry Shear is the president of Eagle Point Solar of Dubuque. The Iowa Supreme Court will decide if the firm should be classified under the law as a 'public utility,' the same category as MidAmerican Energy and Alliant Energy.
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Barry Shear is the president of Eagle Point Solar of Dubuque. The Iowa Supreme Court will decide if the firm should be classified under the law as a 'public utility,' the same category as MidAmerican Energy and Alliant Energy. / Christopher Gannon/The Register

DUBUQUE LEASES ENERGY SYSTEM

Since 2006, the city of Dubuque has put an emphasis on sustainability and hoped to install a “pioneering” renewable energy project to reduce the city’s reliance on fossil fuels.
In 2012 the city began reducing its grid power use through the photovoltaic solar system installed by Eagle Point Solar on the roof of its municipal service center, said Cori Burbach, the city’s sustainability coordinator. The building houses the city’s public works and some water department employees, as well as trucks and other equipment.
The city currently leases the system from the solar energy company, though it initially hoped to use a power purchase agreement so the company could take advantage of tax credits, Burbach said.
Though the city could have installed the system through Alliant Energy or another company, city leaders hoped to help a local business by selecting the Dubuque-based company, Burbach said.
“One of the benefits that we saw was supporting a local company that was just getting into the renewable sector,” she said. “Any time we can we like to support a local business.”

WILL IOWA SEE MORE SOLAR GROWTH?

Solar energy advocates argue that allowing third-party purchasing agreements could be the push Iowa and others states need to see more growth in the industry.
However, a wide variety of factors play into the success of solar in different regions, said Vikram Dalal, an Iowa State University professor of electrical and computer engineering. Dalal has studied solar energy and the industry for more than 40 years.
The states that have seen the most development, such as California, have state governments that have “aggressively” offered incentives, Dalal said. Some states have mandated specific amounts of solar energy be part of a utility company’s portfolio.
In 2013, Minnesota lawmakers passed a law requiring utility companies to generate 1.5 percent of their energy from solar by 2020.
California and other states have also seen more development because energy prices are higher per kilowatt-hour, Dalal said. In Iowa and the Midwest, where energy prices are lower, there’s less incentive to install solar technology, both for companies and for consumers who already enjoy smaller bills, he said.
— Grant Rodgers
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The outcome of an Iowa Supreme Court case pitting electric companies against a Dubuque solar energy company will be watched nationally and may help shape the future of how solar energy is sold in the region, advocates say.
The case hinges on whether Eagle Point Solar can install its solar systems on a business or municipality’s building and then sell the electricity produced back to the entity even though a utility has exclusive rights to the customers.
Advocates say the agreements, known as “power purchase agreements,” lower the costs for companies and municipalities interested in using solar energy but don’t want the upfront expense of buyingor leasing the solar systems.Also, nonprofit entities, including cities, cannot take advantage of attractive federal and state tax credits because they do not pay taxes.
Attorneys for Alliant Energy, MidAmerican Energy and the Iowa Association of Electric Cooperatives argue that the arrangements violate Iowa law, which gives utility companies exclusive rights to sell electricity in defined areas. In exchange, the companies are required to serve all the customers in the area.
The attorneys for Eagle Point Solar, a coalition of solar energy and environmental advocacy groups, the Iowa Utility Board and Iowa’s electric companies will argue in front of the Iowa Supreme Court this afternoon. It will be up to justices to determine whether Eagle Point Solar should be classified under the law as a “public utility,” the same category as MidAmerican Energy and Alliant Energy.
A ruling in favor of the Dubuque firm could open the door for the company and others to work with more Iowa cities to reap the benefits of renewable energy and tax credits. But a ruling against the company would preserve the state’s current laws, keeping the right to sell electricity with only the established utility companies.
For solar energy advocates the pending case comes down to giving energy customers one more option to help pay for setting up solar systems, said Josh Mandelbaum, an Iowa attorney with the Environmental Law and Policy Center who will argue in the case. Nationally, the third-party power purchase agreements are a popular model, with 22 states allowing the agreements, according to solar industry trade groups and the U.S. Department of Energy.
Interested residents or cities can already pay outright or take out loans to lease or buy solar installations, Mandelbaum said.
“The broader implication is, this would allow more projects to be built,” Mandelbaum said. “You give consumers more choice, more Iowa consumers are going to be able to take advantage of this.”
The case comes at a time when companies and cities in Iowa and nationwide are looking for ways to increase the amount of renewable energy being used in efforts to reduce reliance on fossil fuels. Alliant Energy, which serves, much of Iowa, Wisconsin and parts of Minnesota, has seen about 1,000 customers install renewable energy systems on homes and businesses, said Justin Foss, a spokesperson for the company.
That number includes 726 solar photovoltaic solar units, he said.
Construction is scheduled to begin in March on Iowa’s largest solar power installation. The project, a partnership between Eagle Point Solar and Farmers Electric Cooperative, will include 2,000 panels near Kalona.
Still, even as Iowa is a leader in wind energy, it has lagged behind other states in developing solar power, said Nathaniel Baer, the energy program director of the Iowa Environmental Council. In other states, such as Colorado, legislators have specifically written laws to allow the power purchase agreements for solar companies.
When Eagle
Point Solar installed the system on a Dubuque operations center in 2011, Alliant Energy told the city that the agreement violated its monopoly in the territory. The solar company, which has completed projects in eastern Iowa and Illinois, took its case to the Iowa Utilities Board, which ruled against it in April 2012.
A Polk County District Court judge in March ruled the company’s arrangement to provide a portion of the power to Dubuque building was legal. In her ruling, Judge Carla Schemmel rejected arguments that Eagle Point Solar should be barred; the company would only provide a portion of the electricity the city building would need and none of the infrastructure used by energy companies would be necessary, she wrote.
Further, the goal of installing a system like Dubuque’s is not to provide electricity to mass amounts of customers, but to help customers reduce their reliance on power from the grid through individual installations, Schemmel wrote.
“Eagle Point does not furnish electricity ‘to the public’ and thus does not meet the definition of a ‘public utility,’ ” Schemmel wrote.
There’s a misconception that the case is about utility companies being against renewable energy, Foss said. Rather, it will determine where Iowa law stands on who has the right to provide that electricity, he said.
“Sometimes you get these outside interests coming in and they have been in a state where it’s not regulated, so they have this view of how things work and then they come to Iowa and try and push those views on the state,” he said.
Other financing options exist for installing solar photovoltaic systems that are permitted by Iowa law. When Alliant Energy raised concerns about Dubuque’s purchase agreement, the city changed the payment method to lease the equipment from the company instead.
The solar installation continues to generate about one-third of the building’s power needs from the system. Iowa law establishes that leases or buying solar panels outright avoids the conflict created by selling actual electricity, Mandelbaum said.
But nonprofit entities, including cities, school districts and churches, cannot receive state and federal tax credits designed to incentivize and lower costs for installing solar power systems.Under the long-term lease agreement between Eagle Point Solar and the city of Dubuque the money-saving tax credits simply “evaporate,” said Barry Shear, the company’s president.
In 2005 
Congress created a 30 percent solar investment tax credit for residents and businesses that install solar energy systems. The credit has helped lower costs of the systems and spurred installation rates that have seen compounded growth of 76 percent each year since 2006, according to the Solar Energy Industries Association.
The Iowa Department of Revenue awarded $632,567 in solar energy tax credits in 2012 and met its $1.5 million cap in 2013, according to the department.
There’s a correlation between states that have allowed more financing options, such as power purchasing agreements, and states that have seen more development in solar energy, said Michael Vickerman, program and policy director for RENEW Wisconsin. The Madison, Wis.-based nonprofit group advocates on renewable energy policies in the state.
“A bank will offer a loan to the system owner when the system owner and the energy customer (is) one and the same,” Vickerman said. “But as soon as you introduce a third party, they get nervous because they’re just not sure that the arrangement can survive.”
Wisconsin experts will closely watch the outcome of the Iowa case, Vickerman said. Wisconsin has a similar regulatory system, and Alliant Energy covers much of the southeastern and central sections of the state, he said.
The uncertainty surrounding the legality of power purchase and other third-party agreements in Wisconsin has stalled solar energy development, Vickerman said.
Vickerman is also optimistic that by clearly allowing power purchase agreements, companies like Wisconsin-based Kohl’s department stores will expand solar energy efforts in the state. Kohl’s already has solar energy systems installed in three sites in Wisconsin and at least 137 sites total across the country, according to the company’s 2012 social responsibility report.
Many of the systems used at Kohl’s locations are operated through power purchase agreements, the report said.
In briefs filed by attorneys for MidAmerican Energy and Alliant Energy, the companies warn that if the court allows third-party purchasing agreements, it could amount to “backdoor deregulation.” Scott Brennan, a Des Moines attorney, will argue before the court today on behalf of the utility companies.
“The District Court’s judicially crafted exception for third-party PPAs would not be limited to renewable energy and would allow back-door deregulation, including fossil-fuel generators set up through third-party PPAs, without any legislative discussion or consideration,” the brief said.
Shear, the president of Eagle Point Solar, believes the concern is unfounded and not supported by evidence in other states where the agreements are allowed.
“The parade of horribles that is going to occur ... it’s a fiction,” he said.

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Wednesday, June 5, 2013

With bill passage, Illinois on a fast track to fracking

With bill passage, Illinois on a fast track to fracking

Environmentalists say absent a moratorium, effective enforcement of new regulations will be key.

June 3, 2013

(Flickr/silverfuture)
Protest against fracking in Springfield. Protesters were repeatedly removed from legislative chambers and from the Governor’s office.
Illinois came a giant step closer to approving the nation's strictest regulations for high-volume oil and gas drilling on Friday, as lawmakers approved a measure they hoped would create thousands of jobs in economically depressed areas of southern Illinois.
The Senate passed the legislation 52-3, one day after it was overwhelmingly approved in the other chamber. Gov. Pat Quinn promised to sign it, calling the legislation a "shot in the arm for many communities."
The legislation was crafted with the help of industry and some environmental groups — an unusual collaboration that has been touted as a potential model for other states.
Legislation sponsor Mike Frerichs, a Champaign Democrat, said stakeholders "sat down for hundreds and thousands of hours" to hammer out the issue.
"These are tough regulations that are going to protect and preserve our most valuable resources in our state," he told floor members. "We are going to increase home produced energy in our state in one of the most environmentally friendly ways possible."
While proponents have said hydraulic fracturing, or "fracking," would generate tens of thousands of jobs, opponents have been pushing for a two-year moratorium to allow more time to examine health and environmental impact. They are worried fracking could cause pollution and deplete water resources.
"This bill was written by industry and parties that have a vested interest," said Annette McMichael, a property owner in Johnson County who belongs to a coalition that opposes fracking. "We have no say in our own water. ... We are totally helpless."
Despite the numerous protests by her group, Southern Illinoisans Against Fracturing Our Environment, and others — one woman was forcibly removed from the House chamber on Thursday after the vote — there was little opposition to the measure on the floor. Senators on both sides of the aisle praised the compromise.
"This could be a bright economic future for many, many Illinoisans," said Sen. Kirk Dillard, a Hinsdale Republican.
Fracking uses high-pressure mixtures of water, sand or gravel and chemicals are used to crack rock formations deep underground and release oil and natural gas.
Among the provisions in the proposed legislation are requirements that drillers disclose the chemicals they use and that they test water before and after fracking. Companies also would be liable for any water pollution, and citizens could sue independently of state enforcement.
Sen. Mattie Hunter, who was among the few who voted against the legislation, said in a statement that the state should "halt fracking practices and allow for a task force to complete concrete, comprehensive evaluation of this highly controversial industry moving further." The Chicago Democrat had introduced a measure that would put a temporary ban on the practice, but two bills proposing a moratorium never gained sufficient traction.
Sen. Sue Rezin, a Morris Republican described the legislation as having "the highest environmental regulations in the entire country."
Energy companies are eyeing the New Albany shale formation in southern Illinois, where they believe there are significant oil reserves 5,000 feet or more below the surface. But actual drilling isn’t likely to start for at least a few months, as the first step for potential drillers is a registration and permit application process that could take months. The process includes 30 days for public comment and public hearings if requested.
After approval, the permitting process requires water quality monitoring and careful controls on the storage and shipment of fracking-related materials and waste, and imposes criminal and civil penalties for violations of the law. The bill also allows for citizens’ suits against drillers who violate regulations.
A recent report found fracking is already underway in Illinois, even in the absence of such regulation.
Henry Henderson of the Natural Resources Defense Council (NRDC) says that’s among the reasons why NRDC supported regulation over no action at all.
“We’re moving from essentially an unregulated situation where Illinois Department of Natural Resources had very little ability to structure what would happen in the state on fracking,” said Henderson. Now, his concern is with the IDNR’s ability to oversee the complex permitting process provided for by the new law.
“There are important technical issues, there are important procedural issues,” said Henderson, for which IDNR will need additional staff and resources. IDNR director Marc Miller said the agency is planning to hire 53 new people, and begin the permitting process in a matter of months.
"This agency, and the Quinn administration, takes very seriously our responsibility for stewardship and for environmental protection," Miller said.
But some argue that even with tight regulation, fracking is likely to harm the environment and human health and enforcement will be difficult.
“Our colleagues in Pennsylvania have seen nearby residents getting sick from this dirty drilling, have seen water supplies contaminated, have seen landscapes and forests devastated,” said John Rumpler of Environment Illinois. A recent report from Pennsylvania found thousands of violations of the state’s regulations on hydraulic fracturing from 2008-2011, many with immediate environmental consequences.
While the measure passed easily in both chambers, the road there wasn't easy. An amendment requiring energy companies to hire a state-licensed water well driller delayed the vote for more than a month before industry and unions reached a compromise that gives drillers a break on extraction taxes if at least half of their employees are from Illinois.
Opponents say the regulatory legislation would leave Illinois communities with no control over the practice.
But others felt it was the best the state could do. State Sen. Don Harmon, an Oak Park Democrat said it was "about as good of a regulatory bill as we could offer."
"God willing," Harmon said, "it's good enough."
Lewis Wallace is a WBEZ Pritzker Fellow. Follow him @lewispants. The Associated Press contributed to this report.
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Monday, May 13, 2013

Exelon seeks to boost nuclear output amid declining power prices


Mar 15, 2013, 11:09am CDT

Exelon seeks to boost nuclear output amid declining power prices

Exelon Corp.'s Braidwood Generating Station nuclear power plant stands in Braceville, Ill.
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Bloomberg
Exelon Corp.'s Braidwood Generating Station nuclear power plant stands in Braceville, Ill.
StaffChicago Business Journal
While many energy companies have sold off power plants to battle declining electricity prices, Commonweath Edison parent Exelon Corp. is still hedging its bets on nuclear energy to power its growth.
The Chicago company, which is one of the nation's largest operators of nuclear power plants, said last month it was deferring plans to spend $2.3 billion on expanding capacity at its nuclear power plants and other projects because of low natural gas prices and slowed electricity demand. But this week it got a step closer to its scaled back goal of adding more than 1,100 megawatts of carbon-free energy by 2021.
The U.S. Nuclear Regulatory Commissionearlier this week accepted the company's application to modify its Peach Bottom nuclear plant in Pennsylvania to increase the plant’s capacity by 12.4 percent,Reuters said. The two reactors at the plant currently have a capacity of 1,122 megawatts, enough to power more than 1 million homes.
The power expansion application for the Peach Bottom plant will now undergo a standard 18-month review. Exelon (NYSE: EXC) initially submitted the application in September but had to resubmit after the NRC requested more information.
Exelon in previous years has aimed to increase the output of several reactors by a smaller 1.6 percent, including those in Byron, Braidwood, and LaSalle in Illinois and Limerick in Pennsylvania, Reuters said, citing the NRC website. Last year, the NRC put the review of the Byron and Braidwood on hold for more information. Meanwhile, poor market conditions forced Exelon to adjust its uprate program and postpone modifications to Limerick.
Earnings at many power companies, including Exelon, have been hit by lower energy prices, pressured by a decline in natural gas prices to their lowest level in over a decade. Coupled with the expense of complying with federal safety and environmental standards, those market pressures have forced some companies to close older coal-fired plants and scrap plans to build nuclear plants.
On Thursday, Ameren Corp. sold the unit that operates its five coal-fired power plants in Illinois to Dynegy Inc. (NYSE: DYN) in a deal worth $900 million, citing weaker power prices. Houston-based Dynegy formed a new subsidiary, Illinois Power Holdings, to buy the Ameren assets, which will double Dynegy’s generating capacity in Illinois.
But as an indication of how tight cash is across the energy sector, the $900 million value of the deal wasn’t in cash but $825 million worth of debt held by Ameren Energy Generating Co. Another $180 million comes from tax benefits Ameren expects to realize in 2015, partially offset by transaction-related costs and liabilities. At the same time, Ameren will pay at least $133 million to buy back three natural gas-fired plants from the Genco unit it's selling.
"We expect that this transaction will reduce business risk and improve the predictability of our future earnings and cash flows," Ameren CEO Thomas Voss said in a statement.
To improve its cash flow, Exelon, last month slashed its dividend by 41 percent so that it could maintain its investment grade rating. It did so after posting a decline in fourth-quarter profits to $378 million from $606 million a year ago.
Chief Executive Chris Crane at the time said although the company planned to reduce capital spending, it had no plans to shut down any nuclear, coal or gas-fired power plants.
In 2009, Exelon began a series of nuclear expansions to add up to 1,300 megawatts of capacity over eight years, which would cost much less than the long process of building a new plant. So far though, the company said the amount of expansion work completed so far is just 310 megawatts, according to Reuters.
Despite public wariness of nuclear energy after the Fukushima accident, power industry leaders say nuclear energy is gaining support as people continue to look for clean-energy alternatives to coal-fired plants. In September, Nuclear Energy Institute Plus said its poll of 1,000 Americans found 65 percent were in favor of nuclear energy, while 29 percent were opposed. Plus, Exelon says, nuclear power could provide more stable prices in the long run.
“The future of nuclear is looking pretty good,” Jack Grobe, the executive director of Exelon Nuclear Partners, told an industry conference last fall, according to Forbes. “It’s not just an economic question....It’s an energy diversity question.”
After dropping to a 52-week low of $28.40 a share late last year, Exelon’s stock has been rising in recent months, closing at $32.48 a share Thursday. The stock’s 52-week high was $39.82 a share in July last year.
The company has also paid its top executives handsomely. Crane received total compensation of $10.2 million in 2012, while John Rowe, Exelon’s chairman and CEO through the completion of its merger with Constellation Energy Group in March 2012, received total compensation of $23.5 million. Mayo Shattuck III, who is retiring as executive chairman, received a compensation package of $8 million last year.
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