Wind power New York: NYISO, Cape Vincent, Italy

Cape Vincent wind zoning parameters determined

Watertown Daily times (9/27) reports on zoning requirements in the Town of Cape Vincent (Jefferson County):

The boundary for the wind turbine overlay district is set tentatively as Route 6 to the west and the riverfront district to the north. The town’s wind zoning amendment committee agreed to those boundaries at its meeting Thursday afternoon.

Yates County approves Town of Italy wind incentives

From the Finger Lakes Times (9/26)

The Yates County Planning Board approved proposed incentive zoning amendments to the Town of Italy’s comprehensive plan that would make way for wind energy development. Incentive zoning refers to designated areas in the town where wind turbines would be allowed and developers eligible for financial incentives…

New York State wind power expands

Schenectady Daily Gazette (9/28) reports on expansion of wind industry in New York:

Wind power will soon become a bigger part of the state’s energy picture. In September, there were over 700 megawatts of wind generating capacity in commercial operation in New York. By next summer, wind capacity is expected to grow to more than 1,200 megawatts, while proposed projects would add another 6,500 megawatts of wind capacity by 2011. The New York Independent System Operator is already preparing for the increase in wind power.

Newsday opinion piece (9/28) supporting wind power in New York state

Iberdrola accepts NY PSC conditions on Energy East purchase

Iberdrola announced that it accepts the conditions imposed by the New York Public Service Commission (PSC) on the company’s bid to purchase Energy East. In a statement, the company noted that its

decision came following analysis of the conditions stipulated by the New York State Public Services Commission (NYPSC) in voting to approve the transaction on September 3 and in the order granting approval issued September 9, which IBERDOLA considered to be consistent with the financial and value creation criteria it has set for corporate transactions.In particular, the NYPSC authorization, containing conditions customary to this kind of transaction, involves no limitation on IBERDROLA’s ability to develop wind power activities in the State of New York.

The company states that with the transaction it is now Spain’s largest investor in the United States. Iberdrola’s (English language) press release is here. For purists, the Spanish-language release is here.

The PSC’s abbreviated order is found here. A longer final order will issue at a later date. The PSC abandoned reasoning of PSC staff and the administrative law judge charged with investigating the transaction. Rather than deny the transaction on public interest grounds, the commissioners found that the transaction will benefit consumers.

Under the PSL [Public Service Law] §70 “public interest” criterion applicable to this proposed transaction, petitioners must show that the transaction would provide ratepayers a positive net benefit. Here, we have weighed the expected benefits from the transaction against related risks and detriments remaining after applying reasonable mitigation measures. We conclude that, with the provision of the positive benefit adjustments (PBAs) and the conditions ordered here, Iberdrola’s acquisition of the Energy East companies will provide ratepayers sufficient positive net benefits to warrant its approval under PSL §70.

Wind, of course, played a significant role in the discussion of the transaction. Not suprising given Iberdrola’s renewables focus and the compelling symmetry between maps of New York wind resources and the map of Energy East distribution and transmission shown in the Iberdrola press release above. The PSC had some words to say about wind:

We conclude that Iberdrola’s ongoing participation in the New York State wind industry offers some benefit in advancing our renewable energy goals. Therefore, consistent with our existing policy of using wind development as an important means of achieving those goals, we do not condition our approval here on a prohibition against Iberdrola’s development or ownership of wind facilities in the State.

Indeed, to strengthen Iberdrola’s commitment to invest in renewables in New York, we will condition our approval of the transaction upon a requirement that Iberdrola commit to make wind-related capital investments in New York worth $200 million. [Note: We note an ambiguity in both petitioners’ [earlier submissions in which] Iberdrola commits “to support” an investment of $100 million in renewable generation. Given Iberdrola’s 80% ownership interest in Iberdrola Renewables and its capacity to create other means to make such an investment, we resolve this ambiguity by requiring Iberdrola to make, rather than merely support, such an investment, and we increase the required investment from $100 million to $200 million.] This requirement will be subject to the same contingency Iberdrola placed on its original $100 million commitment, namely, that there be “no material adverse change to the existing fundamental economics of wind generation development in New York State.” [Note: … According to petitioners’ qualification, this condition would relieve Iberdrola of its commitment should the federal production tax credit [PTC] or our renewable portfolio standard [RPS] subsidies be eliminated or reduced, or should there be material changes in the market price for power in the market maintained by the New York Independent System Operator (NYISO)…] However, this qualification does not extend to the economics of any individual wind project, such as land rights acquisition, turbine rights acquisition, financing, construction, interconnection, or operation and maintenance. [Note omitted]

This capital investment requirement applies to incremental investment in construction of new wind projects, as distinguished from investment in or acquisition of existing wind resources or sums already spent on projects underway. This requirement may be satisfied by new investments in wind projects within New York State that are made during the initial two years following the acquisition’s closing date. We are willing to consider, however, upon a petition from Iberdrola, a modest extension of the two-year period.

With wind project costs at somewhere between $2 and $3 per watt (and, generally speaking, rising), this presumably would result in some 60-100 megawatts of additional wind generation in the state, the size of a wind farm not atypical in New York state. (By contrast, the state’s largest wind farm, Maple Ridge, partially owned by an Iberdrola subsidiary, is some 325 megawatts).

One of the investment caveats is particularly noteworthy. The federal production tax credit or PTC is set to expire at the end of this year, and Congress has shown only moderate inclination to extend it (or at least to attempt to extend it without also including other extraneous matters). While this blogger has spoken with some wind industry players who believe the industry is mature enough as a whole to withstand a PTC gap of some time, if history is a guide, much development in the country will stop or fail if the PTC is not extended. More concretely for this transaction, a PTC gap may be a kicker for some wind development in the state. Per the PSC decision, should Iberdrola not invest the $200M over two years for any reason, the company is required to contribute up to $25M toward economic development projects in the Energy East service territory.

New York PSC approves Iberdrola purchase of Energy East

At its Wednesday, September 3, special session, the New York Public Service Commission (PSC) approved unanimously (by a 4-0 vote) but with conditions the proposed acquisition by Iberdrola of Energy East.

Conditions include:

  • $275 million in benefits to NY Energy East customers, to be used to either reduce rates or moderate requested rate increases;
  • $200 million in investment by Iberdrola in wind energy in New York and if Iberdrola fails to invest the second $100 million, it must use up to $25 million in shareholder funds to invest in economic development projects in its service territories;
  • divestiture of Energy East’s fossil fuel generating plants (this was Iberdrola’s proposal);
  • a requirement that NYSEG and RG&E (the New York subsidiaries of Energy East);
  • establish a special voting right so that a bankruptcy of Iberdrola or its affiliates would not cause a bankruptcy of the New York companies; and
  • improved financial transparency and reporting requirements

Commissioner Harris in unprepared remarks called it “not perfect” and “not great” but a “good” deal, noting that all parties but PSC staff endorsed the deal. She expressed hope that Iberdrola will be a “good corporate citizen”. Said she’d personally be reviewing the vertical market power issue (the central concern of the PSC staff) to make sure it’s not exercised by Iberdrola.Commissioner Acampora especially thanked the staff of the PSC and indicated it was incumbent upon the Commission to review the Renewable Portfolio Standard in light of the transaction.

Commissioner Curry hoped other companies would be willing to invest in New York, seeing how the PSC approved the deal (and a previous European company purchase of a local utility — National Grid’s acquisition of Niagara Mohawk).

Chairman Brown likened the review to a scale. Noting there are some risks he said the deal balances to produce a net positive, and should help New York reach its goals regarding renewable energy.

The PSC special session may be found online at either

A PSC press release announcing the approval is available. The written approval with all the details will be posted on the PSC website. Iberdrola will presumably respond once the written details are available.

News reports include:

New York PSC postpones Iberdrola-Energy East decision

At its August 27 special session, with two commissioners absent, the New York Public Service Commission (PSC) postponed a decision on the proposed acquisition by Iberdrola of Energy East, tentatively until Wednesday, September 3, 2008.

The PSC Special Session will presumably be available online at either

New York PSC Special Session on Iberdrola-Energy East online 8/27

The New York Public Service Commission (PSC) has scheduled a Special Session to review and, presumably, decide on the proposed acquisition by Iberdrola of Energy East. It is scheduled to commence Wednesday, August 27, 2008 at 10:30 a.m.

The PSC Special Session shall be broadcast live online at either

http://www.dps.state.ny.us/webcast_sessions.htm or

http://www.newyorkadmin.com/cgi-bin/nypsc.cgi

Per a PSC press release

Individuals in Albany wishing to observe the Commission’s meeting may do so in the Board Room on the 19th floor of the Commission’s offices at Three Empire State Plaza. Pursuant to procedures established by the building management, anyone planning to view the meeting in the New York City Board Room must notify Jan Goorsky at 212-417-2378, 48 hours in advance of the meeting, and must be prepared to show valid photo identification upon arrival at 90 Church Street. The videocasting will be for viewing and listening purposes only. In addition, the meeting will be broadcast live on the Internet. The Internet broadcast can be viewed through NewYorkAdmin by accessing http://www.NewYorkAdmin.com from a computer capable of using RealPlayer. RealPlayer can be downloaded from the NewYorkAdmin site. The Commission has no financial interest in the Web site, its management, maintenance or administration.

New York PSC plans to conclude Iberdrola-Energy East case 8/27

The New York Public Service Commission (PSC) heard staff testimony for the first time on August 20. The PSC released a press release thereafter, indicating its intent to resolve the case, which has been pending since May 2007, next week:

Today’s briefing, to be followed by an expected decisional meeting on August 27, capped a year-long review of Iberdrola’s proposal. This review included holding six public statement hearings. The record compiled in the case includes hundreds of pages of submitted testimony and exhibits.

The briefing was designed to provide a balanced view of the strengths and weaknesses of the proposal in an effort to help the Commissioners weigh the risks and benefits of the proposal.

Topics discussed included the financial condition of Iberdrola, the petitioners’ service quality and reliability, their commitments to the community, holding company risks, regulatory compliance, credit rating risks, and utility ownership of wind generation. The Commission’s public discourse is available for viewing at http://www.dps.state.ny.us/webcast_sessions.htm. [For those interested in watching, the Iberdrola-Energy East discussion began more than two hours into the PSC meeting. Don’t forget the popcorn.]

The PSC Iberdrola-Energy East press release is here.

A related Times Union article on the PSC hearing is here. Another is here. A Post-Standard article is here, and Binghamton Press & Sun-Bulletin article here.

New York PSC to discuss Iberdrola-Energy East 8/20

The proposed friendly acquisition transaction by Iberdrola of Energy East will take center stage at the next New York Public Service Commission meeting, scheduled for 10:30 a.m. on August 20, 2008 in the 19th Floor Board Room of its offices located at Three Empire State Plaza, Albany, New York. The PSC press release is here.

Related Times  Union article is here.