First Wind files Amendment 5 to SEC Registration Statement

Lots of great information about the process and financing of wind development in New York State and elsewhere contained in Amendment No. 5 to FORM S-1 REGISTRATION STATEMENT of First Wind Holdings, Inc. before the U.S. SECURITIES AND EXCHANGE COMMISSION, filed March 26, 2010. As we know, New York is desirable for wind development because of a rich wind resource, relatively high electricity rates and its progressive renewable energy policies such as the Renewable Portfolio Standard (RPS). Here are some excerpts:

Our Portfolio of Wind Energy Projects
Operating Projects

Cohocton is a 125 MW project in Steuben County, New York. Cohocton commenced commercial operations in January 2009. The project consists of 50 2.5 MW Clipper turbines. Cohocton is the third largest wind project in the state of New York. Similar to Mars Hill (described below), Cohocton qualifies a portion of its energy for New England RECs. The project provides local benefits to the community through property tax revenue and economic development, along with local renewable power sales.

Cohocton wheels approximately 55% of its energy to ISO-NE where its RECs are sold to various counterparties. 40% of Cohocton’s RECs are sold to the New York State Energy Research and Development Authority (NYSERDA) under 10-year, fully financeable contracts. The remaining 5% of Cohocton’s RECs is sold into the voluntary REC market. Cohocton’s power is also sold directly into NYISO Zone C where it receives floating power prices. To stabilize Cohocton’s electricity revenue, we entered into a swap with an affiliate of Credit Suisse for approximately 70% of expected generation through the end of 2014. Cohocton was among the first recipients of an ARRA grant, receiving approximately $76 million in September 2009. The remainder of our construction costs at Cohocton are financed with a combination of senior project debt from HSH Nordbank and Norddeutsche Landesbank Girozentrale and structurally subordinated debt of CSSW, LLC. Our total installed development and construction costs for Cohocton were approximately $270 million, including approximately $10 million of financing-related costs and excluding prepaid turbine maintenance and warranty costs. We estimate Cohocton’s long-term NCF [net capacity factor] will be approximately 25% to 27%, as described further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”…

Steel Winds I

Steel Winds I, which commenced commercial operations in June 2007, is a 20 MW project on the shores of Lake Erie in Lackawanna, New York, just south of Buffalo. The larger site on which the project is located was formerly a steel mill. The project consists of eight 2.5 MW Clipper turbines, the first turbines of this type Clipper produced. We undertook this project primarily as a means of testing and gaining operating experience with the Clipper wind turbines. The project’s relatively small size allowed us to initially finance the project with 100% equity, which provided more flexibility as we worked with Clipper to understand the technology and deal with start-up issues that can be common in new turbine designs. We anticipate expanding Steel Winds in 2010 to bring the total project size to 35 MW, which we believe will introduce benefits of scale.

For power at Steel Winds I we receive floating power prices within New York Independent System Operator (NYISO) Zone A. To stabilize this revenue, we entered into a swap with an affiliate of Morgan Stanley. The volume of this swap is approximately 95% of Steel Winds’ expected output. This hedge expires at the end of 2016. In January 2010, we entered into a five-year PPA with an affiliate of Just Energy Income Fund for all RECs from the project. Steel Winds I qualifies for PTCs and MACRS depreciation and receives cash payments for electricity and RECs. Our total installed development and construction costs for Steel Winds I were approximately $35 million, excluding prepaid turbine maintenance and warranty costs, and are financed by a combination of equity and structurally subordinated debt of CSSW, LLC. We estimate Steel Winds I’s long-term NCF will be approximately 29% to 31%, as described further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”…

2010 Projects

…       Steel Winds II

Steel Winds II is a 15 MW expansion project in Lackawanna, New York. It will consist of six 2.5 MW Clipper turbines and will use our existing infrastructure, including interconnection equipment and site personnel. We are currently in the process of securing the necessary land and other rights to conduct and operate the project. The project’s System Reliability Impact Study and Facilities Study is complete and we are working towards an interconnection agreement with the New York Independent System Operator (NYISO) and National Grid. While we continue to evaluate alternatives, we anticipate selling power from Steel Winds II directly into the market through NYISO Zone A and hedging our revenue with a financial swap. We estimate that our total installed development and construction costs for Steel Winds II will be approximately $40 million, including approximately $5 million of financing-related costs and excluding prepaid turbine maintenance and warranty costs. We estimate that Steel Winds II’s long-term NCF will be approximately 28% to 30%….

Purchase of Prattsburgh Real Property

On February 22, 2008, we entered into a purchase agreement with Windfarm Prattsburgh, LLC, a Delaware limited liability company and our indirect wholly owned subsidiary; UPC Wind Partners II, LLC; and BEC New York Properties, LLC, a Delaware limited liability company that is owned by Brian Caffyn, with respect to a parcel of land situated in the town of Prattsburgh, New York pursuant to which Windfarm Prattsburgh, LLC purchased the parcel of land from BEC New York Properties, LLC. Windfarm Prattsburgh, LLC agreed to purchase the parcel for (i) consideration of 152,527 Series A Units in UPC Wind Partners LLC to be granted to UPC Wind Partners II, LLC as the seller’s designee and (ii) a payment of $23,000 from Windfarm Prattsburgh, LLC to BEC New York Properties, LLC. In connection with that transaction, First Wind Holdings, LLC granted 152,527 Series A Units for non-cash consideration to UPC Wind Partners II, LLC….

Project Development Costs
… Should the Company decide to abandon or discontinue development of a Tier 1 project, previously capitalized costs are charged to expense in the period that such determination is made. At December 31, 2008, the Company determined that it was more likely than not that it would discontinue development of its Prattsburgh I project, which is located in New York. Upon reaching this determination, previously capitalized development costs of $3.5 million were expensed in December 2008 and included in project development expenditures in the statement of operations. In December 2009, the Company discontinued the development of the Prattsburgh I project….

Legal Proceedings

The Company is involved from time to time in litigation and disputes arising in the normal course of business, including proceedings contesting our permits or the operation of our projects. Management does not believe the following proceedings will, if determined adversely, have a material adverse effect on the financial condition, results of operations and liquidity of the Company:

On July 15, 2008, the Company was served with a civil subpoena by the New York State Attorney General relating to an investigation into its activities in the State of New York. In response to the subpoena, First Wind produced documents and information relating principally to the New York State Attorney General’s investigation into: (i) whether the Company improperly sought or obtained land-use agreements with citizens and public officials, (ii) whether improper benefits were given to public officials to influence their actions and (iii) whether the Company and its competitors entered into anti-competitive agreements or practices. The Company cooperated fully with the requests of the New York State Attorney General, with the assistance of outside counsel. Outside counsel also conducted its own internal investigation on behalf of the Company. On October 29, 2008, the Company voluntarily agreed to implement a Code of Conduct, created by the New York State Attorney General to govern the Company’s future conduct in connection with wind energy project development in New York State. The Company entered into a subsequent version of the New York code in October 2009. The Company has been advised by the New York State Attorney General’s office that it is not currently under investigation….

Source: First Wind SEC filing. See also “Wind-Power Developer First Wind To Price IPO In April”  from Dow Jones (3/31)

NYS and related wind power updates

FirstWind abandons plans for Prattsburgh 50-turbine project. (Stueben Courier, 1/24)

Just Energy, an energy retailer, will be purchasing power from FirstWind’s Steel Winds I wind energy project, in Lackawanna, New York. Under a five-year power purchase agreement, Just Energy will buy all of the electrical output and Renewable Energy Certificates (RECs) from First Wind’s Steel Winds I wind energy project. (CleanTech, 1/27)

Mitsubishi “has pulled off a come-from-behind victory in a wind turbine patent case against [Schenectady’s] General Electric (GE) in the U.S. International Trade Commission (ITC).”  (Green Patent Blog, 1/27)

Michigan Public Service Commission issues Report on the Impact of Setback Requirements and Noise Limitations in Wind Zones in Michigan on January 27, 2010. This report was submitted to the Legislature in accordance with 2008 PA 295, Michigan’s Clean, Renewable, and Efficient Energy Act. The Commission

recommends that decisions regarding appropriate setback distances and noise levels should remain under the province of local planning and zoning authorities at this time. However, there is a clear need for the dissemination of current scientific information on this issue to decision-makers. (p.2)

New York wind energy news

Ecogen – Town of Prattsburgh dispute on hold

Trial court issues restraining order in case concerning 16-turbine project. (Steuben Courier, 12/9) Ecogen previously sued Town of Italy after the Town enacted a moratorium. Municipal developments in each town affect the same wind power project.

Long Island – New York City Offshore Wind Collaborative to Pursue Ocean Floor/Wildlife Surveys, Expects to Issue RFP Spring 2010

The Long Island-NYC Offshore Wind Collaborative, with designs on a 700 MW offshore project, announced that it will begin “pre-development activities,” such as desktop studies of the ocean’s wind, wave and wildlife environment, as part of an effort to develop what may be the country’s largest offshore wind farm proposal. Per the press release:

Approximately 30 wind developers and firms responded to the Collaborative’s (www.linycoffshorewind.com) Request for Information (RFI) issued on July 1, signaling substantial interest in developing a wind farm in the Atlantic Ocean, 13 nautical miles off the south shore of the Rockaway Peninsula.

The Collaborative expects to issue a Request for Proposals (RFP) in the Spring of 2010. The RFP will seek proposals from private development firms to build the project and enter into agreements to sell the clean energy it produces. The wind project would likely be designed for 350 megawatts (MW) of generation, with the ability to expand up to 700 MW… (LIPA, 12/9)

NYS wind power updates

From news sources:

Town of Clayton wind committee proposes changes to existing wind zoning. Watertown Daily Times 4/26

Hudson Valley Center for Innovation announces Wind Power Initiative focusing on development of small-wind technologies. Poughkeepsie Journal, 4/22

Town of North Harmony considers restrictive wind power zoning law. Post-Journal, 4/27

Town of Orleans wind committee prepares substantial setback requirements. Watertown Daily Times, 4/30/2009

With EcoGen project before it, Town of Prattsburgh delays enacting wind moratorium. Steuben Courier, 4/26

Noble Environmental Power Wyoming County lien problems continue. Batavia News, 5/2

New York wind energy developments

From news and web sources:

Regarding the Noble Power Altona wind farm turbine collapse:

  • [update] NYS PSC concludes in October 2010 that “the Noble facilities have been inspected and maintained in accordance with the manufacturer’s recommendations. Moreover, the Commission concluded that Noble has demonstrated that it is in compliance with appropriate specifications and procedures for inspection, maintenance, public safety and site security as required.”
  • Public Service Commission to investigate. Albany Times Union, 3/12
  • Noble indicates wiring anamoly as source of problem for two turbines, including one that collapsed, indicates all debris within setback. Noble Environmental Power, 3/13

Adirondack Park Agency (APA) staff propose new rules for wind energy facility development, including streamlined permits for turbines up to 125 feet (to blade tip). Associated Press in Newsday, 3/12.  See staff-created draft permit here.

Beekmantown wind project rejected. WCAX, 3/17; Press Republican 3/17

Town of Clayton wind committee makes recommendations. Watertown Daily Times, 3/15

Department of Environmental Conservation (NYSDEC) issues wildlife advisories on multiple wind projects. Watertown Daily Times, 3/10

Town of Hammond residents drop lawsuit challenging rescinded wind law. Watertown Daily Times, 3/15

Village of Hilton explores community wind approach. Rochester City Newspaper, 3/11

Town of Lyme considers extending wind moratorium, easement over town property for transmission. Watertown Daily Times, 3/13

Town of Machias considers wind ordinance. Arcade Herald, 3/15

Ending years of bureaucratic squabbling, Federal Energy Regulatory Commission (FERC) and Department of Interior (through the U.S. Minerals Management Service or MMS)  reach agreement to work together on the regulation of offshore renewable energy development. Memorandum of Understanding (MOU) to follow. FERC/Interior press release, 3/17. Background on the dispute here, by the Ocean Renewable Energy Coalition.

EcoGen project in towns of Prattsburgh, Italy, advances. Corning Leader, 3/15

A profile piece on New York City’s first stand-alone wind turbine, on Staten Island. New York Times, 3/13

Oswego County onion farmer considers harvesting the wind. Post-Standard, 3/9

Governor Paterson feels the heat for suggesting a relaxation of carbon emissions rules, undercutting the Regional Greenhouse Gas Initiative or RGGI. New York Times, 3/5

Albany Business Review piece, 3/6-12, on impacts of federal stimulus package on local renewable energy sector (quoting this blogger). (subscription required).

Court rejects Prattsburgh wind ethics violation allegation

Opponents of the 36-turbine Windfarm Prattsburgh LLC project recently lost their judicial challenge, made on ethics grounds, to the votes cast by Town Supervisor Harold McConnell in favor of permitting the Town of Prattsburgh to exercise eminent domain against certain town properties for the purpose of laying electrical lines to serve the wind farm.

In her February 26 decision, Judge Marianne Furfure of the Supreme Court of New York (Steuben County), found that Supervisor McConnell had not violated General Municipal Law section 805-a or the Town’s Code of Ethics. The judge therefore rejected petitioners’ challenge to the June 24, 2008 decision of the Town Board to allow eminent domain to proceed.

The controversial project requires electric lines to be buried. Supervisor McConnell, an advocate of the project, cast a tie breaking vote on June 24, 2008, to approve the condemnation of certain town properties to permit the placement of such lines.  Supervisor McConnell in late 2007 had, in his private role as a real estate agent, received $1900 from the seller’s agent in a transaction between Windfarm Prattsburgh LLC and a local property owner (whose property, because of the transaction, was not required to be condemned). (The opponents earlier in the month lost an appellate court challenge to the eminent domain decisions themselves.)

Project opponents alleged that he was therefore not sufficiently disinterested to cast votes on a preliminary April 2008 and the subsequent June 2008 Town Board resolutions, in violation of state law and the Town Ethics Code.  After first determining that the court had jurisdiction and the petitioners had standing, the court concluded that the April 2008 resolution was not a final decision and so was not appealable.

As for the June 2008 decision and McConnell’s vote, the court reasoned that

[g]iven the isolated nature of the transaction, the time frame within which it occurred, and McConnell’s long standing support of  project, it cannot be said, under all the circumstances, that the monies he received were a gift from Windfarm for any official action on his part or compensation for a matter pending before the Board… Under all the circumstances, receipt of this broker’s commission did not create the likelihood that McConnell’s vote to condemn was influenced by the payment he received.

As consequence, the court declined to annul the June 2008 decision.

The case is Dudley v. Town Board of the Town of Prattsburgh, 2009 NY Slip Op 50317U, 2009 NY Misc. Lexis 472) (Sup. Crt of New York (Steuben County), Feb. 26, 2009).

The issue raised in the case -ethics in the wind development context- is the basis for the investigation of New York Attorney General Andrew Cuomo into the activities of wind developers and town officials in New York state.

New York state wind energy updates

From recent news and web reports:

Community wind opportunities discussed in Town of Batavia. Daily News 2/19

Town of Clayton wind committee discusses sound issues. Watertown Daily Times, 2/20

Cohocton turbines spinning, but per NYISO power not due to hit grid till late 2010.  Hornell Evening Tribune, 2/21

Town of Hunter reportedly extends wind moratorium six more months. The Daily Mail, 2/21

Morristown wind committee comes up with draft wind ordinance. Watertown Daily Times 2/20

Town of Prattsburgh hears about noise complaints from Cohocton residents. Courier, 2/22

After pitch, Pickens Plan piques Paterson’s interest. Star Gazette, 2/22

Wind developers discuss potential changes to Attorney General’s self-styled “code of conduct.” Watertown Daily Times, 2/23