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)

New York wind energy developments

Town of Fulton considers wind development

The Schenectady Daily Gazette reports (July 15) reports on the apparent ambivalence of town residents as expressed at a town board meeting that addressed the potential location of wind farms in the area.

Galloo Island wind farm

Palladium Times (July 11) reports on a presentation made to Oswego County legislators regarding the Hounsfield Wind Farm (Jefferson County). While the proposed Hounsfield wind farm itself is in Jefferson County, the necessary transmission line would go through neighboring Oswego County.

Iberdrola-Energy East

Newsli.com (July 12) reports that two more New York politicians (state senate Democratic members Kevin Parker (D-Brooklyn) and Bill Perkins (D-Manhattan) have announced their support for Iberdrola’s proposed acquisition of Energy East, currently under review at the New York Public Service Commission (PSC). More here on the NY PSC’s consideration of the Iberdrola-Energy East transaction.

Lackawanna Steel Winds wind project will get new turbines

Buffalo News (July 11) reports that the City of Lackawanna Planning Board approved a site plan for 13 new wind turbines for the Steel Winds. Steel Winds is a project of Clipper Windpower.

New York Attorney General Investigation

More on the investigation into First Wind (formerly UPC Wind) and Noble Environmental Power, LLC:

Offshore wind projects

Buffalo News (July 12) reports on the potential of offshore wind projects, particularly around the Great Lakes. Advantages include stronger, more consistent wind resources (including during the day when demand is high), potentially reduced zoning jurisdicitional requirements; challenges include ice and cost and the environmental impact.  Here for description of a recent offshore wind report focusing on New York.

Potential Orange County municipal wind project

Times Herald-Record (July 15) reports on a potential project at Greenwood Lake. Meteorological testing has begun.

Spafford wind law

Skaneateles Press on CNYLInk (July 15) reports that the Town of Spafford discussed a proposed wind turbine law, aimed at regulating the use of smaller scale turbines. Among those present at the Town Board meeting was a representative of the Town of Skaneateles, who expressed concern that that the town had not been notified of the proposed law.

New York wind energy developments

Enfield

Ithaca Journal (July 10) reports that the Enfield (Tompkins County) Town Board sent a potential wind pact with a resident developer back to its attorney for further review.

GE Financial invests in New York wind power projects

GE announced (July 9) that

With a goal of investing $6 billion in renewable energy by 2010, GE Energy Financial Services surpassed the $4 billion mark today by investing in New York State’s three newest wind farms. The unit of GE (NYSE: GE) will invest a total of $100 million in the three wind farms, whose construction began last month.

The three wind farms, all projects of Noble Environmental Power, and per GE expected to completed this year, are

  • Noble Chateaugay Windpark (106.5 megawatts), in Franklin County
  • Noble Altona Windpark (97.5 megawatts), in Clinton County
  • Noble Wethersfield Windpark (126 megawatts), in Wyoming County

Iberdrola-Energy East update

Rochester Democrat & Chronicle (July 11) offers an update on where we are now — awaiting a decision from the New York Public Service Commission on the proposed acquisition by Iberdrola of Energy East. A main sticking point is vertical market integration — should an energy distributor also be permitted to own energy production facilities?

Ithaca residential wind turbine law

Ithaca Journal (July 8) reports that a vote was delayed on a zoning law regarding residential wind projects as the Ithaca Town Board (Tompkins County) could not agree on how much sound should be permitted. Sound (or “noise” as detractors may say), is an important environmental consideration in wind turbine siting.

Lackawanna taxes impacted by wind power

Buffalo News (July 8) reports that city tax rates in Lackawanna (Erie County)
have gone up, at least in part because of an erroneous assessment (or failure to assess) one of the Steel Winds project turbines. Per the report, Steel Winds operates under a Payment in Lieu of Taxes (PILOT) agreement, which exempts the turbines from taxes, but requires that they still must be assigned an assessed value.

Lyme residents challenge wind decision in court

Watertown Daily Times (July 10) and WNYF-TV (July 10). Residents in Lyme (Jefferson County) have filed an Article 78 proceeding in state court against the Town Board, which according to a group called Voters for Wind, has passed an ordinance that is too restrictive. The zoning ordinance reportedly requires wind turbines to be at least 4,500 feet away from the waterfront and the villages of Chaumont and Three Mile Bay. According to reports, the court’s decision is expected July 31, when the town’s wind power development moratorium expires.

Scipio Town Board discusses Shell wind project

The Citizen (July 10) reports that Scipio town residents (in Cayuga County) are in contact with Shell Wind Energy about a prospective project.

Somerset Town Board sends Empire wind project to planning board

Lockport Union-Sun & Journal (July 10) reports that the Town of Somerset, after failure to reach a revenue sharing pact with Empire Wind, has essentially informed the company to submit any application to the town’s planning board. The report indicates that AES Acciona is also interested in developing a project in Somerset.  (Niagara County)