Finance and Project Development

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By Joshua T. Bledsoe, Marc T. Campopiano, and Max Friedman

As California begins to turn the page on the first chapter of its efforts to combat climate change through AB 32 and to prepare for greater emissions reductions over the coming decades, the California Energy Commission (CEC) and California Public Utilities Commission (CPUC) are considering what these changes will mean for electricity transmission infrastructure. To that end, CEC Chair Robert Weisenmiller and CPUC President Michael Picker sent a letter to Cal-ISO President and CEO Stephen Berberich on July 31, 2015 asking him to participate in the planning stages of the Renewable Energy Transmission Initiative (RETI) 2.0. Since 2008, the first iteration of RETI has served as a statewide initiative to identify and implement the energy transmission projects needed to accommodate California’s renewable energy requirements.

Now, with Governor Brown’s executive order to cut California’s greenhouse gas emissions by 2030 and a number of legislative proposals advancing to set further greenhouse gas emissions reductions targets for 2030 and beyond, as well as the US EPA’s federal Clean Power Plan encouraging regional coordination among states to increase renewable electricity production, the CEC and CPUC feel that the time has come to bring RETI up to date.

By Michael J. Gergen, Joshua T. Bledsoe, David E. Pettit and Tara L. Rice

President Obama recently announced that the Department of Energy (DOE) Loan Program Office (LPO) is expanding support for innovative “distributed energy projects” by adding $1 billion in available loan guarantees to support the deployment of these projects through the existing solicitations for Renewable Energy and Efficient Energy Projects and Advanced Fossil Energy Projects.  Eligible projects could include energy storage, smart grid technologies, cogeneration and methane capture for oil and natural gas wells, as well as roof-top solar and energy efficiency technologies that meet certain “innovation” requirements. For example, roof-top solar projects that are combined with storage may be eligible.

The LPO also is targeting distributed energy developers with special supplements to these two pending solicitations that make clear that existing program authority under Title XVII of the Energy Policy Act of 2005 and resources may be used to accelerate the deployment of distributed energy projects. The credit enhancement available through DOE’s LPO traditionally has been used to support utility-scale energy projects. In recognition of the important role of distributed energy in the future of US energy markets, the LPO is making a concerted effort to marshal program resources to support innovation in this growing segment.

By Michael Carroll, Marc Campopiano and Max Friedman

The California Energy Commission (CEC) has released an August 2015 report projecting local reliability shortfalls in the Los Angeles basin planning area as early as 2021. The deficits may require new natural gas power generation to maintain grid reliability.

This finding is part of the Integrated Energy Policy Report, a collaborative effort with the California Public Utilities Commission (CPUC), California Independent System Operator, and the California Air Resources Board.

The report recommends that the CPUC “[i]nclude in its 2016 [Long Term Procurement Plan (LTPP)] rulemaking an explicit focus on local capacity requirements. Further, the CPUC should not assume that such requirements in the intermediate period 5-8 years forward have been satisfied through decisions in the 2012 LTPP rulemaking and the procurement activities authorized by D.14-03-004.” This recommendation would represent a significant shift in the CPUC’s planning horizon because the 2016 LTPP is intended to evaluate the need for new power resources beginning in 2026, not as early as 2021. Now, it appears that new resources may be needed much faster than the CPUC had anticipated.

Authors: Sara Orr and Jennifer Roy

On August 11, 2015, the US District Court for the Northern District of California remanded a US Fish & Wildlife Service’s (FWS) 2013 final rule that had extended the maximum duration of eagle take programmatic permits under the Bald and Golden Eagle Protection Act (Eagle Act) from 5 years to 30 years.[i] FWS promulgated the rule (an amendment to the existing eagle permitting program established in 2009) to align the duration of programmatic eagle take permits with the typical lifetime of renewable energy projects, such as wind farms. Bird protection groups then challenged the rule, alleging the FWS did not properly comply with the procedural requirements of the National Environmental Policy Act (NEPA) and the Endangered Species Act. While the district court recognized that “promoting renewable energy projects may well by a ‘worthy goal,” the court held that FWS did not meet its procedural obligations under NEPA and remanded the matter back to the FWS to complete the necessary environmental review. As a result of the Court’s decision, 30-year incidental take permits are no longer available to project developers under the Eagle Act until the FWS completes its environmental review and reissues the rule.

The Eagle Act’s Regulatory Scheme

The Eagle Act prohibits a person from taking, possessing, purchasing, bartering, offering to sell, transporting, exporting or importing bald or golden eagles, whether the eagle is alive or dead, or “any part, nest, or egg” of an eagle without a permit.[ii] Under the Eagle Act, take includes to “pursue, shoot, shoot at, poison, wound, kill, capture, collect, molest, or disturb.”[iii] “Disturb” is further defined broadly by regulation, including agitating or bothering a bald or golden eagle “to a degree that causes, or is likely to cause injury to an eagle, a decrease in its productivity, or nest abandonment, by substantially interfering with normal breeding, feeding, or sheltering behavior.”[iv] The federal government can assess both civil and criminal penalties for unauthorized take of bald and golden eagles.[v]

By Joshua T. Bledsoe and Douglas K. Porter

On June 10, 2015, the California Independent System Operator (“CAISO”) released a draft final proposal (the “Expanded Metering and Telemetry Options Phase 2, Distributed Energy Resource Provider”) that, if finalized, would represent an initial  step towards a regulatory structure that would result in distributed energy resources (“DERs”) competing in California wholesale energy markets.  DERs are resources that are physically connected to the distribution grid of an electric utility (e.g., rooftop solar, energy storage, plug-in electric vehicles, and demand response).  In order for DERs to sell into the CAISO wholesale markets, they would use the distribution grid of the electric utility to deliver power to or to take power from the transmission grid.  Currently, the vast majority of existing renewable resources sell their power to California’s electric utilities.  Those distributed resources are compensated by electric utilities for the electricity they generate at a rate far in excess of current CAISO market prices.  In addition, those resources do not have the right or the ability to sell power directly into the wholesale market.  Absent the California Public Utilities Commission (“CPUC”) adopting a substantially revised regulatory structure that sorts out the thorny jurisdictional, economic and technical issues (e.g., metering and compensation for resources located behind the retail meter), the immediate impact of CAISO’s proposal may be modest at best.

By Marc Campopiano, Joshua Bledsoe, Jennifer Roy, James Erselius

Phase I of the Desert Renewable Energy Conservation Plan (“DRECP”) is underway on the 9.8 million acres of public land managed by the Bureau of Land Management (“BLM”). As discussed in our previous post, the four lead agencies responsible for the plan introduced a phased approach to implementing the DRECP in March 2015 in response to public comments. Under Phase I of this approach, between 81,000 and…

By Chris Garrett, Cindy Starrett and John Morris

Today, the California Supreme Court unanimously upheld the City of San Jose’s Inclusionary Housing Ordinance, rejecting a facial constitutional challenge brought in California Building Industry Association (CBIA) v. City of San Jose (Affordable Housing Network of Santa Clara County et al.), S212072. The Court determined that, contrary to CBIA’s position, conditions upon new development contained in San Jose’s Inclusionary Housing Ordinance did not need to be justified by the more…

By Andrea Hogan and Joshua Marnitz

On May 6, 2015, the US Senate Committee on Homeland Security and Governmental Affairs voted 12-1 in favor of a bill designed to streamline the Federal permitting process for major energy and infrastructure projects. The bill, first introduced in January 2015 by Senators Rob Portman (R-Ohio) and Claire McCaskill (D-Missouri) as S. 280 or the Federal Permitting Improvement Act of 2015, will now proceed to the full U.S. Senate for consideration.

If passed, the…

By Marc Campopiano and Max Friedman

On March 6, 2015, the California Office of Environmental Health Hazard Assessment (OEHHA) updated its Guidance Manual for Preparation of Health Risk Assessments (HRAs) for the purpose of better characterizing exposure risks to children from air toxics.  Using the new Guidance Manual, HRAs are expected to estimate risks that are two to five times greater than HRAs using the former methodology—even assuming no changes in air toxics exposure.  As a result, once the updated…

By Jennifer Roy, Marc Campopiano and Joshua T. Bledsoe

On September 23, 2014, the California Energy Commission (“CEC”), California Department of Fish and Wildlife (“CDFW”), US Bureau of Land Management (“BLM”), and US Fish and Wildlife Service (“FWS”) released the Draft Environmental Impact Report (“EIR”)/Environmental Impact Statement (EIS”) for the Desert Renewable Energy Conservation Plan (“DRECP”).  The DRECP would create a framework to streamline permitting for up to 20,000 megawatts of renewable energy projects on more than 22 million acres in the California Mojave and Colorado/Sonoran desert region.