Source: http://www.climatelawyers.com/category/Utilities.aspx
Timestamp: 2014-08-27 10:49:29
Document Index: 33965706

Matched Legal Cases: ['§ 365', '§ 556', '§ 703', '§ 668', '§ 22', '§ 22', '§ 22', '§ 22']

March 3, 2014 23:25
What happens to the payment for a solar renewable energy credit (SREC) when the payor closes its doors? Maryland citizens are finding out the hard way. The promises made to some of them are turning up empty.
Here are the details. Greenspring Energy was a promising solar installation company. As it describes itself: "Greenspring Energy offers a unique combination of high-quality solar energy systems and the best energy saving products and services in the marketplace today. Created to help people effectively and permanently reduce their utility bills, Greenspring Energy’s products and services will allow you to: Reduce your utility bills with innovative energy saving products, Produce your own energy with solar systems, Take advantage of federal, state, and local incentives to go solar, Increase the value of your property, Reduce your carbon footprint.” It was a good business model. Following its founding in 2007, Inc. reports it had revenues of $10.5 million in 2010 and 40 employees the next year. Its website boasts 2011 Inc. 500. Then something happened. Jamie Smith Hopkins of the Baltimore Sun reports that Greenspring Energy closed its doors at the end of January this year. Its employees received rubber checks. And its customers, promised recurring payments for the SRECs associated with the electricity generated from their solar equipment, were likewise burned. This is not a particularly unexpected outcome. Entities regularly enter bankruptcy and their creditors take a beating. The solar industry is no different. In fact, one website compiled a list of dozens of “Deceased Solar Companies” through early 2013. But what is not getting a lot of play (or even any) is the effect of a bankruptcy of the SREC provider. It is probably safe to say that most SREC transfers are the subject of executory contracts, long-term contracts where the provider agrees to transfer the SRECs accompanying its future electricity generation for some future consideration. In bankruptcy, such contracts may be assumed, or not, at the discretion of the bankruptcy trustee. 11 U.S.C. § 365. Except, however, where such contracts are forward contracts. E.g., Master Solar REC Agreement (NJ BPU 2014) (“Buyer and Seller each acknowledge that it is a “forward contract merchant” and that all transactions pursuant to this Master Agreement constitute “forward contracts” within the meaning of the United States Bankruptcy Code.”). In that case, the trustee’s right to reject or assume the executory contract does not exist. 11 U.S.C. § 556. So there is some complexity here. And it gets worse. The SREC does not exist but for the generation of 1 MWh of electricity, even if the SREC is sold separately from that electricity. It is not difficult to conceive of a situation where the value of the contract for the sale of electricity is going in the opposite direction of the value of the SREC contract. Suppose the bankruptcy trustee has the right to suspend electricity generation, even if it does not have the right to walk away from the SREC contract. Does an SREC contract have any value if there is no generation?
To our knowledge, SRECs (and RECs as well) have not been tested in the furnace of bankruptcy. We will be interested in seeing how that turns out. abe666f9-c4b3-4d82-a3e0-8bdcfc5c991b|1|5.0
February 9, 2014 22:34
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Eagles and other migratory birds are a substantial threat to wind projects and not because they will cause turbine blades to fail. Rather, turbine blades (and to a lesser extent, towers, guy wires, transmission lines and other constructions in the air space) can be lethal to birds. This poses a serious problem for wind energy companies as birds are legally protected by the Migratory Bird Treaty Act (16 U.S.C. §§ 703-712) and eagles further protected by the Bald and Golden Eagle Protection Act (16 USC §§ 668-668d). Duke Energy Renewables, Inc. recently ran afoul of these requirements at its 176 turbine Campbell Hill and Top of the World wind projects in Wyoming, where at least 14 golden eagles died between 2009 and 2013. In November Duke accepted a plea agreement in “the first ever criminal enforcement of the Migratory Bird Treaty Act for unpermitted avian takings at wind projects.” It included:
• Fines - $400,000 • Restitution - $100,000 to the State of Wyoming• Community Service - $160,000 payment to the National Fish and Wildlife Foundation for eagle preservation projects• Conservation funding - $340,000 to a conservation fund for the purchase of land or conservation easements • Probation – five years• Compliance Plan – implementation of a plan at a cost of $600,000 per year with “specific measures to avoid and minimize golden eagle and other avian wildlife mortalities at company’s four commercial wind projects in Wyoming.”• Permit – required application for a Programmatic Eagle Take Permit.
The last is directly tied to tomorrow’s rule. “Take” is defined in the regulations as “pursue, shoot, shoot at, poison, wound, kill, capture, trap, collect, destroy, molest, or disturb.” 50 CFR § 22.3. “Programmatic take” is “take that is recurring, is not caused solely by indirect effects, and that occurs over the long term or in a location or locations that cannot be specifically identified.” Id. The regulations at 50 CFR § 22.26 provide for permits to take bald eagles and golden eagles when the taking is associated with, but not the purpose of, an otherwise lawful activity. Programmatic permits authorize take that “is unavoidable even though advanced conservation practices are being implemented.” The new rule commentary notes that permits may authorize “lethal take … such as mortalities caused by collisions with wind turbines, powerline electrocutions, and other potential sources of incidental take.” Under the current rule, a take permit was good for only 5 years, which inserted much uncertainty into wind farm projects. The new rule permits wind energy developers to obtain a take permit that runs for 30 years, 50 CFR § 22.26(i), which “better correspond[s] to the operational timeframe of renewable energy projects.” The risk that a wind project will cause unforeseen harm to eagles during this much longer period is mitigated by a new requirement for 5 year reviews, in which the FWS “will determine if trigger points specified in the permit have been reached that would indicate that additional conservation measures ... should be implemented to potentially reduce eagle mortalities, or if additional mitigation measures are needed.” Id. at § 22.26(h). Additional actions that might be taken as the result of the review could be permit changes, including implementation of additional conservation measures and updating of monitoring requirements. Id. Even suspension or revocation of the permit is possible. Id.
That the FWS is serious about protecting eagles is demonstrated by the enforcement action against Duke. But the FWS also recognizes that development is necessary. The 30 year permit period appears to be a reasonable compromise (unless one is an eagle).
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3. The Cost of the Grid - On November 14, the Arizona Corporation Commission ruled that Arizona's net metering program should spread the cost of maintaining a reliable grid among all of Arizona Public Service's customers, including its rooftop solar customers. Up to that point rooftop solar customers were paid for the electricity they provided to the grid at retail rates, without any adjustment for the cost of the grid. The Commission concluded that this resulted in a "cost shift" from customers that were paying for the grid, to rooftop solar customers, who weren't. APS put on a good case demonstrating that rooftop solar customers were substantially be