" ."),., '," : '.. ' rf I" LAW OFFICE OF GARYA. ABRAHAM
110 No. Second Street gabra ha [email protected] Allegany. New York 14106 www.garyabrabam.com 116-312-1913; fax is same (please call first)
June 23, 2008 Ii~~(.~;--~~', \. "~-~~r~~:-"~"'1 Hon. Garry Brown, Chairman f.\)'B~Jf "~ ',.' New York State Public Service Commission Department of Public Service Three Empire State Plaza Albany, New York 12223-1350
Re: Iberdrola merger proceeding, PSC Case No. 07-M-0906 .->
=~ rTI c:;lO -.,.( Dear Chairman Brown: e.- " " c:: r Piease accept the following comments on the above-referenced matter. I o.D
I am a public interest environmental attorney currently representing two community ~ groups raising concerns about local utility-scale wind power plant proposals, and I have becouee aware of weil over a dozen similar situations around the state. This gives me a unique ;;,
perspective from which to comment on some likely results of the proposed merger. I support T' Judge Rafael Epstein's and PSC Staffs recommendations that approval of the merger should not be granted without a divestiture of wind power by Iberdrola.
Prominent public officials have urged you to consider the benefits of wind energy development that purportedly would flow from the merger if approved, but this consideration is irrelevant to PSC's decision. However, to the extent these voices are endeavoring to cultivate your sympathy for approval, the asserted benefits are largely a fiction. As the fol1owing comments show, wind energy can make no more than an insignificant contribution to New York's electricity needs and promoting unplanned further development will result in specific harms to New Yorkers.
1. Approval would exacerbate an already irrational and harmful siting regime.
Because there is no comprehensive state regulation of the siting of utility-scale wind energy projects, developers including subsidiaries of Energy East and Iberdrola have become excessively aggressive, prevailing on unsophisticated rural town officials to adopt local standards that are woefuily deficient in achieving minimally reasonable health and environmental protections. I understand Your Honor has heard much about the deficiencies in the siting process for these projects from residents ofhost communities.
I have followed closely the regulatory climate goveming wind projects and, from what I have seen I do not believe the absence of state siting rules wiil be addressed any time soon. It therefore fails more heavily on PSC than perhaps it should to protect New Yorkers from 2
Han. Garry Brown, Chairman, NYS Public Services Commission Gary A. Abraham, Esq. Iberdrola merger proceeding, PSC Case No. 07-M-0906 June 23, 2008 excessive concentrations of power within the industrial wind industry in the state. Already the inability of rural town officials to shoulder this burden is threatening the state's land resources, community character and the health of residents of the communities that host these projects.
The wind projects that would be developed in New York by a post-merger Iberdrola should the Commission approve the proposed merger without divesting New York wind project holdings are likely to be segmented in phases, with about 100 MW of installed capacity in each phase, and phases approved separately by adjacent towns. For example, last year a developer won local and PSC approval for 671.5 MW turbines in the Town of Eagle (Wyoming Co.); this year it seeks approvals for 67 more in the adjacent Town of Centerville (Allegany Co.); and next year it plans to seek approval for 67 more in the adjacent Town of Farmersville (Cattaraugus Co.) and to add about 50 turbines to its project in Eagle for a continuous wind farm comprised of 200 to 250 turbines. Each phase of this project requires half or more of each town's land area.
A similar situation is developing in Steuben County, where a developer has approvals for a wind farm in one town, a wind project pending approval in an adjacent town, and another wind project planned in the town adjacent to that. The developer has prevailed on the second town to institute a condemnation proceeding against property owners unwilling to grant an easement for the developer's proposed transmission line.
In all of these cases and others with which I am familiar, towns adopt new performance standards (including setbacks and noise levels) at the urging of the developer without consulting specialists in acoustics or other environmental disciplines. When public comments identifying such issues are submitted, the town rejects them as appropriate only later, when a project application under the local standards is submitted. I know of no New York town that has planned for wind turbine siting in any other way. Where wind project applications have been reviewed, to my knowledge no developer has offered to mitigate adverse impacts by altering the location of turbines, reducing their number or concentration, or obtaining higher-rated machines so as to avoid the most intrusive sites.
Until rational siting rules can be developed, Commission approval of the proposed merger without wind power divestiture would promote more unplanned development ofhighly intrusive projects without adequate protections for public health and the environment.
2. Approval oftbe merger would make an insignificant contribution to New York's need for additional renewable energy sources.
Ifwind power cannot be expected to make a significant contribution to New York's policy to increase renewable energy generation, there is little or no public interest in allowing IberdroJa to concentrate its control over wind power projects in the state. 3 Han. Garry Brown, Chairman, NYS Public Services Commission Gary A. Abraham, Esq. Iberdrola merger proceeding, PSC Case No. 07-M-0906 June 23, 2008
GE Energy, a manufacturer of wind turbines, recently reported to NYSERDA that utility scale wind turbines in New York have an effective capacity of 10 percent I In Germany, the nation with the greatest amount ofcommercial wind power, grid operator E.ON Netz recently reported that wind energy "provid]es] 8% ofits installed capacity.'?
This is in sharp contrast to the basis offered for pre-filed testimony of Jared Synder for the NYS Department ofEnvironmental Conservation in this matter, "encouraging more wind energy projects.'" Mr. Synder asserts that New York's current six industrial wind projects are "producing about 424 megawatts of power." The largest of these projects, the Maple Ridge (Flatrock) Wind Farm in Lewis County, comprises 195 1.65 MW turbines, or an installed capacity of321.75 MW. However, based on actual hourly generation rates reported to the Federal Energy Regulatory Commission (FERC), after subtracting power the combined project took from the grid, Flatrock I and II generated at an average hourly rate of 79.8 MW during the first quarter of2008, or a 24.8% efficiency.' A review of the times of greatest generation rate reported to FERC shows these times are "off peak," further reducing the effective capacity of the Flatrock project.'
The other projects included in Mr. Synder's 424 MW are seven 1.65 MW turbines in Madison County, ten 0.66 MW turbines in Wyoming County, 20 1.5 MW turbines in Madison County, and 67 1.5 MW turbines recently approved in Wyoming Co. 7 None of these project sites
I GE Energy, THE EFFECTS OF INTEGRATING WIND POWER ON TRANSMISSION SYSTEM PLANNING, RELIABILITY, AND OPERATIONS, March 4, 2005, at 7.16, available at
2 E.ON Netz, WIND REpORT 2005, p. 9 (E.ON Netz GmbH, Bayreuth, Germany), available at
3 Submitted in this matter on January 11,2008, p. 7 bottom.
5 FERC's website offers a utility for downloading spreadsheets by quarter and by company for hourly electric generation rates,
6 Jd. Cf above, note 1.
7 NYS Energy Research & Development Authority (NYSERDA), Wind Energy Project Development In New York, October 2005, available at Given the small contribution that wind projects Iberdrola would develop can make to New York electricity needs, the Commission should preclude Iberdrola from taking advantage of the vacuum in siting standards that marks wind energy development in New Yark. Unless the Commission conditions approval of the merger on divestment of wind energy holdings, approval would result in Iberdrola's domination of the wind energy market in New York, but without any compelling public interest. 3. Rapid unplanned growth of wind power in New York will have an adverse impact on system reliability. As suggested above, the existing siting regime is devoid of meaningful planning. If approval of the merger without wind power divestiture would result in a rapid and unplanned expansion of wind power, approval could compromise the reliability of the state's electric grid. In its 2005 report discussed above, GE Energy evaluated the consequences for electricity system reliability if3,300 MW of wind generation spread over 37 wind farms, or 10% of the state's peak load, were integrated into the New York grid.' However, more than double that amount of wind power is currently proposed and identified in NYISO's interconnection queue." Were the Commission to approve the merger without wind power divestiture, an even greater penetration of wind should be expected. The GE Energy report found that at a penetration of 3,300 MW, wind power could reduce reliability of the state electricity system unless the market for wind generation is restructured Programs/Wind/toolkit/I 1 windenergydevNewYork.pdt>. 8 See above, footnote 1. 9 GE Energy, above, note 1, at p. 1.1 et passim. 10 Larry Rulison, "Utility aims to ride new breeze," Times Union (Albany, NY), February 19,2008. 5 Hon. Garry Brown, Chairman, NYS Public Services Commission Gary A. Abraham, Esq. lberdrola merger proceeding, PSC Case No. 07-M-0906 June 23, 2008 prior to that level of penetration. II The report also found that, without state-of-the-art wind generation forecasting and active participation by wind generators in the day-ahead power market, this level of penetration of wind power would come at the expense of non-wind generators, principally New York's hydro-electric plants, which would be called upon to operate at reduced, less efficient generation rates. 12 Finally, the report was less than sanguine about NYISO's ability to accommodate 3,300 MW of wind generation under its current regulation performance. IJ Planning recommendations in the GE Energy report have yet to be adopted. Until they are, a Commission approval of the merger without wind divestiture can be expected to result in rapid development of wind power facilities in excess of3,300 MW penetration, which can be expected to have adverse impacts on system reliability and costs to consumers." II GE Energy, above, note 1 at p. 2.9. Specifically, GE Energy recommended incentives to promote wind generation forecasts, and incentives to "encourage wind generators to reduce production during periods oflight load and excessive generation," which it said "is particularly critical to overall system reliability. If excessive wind generation causes the NYISO to shut down critical base-load generators with long shutdown/restart cycle times, the system could be placed in a position of reduced reliability." Id. 12 Id., at p. 2.13. The report also assumes low-voltage ride-through capabilities and other technology improvements for wind turbines have been adopted, avoiding additional adverse impacts on system reliability. Id., at p. 2.16. I understand turbine manufacturers have generally incorporated these technology improvements in current models. IJ See id., at p. 2.6, Table 2.2. See a/so id., at p. 2.12 ("It is possible that the NYISO grid could accommodate 3,300 MW of wind generation with no increase in NYISO's regulation capability, and still meet minimum NERC criteria."). 14 E.g., in Germany, where in 2007 "renewables are expected to account for well over 13% of electricity consumed, mostly from wind power, "additional control and balancing energy and transaction costs, amounted to between €300 and €600 million in 2006," and "this is a particular issue for wind power." (German) Federal Ministry of Environment, Nature Conservation and Nuclear Safety (BMU), 2007 EEG PROGRESS REPORT (GERMANY'S RENEWABLE ENERGY SOURCES ACT (EEG), December 5, 2007, pp. 4 and 7, available at Hon. Garry Brown, Chairman, NYS Public Services Commission Gary A. Abraham, Esq lberdrola merger proceeding, PSC Case No. 07-M-0906 June 23, 2008 4. The merger proposal is driven by the availahility of public money and is not in the public interest. What drives deveiopment ofwind projects in New York is not revenue from electricity generation but rather some of the most lucrative public money available in the energy industry. There is no evidence that if government support for this level of assistance falters, New York ratepayers will be protected. In contrast to European nations, which generally support renewable energy with much more transparent feed-in tariffs, the U.S. federal government provides two very large benefits that ensure that wind energy lobbyists will continue to drive policy. A 5-year 200% declining balance depreciation pays for the entire capital cost of a utility-scale wind project--52% of the capital investment in the first 2 tax years and nearly 3/4th in the first 3 tax years. The Production Tax Credit pays $0.02 per KWh is worth half to three-quarters of the cost of a project. New York adds a comparable per-kilowatt benefit as well as grants for wind farms, the largest disbursement from some $175 million in annual surcharges already collected from ratepayers. The state also makes wind projects exempt from local property taxes for fifteen years, subject to a negotiated payment in lieu of taxes that generates a fraction of the taxes that would be collected on a project worth about $\00 million. Finally, wind projects in New York face no competition, as the grid operator is mandated to pay them the current wholesale price for whatever electricity they generate. However, public subsidies dwarf the revenue a wind farm owner can expect from electricity sales. Iberdrola wants to cash in on this on this very favorable regulatory climate because in Europe governments are tuming away from land-based wind projects and promoting instead off-shore projects. Europeans are doing so because of "the increasingly limited availability of land based wind energy sites.?" The population density ofrural New York is not unlike that of rural Europe. Promoting significant further development ofindustrial wind energy in our state will likely lead to the same conclusion. growth in electricity trading ... first and foremost [the expansion] ofthe subterranean and submarine cable connections to offshore wind farms which will be required in the next ten years," expected to be about €4 billion.ld. In 2007 the typical German household paid €2.20/mo. in extra surcharges, (id., p. 6, Table I), and this will increase to "around €4.40 in 2015." ld., p. 14. IS University at Buffalo Law School, Environment and Development Clinic, CREATING A PUBLIC PLAN FOR NEW YORK'S GREAT LAKES OFFSHORE WIND POWER: ASTRATEGY FOR ENERGY AND ECONOMIC DEVELOPMENT, May 2008, p. 21, available at Hon. GarryBrown, Chairman, NYS Public Serviees Commission Gary A. Abraham, Esq. Iberdrola merger proceeding, PSC Case No. 07-M-0906 June 23, 2008 For the reasons stated above, I urge you to resist political pressure to approve the proposed Iberdrola-Energy East merger on grounds that are outside the standards for PSC approval in this matter and, in any case, are not well founded. Respectfully submitted, GaryA~CJVL gaa cc: New York Citizens Power Alliance http://www.citizenpoweralliance.org/