PSB Standard Offer Docket Nos. 7523 & 7533 - Update

The Vermont Public Service Board (PSB) issued an Order yesterday in the Standard Offer docket resolving certain threshold legal issues.

The three threshold legal issues were:

Issue 1 -Nature of Docket 7533. In response to concerns raised by a participant, the July 15 memorandum requested comments on whether: (a) the process established in the June 29 Order should be altered; (b) Docket 7533 must be a contested case as a matter of law; and (c) even if Docket 7533 does not need to be a contested case, certain procedures associated with contested cases, such as hearings or ex parte rules, must apply to Docket 7533.

Issue 2 - Legal authority to conduct an auction to assist in the determination of standard offer prices. The July 15 memorandum stated that any participant that believed that an auction is consistent with the statute must file such an analysis, along with sufficient detail of the auction to allow meaningful comment.

Issue 3 - Project eligibility. The July 15 memorandum requested comments on what event should determine whether a particular project is eligible for standard offer prices; in particular, are standard-offer prices available to: existing generation facilities; facilities that have been constructed but have not yet begun selling power; and facilities that have not been constructed but have received approval under 30 V.S.A. § 248 or 219a? In addition, the July 15 memorandum asked whether the Board can limit the participation of small-scale facilities and whether there are any statutory barriers to establishing a queue for resources.

In its August 18, 2009 Order, the PSB resolved these issues as follows:

Issue 1 - Nature of Docket 7533: The PSB rejected numerous parties arguments that Docket 7533 must proceed as either a contested case or as a rulemaking, and specifically determined that the "processes set forth in [the PSB's] Orders of June 3 and June 29, 2009, are the most efficient means of carrying out [the PSB's] statutory requirements." Therefore, the Docket will proceed as a non-contested case.

Issue 2 - Legal authority to conduct an auction: No party briefed this issue, even though it was originally raised by the Department of Public Service, so the PSB concluded that it does not need to address the issue further.

Issue 3 - project eligibility: The PSB concluded "that any project that sought regulatory approval prior to May 27, 2009, the effective date of Act 45, is not eligible to participate in the standard offer program.” In support of this conclusion, the PSB specifically cited Act 45 direction to the PSB to ensure that the SO program “provides sufficient incentive for rapid deployment and commissioning of plants.” Order at 11 citing 30 V.S.A. §8005(b)(2)(B)(i)(III)." The PSB also concluded that projects approved under the net-metering statutes and rules may not withdraw from that program and apply for a standard offer contract. Therefore, "a project on which site preparation or construction had begun, under the net metering process, would not be eligible for standard offer prices." The PSB also ruled that there is no statutory basis to exclude "small-scale projects" from the standard offer program.

U.S. Treasury Department Accepting Applications for ITC Grants

The Treasury Department and the Department of Energy announced on Friday that they are now accepting applications for grants for renewable energy facilities under section 1603 of the American Recovery and Reinvestment Act of 2009 (ARRA). Section 1603 established the grant in lieu of a tax credits program, which authorizes the Treasury Department to issue grants to renewable energy facilities that would otherwise qualify for the investment or production tax credit (ITC or PTC). The Treasury Department released guidance for the grant program earlier in July.

According to the DOE and Treasury press release, the two agencies estimate distributing at least $3 billion in financial support to approximately 5,000 biomass, solar, wind, and other types of renewable energy production facilities.

To be eligible for the program the facility must be either (1) placed in service between January 1, 2009, and December 31, 2010, (regardless of when construction begins), or (2) begin construction between January 1, 2009, and December 31, 2010 and be placed in service after 2010 but before the "credit termination date" for that type of facility. The "credit termination date" varies by facility:

• Large wind facilities must be placed in service before January 1, 2013;
• Open and closed loop biomass facilities, landfill gas facilities, trash facilities, qualified hydro facilities, marine facilities, and geothermal facilities authorized under Internal Revenue Code Section 45 are eligible if placed in service before January 1, 2014;
  
• Solar facilities, combined heat and power facilities, small wind facilities, and geothermal facilities authorized under Internal Revenue Code Section 48 must be placed in service by January 1, 2017.

Grants will generally be limited to 30% of the cost basis for the facility.

The Treasury Department has set up a website for submitting section 1603 grant applications on-line.

The New York Times has a report on this program, as well as other renewable energy funding opportunities announced by DOE on Friday.