Residents, supervisors consider next moves
RICHMOND – More than six years after residents were introduced to the idea of wind energy generation in Highland County, the State Corporation Commission Dec. 20 granted developer Henry T. “Mac” McBride of Harrisonburg and his family a permit to build Virginia’s first industrial wind facility here.
One person vehemently opposed the utility hopes it still may never be built.
“I haven’t read the decision,” said Highland resident Patti Reum. “I have read everyone’s interpretation of it, and we all knew that’s what (the SCC) would decide. But the conditions are pretty strict, and I’m somewhat optimistic it won’t happen, so I decided not to worry about it and just get back to work … I did everything I could.”
Reum and her husband, Tom Brody, own and operate Bear Mountain Farm and Retreat; the towers would be situated in their front-yard view shed, and put their environmental education business at risk of going under, they say.
Securing a state certificate for the project was one of the major hurdles for the McBrides’ company, Highland New Wind Development LLC, but a number of variables in play make construction far from certain, and those opposed to erecting 400-foot towers on the area’s pristine Appalachian ridges remain hopeful the project will never get off the ground.
The majority of county residents and landowners have said while they can support the idea of renewable energy, Highland County, the state’s most rural, least populated locality, is not the right place for a wind turbine plant on an industrial scale.
Building the facility is estimated to cost $65 million, and estimated to gross at least $5.7 million a year for the McBrides’ company over 20 years, and perhaps more than $6 million annually according to other interpretations of the figures.
Randy Richardson, president of Highlanders for Responsible Development, the group formed in response to the project proposal, said he wasn’t surprised by the SCC’s approval. “I’m not at all pleased, but not surprised. I do think the pressure the public placed on the SCC to have closer wildlife monitoring was crucial in getting a monitoring plan established, and I am pleased to have been a small part of that,” he said. “I personally feel the state is still going forward before it should, because we still have nothing on the legislative or regulatory level that specifically deals with wind turbines. It should also be noted that there are several conditions on the local permit that are not yet satisfied.”
Rick Webb, a Highland resident who participated in a National Academies of Science review of the wind industry’s environmental impacts, said he doesn’t believe the project will go forward unless HNWD can find a way to avoid responsibility for violating the Endangered Species Act. “With respect to enhancing anyone’s ‘green’ image, this project is a bust,” he said. “It will discredit the idea that wind development in the Applachian Mountains is a green endeavor, and I think the wind industry will rue the day it pushed for development in the face of these kinds of environmental problems.”
The ball is back in the court of county supervisors to make sure HNWD meets conditions attached to the local permit it granted the com pany in a controversial 2-1 vote in 2005. Board members said this week they were not surprised the SCC granted approval.
“This is a decision I anticipated,” said supervisor Robin Sullenberger, who had cast the dissenting vote on the county permit, “but I still have mixed emotions about it.”
His goal now, he says, is to make sure construction and operation is handled correctly from the county’s perspective.
The SCC’s decision, Sullenberger added, shows the agency’s intent to support renewable energy but “address some unknowns, and mitigation issues, and make sure these things are adequately set up. They did as much or more than I anticipated … and everyone realized there would have to be a compromise … I can’t say I see anything (in the order) I’m surprised by or significantly concerned about … This will be a bellwether project for the industry.”
Also, he said, “McBride is a man with a great deal of pride. He personally will demand nothing less than a quality project.”
HNWD spokesman Frank Maisano of New York public relations firm Bracewell Guiliani, issued a statement following the decision. “Clearly, we are pleased the SCC has approved Virginia’s first renewable project,” he said. “We strongly support the suggestions for the initial important post-construction analysis at the levels prescribed.That data, research and information will go a long way in providing the necessary and important scientific basis that guide mitigation and monitoring efforts over the life of the project. While we still have some serious concern over the cap levels for monitoring and mitigation in years following initial analysis period … we are proud that this project will now be a model for care and concern regarding wildlife at wind projects. The purchase of the wind power from Highland County will be the greenest, most environmentally friendly in the nation.
“This is an important project for Highland County and Virginia,” he continued. “Highland County Board Supervisor Jerry Rexrode may have summed it up best when he told me … ‘Not only will this help our county (with) important revenues, but it will show companies andºcommunities that the commonwealth’s road to a cleaner energy future runs right through Highland County.’ With Gov. Kaine, Sen. Warner and others leading the charge against climate change, the Highland project will be an important step forward to meet the commonwealth’s environmental goals, while still providing significant economic benefits to rural Highland County.”º
Maisano said McBride was “elated to have this last significant milestone accomplished. With this approval, the next step will be (for) HNWD to identify financial investors, a process that could be completed during the first quarter of next year,” he said. “It is widely expected that opponents of the project will exercise the SCC appeals process. The appeal will be considered by the Virginia Supreme Court and will likely delay the operation and construction for another 12 months,” Maisano said. “The court earlier this year denied opponents’ lawsuits against Highland County officials, in which many of the details of the project were discussed. If there is no appeal, the wind farm could be operational as early as late 2008, but otherwise, the wind farm should be operational at the end of 2009.”
Rexrode declined to offer comment on the permit to The Recorder this week, and said from now on, he’s not going to give interviews to the media outside of a board meeting. Instead, he said, media representatives will have to ask questions during the public comment session of supervisors’ meetings so what he says does not get misrepresented. “That’s the way I’m going to handle all interviews from now on,” he said Wednesday.
Highland supervisor David Blanchard, who has just begun his first term on the board, said if the project is built, the county’s best interests must be served. The SCC’s order, he said, “sounds like it makes some pretty good recommendations. I realize there are people who are wishing they were stronger and the developer is probably wishing it were a little lighter, but everyone seems to agree there’s some satisfactory numbers here, and additions can be made if protected species are killed.”
Blanchard said how federal and state laws on endangered and protected species are addressed remains a gray area.
Sullenberger added, “If anything major happens (with the project), people will come forward and demand some accounting. This project will continue to be under tremendous scrutiny, and we’ve got a strict set of conditional use guidelines to follow. I don’t feel there are any restrictions about how to do that. The county will monitor things.”
Attorney David Bailey, who represented citizens challenging the supervisors’ permitting decisions all the way to the Supreme Court, said he was amazed by the level of detail included in the SCC’s order. “They (SCC) really took their job to protect the environment seriously,” he said.
He noted testimony given about the risks to birds and bats indicated the likelihood the project would kill protected species was high, particularly because the utility site is located on an Atlantic migratory flyway, and the only way to mitigate damage to wildlife is to turn off the turbines at peak generation times in the spring and fall when the wind is blowing. “This puts the project at very high risk for investors,” he said. “The endangered species issue is really still wide open and I’m afraid what the Environmental Protection Agency might give (HNWD) when the first one is killed,” he said. “If they don’t have investors now, they’re looking at a very high risk venture in a poor market.”
Bailey said he always knew the SCC would grant HNWD a permit, but gave credit to Woods Rogers, The Nature Conservancy, and Highland citizens who raised the right questions and concerns.
All involved agree there are a number of factors still affecting the outcome of the proposed project.
The SCC attached conditions to HNWD’s permit, including relatively strict environmental studies the developer must pay for to protect bird and bat species. The costs of monitoring and mitigating impacts from the project, HNWD has said, will make it difficult to get investors to support the facility.
Moreover, turbine and tower equipment is becoming increasingly hard to procure.
HNWD will also need other permits, including one from the Federal Aviation Administration with regard to how the height of the towers may affect Department of Defense airspace in the Evers Military Operations Area used for training.
Making matters more challenging is the uncertainty of federal production tax credits, which are set to expire at the end of this year. The tax credits, HNWD has said, are essential to keeping the project financially viable. But the recently revised federal energy bill does not extend those credits beyond Dec. 31. They have been allowed to expire several times over the years, and have been intermittently extended, usually by amendments to other federal bills passed by Congress. But this time, government watchers say the credits may not get a reprieve anytime soon. HNWD must have its 20-some turbines up and operating by Dec. 31 in order to qualify for the current credits – a tight deadline for the company.
Production tax credits typically provide up to 65 percent of the capital costs for wind projects, and those projects drop off sharply when the credits expire.
In addition, one of the conditions suggested by state agencies and Highland citizens is that HNWD be required to obtain a federal habitat conservation plan and incidental take permit to protect endangered species.
HNWD has thus far declined to pursue that option, saying it would cost too much and take too much time.
In granting the state permit, the SCC said it does not have the authority to require the plan or take permit as a condition. Commissioners agreed, however, HNWD’s project is at risk without them. If the spinning blades are fatal to even one endangered species, the company has broken the Endangered Species Act and becomes subject to fines, penalties, and costly shutdowns.
Getting a habitat conservation plan and incidental take permit is possible, but it would mean HNWD would incur further expenses, and require more detailed study of the potential impacts at the project site, including those under the National Environmental Protection Act, a process which could take up to two years.
Sullenberger and Blanchard have both indicated they might consider requiring HNWD to get a plan and take permit, if it doesn’t violate the basic conditions attached to the local permit (see related story).
A group of Highland citizens hired attorneys at Woods Rogers, Roanoke three years ago to represent their concerns about endangered species. In July 2005, counselor James Jennings sent a letter to HNWD, county supervisors, and the U.S. Department of the Interior, warning that if an endangered species is killed, his clients will sue in federal court.
This week, Jennings said, that remains an option. “I feel like the conditions (of the state permit), if DGIF follows up, are really good, but I’m disappointed (the SCC) didn’t require a habitat conservation plan and incidental take permit. It doesn’t make sense,” he said.
“This is a tax project,” Jennings added. “The evidence shows it’s not going to reduce emissions, it’s not going to add to energy efficiency; it’s an investment device to sell tax credits. No local government or the SCC should have indulged this project for that.”
Since it’s a private project, Blanchard said, “It’s not my responsibility to put the county at risk just to benefit a de- veloper. It’s not my responsibility if the (production tax) credits expire. My responsibility is to the county, and to see that whatever project comes about benefits the county … It’s a big project and it comes with big risks and big costs. If mistakes are made, the costs are large. That burden should be put on the developer, not the county … I’m not interested in easing the road for developers. (The credits) mean government money is involved. That’s our money. We need to protect that.”
Like Blanchard, Sullenberger believes the county cannot take any position with regard to whether expiring tax credits affect the project’s financial viability. “It does put pressure on them, I think it does,” he said. “But (McBride’s) business plan is in his court. I don’t know that we have anything to say about it. The project has got to be capitalized, and I have to think the interest is there to see the project move forward. I think there is an availability of resources (for HNWD).”
But, he added, “The dynamics of the whole industry are going to change. The lobbying effort by power companies is so strong.”
Sullenberger believes that eventually, federal lands will become more important to wind energy developers, which would include more areas of Highland County and neighboring Bath, where 50 percent of the county is federal property. “The shift will be to these federal lands,” Sullenberger said, but it won’t happen until the economies involved catch up and make sense to investors.
Bailey does not believe the production tax credits will be extended beyond this year, at least not anytime soon. “We’ve already had the big battle about that (at the federal level),” he said. “Southern congressman objected to the requirement that big utilities be forced to buy renewable energy … There was a lot of balking about that and the energy bill has now passed with a focus on ethanol … the wind industry is now crying the blues because all those subsidies will be cut off, and the projects won’t work without those subsidies.”
HNWD now has both a conditional use permit from the county and a state certificate to build and operate its facility. Both expire after two years if construction has not begun, but the developer could request an extension on either of them.
The county’s two-year clock started ticking after all challenges to the permitting decision were settled. That happened in September, after Virginia’s Supreme Court ruled against those who sued the county over its permitting decision, and subsequently turned down a request for reconsideration submitted by Bailey.
The state’s permit contains a two-year sunset provision; if construction has not begun two years from the Dec. 20 SCC order, the permit expires.
Both the developer and formal participants in the application process at the SCC have the option of asking the agency to reconsider its decision within 21 days of the SCC’s order (by Jan. 9). If the SCC chooses not to reconsider, it loses jurisdiction over the case. At that point, parties could appeal the decision directly to Virginia’s Supreme Court. They would have 30 days to file their intent for appeal, and four months to file the appeal itself. If the Supreme Court chose to hear the appeal, that could easily add another year to the time involved in settling the case.
HNWD attorneys Brian Brake and John Flora declined to make any comment on the SCC’s decision or answer questions about how the company will proceed from here.
At this point, Bailey said he doubted the SCC would reconsider its permit order. “Legal arguments at the SCC are always edgy, and here, it’s so clear how seriously they have taken the environment. The chances (of an appeal) prevailing are remote … This has set a wonderful precedent for Virginia, and I can’t see wind turbines exploding in this state now.”
And, before construction can begin, HNWD is required to submit a final site plan. The company cannot do anything, including storing equipment on site, until that site plan is approved. Before HNWD can get a county building permit, it must also file a performance bond. For the first partial year and five subsequent years, that bond must be for $2,500 per turbine tower; for the remaining years, the amount is $6,000 each.
Whether anyone appeals HNWD’s decision remains to be seen, but on Bear Mountain, Reum remains upbeat. “I’m still hopeful,” she said. “I realize there are a lot of obstacles to this project yet, and if I keep thinking about this like I have for the last 4-5 years, what else will I get done? I told myself I would not do anything more related to wind for a while. It’s a new year.”
BY ANNE ADAMS • STAFF WRITER
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