While Delaware government agencies sign off on the long-drawn-out deal between Bluewater Wind and Delmarva Power to put electricity-generating wind turbines off Rehoboth Beach, the U.S. government has put its hand on the tiller.
The U.S. Department of the Interior is now officially in favor of developing wind, wave, ocean current, solar and other energy alternatives on the Continental Shelf under its jurisdiction. And this week its Minerals Management Service, which more typically deals with oil and gas leases, published draft rules for how alternative projects may site facilities and operate in return for fees.
Bluewater spokesman Jim Lanard said Friday, “We’re studying them very carefully.”
The proposed federal regulations cover applications and payment for seabed leases, easements and rights-of-way for experimental and commercial installations. They also invite in local authorities and allocate shares of project revenues to nearby coastal states.
“We’re impressed with the quality of the work and the level of detail,” Lanard said. Bluewater is also “delighted” that the Minerals Management Service aims to finish final rules by December, to guide these nascent industries in starting work.
But Bluewater is seriously concerned about the proposed federal acreage rents, bidding bonuses and operating fees. Bluewater thinks they’re high for a developing industry, though the firm is not yet able to say whether the fees are prohibitive to its project. “We’re running the model,” Lanard said.
The Minerals Management Service is accepting comments on these rules through Sept. 8. Lanard said Bluewater intends to formally reply soon, along with the American Wind Energy Association, and is encouraging other companies to do so, too.
Lanard said they want to respond early while the Bush administration is still in office. He said that while presidential candidates Barack Obama and John McCain are sure to be supportive of alternative energy, there may be delays in forming a new government. And that would leave Bluewater and other firms hanging.
The Minerals Management Service is offering two kinds of leases. Commercial leases for full-scale energy production would go up to 25 years. Limited leases of five years would allow research and data collection, site or technology testing, but no production and distribution and no right to followup commercial operation.
Commercial applications would be treated as competitive, with public notice and consultation with states, locales and a long list of other federal agencies that monitor the environment, wildlife, navigation and aviation. A lot of existing laws apply.
Now the money part. Commercial leases would pay $3 in rent per acre per year. Then there’s an operating fee formula involving installed production capacity, hours and power price. Rights-of-way would be $70 per statute mile. Easements would be $5 per acre or a minimum of $450 a year.
The government also proposes payment of cash bonuses when there are multiple bids for a site, to pick the winner. There are objections to this already.
Nearby states would get a 27 percent share of the federal revenue, to be divided according to their coastlines’ distance from the center of a project site. One state could get the whole share.
However, the Minerals Management Service doesn’t expect much income from this any time soon. It foresees earning some revenue about 2015, and about $100 million by 2022.
And, yes, there are provisions for impact statements, construction review, bankruptcy, mergers and business changes, and decommissioning and removing facilities that quit operating.
These rules were based on examining 103 projects in development, mostly wind farms. Now the industry has to keep up the momentum.
12 July 2008
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