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PUD may be out of luck on getting its money back Friday  

Credit:  October 7, 2011, BY ANGELO BRUSCAS, The Daily World, thedailyworld.com ~~

The proposed Radar Ridge wind farm in Pacific County may be scuttled by developer Energy Northwest, Grays Harbor PUD commissioners have been told, in part because the investors might be required to put up what amounts to a $10 million contingency fund as a hedge against environmental damage.

If the project dies, so does the Grays Harbor PUD’s chances of recouping nearly $1 million it has already invested. The PUD has pulled out of the project, but hopes to get all or at least some of its money back if other investors carry it forward.

Energy Northwest official Jim Oakley told PUD commissioners Monday that the contingency fund requirement has been discussed as part of a draft environmental impact statement now being completed by the U.S. Fish and Wildlife Service, and that it could cause the demise of the project.

“It’s not looking good right at the moment,” Oakley said during a briefing on Energy Northwest operations, which the PUD shares in as one of the 28 utility members affiliated with the Richland-based energy supply company.

“It’s pretty onerous some of the stuff they want us to do,” Oakley added.

But Fish & Wildlife officials say the contingency fund is just one of many ideas thrown out in very preliminary discussions on permits.

If Energy Northwest halts the project, it likely means no buyer will ever be found to assume Grays Harbor PUD’s 49 percent share of the project.

Grays Harbor PUD was one of the original four partners in the project, but PUD commissioners stopped funding the effort in May 2010 after costs for environmental studies escalated and the PUD found other renewable energy resources to acquire. Up to that point, the PUD spent $985,861 on pre-construction costs, and PUD commissioners had asked Energy Northwest to find a buyer or new investor to possibly pick up Grays Harbor’s share.

“Our hope was the project could be successfully permitted and our share would be acquired by another interested party, which will allow us to recoup some of our investment. At this time, we do not have an interested party,” said Liz Anderson, the PUD’s community and government relations director.

The project would consist of up to 32 wind turbines with a total generating capacity of 82 megawatts of electricity. Power generated by the wind turbines would be transmitted to an existing BPA substation at Naselle.

Energy Northwest and its remaining partners in the project – PUDs in Pacific, Clallam and Mason counties – have been trying to offset any harm the wind turbines might have on the population of endangered marbled murrelet seabirds that nest in the area.

“They want us to put $10 million in the bank just in case anything were to happen. They call it a mitigation fund,” Oakley added.

Fish and Wildlife officials, however, say such a proposal is only a suggestion, and they contend it was Energy Northwest that actually stopped funding the environmental impact statement process this past summer. The federal agency is in the process of working through all the requirements of the National Environmental Policy Act (NEPA) for the project.

As part of the process, Energy Northwest and its partner utilities developed a habitat conservation plan and asked for an “incidental take”

permit for the marbled murrelet, a bird under the protection of the Endangered Species Act. The permit would authorize the “incidental take of marbled murrelets for the construction, operation, maintenance, and decommissioning of the Radar Ridge Wind Project.”

“We are putting together a document that will have several alternatives to it, as we have to look at alternatives to the project,” said Jim Michaels, Fish and Wildlife Service division manager for habitat conservation on the project. “We did have discussion with Energy Northwest on Sept. 30. They knew we were putting together an alternative that has proposals, and that’s all they are. They are things we are looking at with them.”

The alternatives, he added, will then be put before the public for comment before any proposal is made final.

“They are not requirements. They are only parts of a telephone conversation we had with Energy Northwest,” Michaels said.

PUD INTEREST

Anderson noted that most of the money invested in the project by the Grays Harbor utility was in its first year “and used for development of a project we believed would be extremely viable.”

But commissioners decided to halt funding “amid concerns about increasing permitting costs, anticipated extended time lines for permitting, an approaching lease deadline, and the value of the project based on future markets,” Anderson said.

If the participants in the project decide to discontinue pursuing the permits, the project would be abandoned, Anderson added.

“We have retained a minimal .5 percent share to protect our interests should there be a sale,” she said. “This would allow us to recover some or all the funds invested.”

Energy Northwest intends to ask Fish and Wildlife to reconsider the request for a contingency fund among other things, according to Oakley, but it’s unclear whether the project will move forward to the point where a sale of any portion of it would be possible.

“At this point, if that doesn’t get reconsidered and if that doesn’t happen, it is very possible that we will have to walk away … because it’s just not going to be economical,” Oakley said.

PROCESS STALLED

Doug Zimmer, Fish and Wildlife spokesman, said the NEPA process often involves a number of different proposals that might not be adopted.

“There are typically about four alternatives, which will have various pieces,” he said. “… We may go through 30, 40 or 50 ideas and boil those down to three or four. Our alternatives are not set at this point.”

While the process now appears to have stalled, Zimmer said Fish and Wildlife continues to look at what issues still remain. But the agency is blaming Energy Northwest for not carrying through with some of the environmental work that still needs to be done.

“They stopped funding the consultant that they had hired to put together the EIS process,” Zimmer said, noting the date was Aug. 10 when the funding was halted.

“We have made Radar Ridge a priority for us for four years. We have put this front and center on our agenda. We have worked very hard with Energy Northwest to move this forward because we know they have been working on a timeline. We have tried to keep this thing moving as much as we can,” Zimmer said.

Economic concerns might be playing as much of a factor now as the environmental issues that remain.

Oakley acknowledged that “the bottom has kind of fallen out of the wind market,” with more wind production than can be handled by the Northwest energy grid and with excess hydroelectric-generated power due to a heavy snowpack and high water levels in the region’s dams.

“This process has taken so long. It was good when it started, but right now it’s probably going to be difficult to find anybody that wants to buy that power,” Oakley said.

“We’ll see how it works out. It’s not over, but it’s not looking good.”

Source:  October 7, 2011, BY ANGELO BRUSCAS, The Daily World, thedailyworld.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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