Business Meeting #29

Meeting Summary

Sept. 26-27, 2002
RESOLVE Inc.
1255 23rd Street, NW, Suite 875
Washington, DC 20037
(202) 944-2300 Fax: (202) 338-1264

Welcome and Introductions

The meeting was convened at 2:30 pm EDT. Abby Arnold (RESOLVE) reviewed the agenda for the afternoon session.

Strategic Planning Process

Kevin Bryan (RESOLVE) began the meeting with an overview of the proposed Evaluation and Strategic Planning Process for the Committee (see attached presentation). The purpose of the process is to assess the strengths and weaknesses of the NWCC and to consider steps to improve the process and outcomes of the Committee. The process will accomplish the following objectives:

• Review the NWCC Mission and its goals
• Assess the strengths of the NWCC and identify areas for improvement
• Identify partnerships with wind power partners to promote action on wind power development issues.
• Determine short-term objectives for the NWCC and outline a long-term strategy for NWCC action.

Out of this process, Mr. Bryan explained that the NWCC would clarify strategic process improvements and priority areas for substantive work, as well as identify opportunities to collaborate with partnering organizations. He stated that NWCC staff had already conducted interviews with past and present NWCC participants to gain insight on perceived strengths and weaknesses of the Committee. Input for the process will include:

• Results from interviews with past and present NWCC participants
• Discussions from the Wind Partners Coordination Meeting and the NWCC Business Meeting
• Work Group discussions on proposed activities

During October and November, a small planning group will be formed to assess the information obtained from these interviews, as well as input for Committee and work group members about short-term activities and long-term goals. A draft report summarizing the evaluation results, short-term and long-term priorities and activities will be prepared by January for review. The Coordinating Committee will discuss the document at the Annual Business Meeting, scheduled for January 23, 2003. Several members agreed to work with this small planning group, which will convene in October.

Mission Statement

One goal of the meeting was to review the NWCC mission statement and consider any necessary changes to reflect more accurately the NWCC charge. All members voiced the belief that significant work remains to accomplish our goals as a group; some members believe that as the environment for wind has changed, so too have the needs of the industry and, thus, the issues the NWCC should address. One participant suggested that the vision statement should be a concise, clear idea, such as “a commercial wind -power market that is environmentally, economically and politically sustainable." Others felt the existing vision statement was sufficient. After some discussion, the group considered the potential role that NWCC activities may have on different markets. One participant mentioned that the audiences for the NWCC have changed somewhat, impacting the issues about which the NWCC is concerned. Some members felt that the group was not using a consistent definition and it was decided that the statement should be: "The NWCC's vision is a commercial wind -power market that is environmentally, economically and politically sustainable."

Some members were concerned that the statement appears to be an advocacy statement for wind power. It was decided that the vision is acceptable because it is not a blanket statement supporting wind power, only under situations where all stakeholders are comfortable. The consensus format removes the possibility for advocacy.

An outcome of the vision discussion was an agreement to review representation from stakeholder sectors and participant involvement. There were a few categories that the members believed were under- represented, including environmental and public interest organizations and utilities. The group agreed to consider strategies for increasing participation in these sectors during the Evaluation and Strategic Planning Process.

Then members who attended the Wind Partners Coordination Meeting reviewed the morning conversation. For a full report see the meeting summary, but in general it was determined that the NWCC's role should continue to be research- and education- oriented. The audience has yet to be fully determined but will be flushed out during the evaluation and strategic planning process.

Offshore Wind Development Briefing

Members provided a brief summary of the Offshore Wind Development Briefing that took place in the RESOLVE DC office on September 25, 2002. The meeting highlighted important issues regarding offshore wind development and attracted a large group of stakeholders to discuss relevant issues and concerns. Members expressed an appreciation for the European experience with offshore wind development that was illuminated through briefing presentations. Several members agreed that the discussion with various regulators holding some level of potential oversight and jurisdiction for offshore projects served to highlight the levels of complexity that will be encountered by developers, citizens, and other stakeholders in outlining paths of authority for offshore development.

As far as the NWCC's role, participants recommended that a paper summarizing the relevant governmental agencies and applicable laws as well as a step-by-step permitting process would be helpful. Such a document would essential create a mapping of regulatory efforts in the offshore permitting and oversight process, provide a clarification of the process gaps and overlaps, and offer decision-makers a beginning point to launch efforts to address these deficiencies. The members also discussed was the need to gather more information about the European experience, either in the form of a white paper or another workshop fully devoted to the topic.

NWCC members present at the workshop suggested that the full Coordinating Committee should decide what role, if any, the NWCC may play in offshore wind power development and asked the staff to look into future opportunities. Some meeting participants discussed the merits of such a role. Most members agreed that the NWCC could impact the permitting process through the aforementioned regulatory mapping activities and could provide information to the public about the facts involving offshore development, particularly on issues such as noise and visual impacts. Some members expressed a belief that the technical role for the NWCC on offshore wind issues was limited. Others, however, suggested a significant technical role, one that would compile information of the impacts of vibrations from construction and operation of the turbines on fish and other environmental impacts on marine life. The NWCC could gather information learned from oil drilling activities to understand how platforms may affect fish schools.

Work Group Updates

Avian: A small group is currently working to build consensus around the Avian Fact Sheet. Several versions of the fact sheet have been developed and reviewed, and members of the workgroup are optimistic that a resolution to the relevant issues could be reached soon. The Work Group hopes to have the document done around the EPRI Avian Workshop in Wyoming next month.

Credit Trading: NWCC staff announced that the Credit Trading Workshop will be held in Chicago, IL November 7-8, 2002. Invitations are being mailed, and the workshop agenda is close to being finalized. A good turnout is expected. The goal of the workshop is to educate air and energy regulators about Renewable Energy Credits and their benefits to wind. Several NWCC members, including NARUC, NASEO, the Alliance of Energy Suppliers, the Center for Resource Solutions, and Green Mountain Energy, agreed to co-sponsor the event.

Economic Development: NWCC staff gave an update on the Economic Development Case Studies report. Currently, the report has been through two drafts. The work group expressed some concerns about clarity of issues within the report, and a small group from the work group was selected to work with the consultant, Northwest Economic Associates (NEA), that is preparing the document. On an August 11th conference call, the NEA and the small group participants agreed to a plan to address those major issues with the report and complete a final draft for work group review. NEA is currently revising portions of the report in accordance with the agreed-upon language between the work group and NEA. The final report should be completed by the end of the calendar year.

Members commented on the process and the preliminary findings of the report. The research found modest job impacts in the individual cases, but also found significant increases in tax benefits to citizens and local jurisdictions. One problem of the research process has been the difficulty of obtaining access to proprietary information from project developers. The report will outline solutions for addressing this problem. Several members pointed to the need for follow-up work on the subject once the report is completed. Work group members present at the meeting mentioned that one possibility would be to develop fact sheets regarding tax implications, income impacts, and job development, to name a few possible subjects. One target audience for this information should be tribal communities, with consideration in future studies on the specific impacts of wind development on their economies.

Presentation on the Implications of FERC’s Proposed Standard Market Design on Wind

Kevin Porter gave a presentation on the implications of the Federal Energy Regulatory Commission’s (FERC) proposed Standard Market Design (SMD) for regional transmission organizations (RTOs). According to Mr. Porter, the FERC was motivated to issue the SMD Notice of Proposed Rulemaking (NOPR) to address design flaws in wholesale markets and “unduly discriminatory behavior” by transmission providers. The FERC hopes to establish a standardized electricity market design that offers a “level playing field” for all wholesale market participants.

Mr. Porter outlined the major elements of the FERC SMD proposal. In particular, he noted the SMD inclusion of the California ISO scheduling protocol that removes imbalance penalties for intermittent resources such as wind. FERC is currently seeking comment on “whether there is a better way to schedule intermittent resources”.

He stated that, in general, the SMD NOPR provides significant benefit for wind. He noted that several elements of the NWCC RTO Principles were included either in the SMD proposal or in related orders issued by the FERC. As written, the SMD proposal is technologically neutral, providing access for intermittent energy sources to regional transmission grids. The existing proposal also will streamline interconnection rules for wind and create a fair operating environment for wind and other renewable energy sources.

Mr. Porter called attention to additional features of the SMD that he believes will be beneficial to wind energy. The network access transmission service will help wind generators avoid having to choose between firm transmission service that is probably more than what wind generators need, and non-firm transmission service that is probably less than what wind generators require. Furthermore, network access transmission service will avert a problem facing wind generators in the Midwest and the West. In those regions, the transmission systems appear quite congested, since no available transmission capacity is shown for many transmission routes. However, operations data shows that the congested routes may only be congested for a few hours per year. The network access transmission service proposed in the SMD tariff could conceivably avoid this problem and make more use of the transmission system. In addition, assigning the transmission access charges to load will be beneficial to wind resources. Because wind energy has lower capacity factors than other generating technologies, imposing transmission access charges on generators would put wind energy generators at a severe competitive disadvantage vis-a-vis other generating technologies.

In the SMD NOPR, comments are requested on whether additional charges should be assessed on uninstructed deviations in real time from schedules, such as for regulation or other ancillary services. Such action may allow for continuation of energy imbalance penalties that were promulgated in Order 888 in 1996. Mr. Porter reminded the group that energy imbalance penalty provisions across the country have posed a formidable entry barrier to wind energy generators. He suggested that the NWCC request clarification from FERC that the “additional charges” FERC is envisioning are not energy imbalance-type penalties.

Mr. Porter was particularly concerned that FERC may have retreated from statements in the staff working paper that intermittent resources can participate fully in capacity markets that may be administered by a Independent Transmission Provider (ITP) or RTO. Instead, FERC appears to have delegated this to the North American Energy Standards Board (NAESB). Mr. Porter suggested that such action by the FERC will force the wind industry to lobby to ensure wind’s eligibility for capacity markets, this time in a membership-driven organization that may have little familiarity with wind energy. Implementation of the staff working paper recommendation that wind energy be eligible as a capacity adequacy resource will be important to wind, and Mr. Porter urged the NWCC to diligently act to ensure such implementation by NAESB.

Discussion on Proposed Comments to FERC Regarding SMD

Charlie Smith (UWIG/Electrotek) presented a set of comments for review by the meeting participants. Mr. Smith proposed that the NWCC should put forth comments to the FERC in response to its July 31, 2002 Notice of Proposed Rulemaking (NOPR) regarding SMD. The NWCC first discussed providing comments to FERC regarding the SMD NOPR in May 2002, when members of the Credit Trading Work Group suggested such a submission highlighting the need to include credit trading guidelines in the SMD. NWCC members contributed to a version of comments in early July, distributed by RESOLVE staff, which focused on credit trading but also considered transmission issues. The version presented at the Business Meeting by Mr. Smith is a revision of that document. Mr. Smith stated that it was important for the NWCC to communicate to the FERC that it recognizes the efforts to include the essence of the NWCC RTO Principles in the SMD.

After discussion among the attendees, the group agreed to pursue a document that addresses the following issues noted below. The content of the comments will be decided through a consensus process in the next month. The participants agreed that the comments may follow an outline as such:

1. Acknowledgement of the FERC’s inclusion of several NWCC RTO Principles in the current version of the SMD proposal and a note of appreciation to the FERC for being responsive to the NWCC concerns. This acknowledgement will not be an approval of the FERC SMD proposal, but merely recognizes the FERC’s inclusion of the RTO Principles in the SMD.
    
2. Acknowledgement of some concepts outlined in the FERC SMD proposal not included in the NWCC RTO Principles that will be good for wind energy development. These concepts are outlined in the FERC presentation by Kevin Porter.
    
3. Questions about some proposals in the SMD NOPR that may have unintended consequences for wind development. These questions were also raised by Kevin Porter in his presentation.
    
4. A discussion of credit trading system integration with RTO development, based on the Credit Trading Guidelines outlined in Chapter Seven of the NWCC report Credit Trading and Wind Power: Issues and Opportunities.

A small group was identified to revise the draft comments. The group will adhere to the following schedule:

If the drafting group can reach consensus on the document, it will provide the comments to the Steering Committee for review and approval. RESOLVE staff will facilitate the process and keep all members informed of the progress of this effort.

The meeting adjourned at 12:30 pm EST.