Laidlaw Energy Group, Inc.(fka LLEG)

[BigBucksFl]

Just Finished Reading Closing Arguments from PSNH, IPP's and Staff. PSNH HITS A HOME RUN ! ! ! ! While biased in my posts, I do possess good analytical skills when it comes to legal documents and arguments and believe that this is not only a fair assessment, but an accurate one as well.

While PSNH stays focused on FACTS, the Staff comments on theory, assumptions and conjecture while ignoring key aspects of evidence IN THE RECORD. While the Staff report would not let me cut and paste here is the link for all to read;

http://www.puc.state.nh.us/Regulatory/CaseFile/2010/10-195/LETTERS,%20MEMOS/10-195%202011-02-14%20Staff%20closing%20statement.pdf

My favorite theory of theirs based on unsupported testimony of assumption and conjecture was this line right off the bat;
Pg 2

…The first test, comparing the PPA prices with the prices for comparable renewable energy projects, demonstrates that PSNH could have received the same products that it is purchasing from Laidlaw from two competing biomass projects (Concord Steam and CPD) at prices that represent discounts of 12.6% and 8.5% respectively compared to Laidlaw. …

Now Concord Steam and CPD are the two IPP's that pulled out of the process after contaminating the issue with this bogus testimony and were faced with discovery to provide documentation that these undocumented CLAIMS were based on fact and reliable evidence to support the claim. Instead, they tucked tail and removed themselves from the process rather than face having to substantiate these claims with evidence of some sort. YET, HERE IS THE STAFF, relying on this as factual evidence to support their "CLAIMS".

As you continue to read through their closing argument, you begin to realize that their entire argument is based on such things as shown above. Claims that were made without documentation to back them up, Testimony that was admittedly false when cross examined, testimony that was later clarified to remove conjecture, and so on.

I feel very confident that the Commissioners will see through this FOG easily and find the truth of the matters before them.

In so far as the IPP's Closing argument, which again would not allow me to cut and paste, here is the link;

http://www.puc.state.nh.us/Regulatory/CaseFile/2010/10-195/LETTERS,%20MEMOS/10-195%202011-02-14%20Wood-Fired%20IPPs%20closing%20statement.pdf

If it did let me cut and paste, trust me, you don't want to waste your time on it. It is nothing but a combination of supporting rhetoric for positions of the Staff along with MANY MANY disections of NH Statute. What they do is to try to manipulate existing statutes to mean something other than what they plainly state in clear language. By taking a part and saying for instance, "it does not state that a utility must" do this or that. In this way they hope to make legal points which again, the commissioners will see right through as EVERY INTERVENOR on EVERY PROJECT that comes before them tries to do the EXACT SAME THING.

NICE TRY but no cigar. Their arguments were lame and off point, based on assumptions and calculations of what THEY FEEL the intent of the legislature was at the time the law was enacted. Always a lame argument which 99.9999999% of the time is dismissed or unsuccessful when looked at.

NOW WE GET TO THE GOOD STUFF. PSNH's CLOSING ARGUMENTS;

Just a couple of comments before hand since it is a read. This clearly shows WHY PSNH has their way so much of the time. They have a dedicated staff of attorneys that specialize solely in utility issues and are expert at using FACTS to make their case, pointing out inconsistancies of opposing positions as well as showing assumptions and unproven projections to be just that.

WE ARE DEFINITELY HEADED FOR APPROVAL ! ! !

http://www.puc.state.nh.us/Regulatory/CaseFile/2010/10-195/LETTERS,%20MEMOS/10-195%202011-02-14%20PSNH%20closing%20statement.pdf

THE STATE OF NEW HAMPSHIRE
before the
NEW HAMPSHIRE PUBLIC UTILITIES COMMISSION
Petition for Approval of Power Purchase Agreement Between
Public Service Co. of New Hampshire and Laidlaw Berlin BioPower, LLC
Docket No. DE 10-195
Closing Statement of Public Service Company of New Hampshire
In 2007, the General Court enacted the state’s “Electric Renewable Portfolio Standard” (“RPS”),
RSA Chapter 362-F. The purpose of the RPS is, inter alia, to “provide fuel diversity to the state…
through use of local renewable fuels;” to “stabilize future energy costs by reducing exposure to rising
and volatile fossil fuel prices;” “to keep energy and investment dollars in the state to benefit our own
economy;” and, “to stimulate investment in low emission renewable energy generation technologies
in … in particular, New Hampshire… .” The Legislature created a series of minimum escalating annual
requirements beginning in 2008 and increasing until levelizing in 2025, mandating that the
electricity sold to retail customers within the state be composed of certain percentages of various
classes of renewable energy. All Load Serving Entities must comply with this RPS requirement. In
2025, the RPS requires 23.8% of the energy sold to be from designated renewable sources, with 16%
from Class I sources.
To comply with the RPS law, PSNH negotiated a Power Purchase Agreement (“PPA”) with
Laidlaw Berlin BioPower, LLC. That PPA was executed on June 8, 2010, following detailed arm’s
length negotiations. That agreement would provide PSNH with energy products, including Class I
RECs, necessary to comply with the RPS law. On July 26, 2010, PSNH petitioned the Commission
for approval of the PPA pursuant to RSA 362-F:9. PSNH submits that the PPA it brought to the
Commission for approval precisely meets the intent and purpose of the RPS law.
In this proceeding the parties have presented myriad analyses, benchmarks, forecasts, and
projections regarding how the PPA may fare against the marketplace over its 20 year term. Staff Ex.
14 shows that, depending upon which set of numbers is used, the results of those predictions vary
significantly, from a $300 M net benefit to customers to a $300 M detriment. All the parties do agree
on one thing - - no one can predict the future. However, the PPA protects customers against the
potential for this wide range of possible outcomes by having a fixed base energy charge, an
adjustment for fuel based on an index that is within the Commission’s regulatory jurisdiction, and a
means to capture any accumulated above market energy costs and ultimately return that value to
customers, while also providing that if accumulated prices are below market customers will receive
the benefit of the below market prices.
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What we do know is that the legislature has mandated that LSEs include certain percentages of
renewable power in their portfolio. We know that from 2010 through 2025, the legal requirement
for the inclusion of Class I resources increases 1600% - - and load growth will push that need even
higher. We also know that virtually nothing is being built to meet this increasing demand. ISO-NE
predicts that even if 40% of the projects in the ISO queue are developed, the region’s need for RECs
will outstrip supply by 2013. There is no evidence that disputes this ISO prediction. Even Synapse
relied on the ISO for this issue. When demand surpasses supply, as we are clearly heading toward,
the price of compliance in the marketplace will escalate until it hits the Alternative Compliance
Payment (“ACP”) limit.
The PPA allows PSNH to buy RECs at a fraction of the ACP price. If one compares the ISO-NE
chart (Attachment PSNH Rebuttal 6) with the PPA’s REC pricing - - as time goes on, the gap
between supply of and demand for RECs widens; but as time goes on, the cost of RECs to PSNH
under the PPA drops from 80% of ACP to 75% to 70% and finally to 50% of ACP. In testimony
before the Massachusetts DPU related to a renewable energy contract entered into by NSTAR,
NSTAR’s James Daly noted, “Forecasts of supply and demand for RECs vary; however, as a threshold
issue, should the market be in shortage due to the inability to supply enough RECs, this contract
will serve as a hedge against such exposure thereby reducing ratepayer costs versus paying the ACP.
By this measure also the contract is cost effective.” The Laidlaw PPA does that very thing.
There is also little dispute that the cost of wood fuel has demonstrated less volatility than market
energy prices. Attachment PSNH Rebuttal 2, PSNH Exhibit 19 and Staff Exhibit 16, all using
different sources for the cost of wood, visually demonstrate this fact. La Capra Associates has noted
that one of the principal purposes of an RPS law is “Hedging against price volatility or increasing
fuel costs.” In fact, the New Hampshire RPS at RSA 362-F:1 includes as one of the law’s purposes,
“the potential to lower and stabilize future energy costs by reducing exposure to rising and volatile
fossil fuel prices.” The PPA fulfills this legislative purpose.
The testimonies submitted by OCA and the Staff Advocate have little to say about the cost of
capacity under the PPA. Mr. McCluskey’s Exhibit GRM-14 shows the PPA appears to present a
nominal savings of over $40 M in capacity value. He criticized that figure based on Levitan’s use of
an inflation factor adjustment in the later years; however, both Synapse and Mr. McCluskey himself
utilized that same methodology with impunity.
OCA’s analysis of the REC issue utilized an analysis where the price of RECs remains at 30% of
the ACP for the term of the PPA. Even Mr. Traum conceded, in response to a data request, that it
was not OCA’s opinion and testimony that REC prices will be 30% of the ACP for the term of the
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proposed Laidlaw contract. It would be patently unreasonable to rely upon the OCA’s analyses,
given Mr. Traum’s response to that question.
The Staff Advocate’s testimony was tainted by myriad credibility issues. The Staff Advocate
testified, “I've never even heard of Ventyx before this, the hearings.” Similarly, despite his repeated
citations to the Massachusetts and New York renewable programs, he claimed unfamiliarity with
the Connecticut Project 150 statutory renewable RFP process. The Staff Advocate criticized PSNH’s
witnesses for not reading the Synapse report. Yet, that very same report, on more than a half dozen
occasions, references Ventyx (which he claimed he had never heard of) and, in more than a half
dozen other places, references Connecticut’s Project 150 (which he claimed he was unfamiliar with).He accused PSNH of omitting interest on the Cumulative Reduction fund to benefit itself over
customers, and testified that cost minimization was not high on the Company’s list of objectives for
the PPA. He testified that the PPA failed to comply with the RPS law…but then admitted he was
wrong. When asked about his testimony where he stated PSNH “will pay” $1.6 B for the Laidlaw
products, he ultimately conceded that he really does not know what PSNH will pay. Upon cross
examination he continued to hold to his belief that there is a concept of “Lost RECs” caused by line
losses, despite the express language of the statute that says a REC represents “the record that
identifies and represents each megawatt-hour generated by a renewable energy generating source
under RSA 362-F:6.” Clearly, a REC created by a generator does not degrade with distance - - a
concept that would play havoc with the NEPOOL Generation Information System (GIS) that tracks
RECs. And, despite his testimony in Docket No. DE 09-137 that, “Staff assumed that the price of
RECs would rise from the existing level at the rate that the ACP rose,” in this proceeding, his
testimony included steadily decreasing REC pricing. Such inaccuracies and inconsistencies make
the Staff Advocate’s testimony unreliable and of little merit.Staff and OCA both advocate use of a competitive solicitation process as superior to the bilateral
negotiation process used by PSNH to develop the PPA. Connecticut’s Project 150 process is just
such a competitive process – and it has been an utter failure. In five years, nothing has been built,
because nothing can get financed. The only investments being made in Connecticut are in legal fees.That is not what the New Hampshire legislature intended. Even NSTAR’s lauded competitive
solicitation produced a result which, “The Company [NSTAR] acknowledges…provides power at a
price higher than its consultant's forecast of market prices for conventional energy and RECs.”
We have had many red herrings thrown into this proceeding. Wood will not be available; there
are prisons to provide jobs in Berlin; the Coös loop cannot handle the power; PSNH is using the PPA
as a Trojan horse to be able to own more generating assets in 2034; used-and-useful; anti-CWIP.
4
The wood and transmission issues were reviewed by the Site Evaluation Committee and need not be
rehashed here. The prison jobs have no relevance to the PPA. The Trojan horse analogy - - that is
merely preposterous. With respect to used-and-useful and anti-CWIP – every penny paid by PSNH
would be pursuant to a FERC tariff; not one penny will be put into PSNH’s rate base throughout the
term of the PPA. What, if anything, happens in 2034 would be subject to whatever regulatory
paradigm exists at the time.
The Staff Advocate testified that he was not recommending disapproval of the PPA - - just that it
needed to be substantially altered before receiving approval. He outlined several recommendations
on how the PPA must be changed. Unfortunately, the changes he recommends would produce a deal
that will not be financeable and a project that will not be built. Even the Staff Advocate testified
that PPA prices must be reflective of what is necessary for the facility to receive financing. However,
he admitted that he had no experience regarding the financing of a generation project. It is not
surprising, therefore, that his recommendations are unobtainable if the project is to be financeable.
The evidence demonstrates that receipt of financing for a generation project is not an easy task.
Recall Mr. Daly’s testimony in the NSTAR proceeding that “Any delay in approving the contract
would jeopardize the project's ability to qualify for the tax credit resulting in either the inability to
finance the project or increased prices to ratepayers if the project had to rebid in a later RFP.” Also
recall the experience of Connecticut in its Project 150 RFP process. Not one project is being built;
numerous winning bidders are seeking contract changes due to their inability to finance under their
PPAs.
PSNH insisted on finding a solution to untie the Gordian knot caused by the necessity to have a
financeable PPA, while also protecting customers from unduly enriching the developer. That
solution was the Cumulative Reduction fund (“CRF”) mechanism in the PPA. The CRF is unique
and required extensive negotiating and crafting. PSNH mandated that customers be protected by
having a recorded real property purchase option interest and a lien on the facility that has priority
over every other creditor. The value of the CRF is further protected by a title insurance policy. This
innovative solution to the financing vs. customer protection issue was characterized by the Staff
Advocate as insufficient. However, Mr. Sansoucy testified that the fair market value of the facility in
20 years may be upwards of $130 M.
One issue raised during the proceeding was the lack of interest applied to the balance of the CRF.
But, now that such accrual of interest has been offered, there is a distinct lack of interest from the
Staff Advocate. When asked why his interest in interest had waned, his response was that the
facility would have little value at the end of the PPA. But, when probed on the basis for his
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testimony regarding the future lack of value of the plant, the Staff Advocate admitted that although
he was aware that the existing wood IPP facilities had been sold over the course time, he did not
know who owned them and had no idea what they sold for. He provided no basis whatsoever for his
testimony that the Laidlaw facility would have little value in the future except to say that the value
would be influenced by future events.
Perhaps the biggest problem with the Staff Advocate’s testimony was his mathematical error in
computing the cost of RECs. He agreed that his REC pricing was based on data from the Synapse
report. He agreed that the Synapse REC model was based on the REC premium needed to meet the
cost-of-new-entry (CONE) for a new facility. He agreed that if the energy price drops, the CONE
does not. But, when he adjusted the Synapse REC numbers to account for his 30% lower energy
price, he failed to appropriately increase the REC price as necessary to make up the difference to
reach the CONE. During cross-examination, the Staff Advocate waffled and equivocated regarding
this error. It required direct questioning from Commissioner Below for an almost-direct response
that maybe he had made a mistake. The arithmetic performed during cross-examination on Exhibit
GRM-13 resulted in an “Adjusted Synapse Market REC Projection” for 2014 of $54.55 - - a price
higher than the PPA’s 2014 REC price of $53.80. That mathematical error affects every REC number
and every REC conclusion in the Staff Advocate’s testimony. Since the Staff Advocate testified that,
“The major issues, in my opinion, are the excessive REC prices and the requirement to purchase more
RECs than is actually needed,” an error in his analyses of REC pricing casts a cloud on the entirety of
the Staff Advocate’s recommendations. Moreover, as Mr. Frantz’s testimony relied solely on the Staff
Advocate’s faulty analyses, the opinions in his testimony similarly cannot be relied upon.
Mr. Sansoucy outlined the numerous benefits of the LBB facility. There is one in particular we
wanted to reiterate, the benefits of siting this facility on a contaminated brownfield site. Turning
“brown to green” is in the best interest of all residents of New Hampshire (see, RSA Chapter 147-F),
even more so when you can turn “green dollars” into jobs and opportunities at the same time.
Dr. Shapiro’s testimony demonstrates that the Laidlaw facility will provide significant economic
benefits to an economically depressed area of the state by supporting 470 average annual New
Hampshire jobs during the construction of the Project, and once operational, 40 direct jobs at the
plant, and about 200 additional indirect and induced jobs, many of which will be in the logging and
related industries. And, that does not include the additional 65 jobs announced recently for the
related business that has announced an intention to locate on the site, and their additional indirect
and induced jobs.
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The Commission must not forget that the RPS is a public policy law, and the importance this
docket has to implementing that public policy. This quotation perhaps sums up this mandate best:
“The proposed Laidlaw biomass power plant could result in significant benefits to the economy of Berlin and New
Hampshire's North Country. This investment will create construction jobs, operating jobs, support New Hampshire's
timber industry, expand our state's renewable energy supply, and contribute significantly to the tax base of the City of
Berlin. I recognize and support the important benefits this project represents.” That quotation did not come from
Dr. Shapiro. Nor did it come from Gary Long. That statement of support came from Governor John
Lynch in his January 11, 2011 letter filed in this proceeding.
The legislative purpose and public interest findings of the RPS law are clear. The PPA submitted
for approval by PSNH implements those purposes and satisfies the RPS law’s public interest
requirements. When considering the merits of the PPA, consider the concerns of the Massachusetts
Department of Energy Resources: “DOER's predominant concern is that the multitude of potential
intervenors may compromise the legislative objective of an expeditious process for the approval of
long-term contracts to facilitate the financing of renewable energy generation.”
PSNH implores the Commission not to let the process in New Hampshire be compromised. Don’t
create a situation where New Hampshire’s RPS dollars are being sent out of state. Don’t block
development of a significant in-state renewable generator that will ensure PSNH’s ability to comply
with the RPS law at prices that are fractions of the ACP. Don’t throw away millions of dollars in
federal grants that can benefit the North Country. Don’t take away the hundreds of jobs that the
Laidlaw Biomass facility will provide to the citizens of Berlin, Coös County, and the state of New
Hampshire. As Executive Councilor Burton noted in his January 27, 2011, letter to the Commission,
“WE NEED THOSE JOBS.”
The PPA PSNH has presented is a good deal, a financeable deal, a deal that took extensive
negotiations, a deal that is innovative and provides unprecedented protections for customers, a deal
that will result in keeping energy and investment dollars in the state to benefit our own economy,
and create hundreds of jobs - - just as the Legislature intended. As stated by Mr. Long in his
testimony, this deal is the best one available for meeting the state’s RPS. There will likely not be
another one if this PPA is not approved. The Commission must therefore decide whether it will
implement the state’s policy objectives based upon the significant merits of this PPA and not on
long-term forecasts which all parties agree will ultimately be incorrect.
PSNH is grateful to the Commission for dedicating 6 days of hearings to consider the Petition, and
we ask that the Commission expeditiously deliberate and grant its approval of the PPA.
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Respectfully submitted this 14th day of February, 2011.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
By:_____________________________________
Robert A. Bersak
Assistant Secretary and Assistant General Counsel
Public Service Company of New Hampshire
780 N. Commercial Street
Post Office Box 330
Manchester, New Hampshire 03105-0330

AND THAT IS HOW IT IS DONE ! ! !

BADA BANG BABY ! ! !

LOOKING FORWARD TO ANOTHER GREAT DAY, WEEK, MONTH AND YEAR WITH LLEG !!!

AS ALWAYS,

GO LONG ! ! ! ! ! ! ! ! !

KEEP THE FAITH ! ! ! ! ! ! ! ! ! ! !

ENHANCE YOUR CALM ! ! ! ! ! ! ! ! ! ! !

STAY THE COURSE ! ! ! ! ! ! ! ! ! ! ! !

GO LLEG ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !