Laidlaw Energy Group, Inc.(fka LLEG)

[BerlinMBBLLEG]

SUNSPOTTER & SPENCERFORHIRE -

ANY FEEDBACK ON THIS? WILL YOU BE WATCHING THE TICKER TOMM..

BULLET POINTS OF MEANING ! ! !

FROM PSNH CLOSING ARRGUMENT

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

Staff Ex.14 shows that, ... 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...
ISO-NE predicts .. the region’s need for RECs will outstrip supply by 2013.

There is no evidence that disputes this ISO prediction.

The PPA allows PSNH to buy RECs at a fraction of the ACP price.

"..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

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.

Even Mr. Traum conceded,.. that it was not OCA’s opinion and testimony that REC prices will be 30% of the ACP for the term of the 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 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.

“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.

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.

The Staff Advocate testified that he was not recommending disapproval of the PPA

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.

“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.”

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.

..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.

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.

..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

The Commission must not forget that the RPS is a public policy law, and the importance this docket has to implementing that public policy.

“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.

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.

“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.


http://www.puc.state.nh.us/Regulatory/CaseFile/2010/10-195/LETTERS,%20MEMOS/10-195%202011-02-15%20City%20of%20Berlin%20closing%20statement.pdf


FROM CITY OF BERLIN’S CLOSING STATEMENT


This has the potential to lower and stabilize future energy costs...

...can also help to keep energy and investment dollars in the state to benefit our own economy.

..thereby improving air quality and public health, and mitigating against the risks of climate change.

It is therefore in the public interest to stimulate investment in low emission renewable energy generation technologies in New England and, in particular, New Hampshire, whether at new or existing facilities.

– that is the type of investment that is expressly stated to be “in the public interest” by this statute.

Furthermore, as acknowledged by Staff Witness Frantz, it is the express public policy of this State to support and promote sustainable and viable forest based economy

Additionally, the approval of this PPA brings on-line a new, highly efficient and clean renewable generation resource that meets the heightened environmental strictures imposed on “eligible biomass technologies” under RSA 362-F:2, VIII (a).

This is not something that the intervening IPP?s qualify for,

To that end, the City respectfully requests that this Commission not be distracted by any arguments of the IPP?s against this PPA since those entities have had the last several years to bring their plants up to grade to qualify for Class I REC?s but have for the most part chosen not to do so.

This PPA will result in a new, ultraclean, highly efficient, greenhouse gas-reducing plant that will cost-effectively install the new required pollution control devices – the very type of plant that the statutory scheme of RSA 362-F was designed to foster for the benefit of our State as a whole.

Of course, the North Country and the struggling City will also greatly benefit from approval of the PPA, which is necessary for this project to go forward.

Approval of the PPA means the creation of jobs, an increased industrial tax base, the lessening of residential sewer/water rates, and the ability to take advantage of approximately three million dollars ($3,000,000) in community benefits from New Market Tax Credits allocated to the project.

Staff Witness McCluskey acknowledged, this site has various unique features that are not generally available to any other potential project, including: the existing, unused and maintained boiler at a reduced cost of up to $100 million as compared to a brand new greenfields site; existing municipal water and sewer with sufficient capacity to handle the needs of this project; existing wood yards, scales and out-buildings on 60 acres of industrially zoned land with other such acreage adjacent;
a site with such features adjacent to existing transmission facilities like the Coos Loop and existing roadways such as Route 2 and Route 16 that have long been used to accommodate the truck traffic necessary for transporting the wood to the site;
and the availability of trained, skilled workforce with a long and illustrious history of service in the wood industry.

It is a win for the State, the City, and the ratepayers.

Staff and OCA witnesses would have this Commission believe that, based on numerous assumptions and speculations that were shown on cross examination to be not well founded, that there is a potential that the PPA could be over-market and could have a negative impact upon the rate payers over the course of the PPA?s twenty-year term.

look to Staff Exhibit 14 to see that the calculations of Staff?s own witnesses prove that, depending upon which variables are used, the PPA could prove to be under-market by between $336 million and $391 million.

As Staff Witness McCluskey acknowledged under cross examination, “nobody knows the future” and “the question is – what do you mean by „accurate?”.

Staff and OCA witnesses concerning wind-based projects and projections are not accurate..

..between $336 million and $391 million in savings to rate payers.

As was shown in the cross examination of
Staff Witness McCluskey, Wind generated electricity is much less stable and reliable than electricity generated by wood facilities

Staff Witness Frantz recognized, for any wind facility to have a back-up fossil fuel source of capacity ...–that is not necessary with a wood facility

675 megawatts of wind would need to be produced, which, as Staff
Witnesses McCluskey and Frantz acknowledged, equates to approximately 300 to 350 wind towers.

Staff?s REC price calculations based upon Ventyx?s wind numbers simply cannot be transposed without accounting for the above differences.

Furthermore, it became apparent on cross examination that Staff Witness McCluskey also based his testimony and calculations upon his assumption...Mr. McCluskey ignored the fact .. See, Staff Exh. 12C, pg. ES-1.
Mr.McCluskey?s analysis ignores the fact that the term of the PPA would not even begin until 2014..

Mr. McCluskey further based his calculations upon his interpretation that the Production Tax Credit (“PTC”) of 2.1 cents per kilowatt hour is included in the Ventyx REC prices – despite Ventyx?s clear methodology that shows the PTC is not included in the forecasted REC prices.

Mr. McCluskey, therefore, did not account for this additional source of revenue..

Mr. McCluskey?s calculations also failed to recognize that the numbers in Ventyx Table 5-1 were in 2010 dollars without any factoring for inflation.

The City asserts that had these calculations been properly adjusted, they would have agreed with Mr. Sansoucy?s testimony

Mr. McCluskey?s analysis of REC prices also ignored the testimony of OCA Witness Traum

Further, Staff and OCA witnesses all apparently failed to take into account upcoming retirements of existing fossil fuel power plants..

Instead, these witnesses apparently assumed that Ventyx had already taken this into account; but there is no testimony explaining where, if anywhere, this is contained in the Ventyx report.

more renewable capacity will be needed as energy needs increase and Renewal Portfolio Standards (“RPS”) requirements are imposed in the various states.

Ventyx suggests that demand requirements will result in increased energy and capacity prices

Further, as Mr. Sansoucy testified in his rebuttal, the market price of capacity is suppressed due to this recession and it is likely that New England will exceed its required capacity reserves by 2014 to 2015. City of Berlin GES – 3, pgs. 12-13.

Accordingly, new capacity will be needed as our economy rebounds from this recession.

The City asserts that this PPA will meet the capacity needs of our State at the very time such capacity will be needed by our recovering business and industries.

Furthermore, this PPA fixes the energy, capacity and REC prices at levels that could well prove to be below market, while also reducing fuel and energy price volatility for PSNH energy service customers.

Staff and OCA ignore the fact that there will undoubtedly be a negative effect on the rate payers if the PPA is not approved.

Without the Laidlaw plant, the supply of Class I RECs was shown by Mr. Long and Mr. Sansoucy to be insufficient.

PSNH will have to obtain ever-increasing amounts of energy and capacity in the unstable and increasingly costly fossil fuel markets.

All of these facts will lead to higher rates if this PPA is not approved.

the fact remains that no PPA will be ever perfect.

This PPA is before the Commission at a crucial time in the history of the City of Berlin, the North Country and our State.

This Commission can and should approve the PPA as presented..

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 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !