Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Treading Water

With no guidance yet from FERC, Atlantic Wind is forced to wait.

Fortnightly Magazine - May 2011

be “re-entered” to accommodate a comprehensive backbone grid design, as proposed by Atlantic Wind.

According to Dismukes, most states to date are considering the use of direct, long-term purchased power contracts with required power deliveries to the state’s onshore power grid to securitize offshore wind generation projects. By contrast, the Atlantic Wind grid project itself would provide offshore grid system hubs that would collect wind farm output and handle interconnection service to the mainland grid, but with no apparent guarantees regarding how much wind output would be delivered ultimately to individual states.

Other states, Dismukes notes, like New Jersey and Maryland, seek to tie project financial support directly to the delivered energy and environmental attributes of the projects.

For example, as Dismukes notes, the New Jersey Offshore Wind Economic Development Act (OSWEDA) creates a system of offshore wind renewable energy certificates plus an “Offshore Alternative Compliance Payment.” The OACP, Dismukes claims, creates a “backstop” or “circuit breaker” on development costs that wouldn’t likely exist under the formula rate plan proposed by the AWC companies. Also, he notes, AWC’s requested financial incentive for rate recovery of construction work in progress (CWIP) wouldn’t jive with rules in the New Jersey legislation that allow financial support for offshore wind only upon commercial operation.

In short, Dismukes claims that “the terms and conditions for state offshore wind policy support have come from long and often contentious debates, as well as inputs from a wide range of stakeholder groups.” (See, Affidavit of David E. Dismukes, on behalf of New Jersey Division of Rate Counsel, FERC Docket No. EL11-13, filed Jan. 31, 2011.)

Nevertheless, The Atlantic Wind companies see these same facts and draw an entirely different conclusion.

Citing the same New Jersey legislation, as well as laws enacted or pending in Delaware, Maryland, and Virginia, AWC argues that development needs are best met through a comprehensive backbone system that would traverse the entire mid-Atlantic region, and which would be integrated with a region-wide grid plan.

According to AWC, developers such as Apex Offshore, Fishermen’s Energy, and Deepwater Wind “are interested in an offshore backbone transmission project, like the AWC Project, with which to interconnect their proposed wind farms.”

The “bottom line,” says AWC, is that “PJM must decide how best to plan for connecting this energy to the grid.”

Quoting from the Joint Strategic Plan of the U.S. Interior and Energy Departments, AWC claims that “the implications for adding large amounts of offshore wind generation to the power system need to be better understood to ensure reliable integration and to evaluate the need for additional grid infrastructure such as an offshore transmission backbone.” (See, Answer of AWC Companies, FERC Docket EL11-13, filed Feb. 15, 2011.)

Forcing the Issue

When asked about Atlantic Wind’s plans in mid-April, spokesman Bryan Lee confirmed that AWC doesn’t intend to apply to PJM to win approval of its project in PJM’s RTEP before the FERC releases its NOPR decision on transmission planning for so-called “policy-driven” grid projects—projects that fall through the cracks, like AWC, because they can’t point to needed reliability or