ࡱ> _a^%` 0bjbj"x"x ;P@@(iF  ,L$L$L$8$<$< 5h%%"*%*%*%&&&4444444${6h8n4-*&&-*-*4*%*%4...-*p*%*%4.-*4..`11*%$ :%ML$*px14t4051,Q9 +Q911NQ91$&'.'s(&&&44.d&&&5-*-*-*-* $D  H D HT6(TP6 STATE OF MAINE PUBLIC UTILITIES COMMISSION Docket No. 2010-176 MAINE PUBLIC UTILITIES COMMISSIONSeptember 8, 2010 MAINE RENEWABLE ENERGY CONSORTIUM, LLC Request for Certification of a Community-Based Renewable Energy Project ORDERCASHMAN, Chairman; VAFIADES, Commissioner I. SUMMARY In this Order, the Commission rejects the application for certification of the 8 MW combined heat and power facility to be developed by fb88 Renewable Energy Consortium, LLC as a Community-Based Renewable Energy Project pursuant to the provisions of Chapter 325, (4)(B) of the Commission rules. II. BACKGROUND A. Community-Based Renewable Energy Pilot Program During the 2009 session, the Legislature enacted An Act To Establish the Community-based Renewable Energy Pilot Program (Act), P.L. 2009, ch. 329. Part A of the Act establishes a community-based renewable energy pilot program, to be administered by the Commission, to encourage the sustainable development of community-based renewable energy. 35-A M.R.S.A. 3602. In summary, the Act provides incentives, on a pilot program basis, for the development of community-based renewable projects. The projects must generate electricity from an eligible renewable resource, which includes fuel cells; tidal power; solar, wind and geothermal installations; hydroelectric generators; generators fueled by landfill gas; and biomass generators whose fuel includes anaerobic digestion of agricultural products, byproducts or wastes. These projects must be locally owned electricity generating facilities, which means that 51% or more of the facility must be owned by qualifying local owners. The facilities must not exceed 10 MW. The implementing rules (Chapter 325, 4(B)) establish a certification process that allows an owner or developer of a generating project to seek Commission certification through the submission of a petition for certification as a community-based renewable energy project. The rules contain the information that must be submitted in a petition for certification, including documentation as to whether the owners are qualifying local owners, documentation of a resolution of support passed by the local municipal legislative body and documentation of control of the site on which the project is located. Additionally, the Commission may certify a project only upon a finding that the project is reasonably likely to be in-service within three years of certification. Once qualified as a community-based renewable energy project, the facility has the option to elect one of two incentive mechanisms: 1) a long-term contract for the output of the facility with a transmission and distribution (T&D) utility; or 2) a renewable energy credit (REC) multiplier (in which the value of the REC is 150% of the amount of the produced electricity). In its petition for certification, the project must indicate which incentive mechanism it is electing. Projects electing the REC multiplier are responsible for negotiating their own transactions for energy, capacity or RECs. Certified projects of less than 1 MW that elect a long-term contract can complete a standard form contract with the T&D utility at a price per kWh that has been established by the Commission. For certified projects with generating capacity of 1 MW and larger, the Commission shall periodically conduct a competitive solicitation to select projects that will be awarded a long-term contract with the T&D utility. B. Petition for Certification On June 1, 2010, fb88 Renewable Energy Consortium, LLC (MREC) filed a petition to certify an 8 MW combined heat and power facility located in South Portland, fb88 (the Project) as a Community-Based Renewable Energy Project. The Project is the cornerstone of a Bio-Energy Eco-Park that MREC is developing on an 18.5 acre tract located within the industrial zone of South Portland. The facility is designed to primarily use low grade, biomass residue in a syngas combustion process to generate electricity and provide low cost thermal energy. MREC intends to use as fuel a blended biomass feedstock consisting of cellulose/lignin residue from a nearby coffee bean processing facility, agglomerated urban derived woody biomass from landscaping sources and waste biomass from forestry operations. Electricity generated will be provided to adjacent facilities operated by Hannaford Brothers Distribution Center and Portland Shellfish, Inc. and thermal energy will be sold to Hannaford and Portland Shellfish to supplant the use of fossil fuels for heating purposes. MREC intends to sell any electricity generated in excess of the needs of the on-site users under a long-term contract with Central fb88 Power. In its petition, MREC states that it intends to operate the Project fueled with 100% biomass, an eligible renewable resource, but that it is also thermodynamically possible to use natural gas as a fuel source and a natural gas supply is available at the site. MREC has stated that natural gas would be used as a fuel only if it were to become the least cost alternative. Currently, the use of 100% blended biomass fuel stock combined with the value of the renewable energy credits results in the preferred economic operation and MREC has stated that natural gas pricing would have to remain below $4.00/MM Btu for natural gas usage to become comparable to the blended biomass feed stock pricing. In its petition, MREC has asserted that, in the event natural gas were to be blended with syngas derived from biomass, it would be possible through metering to determine the amount of electrical power produced by natural gas and the amount of biomass derived power. III. DECISION In order to be eligible for certification as a Community-Based Renewable Energy project, the facility must meet all the statutory requirements of the program. Based on the information provided by fb88 Renewable Energy Consortium, LLC, we conclude that, although the Project satisfies the size and ownership requirements of a community-based renewable energy project, the proposed fuel source, specifically the use of natural gas if it presents the least cost alternative to the developer, does not meet the criteria of a renewable energy resource. The Project is owned by fb88 Renewable Energy Consortium, LLC, a fb88 limited liability company, which in turn is 91% owned by three individuals who are residents of fb88, all qualifying local owners. The Project is designed to use a blended biomass fuel consisting of a combination of cellulose/lignin residue from coffee bean processing, woody biomass from landscaping sources and waste biomass from forestry operations, but also has the capability to use natural gas as a fuel source if it presents the least cost alternative. The nameplate capacity is less than 10 MW and it is scheduled to begin commercial operations within three years of certification, by mid-2012. On May 17, 2010, the City Council of the City of South Portland passed a resolution of support for the Project. We do not believe that the project, as proposed, meets the intent of the Community-Based Renewable Energy Pilot Program. The Legislature established the program and provided the incentives available to encourage the sustainable development of community-based renewable energy. Because of the current low levels of natural gas prices, however, and the information provided by MREC that indicates that, at current market prices, natural gas provides the least cost alternative to MREC, the MREC project is likely to find the use of natural gas economically preferable. Certification as a community-based renewable energy project, which includes the opportunity to take advantage of the incentives provided by the Legislature to encourage these projects, should be granted to facilities that clearly satisfy the goal of moving away from reliance on fossil fuels. Under current economic conditions, the MREC project as proposed, does not meet the intent of the pilot program in encouraging the development of renewable energy sources. Accordingly, we do not grant certification of the fb88 Renewable Energy Consortium Project as a Community-Based Renewable Energy Project pursuant to Chapter 325, 4(B) of the Commission rules. MREC is free to re-apply for certification in the event it is able to meet all the statutory requirements of the pilot program, including the requirement to generate electricity from an eligible renewable resource. Dated at Hallowell, fb88, this 8th day of September, 2010. BY ORDER OF THE COMMISSION _______________________________ Karen Geraghty Administrative Director COMMISSIONERS VOTING FOR: Cashman Vafiades NOTICE OF RIGHTS TO REVIEW OR APPEAL 5 M.R.S.A. 9061 requires the Public Utilities Commission to give each party to an adjudicatory proceeding written notice of the party's rights to review or appeal of its decision made at the conclusion of the adjudicatory proceeding. The methods of review or appeal of PUC decisions at the conclusion of an adjudicatory proceeding are as follows: 1. Reconsideration of the Commission's Order may be requested under Section 1004 of the Commission's Rules of Practice and Procedure (65-407 C.M.R.110) within 20 days of the date of the Order by filing a petition with the Commission stating the grounds upon which reconsideration is sought. 2. Appeal of a final decision of the Commission may be taken to the Law Court by filing, within 21 days of the date of the Order, a Notice of Appeal with the Administrative Director of the Commission, pursuant to 35-A M.R.S.A. 1320(1)-(4) and the fb88 Rules of Appellate Procedure. 3. Additional court review of constitutional issues or issues involving the justness or reasonableness of rates may be had by the filing of an appeal with the Law Court, pursuant to 35-A M.R.S.A. 1320(5). Note: The attachment of this Notice to a document does not indicate the Commission's view that the particular document may be subject to review or appeal. Similarly, the failure of the Commission to attach a copy of this Notice to a document does not indicate the Commission's view that the document is not subject to review or appeal.  The NYMEX natural gas futures price for September delivery closed at $3.87/MM Btu on August 25, 2010.     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