Decommissioning Rules & Funds for Renewable Energy Facilities

1. Decommissioning Rules & Funds for Renewable Energy Facilities RenewElec Workshop October 21, 2010 Jonathan Voegele Research Associate Institute for Energy and the Environment Vermont Law School

2. What is Decommissioning? • Controlled process to safely retire an electric generation facility. • Deactivation • Defueling • Dismantling • Site Remediation

3. Decommissioning Goals • Restoration to original environment • Footprint reduction: removal of all structures • Hazardous materials remediation • Avoiding environmental disturbances • Noise, dust, water quality, impact on local wildlife and vegetation.

4. Decommissioning Requirements • Dedicated funds • Site-specific bonds or letters of credit • Regulatory requirement but no contribution • Local zoning ordinances with or without dedicated funds requirements • No requirement

5. Decommissioning Implementation • State Lands • Statute • PUC Approval Processes or Orders • Energy Facility Siting Evaluation Commissions (EFSECs) • Local Ordinances • Federal Lands • Controlling Agency Regulations

6. State Implementation: Statute • Specific statutes requiring PUC to adopt rules governing site restoration • Addresses specific renewable energy projects, typically large wind facilities. • Example: Minnesota • MN statute requires PUC to promulgate regs specifying decommissioning and restoration requirements for LWECS, including a valuation method mandating contribution levels.

7. State Implementation: PUCs • Utility commissions use approval processes and agency orders to impose requirements. • Certificates of Public Good • Siting Approval • Example: Vermont • VT PSB conditions Certificate of Public Good – a generation facility requirement – on decommissioning fund establishment.

8. State Implementation: EFSECs • One-stop licensing committees that provide centralized evaluation and oversight of large energy facilities and infrastructure. • Jurisdiction triggered by project capacity rating • Broad public interest authority with varying degrees of standards. • Decommissioning imposed through siting certificate conditions.

9. State Implementation: EFSECs • Example: Oregon • 35MW+ geothermal, solar or wind projects. • Must find that a site “can be restored adequately to a useful, non-hazardous condition following permanent cessation of construction or operation of the facility.” • Applicant must propose site restoration plan and expense estimate. • OREFSC reviews and imposes mandatory condition requiring bond or letter of credit prior to facility construction.

10. State Implementation: Zoning • Absent statewide requirements, local zoning ordinances regulate of decommissioning requirements (majority). • Also used when projects do not meet nameplate capacity for PUC jurisdiction. • Example: South Dakota • SDPUC jurisdiction for100 MW wind farms • Less than 100MW, SDPUC encourages local zoning boards to impose requirements • SDPUC “model ordinance” requires plan and financial assurance after tenth operating year.

11. Federal Implementation • Dept. of Interior: BOERME (MMS successor). • Projects in the outer-continental shelf (OCS) • All non-hydrokinetic facilities. • Hydrokinetic facilities prior to FERC licensing. • Case-by-case basis at amount based on anticipated costs of decommissioning. • Requires financial assurance through bond or letter of credit.

12. Federal Implementation • Bureau of Land Management • Renewable projects sited on public lands. • Requires decommissioning plan development & approval prior to right-of-way authorization. • $10,000 bond for each turbine on public lands, subject to periodic review for funds adequacy.

13. Analysis • No correlation between state decommissioning rules and funds for renewable and non-renewable generation. • Some states govern irrespective of resource. • Others impose contingent on facility type.

14. Recommendations • Statewide decommissioning regulations • Explicit PUC/EFSEC findings requirement that a site can be restored. • Requirement for decommissioning plans • Requirement for financial assurance for the plan’s total cost. • Objectives • Alleviate environmental and aesthetic considerations which hinder large-scale renewable development. • Offset risks for states with ambitious renewable portfolio standards.