South Dakota Wind Energy SDREA Legal Seminar July 11, 2018 PUBLIC UTILITIES COMMISSION

Siting The PUC issues permits to construct transmission lines, hydrocarbon pipelines, energy conversion facilities, and wind energy facilities 100 MWs or greater PUBLIC UTILITIES COMMISSION

Role of the PUC The PUC has three options with a siting permit: Grant Deny Grant with conditions Time Requirements 12 months for energy conversion facilities, transmission lines, and pipelines 6 months for wind farms (SDCL 49-41B and ARSD 20:10:22) PUC does not have the authority to move or reroute a pipeline route. PUBLIC UTILITIES COMMISSION

What does the PUC consider? 1) Facility will comply with all applicable laws and rules; 2) Facility will not pose a threat of serious injury to the environment nor to the social and economic condition of inhabitants or expected inhabitants in the siting area; 3) Facility will not substantially impair the health, safety or welfare of the inhabitants; and 4) Facility will not unduly interfere with the orderly development of the region with due consideration having been given to the views of governing bodies of affected local units of government. Applicant’s Burden of Proof (SDCL 49-41B-22) PUBLIC UTILITIES COMMISSION

Wind Siting 6-month Timeline PUBLIC UTILITIES COMMISSION

Current Wind Applications (920 MWs) Prevailing Wind Park 220 MW Bon Homme, Hutchinson, and Charles Mix Counties Developer: sPower Crocker Wind Farm 400 MWs Clark County Developer: Geronimo Permit Issued with Conditions Dakota Range I and Dakota Range II Two, 150 MW Projects Grant and Codington Counties Developer: Apex Clean Energy Permit to be Issued with Conditions PUBLIC UTILITIES COMMISSION

Potential Wind Applications (1,550 MWs) Crowned Ridge Wind I and Crowned Ridge Wind II Two, 300 MW Projects Grant, Deuel, and Codington Counties Developer: NextEra Energy Deuel Harvest Wind Farm Two Projects, one 300 MWs and one 200 MWs Deuel County Developer: Invenergy Triple H Wind Farm 250 MWs Hughes and Hyde Counties Developer: Infinity Renewables Sweetland Wind Farm 200 MWs Hand County Developer: Scout Clean Energy PUBLIC UTILITIES COMMISSION

South Dakota Wind Development (MW) This graph shows the cumulative wind development in SD. PUBLIC UTILITIES COMMISSION

Wind Energy Support Utility/Commercial Demand and State Renewable Portfolio Standards Benefits to State and Local Communities (Taxes) Lease payments to landowners can be substantial Typical leaseholders earn $3,000 - $20,000 per tower per year Temporary construction jobs Small number of permanent operation and maintenance jobs Possibility of permanent manufacturing jobs No emissions No fuel costs Reduced dependence on fossil fuels PUBLIC UTILITIES COMMISSION

SD Wind Taxes Nameplate Tax: $3/kW Production Tax: $0.00045/kWh 100% to local community 50% to schools 35% to counties 15% to townships Production Tax: $0.00045/kWh 80% to state 20% to local community Same allocation as nameplate tax School district’s wind tax revenue Years 1-5: 100% of tax revenue outside state-aid formula and not counted as local effort Year 6: 80% outside formula and not counted Year 7: 60% outside formula and not counted Year 8: 40% outside formula and not counted Year 9: 20% outside formula and not counted Years 10 and beyond: all tax revenue inside formula and counted as local effort This is for new projects. Some older projects may be taxed at $0.00065/kWh for production if they were operational before the tax law changed. PUBLIC UTILITIES COMMISSION

Wind Energy Opposition Noise Typically limited to a certain noise threshold (e.g. 45 dba at residences) Safety/Potential Adverse Health Impacts Wind Turbine Syndrome due to Infrasound Ice throw Shadow Flicker Typically limited to a certain amount of hours per year at residences Property Value Impact Aesthetics Blinking red aviation lights at night – can be mitigated with Aircraft Detection Lighting System (ADLS) Wind turbines on the landscape Impact on wildlife (e.g. birds and bats) and habitat (e.g. grasslands) Tax Subsidies These are some common concerns we hear about. A lot of the concerns can be mitigated through proper siting of wind turbines The impact to property values is a concern from nearby landowners since they believe people would not want to move into an area surrounded by wind turbines Aesthetics are a concern – new radar technology was recently approved by FAA to only turn blinking aviation lights on when low flying aircraft are nearby – Is mitigation possible for wind turbines on the landscape? It is in the eye of the beholder. Some like to see turbines, some hate to see them. A lot of research is done on impact to wildlife – some wind farm permits have a requirement to shutdown the turbines if Whooping cranes are spotted in the area. Wind industry is continually developing ways to mitigate wildlife impacts. One not listed is that developers want to “site the box” meaning that nearby neighbors PUBLIC UTILITIES COMMISSION

PTC Value (100 MWs @ 43.1% CF) $86,837,880 PUBLIC UTILITIES COMMISSION 100 MWs x 8,760 hrs/year x 43.1% CF = 377,556 MWhs/year $23/MWh x 377,556 MWhs/year = $8,683,788/year 10 Years x $8,683,788 = $86,837,880 Calculated for project that receives full PTC in 2016 PUBLIC UTILITIES COMMISSION

Future Wind? MISO SPP PUBLIC UTILITIES COMMISSION Interconnection queues show interest by developers in accessing the grid. MISO region had about 37 GWs of wind in the queue at end of 2016. Currently ~30.5 GWs in queue The last I checked, the Big Stone South substation had ~4500 MWs in the queue for that one substation by Milbank. A lot of competing projects in the queue so some will fall out.. Historically, about 10% of the queue gets built Source: https://www.spp.org/documents/56816/bod-mc%20material%2020180424_pgd.pdf (pg. 40 of 638) Source: https://cdn.misoenergy.org/20180608%20IPTF%20Item%2002%20GI%20Process%20Improvements219341.pdf PUBLIC UTILITIES COMMISSION

PUBLIC UTILITIES COMMISSION Shows where projects are looking at interconnecting to the Grid Source: https://www.misoenergy.org/Library/Repository/Meeting%20Material/Stakeholder/IPTF/2017/20171017/20171017%20IPTF%20Item%2002c%20MISO%20Queue%20Outlook.pdf PUBLIC UTILITIES COMMISSION

PUBLIC UTILITIES COMMISSION Move to back -Belle Fourche Wind Farm is also under construction. PUBLIC UTILITIES COMMISSION

Thank you Darren Kearney Utility Analyst (SD PUC) 605-773-3201 Darren.Kearney@state.sd.us PUBLIC UTILITIES COMMISSION