Implementing Wave Energy Process and Permitting Issues Presented by Therese Hampton February 20, 2008

2 Oregon Solutions Our mission is to develop solutions to community based problems that support sustainability objectives and are built through the collaborative efforts of business, government and non-profit organizations. Problem or Opportunity Defined by the Community Governor’s Designation An Oregon Solutions team An Integrated Solution A Declaration of Cooperation

3 Reedsport as an Oregon Solutions Project September 25, 2006—Reedsport as Oregon Solutions Project –“The Oregon Solutions team will facilitate a quicker, more effective application process with FERC.” Governor Ted Kulongoski June 2007: Declaration of Cooperation –22 signatories: Federal, state and local organizations Defined and documented Federal and State Regulatory Process Developed a list of issues to be addressed Key parties commitment to a settlement process

4 Summary of Stakeholder Issues Aquatics Issues Whale Entanglement Alteration of Marine Habitat Seal/Sea Lion Haul Out Electromagnetic Fields General Issues Decommissioning Anchor Removal Crabbing/Fishing Issues Lost Productivity Lost gear Navigation Safety Recreation/Public Safety Aesthetics (including lighting) Surfing, Whale watching System Survivability

5 FERC Licensing Process Developed for relicensing of hydro facilities. Estimated to be a 5-year process. Includes extensive upfront work to agree upon and conduct studies for potential effect. Potentially 2 years of study before license application.

6 Key Differences from Relicensing Utility applicant versus new technology applicant’s needs. History of hydro relicensing in the Northwest. New versus existing facilities. Existing use. Location specific application requirement.

7 Applicant is Different Traditional Utility REVENUE: Existing hydro resource is generating revenue throughout process. NO RUSH: No capital investment or other implementation costs incurred until new license is issued. BELOW MARKET: Hydro resource is likely well below market, even after relicensing. CAN ABSORB COSTS: –Guaranteed recovery of process costs, assuming they are reasonable. –Utility has broad resource and customer base to absorb process and investment costs.

8 Applicant is Different New Technology Company NO REVENUE: No existing facilities to generate revenue. Company revenue provided by investors. RUSH: Company revenue is dependent on a project specific Power Purchase Agreement that doesn’t generate revenue until the resource is operational. ABOVE MARKET: New resource, independent of process and implementation costs, is likely well above market. CAN’T ABSORB COSTS: –Company is actively investing capital in technology development. –No guaranteed recovery of process costs. Process costs will be absorbed into overall cost of resource, which is already above market. –At this point in development, there is no place to absorb costs.

9 Applicant is Different Impact  New technology company has a desire for a much faster pace for settlement and permitting.  New technology company is more cost conscious relative to studies and operational measures.

10 Recent History in Relicensing Many Northwest hydro relicensing projects have been long and adversarial. The relicensing process is characterized by: –Lack of trust of the applicant –High process costs –Extensive studies –For some, discussion of removal of the project Impact  Applicant is assumed to have utility characteristics.  The high process costs and extensive studies impacts the cost- conscious developer.  Discussion of project removal can impact investor confidence.

11 New versus Existing Facilities The current FERC process is premised on multi-year studies to inform participants prior to license conditions. A new facility/technology cannot be studied in this way: –With wave energy, there are no existing structures to evaluate. –Further, there is very limited empirical data. –Methods for study aren’t clear. Impact  Requires qualitative analysis with a forward-looking view of information needs.  Difficult for resource agencies to make long-term decision.  Requires a rigorous adaptive management program to address impacts once study results are known.

12 Existing Use Existing ocean use by crabbing and fishing industry. Existing ocean use by recreation. Impact  Either opposition to the project or concern about level of overall development.  Interest in minimizing potential effect to existing uses.

13 Application is Location Specific The FERC permit must be specific about location. Further, the FERC permitting process grants priority to first applicant. Given the impact to existing industry and recreation, stakeholders want to have input into site selection. Impact  Encourages filing of preliminary permit to secure location.  Limits ability to engage collaboratively.  Tillamook has submitted a permit with multiple sites

14 Recommendations Get to know the community — engage with the locals and know what is important to them. Be flexible in site location — if possible, let the community play a role in the decision about where the site will be located. Support regional environmental analysis —the factors and impacts are fluid. Recognize this and encourage a process to address the Coastline. Partnership – Given the uncertainty, expect and plan to be in an ongoing collaborative process for many years.