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

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

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

 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 4 Decommissioning Requirements

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

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

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

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

State Implementation: EFSECs  Example: Oregon l 35MW+ geothermal, solar or wind projects. l 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.” l Applicant must propose site restoration plan and expense estimate. l OREFSC reviews and imposes mandatory condition requiring bond or letter of credit prior to facility construction. 9

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 l SDPUC jurisdiction for100 MW wind farms l Less than 100MW, SDPUC encourages local zoning boards to impose requirements l SDPUC “model ordinance” requires plan and financial assurance after tenth operating year. 10

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

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

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

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