Wind Energy Meeting Notes Aggregate                 Updated 10/14/07

5/20/07 The purpose of the initial meeting was to begin to establish a committee that will develop recommendations for a community owned wind energy project in the Hilltowns.  Russ opened the meeting by outlining the purpose and by asking the group for opinions about the proposed wind energy project.  All members were in support of such an effort. 

• Leadership positions for the new committee are open and members are asked to consider how they might be filled.
• The Pokornys will host monthly meetings of this committee at the octagon barn through December.

5/20/07 Loren presented a handout listing the NYSERDA project deliverables and additional development efforts necessary to construct a wind project.  Many of the deliverables are requirements of the permitting process. 

6/10/07  Loren presented a handout of a trade journal article about wind energy initiatives around the country, in which our project was mentioned, and handouts of hypothetical cash flow models for discussion. 

7/08/07  Loren presented a handout with definitions of acronyms.

7/08/07  Guest speakers:

• Pete Lopez is a member of the NYS Assembly, working on initiative in Ulster, Columbia, Greene, Delaware, Otsego, Chenango Counties for rural agricultural communities; decentralized power, sustainability issues.  Supports a hydro project in Catskill watershed.  Organized a tour to NYS wind projects.  Offered support, connections.  LopezP@assembly.state.ny.us
• Greg Starheim teaches at Hartwick College and is CEO of Delaware County Rural Electric Cooperative.  It is a non profit distributive coop that serves area from Summit, Blenheim, Gilboa, to PA border .  It buys and distributes power.  It has two contracts – Niagara Falls and Fitzpatrick Nuclear plant.  Has 7 substations and wants to buy more lower performing assets.  Formed Delaware Wind Energy LLC, has a relationship with Delaware County DPW.  Is using CREBs financing for a small power project.  They are self regulated.  Goal is 100% renewables. They are in negotiations to buy power from wind projects.  Obligation is to provide lowest cost power to customers.  Greg.Starheim@dce..coop

08 05 07  Attendance was low so the notes from this meeting are commingled with notes from 09 16 07 below.

09 16 07 The movie, New York Wind Power was viewed by the group and recommended for use in community informational programs.  We should acquire more copies to make it available at Town Hall and in local libraries.

1.  Deliverables:

1. Wind Resource Assessment
2. Energy Yield Analysis
3. Bird and bat study
1. Dr. John McMichael is a possible resource on birds and bats.  He lives on Larry Hill Road.  
2. Joe Armstrong is an active caver (3 to 5 x per week) who will work with Kathy to provide information about the locations and depths from the surface of caves in the area.  He can also bring specific bat information to us.  His group does bat counts in the winter using photographs of hibernating bats.
3. Migratory birds can see wind turbines during the day.  Night migrating birds are of concern.  They usually fly 200-300 meters above the ground, which is above the turbines. 
4. Owls and other birds of prey are not much at risk – they have good eyesight and they tend to hunt below the turbines.
5. Kathy has the bird and bat study from Maple Ridge (200+ turbines) which showed higher than expected mortality.  The bird and bat study for our small project would not be required by the State but would help in the permitting process.
6. Kathy mentioned a theory to explain higher bat mortality at some times: Bats sometimes congregate for “socializing” rather than foraging and they do not use echolocation during those times.
7. Bats are not active all year; they hibernate in winter.
8. Ways to address bird and bat traffic can include curtailment (shutting down turbines when the bats congregate and during evening hours when they are active) using detection devices to watch for them, as well as mitigation (funds to help cave conservancies or support research).

Karst (soft limestone) geology

·       Site-specific engineering is needed for the foundation of each turbine.  Turbines and towers can weigh about 140 tons.  They can be located in marshlands with wide, “floating” foundations.  A geotechnical study can be done using core samples from several sites around proposed turbine locations. 

·       Maps of caves, property owners and topography will be overlaid to assess possible turbine sites.

·       Betty Ketcham and Nick Viscio may have maps and information on a hydrologic study involving local caves that was done for the Knox Town Board.  Emily Mobley is also an expert on local caves and bats.

·       We will need to understand air and water flows in caves and sink holes when heavy rainfalls occur.

·       A wind project is in development in Jordanville (near Herkimer) where karst geology is an issue.  

4. Description of ownership options and economic pro formas
5. Noise study
6. Photomontage (superimposed images of turbines on site landscape)

·       Loren presented a map with shaded areas to identify possible sites that would meet setback requirements of 600 feet from roads and 1000 feet from homes.  These are common setback requirements, although setbacks have not yet been defined for the Town of Knox.

·       Ordinance language from the Town of Clinton has been a model for other towns.  Clinton has language that allows landowners to sign agreements with a wind project development entity to allow some degree of variance within required setbacks.  Loren suggested we propose this to our Planning Board.

·       Sarah Gordon will work on view shed issues.  She has offered to make a turbine visibility map as part of her graduate studies.   The group proposed four possible areas for sites.  Loren will ask Sarah to make scatter points to show possible sites within those areas.

·       Advertising signage on turbine towers is often prohibited in ordinance language.   It is an issue to consider.

·       Kathy is working on language for the Town of Berne that is consistent with Town of Clinton law.

7. Description of permitting process to construct wind farm
1. There are three levels of governmental requirements for development of a wind project:  federal, state and local.
2. The local town has all the power to set permitting requirements.  NYS provides the SEQR process that addresses environmental concerns.  The town is the lead agency for the SEQR process. 
3. Loren’s group will prepare a full Type 1 EAF (Environmental Assessment Form) as well as bird and bat, noise and visual impact studies. 
4. An EIS (Environmental Impact Study) might also be needed.
5. Our group will need to make a decision (at our next meeting) on proposed sites for the turbines so these studies can progress.
6. 3 phase power comes as close as the intersection of Knox Cave Road and State Route 146.  It becomes 2 phase west of 146.
7. Noise and setback provisions:  some towns require 4 or 5 decibels above ambient noise and 1000 feet from any house, and 700 feet from roads.  Noise ordinances are difficult and uncommon as they could impact transportation.
8. NYSERDA has a brochure with guidelines for setback requirements to assist towns in writing ordinances.
9. The group will consider a map of overlays including topography, property boundaries and caves in making site proposals for two turbines.

2.  Additional development efforts necessary to construct project:

A.  Land/lease agreements –

1.     The land lease agreements could be arranged and secured by the committee.

2.     Right of way purchase agreements will be needed. 

3.     Protection is an important part of land lease agreement.

4.     Taxes for host landowners:  contract could be written to have project pay taxes. 

5.     Payments to landowners could be linked to project profit $, rather than as a fixed percentage.  This option can be attractive to neighbors without consensus. 

B.  Interconnection agreement secured –

Interconnection opportunities for additional locations may exist between Gilboa and New Scotland as towers are already in the scenic vista and rights of way exist.

C.  Obtain local permits and navigate through the State Environmental Quality Review (SEQR) process –

1.     It may be necessary to request an extension of the permit for the meteorological tower in order to gather more data to build a better financial projection. 

2.     Ordinance language varies, but generally requires placement setbacks of 1000’ from homes and 500’ from roads. 

D.  Construction financing - Tax credits and financing terms would vary with different options.  Funding is a function of political will.

1.     The county comptroller will consider the % of county’s indebtedness to determine the pool of available funds for borrowing.  Albany County’s percentage is low at 12% of limit.

2.     Will revenues come in fast enough to pay debt service?  Operation and maintenance (O&M) costs are about 1.5 cents per KWH.

3.      NYSERDA funding for large wind projects is no longer available (e.g.Madison, Fenner).

4.     How is the tax law applied to wind turbines (green energy).  Are they considered a taxable asset?

5.     REC renewable energy credit sales value contract for flat term for 10 years should go up.  (This applies to all financing models.)

6.     The town decides on taxes and rates. Negotiation is possible; often as payments in lieu of taxes (PILOTS).  The tax liability is usually not on the host landowner. Towns don’t tax themselves.  

7.     The turbines should generate a long term revenue stream to offset taxes.

8.     Another revenue stream is the NYS renewable energy credit of $18 to $20 per MWH.

9.     Electricity rates go up and down (fluctuate every hour) in the open market.  They averaged $77 per MWH in 2005.  They have been about $95 recently.  Day ahead market prices are better for small projects than real time market prices.  Project economics change quarterly; have been going up. Revenue has been increasing for town of Madison as well as the landowners there.  $8,500/MW initial offer from Chicago based market to Stamford/Roxbury project has gone up significantly.

10.   PSC mandates utilities have to buy net metered power at retail prices.  State bill proposed to cap small scale net metering customers at 25KWH production capacity.  Central Hudson has an initiative to increase (double) their number of net metering customers.  Larger scale commercial net metering is getting opposition from utilities.

11.   40% growth in NYC electricity usage demand is forecast for current business viability to be sustained.  Energy costs will go up.  Sematech and other technical development will generate more local demand for power.  Houston Texas fell behind when fast development pressure overwhelmed schools.

12.   Loren will provide some guidance for financing as part of the deliverables for the study that is currently underway.

13.   Bonds secured by revenue generated (versus general obligation bonds) are an option.  The revenue potential rather than or in addition to the assets serves as collateral to guarantee the loan.

14.   The town can issue a bond for any amount.  An underwriter would need to be found who could sell the bond.  Common fears are that property taxes would be adversely impacted.  Bonding capacity is a percentage (7%) of the combined value of all tax dollars.                                                

15.   First Albany underwrites revenue bonds and gets paid a percent of the money paid back.  They assess risk and determine yield, then they sell to public investors; usually wealthy people or institutional investors looking for low risk long term investments.  Construction of a parking garage is analogous:  parking fees provide revenue as electricity will with wind turbines.  Loren will research whether 15 to 25 year bonds at 5.75 to 6.25% to would be an attractive model for our prospectus.  Knox could be a model that could be used throughout the state. 

16.   Need to be able to market these bonds.  They would give people an opportunity to invest in wind energy.

17.   A new expansion wind project is underway in Madison County using a different for-profit developer.  They are able to negotiate a better deal using preliminary data that has already been gathered.   

18.   Liability issues:  Loren’s company managed Jiminy Peak project.  There was no owner liability until the turbines were running.

       13.  Hypothetical funding scenarios as basis for discussion, assuming 5MW project size:

              Renewable Energy Portfolio Standard (RPS) funds are available for wind projects.

a.  Hypothetical annual cash flow model for private owner

NYSERDA administers funds; facility owner and NYSERDA contract.

1.     Bypass SEC ($600,000 legal shares to go public)  Option to sell stocks to private investors: Advertising would be prohibited; it would have to be done via word of mouth.

2.     How to raise $11 million:  10,000 people at $1,100 or 1,000 people at $11,000 investing for long term before gains accrue when positive cash flow begins.  7,500 people in BKW area.  That amount would only pay for equipment/installation costs.

3.     Using an equity to debt ratio of 35-65, farmers in Minnesota raised $15 M to privately fund a wind project.  They have a website.

4.     Local funding sources may exist for 10 year loans. Interest costs have to be considered.

5.     Depreciation and production tax credits are an advantage for private owners.

6.     Owner can sell attributes after 10 years (see flip model below). 

b. Hypothetical annual cash flow model using CREB

1.     CREB interest financing benefits; only pay on principal. 

2.     0% $ for 16 years using clean renewable energy bonds is an attractive option. 

3.     Big tax breaks are available to private owners, but they pay income taxes on profits, CREB model does not.  CREBs are only available for non profits. 

c.  Flip switch model 

1.     LLC (our group) could partner with a private entity so that they assume weighted equity/ownership of e.g. 90% and claim assets as revenue.  After 10 years ownership would flip to us/LLC.  This has worked in the Midwest, and financiers exist for this model.

2.     Our estimates are conservative and energy costs are sure to rise, these models still come out positive.

3.     Economies of scale:  60 MW is low limit for some funding opportunities.  Get input from big companies in industry.

4.     Grouping people to sell shares – tax laws (we need clarification).

a.      “Passive activity” ownership:  Tax credits apply to passive income (e.g., rent) versus active income (e.g., job).  Individual investor participating in O&M = active – needs clarification.  Loren will check on definition of active vs. passive.  Would be able to offset tax liability with PTC if active.

·       Effort is underway to change the tax laws so credits could also apply to active income in this context.  We would need an SEC filing exemption unless tax law is changed to allow credits for active income.

·       Sandy knows a CPA, attorney in East Greenbush and will ask him for information about this issue and to help us sort out the financing options.

E.  Additional wind data (possibly) –

1.     Additional efforts may include another outside study to gather additional wind data. 

2.     The study underway can be used to correlate with data from other sites in the area.

F.  Civil and Electrical project design –

1.     The 3 phase power lines on State Route 146 may handle approximately 5 MW (this needs to be confirmed) of power so it might be feasible to have two 2.5 MW turbines.  They are the newer, larger models that are available. 

2.     Another option would be to have three 1.5 MW turbines, which are the time-tested models.  Loren estimated that it would cost about $1.5 million more for this option.   (It is cheaper to put up fewer larger windmills.)  We will have to research the most recent technology that has been developed in this area. 

3.     State Route 443 also has 3 phase power lines that could accept power.

4.     After the initial turbines are installed, additional turbines could be added to a different 5 MW power line.

5.     A larger project (e.g. 20 MW) would require construction of 8 miles of transmission lines to the substation in Altamont.  We guess that might cost about $2 million.  How much power input could Altamont handle?  Loren will come up with some scenarios, depends on investments in lines.

6.     Rights of way that exist for high tension lines could provide opportunities for some possible sites. 

7.     Not much difference between 360’ and 420’ tower construction costs.  More concrete would be needed for the foundation.

8.     Recommend underground placement to protect new transmission lines.

9.     Access roads have to be kept open in winter. 

10.   Straight ladders are inside towers for O&M.

11.   possibility of community organization taking on examination of O&M costs – preventive maintenance

12.   Needs to be solid, qualified contractors, likely same company as vendor/installer, need available labor, credentials, experience.  Companies specialize in that field.

3.  General Concerns

1. Sharon asked if Schoharie County residents could be involved and benefit from this project.  Sandy said he has had discussions with Bill Cherry (Schoharie Co. Treasurer) and Mike Connors (Albany Co. Comptroller) about shared municipal services as a way to involve other areas and to develop a regional approach.  Mike Connors supports biodiesel/ethanol development.
2. Sandy has talked with Tim Gordon (Albany County assembly member) about the role of an Albany County Renewable Energy Corporation to facilitate implementation of wind and other renewable energy projects. A county power authority could take on public debt and serve as an entity to apply for funding, and serve in an ongoing relationship with a local project.  It would provide greater bonding capacity.  The Host community and the power authority would share benefits.  Schoharie and Montgomery Counties (Amsterdam brownfields) might have good sites for additional projects; development zones are set up already and there would be opportunities to bundle options.  Westchester and Putnam County Downstate Power Authority is an example.  They buy assets of small power producers. 
3. Another option might be to set up an independent power authority.  Bonding backed by state would require legislation.
4. Rural Electric Cooperative of Delaware County is a model that could be used.  A copy of their assembly resolution was used to develop language for the assembly for next term to develop a regional REC for Albany County and beyond (into Rensselaer, Greene, Columbia Counties) to support our project and other energy production models (biomass, hydro,…) and new technologies.  It would not be practical to buy infrastructure.  Better to buy power from NY ISO as an energy coop using bilateral contracts, as members from energy supply angle – not physically connected.
5. A couple for profit wind power developers are working in Schoharie County.  Stamford and Roxbury anticipate a wind project to be implemented in 2009.  Meredith is planning for a project.   Another project is under consideration in Walton (Maurice Hinchey’s area).  A couple for profit wind power developers are working in Schoharie County.  Stamford and Roxbury anticipate a wind project to be implemented in 2009.  Meredith is planning for a project.   Another project is under consideration in Walton (Maurice Hinchey’s area).
6. NYSERDA’s new director has full support of Governor.
7. Carol asked about funding/financing the project; how to do it, how much would be needed. 
8. Other related financial questions are who could/would benefit, and by how much.    
9. How would the exact site/hosting landowners be selected?
10. Carol surveyed neighbors at a garage sale and found most are in favor of large turbines in the Hilltowns.
11. Houston and Albany are the two ports at can accommodate components for wind turbines.  
12. April 12 through 15, 2008 a nationwide Community Wind conference will be held in Albany. 
13. It is being held here because of our project.  Our group will be interested in presenting at the conference.  It will be conducted like a trade show, with a map of booths and an agenda of presentations.
14. Fenner has 20 wind turbines on about 900 acres.

4.  Process

1. We can research how other wind projects are set up but our effort is mostly unprecedented in terms of the community based ownership.

Buy in from the community will be an important goal.  Greg Starheim emphasized value of visibility, to facilitate community buy-in and to minimize FoILs by opponents.  Be clear about “community wind.”  Importance of informing town boards, and of development of expertise on town boards.  Delaware County Rural Electric Cooperative made their process visible and transparent – worked with SUNY Delhi to educate public early in the process and during development of ordinances.  Suggested we emphasize deliverables to the community; the financial benefits as well as the visual impacts.  Our project will deliver a package that can be published with $ amounts. Could compare project revenue to an item in the current town budget.  Define local tax reduction percentage or find something the town wants.  Spread benefit equally. Need options for public to weigh; e.g. debt relief, recreation opportunities, reduce taxes.  Better not to spend $ on a park or trails; Sharon’s experience with Barton Hill gas pipeline pump station revenue being spent on recreation did not benefit all. 

We should get 10 copies of the New York Wind Energy movie and show it for the Kiwanis and other groups. 

• Ask for a place on the meeting agenda to show the movie to the Town Board.
• Make the movie available at the libraries and town halls, etc.
• Ask former supervisor of the Town of Fenner to come speak to our Town Board. 
• Conference in April – presenters should go to Jiminy Peak to see the installation. 

Opposition:

Second homeowners have organized in Cherry Valley area.  We will face opposition when our proposal becomes public.  We need to listen to the opposition.

Points to make:

• By not supporting wind, solar and other clean energy, one by default supports fossil fuel, nuclear and other polluting technologies.  Consider the future for our children; acid rain, mercury emissions, asthma, cancers...
• This project will save open space.  Housing developments raise school taxes.  One house with 3 children costs taxpayers $40,000 a year for school taxes.  Wind turbines produce revenue and do not raise taxes.
• Property values have stayed level or increased due to ecotourism opportunities in view shed areas of other wind projects. 

Objectors should be offered an opportunity to tour the installation at Jiminy Peak.

2. Project in Athens – benefits are beginning to quiet opposition; no opposition in Madison/Fenner area now.
3. A purchase agreement with manufacturer/vendor would have to be crafted. 
4. Business plan would be needed with maintenance requirements.  
5. Some process advantages in keeping the initial project simple, regarding transmission line and number of towers.  It could facilitate faster implementation to take advantage of current pricing.  Proof of concept could be established and further development could follow. 
6. Kathy will post meeting notes on project website, Website Helderbergwind.org and/or Hilltownswind.org
7. 6 months into meetings of this group we could prepare an informational release  for the Enterprise.

5.  Agreement

So far, the group has agreement on:

1. Goal of 5MW project for start up.  The group would like to add language to the prospectus to accommodate maximum development in the future if the proposed two turbine project is successful. 

·       We should write a letter to the utility company to ask for a study of this.  Loren thinks the study could cost about $5,000.

·       Addition of a line to the Altamont sub station would increase capacity for our project.  Size of cabling would determine maximum capacity. Loren estimates that lines to support 8 MW would cost about $200,000 per mile times 6 miles = $1,200,000, which would allow for one more than the proposed two turbines (5 MW).  The current maximum capacity is 5 MW without additional lines.  He thinks the cost would double or triple to install lines to support 20 MW capacity. 20, 40, 100 MW are possibilities for commensurate investments.

2. Sizing for day ahead market to start,
3. CREB for 0% $ for 16 years renewable energy bonds.
4. Need to develop a plan B
5. We need a securities lawyer to advise, investigate options.

6.  Assignments

A.     Dan Driscoll referred us to the Town of Knox Comprehensive Plan to check for inconsistencies. He is concerned about aesthetics.   We need to get a copy of it.

B.     Need to contact Emily Mobley regarding bat population and also geology and map of caves for siting towers.

C.     Need input on photo montage, where to put turbines.  Draft on permitting environmental issues will address aesthetics.

Attending 5/20/07:

Maver Becker, Karin & Stanley Busch, Sandy Gordon, Sue Hawkes-Teeter, Kathy Moore, Francis Miller, Janis Pearson, Gerritt Platel, Amy Pokorny, Russ Pokorny, Loren Pruskowski, Douglas F. Roether, Sharon Spies, Paul Willing, Ashley Willsey, Carol Willsey, Warren Willsey.

Attending 6/10/07:

Karin Busch, Stan Busch, John Elberfield, Sandy Gordon, Kathy Moore, Gerritt Platel, Amy Pokorny, Russ Pokorny, Loren Pruskowski, Doug Roether, Dave Smalley, Sharon Spies, Paul Willing, Carol Willsey, Warren Willsey, George Waldenmaier

Attending 7/ 8/07:

Dan Driscoll, Sandy Gordon, Pete Lopez, Kathy Moore, Gerritt Platel, Rebecca Platel,  Amy Pokorny, Russ Pokorny, Loren Pruskowski, Sharon Spies, Greg Starheim, Paul Willing, Carol King Willsey, Warren Willsey

Attending 8/5/07:

Amy Pokorny, Russ Pokorny, Loren Pruskowski, Sharon Spies, Paul Willing

Attending 9/16/07:

Joe Armstrong, Karin Busch, Stan Busch, Gerry Chartier, Kathy Moore, Amy Pokorny, Russ Pokorny, Loren Pruskowski, Doug Roether, Matt Rowland, Dylan Thornwell, Paul Willing, Warren Willsey 

Attending 10/14/07: 

Karin Busch, Stan Busch, Sue Hawkes-Teeter, Kathy Moore, Amy Pokorny, Russ Pokorny, Matt Rowland, Paul Willing, Kevin ?

Glossary of acronyms:

BKW:  Berne-Knox-Westerlo

C-BED:  community-based energy development

CREB:  Clean Renewable Energy Bond – 0% bonds used by municipal utilities and rural electric cooperatives

MW:  megawatt; one million watts of electricity

MWH:  megawatt hour; one million watts of electricity (consumed or produced) for an hour

NYSERDA:  New York State Energy Research and Development Authority

O&M:  operation and maintenance

PILOTS:  payments in lieu of taxes

PTC:  federal Production Tax Credit

REC:  Renewable Energy Credit provides a revenue stream for private and CREB models, per attributes associated with wind farm

Renewable Energy Portfolio standard

SEQR:  State Environmental Quality Review

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