Wind project hearings begin 

Next week, experts will convene in a State Corporation Commission courtroom to offer their opinions on the merits of what could be Virginia’s first industrial wind utility.

After years of moving through the local and state processes, the hearings will be one of the last hurdles for Highland New Wind Development’s efforts to get final approval for its project.

HNWD already obtained a conditional use permit from Highland County to construct the facility atop Allegheny Mountain, in the county’s westernmost region. That permit was granted last year, with conditions.

The developer applied for a state certificate nearly a year ago, and that process culminates in a report by the SCC’s hearing examiner following next week’s hearings. The examiner’s report will serve as the basis for a decision from the three state commissioners who will make the final decision. There is no deadline by which the SCC must issue its decision, and if it approves the permit, conditions may also apply.

Monday will be the last opportunity for citizens with no formal status in the case to provide information or comments to the SCC. Citizens will be allowed to speak at the beginning of the process before expert witnesses are called to testify on behalf of the company or the formal respondents. These experts have filed their testimony in advance, and will largely be called to the hearings to be cross-examined about their statements and opinions. Most of the testimony offered is centered around the potential impacts to threatened or endangered bats and birds. Experts for HNWD say little if any impact to these species is likely to result from the 400-foot turbines proposed for the ridge. Those opposed to HNWD’s project have witnesses that will say that’s not true, and point to a lack of sound research to judge that position.

State and federal agencies that have already reviewed HNWD’s application and the research conducted by the company’s consultants largely believe there is a strong chance birds and bats could be severely impacted, and have said far more study before and after construction is warranted.

Reducing emissions
A consultant for respondents, Charles Simmons, has offered his opinion that HNWD’s 39-megawatt project would not put a dent in Virginia’s dependence on other energy sources. “There will be no increase in energy available to the Virginia consumer or no reduction in emissions in Virginia if this project were to be built since the energy will be sold to parties outside the commonwealth,” he says. “While there will be a reduction in emissions on a regional or national basis, any reasonable estimate of the amount and location of any such reduction would require a much more rigorous study than that presented in this case. Wind generation is at a very low level during the summer peak load period and will have minimal effect on capacity requirements. There are unavoidable environmental impacts in regard to wildlife as well as visual impacts that would result from this project.”

Furthermore, he says, “Energy produced in Virginia but sold outside Virginia has no effect on the energy required to meet Virginia customer requirements.”

HNWD consultant Colin High of Resource Systems Group Inc. in Vermont, however, disagrees. After reviewing studies about the potential HNWD’s project has to offset polluting emissions from other power sources, he said there are “significant” avoided air emissions that it could be credited with, including nitrous oxide, sulphur dioxide, and carbon dioxide.

“In addition there will be significant avoided emissions of fine particulate matter, mercury, volatile organic compounds, carbon monoxide, and other toxic air pollutants,” he said. “The avoidance of emissions of these pollutants provides public health benefits and avoiding CO2 emissions contributes to the mitigation of global warming. The exact magnitude and creditability of these avoided emissions will change over time and with changes in air regulatory programs.”

Impacts to wildlife
Michael Gannon, a biology professor and instructor with the Smithsonian Institution, is a witness for the respondents. He says not only should more studies be conducted on the potential impacts to wildlife, but “it is also very important to make sure that the studies and their results are not solely in the hands of HNWD and their consultants. The studies should be overseen by a committee comprised of HNWD’s consultants, representatives from the various state and federal wildlife agencies, independent experts and representatives of the neighboring landowners.”

Gannon says taking those extra steps, however, meets resistance. “The problem here is that the wind developers want quick answers that won’t be costly, which at least appear to address these questions. They neither want to wait three years to allow for well designed studies to be done correctly, nor do they want to pay for the expense of such a study that might involve multiple years of mist netting, thermal imaging, radar, and ultrasonic detection. Adequate evaluation of these sites during short periods desired by the developers just isn’t possible, at present, given the nature of the organisms we are studying, the techniques we have available, and the questions that we need to answer. This is precisely why (the U.S. Fish and Wildlife Service) as well as most bat researchers are calling for multi-year pre-construction surveys, using a variety of research techniques in order to assess the impact wind energy will have.”

Gannon has testified primarily on the potentially adverse effects the wind utility could have on bat species. “The United States Department of the Interior, U.S. Geological Survey states that bats are ecologically and economically important mammals. It further states that bats have life history traits that make their populations vulnerable to factors that result in population declines. The General Accountability Office of the United States Government, at the request of Congress, investigated the impact that wind power has on bats. It is their finding that, in the absence of site specific data, wind farms kill bats and wind farms in the Allegheny and Appalachia region of the U.S. kill large number of bats each year “¦ Ecologically and economically bats are extremely important world wide,” he continues. “In the United States they are the major predator of nocturnal insects. As such, bats in Pennsylvania, West Virginia, and Virginia are termed keystone species in ecological terms. If you are familiar with the keystone of a bridge, it is this stone that bears most of the weight in the archway. If other stones are removed, the stability of the arch remains, but if you remove the keystone, the arch collapses. The same is true of ecological keystone species. Bats, by virtue of the fact that they are the primary biological control agent of nocturnal insects, are keystone species. A single bat eats somewhere between 300 and 3,000 insects per night. The control that they exhibit over insect pests is valued in the billions of dollars annually in the United States alone, should we have to take over the insect control of these animals.”
Experts for HNWD, however, claim Gannon’s assessments aren’t accurate, and point to their own on-site research of nocturnal flyovers. HNWD has conducted several surveys on Allegheny Mountain, and its consultants agree there will be little if any significant bat mortality.

Rick Reynolds, a wildlife diversity biologist with the state Department of Game and Inland Fisheries, agrees. He expressed concern about the impact of several wind plants that could be built in the region. “The cumulative impact is a major concern,” he said. “”¦ I believe that this project, if approved, is likely to have a significantly adverse effect on eagles and bats, and possibly other wildlife, and that the impact on bats will be particularly severe.”

Zoologist Merlin Tuttle of Bat Conservation International has also testified about his concerns. “The issue of a wind facility on this site basically becomes one of a cost-benefit ratio. The cost is the almost certain mortality of a number of birds and bats. This number cannot be determined in advance because it is an after-the-fact event. If the project is permitted, I strongly recommend that a post-construction mortality study be done in a sound scientific manner.”

HNWD consultant Dr. Scott Reynolds has testified the project will not have those impacts on wildlife. “(That) the (HNWD) project is unlikely to have an adverse effect on the population of endangered species, or limit their conservation and recovery, is a conclusion drawn from the available empirical evidence. To my knowledge, to date, there has never been a single documented endangered bat that has been killed at a wind farm,” he said.

“Although the Mountaineer facility has had bat fatalities, no endangered species of bats have been documented despite the proximity of known hibernacula of endangered bats and considerable searcher effort. While past observations cannot definitively predict what will occur in the future, the fact is that most of the bat mortality seen at wind projects across the county occurs in the migratory tree bats and the more common house-roosting bats. For reasons that are not currently clear, those bats that are threatened or endangered appear to be at much lower risk of turbine collision. These facts were used to reach the conclusion that endangered bat species are not likely to be adversely affected.”

Reynolds disagrees with Tuttle’s opinion about avoiding bat populations. “If Dr. Tuttle’s recommendations are taken literally, I do not think that there would be a suitable place in the entire United States to construct a wind farm,” he said.

Reynolds says respondents’ experts have little to no data to back up their conclusions, and long-term studies are too cumbersome for HNWD to perform. “I believe that requiring such a comprehensive and exhaustive assessment of the cumulative effect of all wind turbines that have been or are to be constructed places an impractical burden upon a single applicant. The expense, logistical problems and time required to properly conduct such a cumulative impact analysis would most likely result in a financial and time burden so great that no wind farm would likely ever be constructed. I believe that the more appropriate entity to conduct such an impact analysis would be agencies like the Virginia Department of Game and Inland Fisheries or the regional U.S. Fish and Wildlife Services. My testimony about the likely impact on bats is based upon my review of this specific site based upon its own merit, and based upon the best scientific information available to date,” he said. As for Gannon’s criticism of HNWD’s studies, Reynolds says, “Dr. Gannon states that the validity of the studies that have been performed would not pass peer review. He further states that they fall “˜well short of accepted scientific standards in their methodology and reporting.’ However, the methodology conducted at the Highland New Wind project site has not only been peer reviewed, it has been endorsed by the Bats and Wind Energy Cooperative and has become a standard pre-construction protocol in several states. Furthermore, data generated from such studies have also been accepted for publication in the Journal of Wildlife Management, one of the top wildlife conservation journals in the country,” he says.

Dr. Paul Kerlinger, a consultant for HNWD, also disagrees with the respondents’ experts about avian species. “With respect to golden eagle nesting in Highland County, I have not observed this species directly, and a literature search revealed that there has never been a record of nesting for this species within Virginia,” he said. “In fact, there have been nearly no natural nestings (fewer than five records, some of which were not substantiated) of this species in the eastern United States in the past 50-100 years. There is no reason to believe that such a conspicuous species nests in Highland County.”

Furthermore, he said, “With respect to the symbol of our nation, the bald eagle, not a single bald eagle has been reported as being killed by a wind turbine. This is despite the fact there are a thousand or so wind turbines in Illinois, Iowa, Minnesota, and Wisconsin and more than 6,000 bald eagles in those states at some time during the year. Despite these numbers, not a single bald eagle has been found dead as a result of a collision with a wind turbine.”

To those who say the project would hamper eco-tourism like birdwatchers, Kerlinger says it won’t happen. “People go on birding tours to see birds. As long as there are birds present, in my experience, the backdrop is not so important. For example, the Forsyth National Wildlife Refuge in New Jersey has five modern wind turbines visible from a large portion of the reserve. Despite this fact, perhaps 100,000 birders and other ecotourists visit the site each year,” he said.

“I would also note that there is a high voltage transmission line which runs through Tamarack and Red Oak portions of the Highland site, not to mention that both Red Oak and Tamarack are cleared pasture land. These apparently have not discouraged Dr. Rowlett (one of the respondents’ witnesses) from bringing his birding tours to the area.”

State agencies weigh in
One of the issues SCC considers when reviewing utility permit applications is how new facilities could impact others.

Gregory Abbott, a utilities analyst with SCC’s division of environmental enhancement, said HNWD’s project would not have an adverse impact on Virginia’s electric system.

“Allegheny conducted a PJM Generator Interconnection Feasibility Study and concluded that HNWD’s proposed interconnection will not adversely impact the reliability of the transmission system,” he said. “Any additional costs resulting from the interconnection will be borne by HNWD, not Allegheny. Additionally, HNWD will be responsible for the up-front and ongoing costs associated with the interconnection. Based on the foregoing, it appears that the addition of the HNWD facility will not negatively impact reliability in the region.”

However, he noted, “The proposed project is the first wind powered generation project to be considered by the Commission. As might be expected, this unique facility is different from other merchant plants in a myriad of ways.”

HNWD has not developed any other wind facilities, but Abbott said, “the company reports in its application that it has assembled a team of experts to develop this project “¦ The biographies provided for these individuals show that HNWD’s experts have extensive experience in developing similar projects throughout the U.S. The staff believes that the company, through its retention of these personnel, is capable of developing the facility.”

As for the technical and economic viability of the project, Abbott says, “The company has control of the site and has obtained a conditional use permit from Highland County. The staff believes that the company has a well-developed preliminary plan for the project. As all of the output will be sold into wholesale power markets, the economic viability of the plant turns on future wholesale prices as well as the deliverability of the plant’s output to those markets. Unlike other merchant plants considered by the commission, the proposed project also will be able to sell renewable energy credits to the extent that it is able to generate and that there is a market demand for these credits. The company’s business plan seeks to take advantage of a federal production tax credit available to wind facilities such as the proposed project. As for deliverability to distant markets, it is not known whether the transmission system will be able to accommodate requests for the project.”

Abbott also points out the project has plenty of opposition.

“As might be expected in a watershed case involving the first application for a wind facility in Virginia, the response from the public has been significant. A total of 303 comments from the general public were received with 208 opposed to the project, 92 in favor of it, and 3 undecided. If multiple comments received from the same address are counted as one response, the numbers change to 181 opposed, 90 in favor, and three undecided. “¦ Those that are opposed are generally concerned about viewshed, property values, and potential negative impacts on the environment (primarily impacts to birds and bats),” he says. “Those that favor the project express their support for renewable energy and tout the positive environmental benefits associated with displaced fossil fuel generation and the potential for a reduction to global warming “¦ Aside from environmental issues, the staff believes that the HNWD project generally meets the criteria delineated in “¦ the Code of Virginia. Consequently, the staff recommends approval of HNWD’s request for a (permit). However, staff’s recommendation is conditioned upon the commission’s final disposition of the environmental issues raised in this case.”

Lawrence Oliver, an assistant director in SCC’s division of economics and finance, reviewed HWND’s statements regarding financial benefits in the regions. He says the project appears to be on the right track financially.

“Based on the analysis of the proposed facility’s estimated cash flows, it appears that the project is financially viable. The analysis shows a positive internal rate of return based on Highland’s projections of revenues and expenses. As such I do not believe Highland will have a problem finding debt and/or equity investors “¦ I believe the project is financially viable and as a result, (HNWD) should be able to raise the necessary capital to successfully finance the project. Therefore, I recommend that the application be approved so that Highland can construct the proposed facility.”

However, he made a recommendation that the SCC put a deadline on when the project is built under a permit.

“In order to ensure that the commission does not grant Highland authority to construct the proposed facility only to have Highland encounter some difficulties that may result in the project not being built, I would recommend that the commission put a sunset provision in the certificate,” he said. “For example, if construction is not begun on the proposed facility within two years of the commission’s order granting the certificate, the certificate should expire and the partnership must obtain further authority from the commission to build the proposed facility.”

HNWD’s application was also reviewed in terms of its potential to infuse economic benefits in the region by Mark Carsley, principal research analyst in SCC’s division of economics and finance.

“The company stated in its application that the primary positive impact of the proposed facility will be the additional property tax revenue collected by Highland County. At the time of filing, HNWD estimated that this additional annual tax revenue will be between $175,000 and $225,000 per year. In its application, HNWD stated further that during the construction “¦ Highland County would receive a significant economic boost from the expenditures of approximately 75 to 100 temporary construction workers at local motels, restaurants, and stores. HNWD also stated that following the completion of construction, the county would receive additional economic benefits from one to two full-time positions with an estimated payroll of approximately $100,000 “¦ Finally, HNWD implied in its application that, as a wind farm, the proposed facility would be an attraction to tourists in the area,” he said.

The testimony of attorney Jeffrey C. Paulson, on behalf of HNWD, had also addressed economic development benefits Highland and the surrounding area would get from the project, Carsley noted. Paulson said during the plant’s construction, HNWD would attempt to use local contractors as much as possible and that “a concerted effort will be made to use local and regional sources for materials and labor,” Carsley said.

In addition, Paulson had said HNWD would use local lenders if long-term debt is used.

“HNWD states that until bids are received and evaluated, the company cannot determine which selected contractors will be located in Virginia,” Carsley said, “although it believes that it is probable that road and other civil work, foundation labor, and some portion of the electrical work will be performed by local and regional companies. HNWD notes that most of the likely Virginia contractors are from Augusta and Rockingham counties and employ workers from West Virginia as well as Virginia. The company also believes that local and regional contractors will perform the more labor intensive work, making it likely that the majority of construction workers at the proposed facility will be those of local companies. HNWD estimates that, in general, any labor employed will be occupied for one to four months and that while it is impossible to estimate the total wages paid to all of the involved construction workers, based on the project size and other relevant details, total labor costs could range from $4 million to $10 million.”

However, Carsley pointed out, HNWD doubts a large portion of the wages paid to construction workers would be spent in Highland because most would commute to the site. “Therefore, the greatest economic impact of the construction wages “¦ are likely to be on a regional level.”

HNWD believes it could spend more than $3 million on construction services and materials. “Such purchases will likely include “¦ surveying, engineering services, cement and steel reinforcement for foundations, routine electrical components, gravel, miscellaneous hardware and construction materials, etc.,” Carsley said.

After construction, HNWD expects to spend about $20,000 a year for maintenance and operation. HNWD, Carsley said, notes that operating personnel will be one or two maintenance technicians employed by the turbine manufacturer during the warranty period and then by a third party later. “HNWD projects that the pre-tax base pay and fringe benefits for such a position is approximately $50,000,” Carsley said. “In a personal communication with staff, a representative of the company stated that the employee(s) may monitor the operation “¦ off-site and could possibly be located in West Virginia.”

As for the regional economic benefits, Carsley said they were hard to predict. “HNWD recognizes that the potential economic impact to Highland County of tourism related to the proposed facility is “˜probably minimal’ and that (it) would likely be associated with visitation to resorts in the area or local festivals such as the maple syrup festival in Highland County. This visitation “˜may not result in significant expenditures within the county and may not result in too many extra night stays within the county.’ Finally, although the company does not expect to pay state or federal income taxes for “˜at least’ 10 years due to depreciation and production tax credits, HNWD provided information indicating that for years 11 through 20 of the life of the (project), the company anticipates paying “¦ Virginia state income taxes and federal income taxes,” he said.

“While there will likely be other economic benefits associated “¦ that will impact Highland County and the surrounding region, particularly during its construction, it is difficult to assess the level of these benefits precisely given the preliminary nature of the estimates provided by HNWD “¦ Although there could be several thousand dollars of annual expenditures locally or in the region, the company cannot state unequivocally whether Highland or the surrounding region will benefit from any additional employment related to the proposed facility.

“Staff does not believe that the proposed facility will contribute to the local or regional economy in any meaningful way as a tourist attraction “¦ Finally, with the uncertainty related to other estimates notwithstanding, one other consideration relating to the potential economic benefits of the Proposed Facility should be mentioned. HNWD does not expect that there will be any costs to be incurred by Highland County for infrastructure improvements necessary to accommodate the operation and construction.”

Carsley noted, however, that SCC staff did not take off-setting benefits into consideration in their analysis. “One might assume that property values could decline, at least for those properties in the vicinity of the Proposed Facility. Staff’s analysis implies that for any such decline that resulted in lower property tax collections, there would be a direct one-to-one trade off between the economic impact of the lost property tax revenue and an equal amount of property tax revenue gained from HNWD. Lacking evidence that a substantial decline in property values is likely, staff has not speculated on any such decline,” he said.
At the hearings
When evidentiary hearings begin Monday, these expert witnesses and others will be cross-examined, though their pre-filed testimony is unlikely to be repeated.
Following the hearings, if those on either side in the case wish to make further comment, the hearing examiner may grant them a period of time to do so once the transcript is prepared.

By Anne Adams “¢ Staff Writer

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