10/27/11 Wind developers Eco-Energy/ Acciona caught red-handed AND turbines shut down at night to protect bats.That's a good start, but what about protecting people?
NOTE FROM THE BPWI RESEARCH NERD: Folks in Rock County are quite familiar with the wind developers mentioned in the article below. They had big plans for a major wind project in the Towns of Magnolia, Spring Valley and Union. They began by signing up landowners to long term contracts and working the community to pit neighbor against neighbor.
The project that was the subject of this audit is located just a few miles south of the Wisconsin-Illinois border.
CLEAN-ENERGY DEVELOPERS REAPED EXCESS U.S. AID, AUDITORS SAY
By Jim Efstathiou Jr. - Oct 26, 2011
The Obama administration overpaid renewable power developers in a federal grant program, including $2.08 million distributed to a unit of Acciona SA (ANA), a Spanish maker of wind turbines, according to government investigators.
The excess payment to EcoGrove Wind LLC, a unit of Acciona, was uncovered in an audit by the U.S. Treasury Department’s inspector general. EcoGrove received a $67.9 million grant in October 2009 for a wind farm in Illinois through a program to promote clean power created in the economic stimulus bill that year.
President Barack Obama’s administration already faces congressional inquiries over the Energy Department’s $535 million loan guarantee to Solyndra LLC, a maker of solar panels that filed for bankruptcy on Sept. 6. The audits raise questions about the Treasury’s management of a separate grant program that has awarded $9.2 billion to wind, solar and geothermal projects as of Sept. 11.
“A significant number of them no doubt have inflated costs,” William Short, an industry consultant and former investment banker with Kidder Peabody & Co., said in an interview. “The road to Hell is paved with good intentions. This one’s a superhighway.”
The grants, covering 30 percent of a project’s cost, are based on what companies claim as the expense of developing a power source. Inspectors found overpayments in four of the five grants they have audited so far. Aside from Acciona, the discrepancies totaled $43,137. The excessive payments may climb as the inspector general investigates more of the 19,875 grants awarded.
The Treasury grants offer a benefit that leads some project developers to “engage in abusive action,” according to George Schutzer, a partner specializing in tax law with Patton Boggs LLP in Washington. Schutzer said he has advised clients seeking grants against being overly aggressive in their claims.
“It’s on the list of the things the Treasury Department is clearly looking at,” Schutzer said in an interview.
The audits by Eric Thorson, the Treasury’s inspector general, have focused on whether projects were eligible for the grants they received and whether the amounts awarded were appropriate, Richard Delmar, counsel to Thorson, said in an e- mail. The office plans to issue reports on nine additional grants next year, Delmar said.
The audits, which began in February 2010, involve visits to the headquarters of companies that received the so-called 1603 grants, and to project sites, Delmar said.
“We do plan to assess common and/or pervasive issues identified through these individual audits in the aggregate as part of a planned report on Treasury’s administration of the 1603 Program and make recommendations as necessary,” Delmar said.
There isn’t a deadline for completion of the “overall program assessment,” he said.
In Acciona’s EcoGrove project, investigators questioned five items including $5.3 million for interest on a late payment related to a turbine supply agreement with another unit of the company. Ineligible costs totaling $6.93 million led to the government overpayment of $2.08 million, Marla Freedman, assistant inspector general, said in a Sept. 19 report.
“People want to make sure they don’t leave money on the table, but you’ve got to strike that balance between what is permissible and what goes too far,” Jeffrey Davis, a tax partner with Mayer Brown LLP in Washington, said in an interview.
Furniture, Spare Parts
The Treasury Department agreed with the inspector general that Madrid-based Acciona should return $35,479 for costs associated with transmission lines, office furniture and expendable spare parts, according to the report. The Treasury hasn’t determined whether the interest penalty is eligible for the grant.
The company said including the interest payment in the cost of the project is “common industry practice” in construction of wind farms, according to the report.
“I don’t think there’s any padding” of costs, Amy Berry, a spokeswoman for Acciona, said in an interview. “You’re talking about companies that have a lot more on the line than a couple million back from U.S. Treasury. Obviously the consequences are huge if we don’t do it right.”
Six months after Obama signed the stimulus measure, the inspector general said managers at the Treasury Department had failed to explain what staffing would be needed to evaluate “the potentially thousands of applications of varying complexity for awards under this program,” according to an Aug. 5, 2009, report.
The Treasury Department responded that “the current team of four is adequate.”
“Just for just practical matters, we have a program to administer,” Ellen Neubauer, grants program manager for the Treasury, said in a Sept. 21 interview. “We have a large number of applications, a relatively small staff. We sort of have to set some parameters on what we’re going to examine more closely and what we’re not.”
The program has led to $31.1 billion in public and private investment in clean-energy projects that have the capacity to generate 13.6 gigawatts of electricity, about the same amount as 13 nuclear reactors, according to the Treasury.
“Treasury’s team works closely with a larger team of reviewers to carefully evaluate each application to ensure that the amount of money awarded is correct,” Sandra Salstrom, a department spokeswoman, said today in an e-mail. “In all instances where funds are found to be paid improperly, Treasury will work aggressively to recoup them.”
In the first five audits, investigators questioned $2.12 million of $306.4 million awarded in grants, or 0.69 percent. In the case of two wind farms developed by EON AG, inspectors reversed initial decisions questioning $1 million in grant awards related to spare parts after Treasury Department officials said the costs were eligible under tax law.
“The auditors that come out aren’t always the subject- matter experts when it comes to tax policy,” Matt Tulis, a spokesman for EON, said in an interview.
Credits Turned Grants
The incentives began under President George W. Bush as a tax credit companies could use to offset profit by investing in renewable energy projects. The 2008 financial crisis dried up company profits and opportunities to use the tax credit, resulting in the move to convert the benefit to grants.
“Our experience shows that it’s difficult getting financing for the projects,” Schutzer, the tax lawyer, said. “That makes the grant or the credit upfront so valuable. I would bet that the rate of mis-claimed charitable deductions is a good bit higher than the rate of abuse you’d find with the grants.”
The grant program, which was set to expire last year, received a one-year extension in December. A second continuation is unlikely, Bill Wicker, a spokesman for the Senate Energy and Natural Resources Committee, said in a Sept. 12 e-mail.
“Given the considerable fiscal challenges confronting Congress, renewing this program seems to be a steep hill to climb,” he said.
BAT FATALITIES AT WIND FARMS: CURTAILMENT A MORE COMMON PRACTICE
by Bill Opalka,
October 26, 2011
The recent discovery of a dead endangered bat at a Pennsylvania wind site led to the immediate shutdown of night-time operations of a wind facility. The practice has become more widespread I recent years.
Unlike a few years ago, the wind industry has been armed with studies and procedures that lead to immediate actions to prevent further fatalities, which have been deployed in sensitive areas populate by migrating birds and bats.
On September 27, Duke Energy Corporation notified the U.S. Fish and Wildlife Service that a dead Indiana bat, a state and federally protected species, had been found at its 35-turbine, North Allegheny Wind facility.
The facility, located in Cambria and Blair Counties in Pennsylvania, has been in operation since September 2009, and the bat carcass was located during voluntary post-construction mortality monitoring, FWS said.
Duke Energy stopped operating the wind farm at night “to prevent additional mortalities of Indiana bats,” spokesman Greg Efthimiou said.
Efthimiou said the company will continue to switch off the farm a half hour before sunset and a half hour after sunrise until mid-November, when the migration season of the endangered Indiana bat generally ends.
The ridge is in the section of the Appalachian Mountains that extends into West Virginia, where the issue of bat mortality first gained prominence a few years ago.
The bat carcass was discovered by a contracted technician and brought to the office at the end of the day per Duke standard procedures.
Duke immediately curtailed night-time operations of the turbines at the North Allegheny facility, and reported the incident to the Pennsylvania Game Commission and the Service. The FWS said it is currently reviewing the incident.
A project in West Virginia was itself endangered when the Beech Ridge project avoided denial of its permit when wind developer Invenergy and the Animal Welfare Institute reached a proposed settlement in federal court. The developers sought an “incidental take permit” from the U.S. Fish and Wildlife Service, recognition that some fatalities will occur from an otherwise lawful activity.
The actual settlement that was agreed upon allows the turbines to be in 24 hour operation between mid-November and April 1 when the bats are hibernating. For the remaining months the turbines may only operate in the daylight hours.
In other locations, bat and bird monitoring has led to wind curtailment. Not the most lucrative solution, as curtailment cuts into wind plant revenue, but it helps avoid a PR disaster-in-the making.