HCE Wind Energy Meeting Notes 9/21/08

Attending: Karin Busch, Gerry Chartier, Winnie Chartier, John Elberfeld, Sandy Gordon, Sue Hawkes-Teeter, Mike Hebert, Nelson Kent, Gerry Lenseth, Jane McLean, Amy Pokorny, Loren Pruskowski, Todd Mathes, Paul Willing, Carol Willsey, Warren Willsey

The agenda included the status of the NYSERDA prospectus, a discussion of Shell Wind Energy, and legal representation.

NYSERDA Study Prospectus

  • The prospectus will be complete in a few weeks, when Loren will give us a 1st draft.
  • The assets built by the NYSERDA study will be transferred to HCE. Value is now about $250,000. HCE will continue to build project assets through predevelopment activities.
  • Project assets will attract pre development funding, which will allow HCE to get financing for further steps to project realization.
  • Loren presented a narrative outlining next steps and recommendations, and a financial spreadsheet for calculating costs/benefits of different scenarios for the CREBS model financing option. This appears to be the most cost effective model at this time. He will provide proformas for other options.
  • Recommendations include:
  • We need to adhere to our mission, continue to clarify our intentions; to revisit our mission statement as we go. Every quarter we should consider goals; shed old ones and adopt new ones.
  • A priority task is to secure land rights soon. Windustry has a template for this. Gerry also has a template from the Shell offer.
  • We need to define terms and provisions and then educate the public.
  • We have to write a letter to National Grid and ask them to do an analysis of the capacity of the transmission lines.

Financing options:

1. Cooperative LLC Model – we could issue shares to members of the LLC to create equity to secure debt. We can define the ownership structure any way we like.

2. CREBS Model profitability cut off point was 6.8 cents last year, is now 8.6 cents. Needs to come up to 9.5 cents per kWh on day ahead market.

  • Additional revenue stream could be secured after year 10. Years 11-20 we could contract with someone else for $17 to $22 RECs. RECs will change with time.
  • We could negotiate power purchase agreements to attract investment.
  • We can be creative to find ways to make bonds available. Government bodies, not for profits, local universities to work into their curricula, could change financing options. We could offer marketing opportunities for universities. Loren and Todd have met with RPI and the Lally group. They might have interest in our project.

3. Flip Switch Model – 7 year equity investors for a 10 year term @ 7% would need higher bundled energy value, over 14 cents.

Pre-Development Funding

  • Pre development funding is our biggest hurdle.
  • We’ll be developers. Specific next steps would vary per different approaches.
  • USDA grant opportunity for $100,000 for a not for profit – Russ, Todd, Loren and Kathy met with them by phone last week – in next quarter we could get a not for profit to work with us. We don’t have to be a not for profit.
  • Additional funding is available from NYSERDA.
  • We could pool money from local sources.
  • We need about $250,000. Could be less if we partner with another group with same goals to share some project development tasks.
  • We’ll continue meetings with Loren by phone regarding NYSERDA, USDA and other creative options for financing.

Lobbying and Legislation

  • Policy initiatives need to be legislated for sustainable community wind projects.
  • Need to lobby to increase REC $s and to support distributed generation.
  • Albany Co legislature is discussing the renewable energy/county power authority issue. It is up for vote in their October meeting. Sandy said they need a speaker. The issue will then go to the state legislature.
  • Article 10 legislation (shift from home rule to state authority for projects generating over 30 to 50 MW) is likely to come up in state legislature soon.

Education

  • We need to make a strategy, and educate people to attract resources and market the project. Buttons, bumper stickers, t shirts…
  • Define what our terms are (benefits to the community) and communicate to the public.
  • Look for ways to debunk the myths.
  • There is support in Schenectady County. Gerry Chartier, Mike Hebert and Paul Willing went to the Schenectady/GE meeting recently.
  • Prepare a press release on Loren’s presentation in Greenville paper, Altamont Enterprise and Times Union. Would need approval from NYSERDA, but turnaround would be quick.
  • Create a wiki: open source feedback community created website with different security and access levels that allows dialogue, posting of events, broadcast messages w/o input. It would not be expensive. Carol knows about it. Loren has a contact.

Networking and Outreach

  • We need to meet with similar groups to educate ourselves and to develop contacts/resources.
  • TREA – Tompkins County Renewable Energy – Bob Price emailed us about them (Town of Caroline). Loren has contact information. We should check their website.
  • WAG Wind Action Group near Buffalo has worked for about 6 years and could be a resource for education and marketing information.
  • LEEG Lake Effect Energy Group – Bill Nowak is their contact. They want to develop a community wind project.
  • Friends of Renewable Energy want to form a lobby group and might ask us to join their efforts.
  • Citizens Campaign for the Environment – 80,000 members in NYS – do workshops; did one in Cobleskill this summer.
  • We should announce our project, go to the media, gather support, and work with the town. Could take a year to get permits.
  • Tom Golisano is a private developer. He hasn’t installed a met tower or started a wind project yet. We have greater assets than he does and he might be willing to invest. Next year electricity rates will be higher. We have 9 other sites to use with this model.
  • John Deere has been involved in predevelopment financing for wind projects; we should approach them.

Shell Wind Energy

Gerry Lenseth reported that landowners in the Pinnacle, Elm and Bush drive area with 100, 350, 500 acre lots have recently been approached by Shell Wind Energy. So far none have signed deals with Shell. They are looking to develop second generation wind projects. They have also been working in Cayuga County.

  • They plan to develop 100 MW; 25 turbines in the Cass Hill, Wolf Hill, Letter S area and 25 turbines in Partridge Run area. They plan to connect to transmission lines from Gilboa.
  • Gerry met twice with Shell in last 2 weeks and received their promotional materials. We can use some as templates and develop our own presentation comparable to theirs.
  • We need to educate landowners about the values of their resources, and their options so they can evaluate the Shell offer. (What’s the rush to sign up if you have a good site?) They can generate revenue for themselves and the community.
  • Shell has a 75 page contract that might include mineral rights. (Need to look for that.) They are offering bonus payments to secure land leases by November 1.
  • HCE needs agreement with Gerry’s group. An email will be developed to spread word about Shell activity and landowner options.
  • Options: we could vilify Shell or coexist with them and educate neighbors, pursue collective negotiations, offer better opportunities.
  • A strategy could be to offer a 1 year option with renewal lease and right to cancel with 6 month notice.
  • How to evaluate Shell’s offer? 4% of all gross revenues (can’t be verified); are RECs included/bundled?
  • Shell can offer speed and can frustrate us. They can tie up potential interconnect points.
  • We should make a bullet comparison of the variables (operating costs, etc.) between their offer and our goals.
  • We will work with Gerry to develop an outreach letter to explain our history, mission to all his neighbors.
  • We will be meeting about this issue and holding events to educate the public about wind energy opportunities.
  • Oil companies are serious; want to develop wind and other renewables as part of their 100 year plan - carbon market and offset sales factor in.

Whiteman Osterhout & Hannah

  • Charges hourly rate, bills monthly. Total estimated cost could be about $25,000 for attorney fees in a cooperative town. Not pro bono.
  • Would give us a letter of intent to sign. HCE needs to confirm intent to hire Todd’s firm if we want their representation.
  • Legal bills can be controlled and intentional; we can decide how much we can afford.
  • He will run conflict possibilities by us for acknowledgment. We’ll distribute it and decide within 2 weeks.

Insurance (for the project owner) should be about $10,000 per MW.

Next meeting: September 28, 7 PM, octagon barn. Loren will phone in. We’ll invite Gerry’s neighbors to come.