Decommissioning Rules & Funds

for Renewable Energy Facilities

RenewElec WorkshopOctober 21, 2010

Jonathan VoegeleResearch AssociateInstitute for Energy and the EnvironmentVermont Law School

What is Decommissioning?

Controlled process to safely retire an electric generation facility. Deactivation Defueling Dismantling Site Remediation

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Decommissioning Goals

Restoration to original environment Footprint reduction: removal of all structures Hazardous materials remediation

Avoiding environmental disturbances 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

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Decommissioning Requirements

Decommissioning Implementation

State Lands Statute PUC Approval Processes or Orders Energy Facility Siting Evaluation Commissions

(EFSECs) Local Ordinances

Federal Lands 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

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. Certificates of Public Good Siting Approval

Example: Vermont 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. 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 35MW+ geothermal, solar or wind projects. 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.”

Applicant must propose site restoration plan and expense estimate.

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

SDPUC jurisdiction for100 MW wind farms Less than 100MW, SDPUC encourages local zoning

boards to impose requirements SDPUC “model ordinance” requires plan and financial

assurance after tenth operating year. 10

Federal Implementation Dept. of Interior: BOERME (MMS

successor). Projects in the outer-continental shelf (OCS)

• All non-hydrokinetic facilities.

• Hydrokinetic facilities prior to FERC licensing. Case-by-case basis at amount based on

anticipated costs of decommissioning. Requires financial assurance through bond or

letter of credit. 11

Federal Implementation

Bureau of Land Management Renewable projects sited on public lands. Requires decommissioning plan development

& approval prior to right-of-way authorization. $10,000 bond for each turbine on public lands,

subject to periodic review for funds adequacy.

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Analysis

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

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Recommendations Statewide decommissioning regulations

Explicit PUC/EFSEC findings requirement that a site can be restored.

Requirement for decommissioning plans Requirement for financial assurance for the plan’s total cost.

Objectives Alleviate environmental and aesthetic considerations which

hinder large-scale renewable development. Offset risks for states with ambitious renewable portfolio

standards.14