Selectmen seek answers on CVEC funds and projects

Selectmen seek answers on CVEC funds and projects

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West Tisbury officials want to place a solar array in the town's capped landfill.

Over the past several months selectmen in Edgartown, Tisbury, and West Tisbury have expressed skepticism over whether long-delayed solar array projects promised for their towns by the Cape and Vineyard Electric Cooperative (CVEC) would ever see the light of day. Adding to their concerns are questions about CVEC’s viability when its funding from the Cape Light Compact (CLC) ends in 2015.

The compact is a public regional energy services organization created in 1997 to work with the combined buying power of the region’s 200,000 electricity consumers. CLC is authorized by 21 towns and two counties on Cape Cod and Martha’s Vineyard to choose the electric supplier, currently ConEdison Solutions, for their residents and businesses. It also offers energy efficiency programs, consumer advocacy, and green power options.

CVEC was formed in 2007 from a strategic planning process commissioned and undertaken by CLC for the purpose of stabilizing electric rates for member towns and ratepayers with renewable energy generation. At that time, state law did not allow CLC or its member towns to develop electric generation projects and enter into long-term power purchase agreements, according to the compact’s website. However, the statutes did allow to the creation of electric cooperatives such as CVEC to help municipalities develop and operate renewable energy facilities.

Although the two organizations are separate entities, the compact agreed to finance CVEC through fiscal year 2015 (FY15). The compact initially funded CVEC through the transfer of a grant received from ConEdison Solutions.

In a letter dated August 27, Massachusetts Department of Public Utilities (DPU) general counsel Rebecca L. Tepper requested that CLC’s attorneys review the compact’s municipal aggregation plan for selling electricity to its members, to determine whether a revised plan should be filed to reflect the compact’s current structure and operations.

CLC is funded through several sources, including state-mandated energy efficiency funds collected from all ratepayer funds, federal and state grants, Barnstable County general funds, and an administrative surcharge per kilowatt hour levied on electricity sold through CLC’s aggregated power supply contract with ConEdison.

The compact initially funded CVEC through the transfer of a grant received from ConEdison Solutions. The CLC board approved subsequent grants to CVEC from the compact’s mil adder, in the amounts of $500,000 in fiscal years 2010 and 2011, a supplemental amount of $335,792 in FY11, $408,0000 in FY12 and $402,885 in FY13, according to the compact’s website. CLC does not use energy efficiency funds to pay for CVEC.

Local CVEC solar projects

In April 2011, CVEC completed a long and complicated competitive bidding process and awarded a contract to American Capital Energy (ACE) for solar photovoltaic (PV) array projects in Edgartown, Tisbury, and five Cape Cod towns in the first round of a two-phase initiative. Oak Bluffs, Tisbury, and West Tisbury were included in the second round of development, for which a contract was awarded to Broadway Electrical Company.

Energy savings from the solar PV arrays come in the form of a credit from the utility company, which receives solar renewable energy credits (SRECs) from the state for using environmentally friendly methods to generate electricity. Power produced by the solar arrays goes directly into the regional electric grid, along with energy generated by oil, coal, natural gas, hydro, and nuclear plants.

Towns were asked by CVEC to enter into an agreement to lease the land for the projects for 20 years. Although the Tisbury and Edgartown projects initially moved forward quickly through some state and local regulatory boards, they experienced several delays in receiving interconnection agreements with NSTAR and in seeking state approval for net metering.

Net metering allows facilities to receive credits for any electricity that is generated but not used. Under the agreement with CVEC, the PV arrays are expected to produce more electricity than a town can use, but the deal does not allow the town to sell that excess energy on the open market.

Instead, the extra energy will go back to other CVEC members through net metering and allow them to purchase more electricity at a lower price. As part of the deal, the town with solar arrays can take over their management, dismantle them, or have someone else manage them after the initial 20-year period.

CVEC’s future and funding

Long before the long-term agreements between CVEC and towns with solar projects expire, however, financial support from CLC will end. That fact is not lost on West Tisbury selectman chairman Richard Knabel.

In a letter dated October 8 to CVEC president John Checklick, Mr. Knabel asked many questions about how CVEC will be funded and how its financial viability might impact Island towns’ solar array projects.

“Of immediate concern to towns in the phase one and two solar program is the matter of transferring net metering credits from the town to CVEC,” Mr. Knabel said in the letter, which he gave to The Times.

“In the event that CVEC loses its current operational funding, cannot secure new sources, and has to cease operating, what happens to the transferred net metering credits?” he added.

On Tuesday, Mr. Knabel gave The Times a copy of the letter he received in response from Mr. Checklick.

“CVEC has no plans at present to request funding from its members other than by virtue of a member’s payment of the operational cost adder as a buyer of net metered energy from a Phase II Solar PV system,” Mr. Checklick said.

“CVEC’s financing is predicated on CVEC serving as the host customer for net metering,” he added.

Mr. Checklick also assured Mr. Knabel that approval required for CVEC to net meter West Tisbury’s solar PV system is an administrative issue that would not affect the start of the project’s construction.

In regard to several “what if” scenarios Mr. Knabel proposed, Mr. Checklick said in each case, the town’s rights to net metering credit will be protected.

“If the energy management services agreement for the landfill PV system is still in effect (meaning CVEC is not the owner of the PV system) upon CVEC’s dissolution, CVEC has automatic assignment rights under the project agreements that may be used to assign the project to the town,” Mr. Checklick said.

Conversely, if CVEC dissolves and is the owner of a PV system after an agreement with a town expires, he said the CVEC bylaws provide that its assets, such as the solar PV system, may be distributed to the town.

Mr. Knabel prepared three pages of comments in response to Mr. Checklick’s letter, which he said he planned to discuss in detail at the West Tisbury selectmen’s meeting Wednesday night. Among them, Mr. Knabel questioned whether $300,000 in anticipated revenue from CVEC’s solar PV portfolio would be adequate. He said it was good to hear that the town would accrue benefits of net metering credits regardless of what happens to CVEC. Mr. Knabel said he would recommend sending a follow-up letter to Mr. Checklick asking him to clarify some areas of concern.

Update on Island projects

“There’s been a lot of frustration and that’s understandable,” Liz Argo, CVEC’s special projects coordinator, said in a phone conversation with The Times on Tuesday. “But the whole industry has shared in the frustration; it’s not unique to CVEC. We’re in a changing environment.”

Ms. Argo said the solar projects will move forward very soon, as ACE has secured financing and is currently in the process of finalizing contract changes. Of seven towns involved in the ACE program, Ms. Argo said selectmen have approved revisions in three towns, and those in the other four towns plan to address them next week.

“Once they have approved them, ACE will stage ground-breaking ceremonies and more importantly, bring heavy equipment onto the sites,” she said. “Everything should be commencing in about three weeks.”

The Tisbury selectmen plan to consider the revisions next week. The Edgartown selectmen will meet tomorrow morning with town counsel Ron Rappaport to go over the contract revisions and decide whether or not to approve them. The West Tisbury selectmen have signed an agreement.

Ms. Ago said there has been some confusion regarding a December deadline for 50 percent completion of the projects. “That applies to getting SREC qualifications at the end of the year, but contracting companies don’t generally worry about that,” Ms. Argo said. “The expenditure they put out for solar panels and equipment meets that requirement fairly quickly. The deadline that will be critical will be getting the projects in by the end of June 2014. But we have the ability to extend that deadline if the holdup lies with the utility company.”

The towns of Aquinnah and Chilmark opted to go with Vineyard Power (VP), a nonprofit Island-based energy cooperative, for their municipally-owned solar PV arrays.

Aquinnah is not a member of CVEC. The town’s array was constructed and completed by South Mountain Company at the town’s capped landfill in December 2012.

Although a member of CVEC, Chilmark missed out on applying for the solar projects, executive secretary Tim Carroll told The Times in a phone call yesterday. Although the town petitioned to be a substitute for ones that had dropped out, he said the DPU ruled against it.

The Chilmark selectmen recently approved construction of a solar PV array at the capped town landfill off Tabor House Road starting this winter. Mr. Carroll said details of a power purchase agreement and lease with VP are still in the works, which he hopes to present to the selectmen at a meeting on November 5.