The Pacific Gas and Electric Company decided last week not to be the national test case for the Minerals Management Service”s wave energy program.
Just two weeks earlier, the utility officially filed paperwork to pursue those same far offshore wave energy leases. None of the filings have yet been provided to this newspaper by PG&E, or presented to the public locally.
Why such a quick change of mind?
“In early August we said yes to enter into negotiations for the (MMS) Mendocino project,” said PG&E spokeswoman Jana Morris. “Within the following three weeks we hoped there would be change to the economic and commercial terms of the interim lease, which did not occur.
“At that point we made the decision to stop negotiations until the final rules are made available,” said Morris.
Minerals Management Service officials did not respond to questions about what they will do next, now that their test case is gone.
The Minerals Management Service, or MMS, believes it must charge private companies and promote competition for leases of public resources — which the competing Federal Energy Regulatory Commission gives to the first company in line at no direct cost.
After no competing firms emerged by the May 19 deadline, the MMS abandoned the idea of competitive bidding and proposed charging $3 per acre annually to lease the areas.
“PG&E has concluded that the project costs, including the significant rental fees, of going forward under an interim lease are unacceptably high, particularly in light of the absence of any competitive advantage at the commercial leasing stage,” said Morris.
How can $3 an acre be too expensive?
“I think there is some confusion on this,” responded Morris. “According to our original nomination letters to MMS for the Humboldt and Mendocino sites, we estimate the lease acreage would be approximately 97,337 acres for the Humboldt blocks and approximately 53,716 acres for the Mendocino site. At $3 per acre per year we would have to pay MMS more then $450,000 each year to conduct environmental studies with no commercial income to offset the cost,” she said.
But doesn”t that contradict the notion that PG&E is doing this to increase its green portfolio, not to gain advantages over other companies?
“We have to act as steward of our customers” funds, and we need to obtain the best economic deal we can for our customers,” Morris said.
“We have come to the conclusion that the projected costs (including the significant rental fees) of going forward under an interim lease are unacceptably high, particularly in light of the absence of any priority rights in filing for a lease to construct a project at a later time.
“We will continue to work cooperatively with MMS and will be waiting to make a decision concerning the final rules later this year when they are made available,” she said.
PG&E has also asserted the need for competitive advantage in its arguments to the Public Utilities Commission. There, PG&E argued for secrecy and against an open process advocated by the Department of Ratepayer Advocate. PG&E argued that secrecy was needed mostly by its contractor partners in the competitive process of research and development.
PG&E has been involved in dual processes for the development of wave energy off Fort Bragg, where it has been pursuing a 68-square-mile study area. The company was granted that study area and a larger area off Eureka, by the Federal Energy Regulatory Commission, or FERC.
For waters more than three miles from shore, which represents a small portion of the Fort Bragg plan, PG&E has been seeking permission from MMS, which disputes FERC”s claim to that area.
Morris said the two areas overlap, meaning that PG&E now continues its research process for the entire area with FERC alone, leaving MMS out of the process for now.
The jurisdictional dispute between the two federal agencies, which has now dragged on for more than three years, has been a source of aggravation for wind and wave energy developers from coast to coast.
Even the state of California”s top environmental regulator sent the federal agencies a letter suggesting they get their acts together before making decisions that may have long term impacts on California”s ocean waters.
“We are still waiting for a clarification from these two federal agencies as they have promised for some time,” said Morris.
MMS is in the midst of a rulemaking process, which it expects to conclude by year”s end. While that process is under way, in April MMS announced a test process for wind, wave and tidal energy at selected single locations on the East Coast. Fort Bragg and Eureka were chosen from more than 40 nominations as the national test sites for its wave energy development process. Off Fort Bragg, 14 nine-square-mile blocks have been identified for lease sale. Off Eureka, there are 24 blocks identified.
FERC, by contrast with MMS, has refused to do rulemaking, bringing widespread criticism from federal, state and local agencies for launching a process that is constantly being modified and which identifies no clear route for local input.
Last week, the County of Mendocino began the process of filing a lawsuit against FERC, alleging flaws with its local wave energy process.
Last Friday, Aug. 29, PG&E also filed its six-month progress report with FERC. One thing that has changed is that FERC now asserts no testing will take place in the water during the three-year preliminary permit study process. PG&E states in its report it has no intention of entering local waters, which is different than what the utility first contemplated off Fort Bragg.
PG&E has been waiting to get funding for its study from the California Public Utilities Commission. The funding comes with strings attached because of PUC worries that wave energy isn”t yet viable for testing and because of the utility”s insistence on secrecy, rather than sharing information with the public.
The six-month status report reveals that PG&E has now applied for a U.S. Department of Energy grant for $1.2 million in additional funding for the local study. That application, made jointly with the Electric Power Research Institute, Humboldt State University and the University of Texas at Austin, has not been made public. The newspaper has filed a Freedom of Information Act request with the Department of Energy, to find out what may be in that filing.
The MMS alternative energy plans were drowned in the surprise announcement on Aug. 1 that MMS will seek to replace its own five-year plan with a new one to allow expanded oil and gas drilling on the outer continental shelf. This has stirred up the many locals who already thought the entire wave energy process smacked of another oil conspiracy.
While MMS says the two have nothing to do with each other, but many locals are not convinced.
Commercial fisherman/activist David Gurney has confronted the Humboldt County Board of Supervisors with claims that PG&E”s plan is all about oil and gas, not wave energy.
Gurney has no firsthand evidence to back up his claim but does offer one striking piece of circumstantial evidence for his case. The waters in the MMS portion of the wave energy study are more than 400 feet deep, often much deeper. Gurney points out no existing wave energy technology even contemplates working in such depths.
Wave energy devices now in the study stage all are moored to the bottom and none considers cables that long for the dozens of devices that would be needed. There are experiments in open water for wave energy, but those involve the waters of the Southern Ocean off Antarctica, not areas anywhere near busy coastlines.
“Such huge expanses of ocean are not needed in order to test these devices. It is my contention that PG&E has the potential to site sit” these locations, until such a time that the leases will be converted to natural gas and oil drilling permits,” Gurney wrote the Humboldt supervisors.
Gurney showed how several companies involved in developing wave energy and the Eureka harbor have slicker oil and gas backgrounds than PG&E itself. The Bush Administration push for privatizing everything possible, including alternative energy development, conflicts with government-led collaborative efforts in European countries.
“It is an interesting dichotomy: The needs of corporations to pursue deals in private vs. the interests of the public and the ecosystem to have above-board planning on issues that affect the health and well-being of all, especially in relation to public trusts — those that really belong to everyone, not to mention wildlife,” Gurney said.
Late breaking update: PG&E may lose area
With Pacific Gas & Electric abandoning its role as national test case for the interim Minerals Management Service”s wave energy process, a little-known second company will have a chance, it was learned Wednesday morning.
The company is Marine Sciences of San Diego, which is seeking to study wave energy in a single, nine-square mile MMS leasing block off Eureka.
PG&E had sought exclusive rights to 24 of the 9-square-mile blocks off Eureka.
Although no competition for its leases emerged, as MMS hoped, MMS had asked Marine Sciences and PG&E to collaborate on a wave energy study off the Humboldt County coast.
“With PG&E withdrawing its nominations for interim policy leases, the competing nomination off Humboldt County from Marine Sciences will be now be analyzed by the MMS,” said John Romero, a public affairs officer for MMS.
MMS provided a link to the Interim Policy Proposed Lease Project Descriptions and associated map:
http://www.mms.gov/offshore/AlternativeEnergy/PDFs/CaliforniaIPProjectProfile.pdf
This would create a conflict with the Federal Energy Regulatory Commission, which has already granted exclusive study rights to the entire area, including the block which MMS could grant to Marine Sciences, to PG&E.
PG&E has said that the $3 per acre was too expensive. Romero said Congress requires that MMS charge a reasonable fee for use of public resources. There was a public comment period on the $3 per acre fee, which is much lower than the lease fees charged for oil and gas.
Although PG&E”s surprise withdrawal has upset the MMS wave energy process, MMS is continuing with the rest of its test program for alternative energy production on the Outer Continental Shelf.
Recent offshore development timeline
– April — Minerals Management Service releases its interim alternative energy application process. The MMS picks one site for each kind of energy proposed to be generated on the Outer Continental Shelf, wave, current, tide and wind. PG&E”s twin projects in Fort Bragg and Eureka are the wave energy choice.
– May — When no other developer applies for the 200 square miles of ocean that PG&E has claimed off Eureka and Fort Bragg, the MMS proposes a $3 per acre annual fee.
– Aug. 1 — MMS announces a new initiative to open more areas to offshore oil drilling. Email and regular mail public comments are being taken through Sept. 5 on what areas should be opened.
– Aug. 6 — PG&E officially applies for the new MMS leases at $3 per acre.
– Aug. 15 — MMS holds a seminar in San Francisco to explain the new alternative energy process. PG&E attends.
– Aug. 26 — Mendocino County moves ahead with suing the Federal Energy Regulatory Commission, or FERC, over its wave energy process.
– Aug. 26 — PG&E reverses its position of Aug. 6 and announces it won”t pursue the interim leases, instead waiting until MMS finishes its rulemaking process later in 2008 or early 2009.
– Aug. 29 — PG&E files a six-month progress report with FERC. The company claims a large amount of local outreach in the report, naming numerous public meetings it has held. The company has revealed little or no new information at any of those meetings. The status report also mentions the company collaborated with two universities in June on filing a request with the U.S. Department of Energy.
– Aug. 31 — California State Senate passes a joint resolution asking Congress to renew the federal waters Outer Continental Shelf offshore drilling moratorium. This resolution, AJR 51, authored by Assemblyman Pedro Nava, had been passed by the California State Assembly earlier this summer.
– September and October — Congress must pass new annual moratorium for protections off the Mendocino Coast and much of the East and West Coasts to continue. Republicans nationally make creating new drilling wherever possible a key campaign issue. A rival GOP plan would open up only certain Eastern states and new areas in the Gulf of Mexico to drilling.
Sources of information: The newspaper has received the information above from FERC and other government agencies, but no information directly from PG&E about PG&E plans.
