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HomeMy WebLinkAboutREFAC Minutes 8-21-09 Draft Page 1 of 4 Renewable Energy Fund Advisory Committee Meeting August 21, 2009, AEA Board Room 9:00am to 12:00pm Minutes 1.) Call to Order The Renewable Energy Fund Advisory Committee convened at 9:00 a.m. Chris Rose, Vice Chair presided over the meeting in the absence of Chairman Vince Beltrami. 2.) Roll Call: Committee Members AEA Staff Other Participants Chris Rose, Acting Chair Steve Haagenson Wynn Menefee, DNR Brad Reeve Mike Harper Bob Swenson, DNR Jim Posey Sara Fisher-Goad Mike Mitchell, Dept. of Law Sen. Lyman Hoffman (phone) Butch White James Strandberg David Lockard Shauna Howell 3.) Public Comments There were no public comments. 4.) Agenda Comments There were no changes to the meeting agenda. 5.) Approval of Meeting Minutes – May 15, 2009 MOTION: Senator Lyman Hoffman moved to approve the meeting minutes from the May 15, 2009 Renewable Energy Fund Advisory Committee. The motion was seconded by Jim Posey. The minutes were unanimously passed as presented. 6.) Renewable Energy Fund Regulations Mr. White stated that since the last meeting a public hearing was held with no public comment received; however, individual comments were received. A definition of “economic benefits and public benefits” was requested. Mr. Mitchell advised that those were such broad terms that they could really not be defined in the regulations. A definition of “biomass projects,” was requested, our standard answer is that it would depend on the project. Another individual requested that we follow the federal definition of an IPP. Staff determined the definition would stand on the definition in our regulations. Mr. Mitchell clarified the difference between the federal regulations and ours that the state definition defines the public basically within the definition by Page 2 of 4 saying it’s entirely for use by the residents of one or more municipalities or unincorporated communities recognized by DCCED. The purpose was to have a threshold of public use such as it would have to at least be a community recognized by DCCED, rather than “2 or 4 cabins in the woods” for example. Ms. Fisher-Goad pointed out that the feds definition states “to be used primarily by the public” and our definition states “entirely by the residents.” She stated it’s a new program amending the power project fund definition to include IPP and the new program renewable energy fund. Mr. Haagenson stated it was one definition being used for two different programs. Mr. White said another comment came from the Legislative Affairs Agency attorneys and the Department of Law regulations review section that have been assisting to develop the regulations. It clarified AEA’s role in making recommendations to the Legislature that we are not a grant program, but it’s the Legislature that actually approves the grants, in summary, clarifying our statutorily required scoring in the evaluation criteria and in changing the evaluation criteria to “will consider” from “may consider.” Mr. Mitchell said those are viewed as technical comments to conform to the statute and in the case of the recommendations aspect to clarify that this is in the first instance recommendations to the Legislature and then only once they approve the grants is it a grant program. Mr. White summarized the approval process: the entire package is sent to the Dept. of Law regulations section, they review it one last time, as does Mr. Mitchell, if approved, it’s forwarded to the Lieutenant. Governor’s office for filing and 30 days after it’s filed, we will have effective regulations with one last step to post online a summary of what the regulations are then we truly have regulations. The public comment period is completely closed. Mr. Mitchell did not anticipate further changes. A clarification was requested on the definition of “energy,” i.e., under section 107.615 does the definition under eligible projects include a waste heat recovery plant. Mr. Mitchell stated the Legislature specified by statute waste heat recovery was included within the program, and, by definition, waste heat is energy within the program. Mr. Rose asked about the timeline and how long would it take the Lieutenant Governor’s office to sign off on the regulations. Mr. White said it would be about 30 days. Mr. Mitchell said it would depend on how long it remained under review with the Dept. of Law. It then goes to the Lieutenant Governor’s office and when he files it, the regulations will become effective 30 days later. Mr. Rose stated he asked about the timeline as how it would fit into the Round 3 timeline and whether or not we wait till the regulations are effective before issuance of Round 3 RFP. Mr. Haagenson stated September 1 is the target date to issue Round 3. Mr. White said he felt the application period would close after the effective date of the regulations and that the draft regulations would be placed on the website. Mr. Reeve said he was contacted by the RCA as they are trying to understand the technical benefits of the project as opposed to what the financial benefit to the state or the consumer should be. This would be discussed under agenda Item 9. Mr. Rose spoke to Bob Pickett and understands the conversations between AEA and RCA are still ongoing. 7.) Round 1 Status – PowerPoint Presentation – Peter Crimp Round 1 status was presented by Mr. Haagenson. Peter Crimp presented the report to the LB&A Committee on August 14. Many have submitted initial grant drafts awaiting grantee action. Three grants Page 3 of 4 out of 78 projects are awaiting AEA action. Twenty-two are waiting for final signature of the grantee. Twenty-four are active amended. He is hopeful the six capped projects will be resolved in Round 3. Mr. Rose asked what kinds of issues are requiring AEA action. Mr. Haagenson stated it is nailing down milestones to create a complete package before they are signed. Those awaiting grantee action are the grants that have been put together in a form we like and we are working with them and waiting for them to actually develop their milestones and update any cost estimates, etc. Mr. Rose stated that some grantees were confused regarding the process of milestones and getting reimbursed by AEA and hoped that in Round 3 the process would be more clearly defined. A discussion regarding the reimbursement process ensued, including monetary advances, proper use of funding by the grantees, rules, milestones, providing important advanced information to the applicants, AEA’s ability to manage projects and the emphasis to the grantees that this is a cost reimbursable grant process. About 2/3 of the grant applications are in place. 8.) Round 2 Status – Butch White The Round 2 status report was given by Mr. White: Have not put any grants out, they are all drafted and on the system, however, the focus has been on the Round 1 grants. Out of 30 projects, worth about $25 million, about one third of the grantees have provided the information needed. Ms. Fisher-Goad stated that $9.6 million for 14 projects in Round 1 have been expended to date. 9.) Round 3 Request for Applications – Discussion of Issues – Steve Haagenson Round 3 status report was given by Mr. Haagenson: Benchmark/ payments was discussed as to the relationship between accounting and project engineering and ways to simplify the accounting certification process and to define benchmarks, i.e, design, permitting, construction, ordering materials, and closeout; as milestones are reached a fixed percentage of the payment will be made. It was suggested that perhaps using contractors to help do some oversight in some cases. Audit procedural concerns were also discussed. Mr. White stated an audit can be called up to $500,000 received in a single year. There’s a federal and a state single audit requirement pretty much along the same thresholds. Ms. Goad stated that in all of our grant agreements there are standard provisions that require documentation and record keeping. It was suggested that a good way to tell if the books were in order was to perhaps perform a preliminary audit when the first milestone is reached or perhaps hiring another accountant in house or contracted out may be considered. AEA receives no funds to administer the grants; a discussion ensued as to how much funding to administer would be needed in the future and that funding would be pursued through the Governor’s office and the OMB. Bob Swenson asked if we had a feel for the next two years of the level of new project costs. Mr. Posey? stated he felt we could get another $25 million this year, and Sen. Hoffman stated it’s critical that the committee impress upon the Governor that we need to get back on track with the renewable energy commitments. Mr. Rose stated we should definitely ask for $50 million, which was the intent a year and a half ago. He felt there was at least that amount of good projects out there. Page 4 of 4 Mr. Menefee stated that the permitting that comes up afterwards, water, land, etc. should be considered. DNR is having trouble pushing permitting through OMB. CAPS – assume caps at application: After the fact does not work. Assume caps are in place when we give them the application. Ms. Goad asked if the program could be designed with the flexibility to go higher than the proposed cap. A cap that could be lifted if necessary. Mr. Menafee said the cap is not in the regulation or legislation, and as long as everyone is getting notice and treated similarly it should be ok. Cost Based Rates: Mr. Haagenson explained the concept then opened the floor for discussion. An extensive discussion followed regarding PERPA / RCA authority responsibilities and certifications; definitions of IPPs, responsibilities for rate making, and a new subject of collateralizing of the grants which should be discussed further at another meeting. Schedule: Issue RFA by September 1, 2009 with recommendations to the Legislature by January 29, 2010. REFAC Terms: Appointed to three year terms, may be staggered terms. We will contact the Governor’s office for clarification. Next Meeting date: Tentatively late September. The meeting was adjourned at 11:55 a.m.