Vermont PUC approves contracts for over 10 MW of renewable energy

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Vermont PUC approves contracts for over 10 MW of renewable energy

Tue, 07/24/2018 - 1:52pm -- tim

Vermont Business Magazine On July 20, 2018, the Vermont Public Utility Commission approved the award of four contracts under Vermont’s Standard Offer program. These four contracts are in addition to three contracts awarded on June 15, 2018. The seven projects range from 90 kW to 2.2 MW in a diverse range of renewable energy technologies – five solar, one food waste anaerobic digestion, and one small wind. The successful projects will result in more than 10 MW of additional renewable energy in Vermont.

The Standard Offer program uses a competitive bidding process, with price caps related to the cost of different technologies and with the lowest-priced bids accepted first.

All four contracts awarded in this round were for solar projects ranging in price from approximately 8.8 cents to 11 cents per kilowatt-hour, which ranks them among the lowest-priced solar in the state.

The Standard Offer program was established in 2009, pursuant to 30 V.S.A. § 8005a, and is intended to promote the rapid deployment of small renewable generation through long-term, fixed-price contracts. The total program capacity of 127.5 MW is distributed in annual increments, with 10 MW available annually going forward.

Program costs, along with each project’s renewable energy credits (RECs), are distributed among Vermont utilities based on their share of electric sales. The annual request for proposals (RFP) specifies total available capacity, capacity allocated to each technology, and price caps for each technology.

The Standard Offer Facilitator maintains a website for the program that includes the annual RFP and other information. Locate the June 15, 2018, and July 20, 2018, Orders (Case No. 17-3935-INV) by searching for the case number using ePUC, the PUC’s online document management system.

STATE OF VERMONT
PUBLIC UTILITY COMMISSION
Case No. 17-3935-INV
Investigation into programmatic adjustments to
the standard-offer program for 2018
Order entered:
ORDER RE: 2018 STANDARD-OFFER AWARD GROUP

I. INTRODUCTION
On May 1, 2018, the Standard-Offer Facilitator (“Facilitator”) received 14 proposals in
response to the 2018 Request for Proposals (“RFP”) under the standard-offer program. In this
Order, the Vermont Public Utility Commission (“Commission”) directs the Facilitator to enter
into standard-offer contracts with Furnace Brook Solar, Warner Solar, Stark Solar, and Otter
Creek 1 Solar and to place Otter Creek 3 Solar in the reserve group.

II. PROCEDURAL HISTORY
On April 2, 2018, the Facilitator issued an RFP to solicit standard-offer projects to meet
the requirements of 30 V.S.A. § 8005a(c). The available annual capacity for 2018 was 1.125
MW for the Provider Block and 6.375 MW for the Developer Block.1 The RFP also specified
capacity set-asides of 0.835 MW each for biomass plants, small wind plants (wind power with a
capacity less than or equal to 100 kW), large wind plants, food waste anaerobic digestion plants,
and hydroelectric plants.

On May 1, 2018, the Facilitator received 14 proposals in response to the RFP. The
proposals were opened on May 3, 2018, at the Commission’s offices and, on May 25, 2018, the
Facilitator filed a report on the proposals and recommended that the Commission award
contracts to seven projects (“Recommendations”). The Facilitator also recommended that the
Commission place three projects in the reserve group and reject the remaining four proposals.
The proposals are summarized in the following table, along with the Facilitator’s
recommendations:

1 The Developer Block is capacity reserved for proposals made by private developers and the Provider Block is
capacity reserved for proposals made by Vermont retail electric utilities. See 30 V.S.A. § 8005a(c)(1)(B).
2 Programmatic Adjustments to the Standard-Offer Program, Case 17-3935, Order of 3/16/18 at 23-24 (the
“March 16 Order”).
07/20/2018
Case No. 17-3935-INV Page 2
2018 Standard Offer Program RFP Proposals Received


The Facilitator provided the following reasons for recommending that the Commission
reject four of the proposals. The Power Factor Solar proposal failed to comply with the project
map requirements of Section 3.2.4 of the RFP, and the bid form required by Section 2.2 of the
RFP was not signed. The Vergennes Solar and Charlotte Solar proposals failed to comply with
either the project map requirements of Section 3.2.4 or the price cap formats set forth in Section
3.3.4 of the RFP. The St. Albans Solar proposal did not include a completed bid form.

On June 15, 2018, the Commission issued an order awarding contracts to three projects:
1861 Solar, Tomlinson Wind, and Middlebury Resource Recovery.3 In the same order, the
Commission requested comments on the deficiencies identified by the Facilitator with respect to
the four proposals recommended for rejection and on whether the proposed North Hartland Unit
3 project was part of the same “project,” as that term is used in 30 V.S.A. § 8002(18) and
Sections 3.2.1 and 3.2.3 of the RFP, as North Hartland Units 1 and 2.

On June 22, 2018, the Facilitator filed an addendum to its Recommendations explaining
that Windsor Tech Solar, which received a standard-offer contract as part of the 2017 RFP, had
withdrawn from the award group on March 16, 2018. The 2017 RFP specified that the 1.222
MW capacity associated with Windsor Tech’s withdrawn contract should be allocated to the
2018 RFP because the withdrawal occurred after January 1st but before April 1st.4 The Facilitator
explained that the additional capacity available due to Windsor Tech’s withdrawal allowed the
Commission to award an additional contract and recommended Stark Solar, which the Facilitator
had previously recommended for the reserve group.

On June 25, 2018, the Vermont Department of Public Service (“Department”) and MHG
Solar LLC5 filed comments. Allco Renewable Energy Ltd. (“Allco”) and Otter Creek Solar LLC
also filed joint comments.

On June 26, 2018, Green Mountain Power Corporation (“GMP”) and NextEra Energy
Resources Development (“NextEra”)6 filed comments. MHG Solar also filed additional
comments responding to the comments filed by Allco.

On June 29, 2018, the Facilitator notified the Commission that the Bennington East Solar
project had withdrawn its proposal from the 2018 standard-offer program.
No other comments have been received.

3 Programmatic Adjustments to the Standard-Offer Program, Case 17-3935, Order of 6/15/18 (the “June 15
Order”).
4 Request for Proposals for the Standard Offer Program, April 24, 2017, § 3.3.2.
5 MHG Solar LLC is the proponent of the Furnace Brook Solar project.
6 NextEra is the proponent of the Power Factor Solar, Vergennes Solar, and Charlotte Solar projects.
Case No. 17-3935-INV Page 4

III. DISCUSSION
A. Technology Diversity Developer Block
North Hartland Unit 3
Two of the mandatory requirements in Section 3.2.1 of the RFP state that all standardoffer
projects must:
2. Have an installed net AC capacity, defined in 30 V.S.A. § 8002(19), measured
at the project’s location, no greater than:
• 2.2 MW for projects in the Price-Competitive Developer Block or the
Technology Diversity Developer Block;
3. Not already be selling its output to VEPP or Vermont distribution utilities.
This provision is not designed to limit the ability of a proponent to submit a
proposal for an additional project or to prevent a Vermont distribution utility from
submitting a proposal for a new standard-offer contract as part of the Provider
Block being established by the Commission.7

Section 3.2.3 of the RFP further states that “[i]f a proposed project is located at, adjacent to, or
near an existing or proposed renewable energy generation facility, the project proponent must
demonstrate that the two facilities would be considered separate plants under 30 V.S.A.
§ 8002(18).” Section 8002(18) defines “plant” as:
an independent technical facility that generates electricity from renewable energy.
A group of facilities, such as wind turbines, shall be considered one plant if the
group is part of the same project and uses common equipment and infrastructure
such as roads, control facilities, and connections to the electric grid. Common
ownership, contiguity in time of construction, and proximity of facilities to each
other shall be relevant to determining whether a group of facilities is part of the
same project.

The North Hartland, LLC’s Unit 3 proposal adds a third generating unit to an existing
dam in Hartland, Vermont. The project map included with the proposal is shown below. As the
project map shows, the proposed Unit 3 powerhouse would be adjacent to an existing Unit 2
powerhouse and fed by an offshoot from the Unit 2 penstock, which itself is an offshoot of the
main penstock feeding the powerhouse for Unit 1.

7 VEPP, Inc. is a not-for-profit Vermont corporation acting as the standard-offer facilitator and purchasing agent
for the Standard Offer Program.
Case No. 17-3935-INV Page 5

North Hartland’s proposal for the Unit 3 project explains that Unit 1 is 4 MW, was
commissioned in 1985, and sells its output to GMP. Unit 2 is 137.5 kW, was commissioned in
2012, and sells its output to VEPP under an existing standard-offer contract.8

North Hartland’s proposal explains that adding Unit 3 would allow it to take advantage of
flows between 40 and 120 cubic feet per second, which are too large to bypass or send through
Unit 2 and too small to generate power using Unit 1. North Hartland states that Unit 3 would
require new control equipment but would use the existing interconnection to GMP’s system.
According to North Hartland, Unit 3 should be considered a separate plant under 30 V.S.A.
§ 8002(18) because it would be installed six years after Unit 2 and more than 30 years after
Unit 1.

The Facilitator recommended that the North Hartland Unit 3 project be placed in the
Technology Diversity Block award group. The Facilitator noted that although the project “could
share infrastructure with the existing North Hartland Standard Offer Project (0.138 MW)
8 The effective date of the Unit 2 contract is June 8, 2011, and was part of the original 50 MW capacity allotment
for the standard-offer program.

Project Map from North Hartland Unit 3 Proposal
Case No. 17-3935-INV Page 6
according to Section 3.2.3 of the RFP, the proposed project is being recommended for the Award
Group because the plant would not collectively exceed the 2.2 MW project cap.”9
Allco Renewable Energy Limited and Otter Creek Solar LLC (“Allco”), the Department,
and GMP submitted comments addressing the Commission’s question on how “North Hartland
Unit 3 complies with the requirements of Section 3.2.1 and 3.2.3 of the RFP and 30 V.S.A.
§ 8002(18), including whether North Hartland Unit 3 is part of the same ‘project’ as the other
North Hartland units as that term is used in the RFP and section 8002(18).”10 Although the
comments vary in their reasoning, all conclude that the North Hartland Unit 3 proposal should
not be eligible for a standard-offer contract. North Hartland did not submit any comments in
response to our request.

Allco maintains that North Hartland Unit 3 is part of the same project as Units 1 and 2
and is not an independent technical facility. Allco represents that Units 1, 2, and 3 would all use
the same dam, the same interconnection with GMP, and the same access road and would share
much of the same infrastructure. Allco’s comments also attached several exhibits, including a
document from North Hartland’s FERC relicensing efforts characterizing Units 1 and 2 as a
single 4,137.5 kW project and a FERC order certifying that the addition of Unit 2 qualified for
tax credits for “incremental production gains from efficiency improvements or capacity additions
to existing hydroelectric facilities.”11

The Department states that the proposed North Hartland Unit 3 project appears to satisfy
the requirements of Section 3.2.1 because it is in Vermont, has a capacity of less than 2.2 MW, is
not already selling output to VEPP or Vermont distribution utilities,12 and has proposed prices
below the price caps in the RFP. The Department further concludes, however, that North
Hartland has not met its burden of demonstrating that Units 1, 2, and 3 are separate “plants” as
defined in 30 V.S.A. § 8002(18). According to the Department, although Unit 3 would not be
constructed contiguous in time with Units 1 and 2, it does not satisfy the remainder of the

9 Recommendations at 3 n.4.
10 June 15 Order at 4.
11 Exhibit B to Allco Comments at 1.
12 The Department states that North Hartland’s proposal represents “that it is not already selling its output to
VEPP Inc. or the Vermont electric utilities” and that it “has no evidence to the contrary nor any reason not to trust
the applicant.” Department Comments at 2.
Case No. 17-3935-INV Page 7

considerations to be a separate “project” under the two-part definition set forth in Section
8002(18).

GMP maintains that the North Hartland Unit 3 proposal does not provide sufficient
information to determine whether it complies with either Section 3.2.1 or 3.2.3 of the RFP.
GMP explains that Unit 3 alone would satisfy the requirements of Section 3.2.1 (in Vermont, less
than 2.2 MW, not already selling capacity to VEPP or a Vermont distribution utility, and bid
price below set caps). If Unit 3 is not a separate plant from existing Units 1 and 2, then,
according to GMP, the project does not qualify because it is already selling capacity to VEPP
and a Vermont distribution utility and the combined capacity would exceed 2.2 MW because
Unit 1 alone is 4 MW. GMP also notes that the proposed price for the Unit 3 project
($0.13/kWh) is more than the current pricing of $0.1224/kWh that Unit 2 receives under its
existing standard-offer contract.13

Because North Hartland Unit 3 would be “located at, adjacent to, or near an existing . . .
renewable energy generation facility,” Section 3.2.3 of the RFP requires North Hartland to
demonstrate that it would be considered a separate “plant” under 30 V.S.A. § 8002(18). We
have previously explained that facilities are a single plant if they are “part of the same project
and share common equipment and infrastructure.”14 North Hartland’s proposal points to the
“contiguity in time of construction” factor of Section 8002(18) as support for concluding that
Unit 3 is not part of the same project as Unit 1 (built 30 years ago) and Unit 2 (built six years
ago). North Hartland also represents in its proposal that Unit 3 “would require new control
equipment,” but does not explain whether the new control equipment would also be shared with
Unit 1 and Unit 2. The remaining considerations set forth in Section 8002(18)’s definition of
“plant”—common ownership, proximity of facilities, and the use of common equipment and
infrastructure such as roads and connections to the electric grid—all favor the conclusion that
Unit 3 would be part of the same “plant” as Units 1 and 2.

We conclude that the proposal for North Hartland Unit 3 does not demonstrate that it is a
separate plant as required by the statutory definition of plant incorporated in Section 3.2.3 of the
RFP. Although it would not be contiguous in time of construction with Units 1 and 2, Unit 3

13 The standard-offer contract for North Hartland Unit 2 provides a levelized price of $0.1228/kWh. The
$0.1224/kWh amount referenced by GMP is the rate for this year.

14 Programmatic adjustments to the standard-offer program, Docket 8817, Order of 10/20/17 at 14.
Case No. 17-3935-INV Page 8

would be under common ownership and would substantially overlap with the existing equipment
and infrastructure of those units. Our conclusion that Unit 3 is not a separate plant implicates
both the statutory 2.2 MW capacity limit of the standard-offer program and the RFP’s exclusion
of projects already selling output to VEPP or Vermont distribution utilities. We recognize that
our conclusion is contrary to the technology diversity goals of the standard-offer program
reflected in 30 V.S.A. § 8005a(c)(2) and may reflect an ongoing challenge for proposals in the
hydroelectric power category. However, because the definition of “plant” is statutory in origin,
we must apply that definition as written.

Accordingly, we do not authorize the Facilitator to award a contract to the North Hartland
Unit 3 proposal. As specified in our March 16 Order, the remaining 3.25 MW of unused
capacity from the Technology Diversity Developer Block is allocated to the Price Competitive
Developer Block because there are no other proposals in the Technology Diversity Developer
Block.15

B. Price Competitive Developer Block
The Facilitator recommended rejecting four of the proposals received in the Price
Competitive Block—Power Factor Solar, Vergennes Solar, Charlotte Solar, and St. Albans
Solar—for the reasons outlined in the June 15 Order, about which we requested comments. We
address below the comments received on the various deficiencies identified by the Facilitator.
In future RFPs, we encourage bidders to carefully review their submissions prior to
submitting them to the Facilitator and even consider an in-person review of the materials with
the Facilitator to determine that the RFP requirements have been satisfied. This will ensure that
all bids submitted may be evaluated on their merits rather than rejected based on technical
deficiencies and streamline the RFP bid-review process.

Deficient Project Maps
Section 3.2.4 of the 2018 RFP specifies the requirements for the project maps that must
be included with each proposal. Section 3.2.4 is a subsection of Section 3.2, which is titled
“Mandatory Requirements” and explains that “[p]roposals must satisfy the mandatory
15 March 16 Order at 50-51.
Case No. 17-3935-INV Page 9
requirements outlined in this section to be considered further in the evaluation process.” The
Facilitator recommended that the Commission reject the proposals from Power Factor Solar,
Vergennes Solar, and Charlotte Solar because the project maps included with the proposals did
not comply with Section 3.2.4.

The Department, GMP, and MHG Solar all agreed with the Facilitator that the project
maps provided for Power Factor Solar, Vergennes Solar, and Charlotte Solar do not comply with
Section 3.2.4 for the reasons stated in the Facilitator’s recommendations. NextEra, the
proponent of the Vergennes Solar and Charlotte Solar projects, also submitted comments
agreeing with the Facilitator’s conclusion that NextEra’s project maps “do not comply with
Section 3.2.4 of the 2018 RFP in several minor respects.”

NextEra offered to provide corrected maps to the Facilitator and the Commission. Power
Factor Solar did not submit comments addressing the deficiencies identified by the Facilitator,
but a representative of the project, Andrew Streit, attempted to submit a corrected map for the
project through the Commission’s ePUC system (case no. 18A-1920).

The project map requirements of the RFP are part of the “mandatory requirements” of
Section 3.2 of the RFP and we cannot accept corrected maps after the RFP deadline. Permitting
project proponents to modify their bid proposals after submission would prejudice participants
that submitted proposals that fully complied with the requirements of the RFP. Furthermore, we
do not agree that the deficiencies in the project maps were minor. These requirements are
included to facilitate proposal review and promote the likelihood that projects receiving RFP
awards will be developed. Accordingly, we accept the Facilitator’s recommendation and reject
the proposals from Power Factor Solar, Vergennes Solar, and Charlotte Solar for their failure to
comply with Section 3.2.4 of the RFP.16

Missing Bid Forms
The proposal submitted for the St. Albans Solar project did not include a bid form, which
is required by Section 2.2 of the RFP. NextEra states that its records show that a bid form was
16 The price proposals for Charlotte Solar and Vergennes Solar were also not in compliance with the RFP
requirements that prices be stated “to four decimal places in $/kWh.” See RFP Section 3.3.3. Because we are
rejecting these proposals based on the deficiencies in the project maps, we do not address whether stating prices in
$/MWh is the type of “minor” deficiency that is within the Facilitator’s discretion to disregard.

Case No. 17-3935-INV Page 10
included as Exhibit 5 to the St. Albans bid package. The bid package did not include an Exhibit
5 when the proposals were opened by the Facilitator at the Commission’s offices.
Comments received from Allco, the Department, GMP, and MHG Solar all state that the
omission of a completed bid form is not a minor deficiency that can be disregarded by the
Facilitator.

A bid form contains information about the proposed project that is necessary to evaluate
the eligibility of that project for the standard-offer program. For example, due to the missing bid
form, we are unable to determine the bid price for the St. Albans Solar proposal or whether the
project is already selling output to VEPP or Vermont distribution utilities.17 We therefore accept
the Facilitator’s recommendation and reject the St. Albans Solar proposal.

Additional Issues Raised by Allco
Although it was not an issue on which the Commission requested comments, Allco
asserts that the site-control documents submitted by MHG Solar for the Furnace Brook Solar
proposal do not give the project site control for the full 25-year term required for solar standardoffer
contracts. According to Allco, the purchase agreement for the Furnace Brook site includes
a buyback option that allows the seller to repurchase the property beginning 25 years from the
closing date of the sale. Allco asserts that because the closing date must occur before
construction of the Furnace Brook Solar project can begin and because the 25-year standardoffer
contract period for solar projects runs from the commissioning date of the project, the sitecontrol
period will be less than the standard-offer contract period.

MHG Solar responded to Allco’s comments and explained that Allco’s reading of the
option agreement and the purchase-and-sale agreement is incorrect. MHG Solar explains that
Section 5(a) of the option agreement gives MHG Solar a right of entry to begin site evaluation
and preparation during the two-year period beginning on March 18, 2018. The purchase-andsale
agreement, MHG Solar continues, includes an option for the current owner of the property
to repurchase the property that may be exercised 25 years after the closing date of the purchase

17 The proposal submitted by Power Factor Solar included a bid form, but the form was not signed. Mr. Streit
filed a signed bid form in case no. 18A-1915 attempting to cure the defect. Because we have already agreed with
the Facilitator’s recommendation to reject the Power Factor Solar proposal because of problems with its project
map, we need not also consider Power Factor Solar’s failure to sign its bid form.

Case No. 17-3935-INV Page 11
of the project site by MHG Solar. The repurchase option expires after MHG Solar removes all
structures and equipment from the property or 24 months from the 25th anniversary of the closing
date on the purchase-and-sale agreement, whichever occurs first. MHG Solar explains that the
two-year option up front, the 25-year ownership period, and the decommissioning period of up to
two years at the end of the 25-year ownership period provide site control for the full duration of
the standard-offer contract.

After reviewing the site-control documents, including the option agreement and the
purchase-and-sale agreement, we agree that MHG Solar has satisfied the RFP’s site-control
requirements. The option period permits MHG Solar to undertake significant site preparation
prior to purchasing the project, and the repurchase option provides for the removal and
decommissioning of the project. As MHG Solar explains, the option periods combined with the
ownership period provide MHG Solar with 29 years of site control, which would exceed the 25-
year period of a standard-offer contract for a solar facility.

IV. AWARD GROUP
Of the 6.375 MW allocated to the Developer Block, 4.175 MW was initially allocated to
the Technology Diversity categories and the remaining 2.2 MW was allocated to the Price
Competitive block. The 3.25 MW of unused capacity from the Technology Diversity categories
is added to the Price Competitive block, resulting in a total available capacity from the 2018
allocation of 5.45 MW. Additionally, the withdrawal of the Windsor Tech Solar project from the
2017 RFP award group contributes an additional 1.222 MW to available capacity for the 2018
RFP, yielding a total of 6.672 MW of capacity available to the Price Competitive Developer
Block for 2018.

We have already awarded contracts to 1861 Solar, Tomlinson Wind, and Middlebury
Resource Recovery. The Facilitator initially recommended awarding contracts to Bennington
East Solar, Furnace Brook Solar, and Warner Solar for a total of 5.6 MW on the assumption that
a total capacity of 4.950 MW was available and recommended that Stark Solar, Otter Creek 1
Solar, and Otter Creek 3 Solar be placed in the 2018 reserve group. The Facilitator updated its
recommendations to include an award to Stark Solar to account for the additional capacity

18 June 15 Order at 2-3.
Case No. 17-3935-INV Page 12

available from the withdrawal of the Windsor Tech Solar project from the 2017 award group.
Additionally, the elimination of the North Hartland Unit 3 project and the withdrawal of the
Bennington East Solar project proposal allow for the award of an additional contract to Otter
Creek 1 Solar. Accordingly, we direct the Facilitator to enter into standard-offer contracts with
the following four additional proposals: Furnace Brook Solar, Warner Solar, Stark Solar, and
Otter Creek 1 Solar, for a total award of 8.3 MW. These results are summarized in the table
above.

V. ORDER
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED by the Vermont Public Utility
Commission (“Commission”) that:
1. The Standard Offer Facilitator is directed to make standard-offer contracts available
to the proposals listed above.
2. The Standard Offer Facilitator is directed to place the Otter Creek 3 Solar project in
the Reserve Group.

SO ORDERED.
Case No. 17-3935-INV Page 13

Dated at Montpelier, Vermont, this 20th day of July, 2018.
Anthony Z. Roisman
Margaret Cheney
Sarah Hofmann