Virginia Wind Responds to Highland New Wind Development Air Quality Benefit Claims

The Honorable Mark C. Christie, Chairman
The Honorable Judith W. Jagdmann
The Honorable Theodore V. Morrison, Jr.
State Corporation Commission
c/o Clerk of the State Corporation Commission
Document Control Center, P.O. Box 2118
Richmond, VA 23218-2118

RE: Highland New Wind Development LLC – Case No. PUE-2005-0010.

Dear Chairman Christie and Commissioners Jagdmann and Morrison:

On July 5, 2006 Alden Hathaway and Deborah Jacobsen submitted comments to the SCC
purporting to:

• Provide factual information on the benefits of wind energy in reducing emissions of air
pollutants,
• Rebut comments that we submitted to the SCC on March 29, 2006 on behalf of Virginia
Wind.

Mr. Hathaway and Ms. Jacobsen made their arguments in part by reference to an appended
document, “Avoided Air Emissions from Electric Power Generation at Three Potential Wind
Energy Projects in Virginia,” prepared by Colin High and Kevin Hathaway of Resource Systems
Group (RSG). This document and the comments of Mr. Hathaway and Ms. Jacobsen were
resubmitted to the SCC on August 4, 2006 by Highland New Wind Development (HNWD) in
response to a June 30, 2006 report to the SCC by the Virginia Department of Environmental
Quality (DEQ). HNWD presented this material in response to a recommendation in the DEQ
report calling for a “backdown study” to quantify avoidance of air pollution that would result due
to the wind project.

Although we agree with many of the points made by Mr. Hathaway and Ms. Jacobsen
concerning the negative effects of air pollution on human health and the environment, we do not
agree that onshore wind development in Virginia represents a meaningful response to these
problems. As we described in our March 29, 2006 comments, the potential benefits of onshore
wind development and the HNWD project in particular, are extremely small and the potential
environmental costs are large.

Mr. Hathaway and Ms. Jacobsen have sought in their comments to the SCC, as well as in other
venues, to make the case that substantial air pollution benefits can be obtained through wind
power development in the central Appalachian region. Their arguments are flawed in multiple
respects.

Specifically concerning the proposed HNWD project:

1. Mr. Hathaway and Ms. Jacobsen present an unusual and extreme argument that the emissions
displaced by the proposed HNWD project would be entirely from coal-fueled electrical
generating units rather than from a mix of generator types, including the cleaner quick-start
units that are generally higher on the economic dispatch order. They base this argument on
analysis provided in the above cited RSG document, which relies extensively on confidential
and summary data that are not available or provided for independent review. These data
include wind power data for other wind project sites, as well as data that support the
designation of the specific displaceable electrical generating units (EGUs) used in their
analysis. This lack of transparency is well outside the norm for either scientific assessment or
public policy deliberation, and it is especially unacceptable in a contested case such as this.
In addition, no data are provided that would allow analysis of wind power potential and
temporal patterns at the proposed project site. Without these data, it is impossible for other
parties, including the SCC, the DEQ, and the concerned public, to evaluate the merits of the
analysis presented.1

2. Mr. Hathaway and Ms. Jacobsen assert that our March 29, 2006 submission to the SCC
included incorrect estimates of Virginia’s projected NOx and SO2 emissions under existing
regulatory programs. They failed to recognize, however, that the estimates we presented were
for emissions from all sources rather than from EGUs only. This was indicated in our
comments and documented in the data sources we cited. In the interest of further
improvement in air quality it should be acknowledged that substantial reductions in
emissions of NOx and SO2 from EGUs have been achieved in recent years, that substantial
additional reductions are projected, and that most of the remaining emissions are associated
with non-EGU sources. For example, wind power development can contribute very little to
reducing ozone, which is mostly related to emissions from the transportation and other non-
EGU sectors.2

3. Mr. Hathaway and Ms. Jacobsen claim, based on the RSG analysis, that the HNWD project
will reduce annual emissions of NOX by approximately 3.85 lbs/MWh. This is more than
twice the 1.5 lbs/MWh rate adopted by five of the six eastern states that have adopted a
renewables or energy efficiency set-aside program to retire NOX allowances.3 Although Mr.
Hathaway and Ms. Jacobsen make no specific claims in their submission to the SCC about
reduced emissions of sulfur dioxide (SO2), the RSG report which they cite and which HNWD
has also submitted to the SCC, does claim that wind projects in Virginia will reduce SO2
emissions at an average rate of 5.32 lbs/MWh. The RSG report, however, fails to
acknowledge that wind projects will not affect regional SO2 emission levels, which are
established by an emissions cap, and that no provisions are in place for retirement of SO2
allowances.4

4. Mr. Hathaway and Ms. Jacobsen dramatically overstate the potential CO2 emissions
displacement that might be attributable to the HNWD project. Even if it were correct that all
of the electricity generated annually by the proposed wind project would displace coal-fueled
electricity generation, a point we do not accept, their calculation (top of page 4 in their
comments) that 212,674 tons of CO2 would be displaced annually is off by more than 100%.
Using both the 2037 lbs/MWh emissions rate that they indicate for coal generators and the
capacity factor of 29.51% that they indicate for this wind project, the actual displacement of
CO2 would amount to 102,683 tons – not 212,674 tons.5

5. Even if we accept the arguments presented by Mr. Hathaway and Ms. Jacobsen, we still
reach the same conclusion that we presented in our comments to the SCC. That is, the
potential contribution of onshore wind energy development in Virginia to electricity supply
and emissions displacement is very small. For example, our calculation of CO2 emissions
offsets attributable to prospective wind development was based on the system average CO2
emissions rate for all EGUs in Virginia. Mr. Hathaway and Ms. Jacobsen argue for use of the
CO2 emissions rate for coal-fueled generating units, or 1.65 times the system average rate.
This difference is immaterial given the small amount of electricity that would be supplied by
HNWD. Based on the system average emissions rate, the offset for the proposed project
would be equivalent to only 0.037% of Virginia’s projected 2015 CO2 emissions. Based on
the coal-fueled unit emissions rate, the offset for the proposed project would still be
equivalent to only 0.061% of Virginia’s projected 2015 CO2 emissions. To put these offsets
in context, consider that CO2 emissions rates in Virginia are increasing 2.1% per year (based
on 1990-2001).6

Mr. Hathaway and Ms. Jacobsen also observe that Virginia has adopted a policy to foster
renewable energy development, and they state that the SCC should consider this policy,
including its emphasis on clean energy sources and air emission reductions in ruling on the
HNWD project proposal. We agree, but we further observe that normal standards of scientific
and public policy debate are still in effect. There is nothing in the Commonwealth’s Energy
Policy that argues for uncritical acceptance of unverifiable analysis and benefit claims.

Moreover, the policy also calls for ensuring that energy development is located to minimize
impacts to pristine natural areas and to be as near to compatible development as possible. By any
reasonable measure, the HNWD project fails in this respect.

Despite the arguments of Mr. Hathaway and Ms. Jacobsen, we reaffirm the comments that we
submitted to the SCC on March 29, 2006. As is common for the usual case in which the data
required for detailed dispatch modeling are unavailable, we have used system average emissions
rates to calculate emissions displacement attributable to wind power development. Our analysis
based on this approach indicates that any air quality benefits that might be obtained from the
proposed HNWD project will be insignificant. Although we have serious doubts about the coal-
unit displacement rates proposed by Mr. Hathaway and Ms. Jacobsen, we note that the air quality
benefits they would attribute to the proposed project are still insignificant.

Finally, we request that the DEQ and the SCC defer consideration of the emissions displacement
or “backdown” analysis presented by Mr. Hathaway, Ms. Jacobsen, RSG, and HNWD until all
the data that underlie the analysis, including detailed wind data for the proposed project site, are
provided and made available for unrestricted public review and verification. We further request
an opportunity to provide additional comments concerning any such analysis once the data
necessary for informed review are made available.