OVERCOMING KEY BARRIERS TOOFFSHORE WIND DEVELOPMENT

IN THE NORTHEAST

Michael Ernst, Esq, Director of Regulatory AffairsPace Law School & Environmental Review

White Plains, NY March 2, 2012

Introduction to Tetra Techy Tetra Tech, Inc.

y Founded in 1966y Publicly traded on NASDAQ (TTEK)y FY 2010 Revenues - $2.2 billion.y More than 12,000 employees in 330 offices worldwide.

y Ranked #1 Wind Development Consulting Firm in 2010 andTop 10 Environmental Firms by Engineering News Record

y Full-Service Firm Providing Integrated Servicesy Consulting (Siting, Surveys, Permitting), Engineering & Construction

y Supported Development of over 1000 Energy Projects last decadey Supporting 450 wind projects totaling 22,000 MWy Supporting 65 utility scale solar projectsy 30 Energy Construction projects 2500 MW and $500 My Siting & Permitting 10 Offshore Wind Farms

y Atlantic Coast: Maine, Rhode Island, MA, NY, NJ, DE, MD, VAy Lakes Erie & Michigan

Outline of Presentationy Offshore Wind Resource for Coastal States & New Yorky Federal Offshore Wind Leasing Process

y Identify Wind Energy Areas/Environmental Assessmentsy Requests for Information & Lease Block Nominationsy Competitive Bidding or Non-Competitive Processy Site Assessment Plan (Surveys) & Construction & Operations Plan

y Offshore Submarine Cablesy Leasingy Proposed Cables

y Federal & State Approvalsy Environmental, Legal, Technical

& Financial Challengesy Policies to Overcome Challengesy Status of Northeast Leasing

y MA, RI, NJ, NY

Introduction to Offshore Wind Resource

WindPowerClass

ResourcePotential

Wind PowerDensity at 50 mW/m2

Wind Speedat 50 mm/s

a Wind Speedat 50 mmph

a

34567

FairGoodExcellentOutstandingSuperb

300 - 400400 - 500500 - 600600 - 800800 - 1600

6.4 - 7.07.0 - 7.57.5 - 8.08.0 - 8.88.8 - 11.1

14.3 - 15.715.7 - 16.816.8 - 17.917.9 - 19.719.7 - 24.8

a Wind speeds are based on a Weibull k value of 2.0

Wind Power Classification

New York Offshore Wind Resourcey Renewable Portfolio Std: 24% by 2013

X MWs??y Long Island Power Authority RFP

2001??y Cancelled: Rising Costs

y NYPA Great Lakes RFP 2008??y RFP: 3 Bidder Interviewsy Postponed: High Costs

y LIPA All Resource RFP 2010??y Deepwater proposes cable from Rhode

Island Wind Farmy Cable interconnection to Mass.

y LIPA, Con Ed, NYPA Unsolicited LeaseNomination off Long Island

[Add MAP=>

New York Offshore Wind Proposalsy Renewable Portfolio Std: 24% by 2013

or about 8000 MWsy Long Island Power Authority RFP 2004

y Costs rose to 29 c/kwhy NYPA Great Lakes RFP 2009

y RFP: 3 Bidder Interviewsy Postponed: High Costs

y LIPA All Resource RFP 2010y Deepwater proposes cable from Rhode

Island Wind Farmy Cable interconnection to Mass.

y NYPA, LIPA, Con Ed 2011 UnsolicitedLease Nomination 13M off Long Island

NYPA 2011 Site Nomination =>

Alternative Energy Rulemakingy EPACT 2005 directs issuance of rules within 270 daysy Programmatic EIS: May 2005 – December 2006

y 1000 pages of analysis plus appendicesy PEIS Conclusion: “In general, most impacts would be negligible to

moderate for all phases of wind energy development assuming thatproper siting and mitigation measures are followed.”

y Notice of Proposed Rulemaking: July 9, 2008y Tetra Tech helped draft AWEA Offshore Wind Working Group comments on

Draft Rule to reduce proposed 3 Environmental Impact Statementsy Final Rule June 29, 2009 (233 pages in Federal Register)

y Minerals Management Service acknowledged final lease process may take5-7 years or more due to 2 EISs

y Negotiations with MMS, lead NEPA agency, in late 2009 to reduce length ofprocess consistent with NEPA and other federal laws:Level of NEPA review commensurate with likely environmental impacts

y Offshore Wind Development Coalition meetings with DOI and BOEMRE onmore streamlining of process in January, March & April 2011

y BOEM Smart from the Start Program: BOEM EA for Site Assessment

BOEM Lease Processy State Task Forcesy Identify Area of Interest aka a

or Wind Energy Area (WEA)y Request For Interest (RFI)y Call for Information (Call)y Determination of Competitive Interesty Lease issued for site assessmenty Site Assessment Plan (SAP) & Surveysy Construction & Operations Plan (COP)y File Permit Applicationsy NEPA Review

y Draft EIS (Third Party Contractor)y Final EISy Record of Decision

y COP approvedy Certified Verification Agent approves Final

Design & Construction Plans

Request for Interesty Request for Interest Process

y State Task Force Sets Area of Interesty State Constraint Analyses & Meetings

y Request for Interesty Nominations for specific lease blocksy Demonstrate Legal, Technical &

Financial Qualificationsy Public comments on any concerns

y Call for Nominations & Informationy Environmental Assessment for Site Surveys

y Determination of Competitive Interesty Geographic overlap of nominated sitesy Total nominated capacity exceeds state’s

maximum targety If either, initiate Competitive Process

DelawareConstraints Map

Competitive Interest ProcessCompetitive Interest Process

Call for Information & NominationsArea Identification by BOEM after State InputNEPA Review & Coastal Zone ManagementAct Consistency DeterminationProposed Sale Notice & 60-day CommentsFinal Sale NoticeCompetitive Auction Process Options:

Sealed biddingAscending biddingTwo-stage biddingMultifactor bidding(30 CFR §285.221)

Bid EvaluationIssuance of Lease

Site Assessment Plany Survey Plan Development

y Per the BOEM Rules, the SAP or GAP must:y Describe the survey activities proposed to characterize the development area;y Demonstrate how site assessment activities will collect the necessary information and data

required for the COP filing; andy Show how the developer will comply with all relevant Federal statutes when conducting

survey activities.y The following 5 offshore site assessment surveys will play an integral part of

offshore wind facility siting, planning, permitting, construction and operation.y Avian and Bat Surveysy Marine Mammal and Sea Turtle Surveysy Geological, Geophysical and Hazard Surveysy Marine Cultural Resource Surveys; andy Benthic Surveys

y Each survey plan should be developed in closecoordination with resource agencies of concernbefore implementation.

y Regional Environmental Assessments will reducestudy & review requirements for standard surveys

Construction & Operations Plan

y BOEM COP Regs & Guidelines (30 CFR §285.627)y Site Investigation Report - Survey Results (shallow

hazards, geological, geotechnical, biological, archeological)y Construction & operation concepty Compliance with Lease Stipulationsy Interconnection cables and power linesy Decommissioning Plany Mitigation Measuresy List of Federal, State & Local Approvalsy NEPA Compliance Analysisy Oil Spill Response Plany Safety Management System

Offshore Submarine Cables toInterconnect Renewable Projects to Gridy BOEM Regulations for Cable Associated with Offshore

Wind Farmy A commercial lease will confer the right to a “project

easement” to install on the OCS “gathering, transmission,and distribution cables…” 30 CFR 285.200(b)

y Preliminary transmission plans submitted with theConstruction & Operations Plan (COP) or GeneralActivities Plan (GAP)

y Terms and conditions for the project easement will beissued by BOEM in an addendum to the lease

Offshore Cables for Renewable Projectsy Regulations for Independent Cable to Transmit Offshore

Renewable Energyy BOEM will “issue ROW grants to allow for the construction and

use of a cable or pipeline for the purpose of gathering,transmitting, distributing, or otherwise transporting electricity …generated or produced from renewable energy not generated ona lease issued under this part.” Final Rule, 74 Federal Register19647; 285.300(a).

y BOEM will consider “on a case-by-case basis, renewable energyROWs supporting the transmission of energy from oil or gassources that is combined with energy from sources other than oilor gas, provided that renewable energy generated from sourcesother than oil and gas is primarily what is being transmitted.” 74Fed Register 19671

y Application for ROW (200 foot width plus area necessary forsubstation(s)y Competitive Interest Determination 285.307y General Activities Plan & NEPA Review 285.306

y Atlantic Wind Connection filed ROW Request with BOEMMarch 2011

Offshore Submarine Cable Backboney Atlantic Wind Connection

y 6000 MW HVDC Cabley Interconnections in

NY, NJ, DE & VAy Filed application for lease &

GAP at BOEM in March 2011y Competitive Interest Notice

y Deepwater Wind Cabley Rhode Island Sound Wind

Farm Cable to Long Islandy Mass. RFI

y 2 Cable Bidsy Dominion Resources Study

y Virginia Cable Study multiple wind farmsy Delaware Atlantic Coast

Weather Studyy Great Lakes Cable Backbones?

y Lake Eriey Canada & US interconnections

Major Federal, State & Local Approvalsy Federal, state and local approvals and consultations for the project will include but not

be limited to:y CZMA Consistency Determination for SAP and COP (NY Dept. of State)y NOAA Letter of Concurrence to support Geophysical surveys activitiesy USACE Section 10/404 Permity EPA Air Permit (construction vessel emissions)y NOAA Incidental Harassment Authorization/Incidental Take (IHA/ITS) Permits

under ESA and Marine Mammals Protection Acty USFW Consultation and possible Incidental Take Permit under ESA for Eagles or

EFH for endangered species, and Migratory Bird Treaty Acty Advisory Council on Historic Preservation & SHPO Consultation under NHPAy Dept. of Defense Consultation for military practice areas and defense radary USCG Private Aid to Navigation (PATON) and Local Notice to Mariners (LNM)

y Article VII CPCN from NY PSC (no Article X jurisdiction out of state)y Submerged Lands Easement (NY Office of General Services)y NY DEP: Art.XV Protection of Waters Permit, Tidal and Freshwater Wetlands

Permits, Coastal Erosion Permit, 401 Water Quality Certification,y NPDES Stormwater Construction Permity NYSDOT Highway Construction Permit

y Local zoning and building code approvals for interconnections & substations

Hydrokinetic Projectsy BOEM must first issue a lease, easement or Right-

of-Wayy FERC may then issue a license to construct and

operatey March 2009 Memorandum of Understanding FERC

& BOEM

Environmental Challenges

¾Significant Environmental Issues¾Birds & Bats – USF&W wants 3 yr studies¾Commercial Fishermen oppose any infringement of

fishing grounds or spawning areas¾Marine mammals – Collision risk during construction¾ Icing in Great Lakes – Collision with floating icebergs¾Cultural Issues – Native American historic sites¾Radar Interference for DOD security, aircraft, weather¾Shipping routes: adequate buffer zones, warning devices¾Visibility from Sensitive Viewpoints on Shoreline

Overcoming Environmental Challenges¾Significant Environmental Issues¾Birds & Bats – 3 years of pre-construction studies +

post construction¾Commercial Fishing – Avoid or accommodate within

wind park¾Marine Mammal – Construction warning systems¾ Icing – Foundation skirts & equipment protection¾Cultural Issues – Archeological studies – GGARCH

Guidelines¾Radar Interference – Negotiate with other agencies¾Shipping routes – Negotiate navigation buffers &

warning devices¾Visibility from Sensitive Viewpoints – Minimize by

siting further offshore

Legal & Technical Challenges

¾Permitting Process¾ First projects & impacts reviewed under current laws which

did not anticipate offshore wind projects & interconnections¾New Legislation must be enacted & then new regulations

¾Transmission Interconnections¾ Sensitive coastal habitat: tidal and freshwater wetlands¾ Inadequate capacity of shoreline grid along most shores¾ Michigan Study: ~$200 Million for new lines & upgrades in U.P.

¾New lines will be needed after initial offshore wind parks¾ ISO-NE, MISO & PJM policy requires new generator to pay

for interconnections and grid upgrades

Overcoming Legal & Technical Challenges

¾Permitting Process¾ Negotiate coordinated and streamlined siting under current and

new laws¾ NY Joint Application¾ Expedite enactment of new legislation & drafting new rules

¾Transmission Interconnections¾ Study and Subsidize Grid Upgrades¾ FERC 1000: ISOs must consider renewable policies in regional

transmission planning & cost allocation¾ Proposed offshore submarine cable backbones

¾ Atlantic Wind Connection (NJ to VA, initially)¾ Deepwater Rhode Island Sound to Long Island

¾ New Integration Technologies: Energy Storage

Offshore Wind Financial Challenges¾Total Offshore Wind Development Costs

¾ Construction of Offshore Foundations with Special Vessels¾ European Supply Chain for Turbines & Cables¾ European Construction Expertise for Turbines & Cables¾ Production & Investment Tax Credits

¾ Short Term¾ Expiring 2012

¾U.S. Offshore Wind Project Prices¾ Fishermen’s Energy Atlantic City Pilot (20 MW)

¾ NJ BPU denies ORECs at ~30 cents/kwh¾ Deepwater Block Island Rhode Island Pilot (30 MW)

¾ Legislative Act to override RIPUC rejection at 24.4 cents/kwh¾ Cape Wind, Cape Cod (454 MW)

¾ Legislative Mandate & Merger Settlement to sell 77% at 18.7 cents/kwh

Overcoming Financial Challenges¾ Offshore Wind Development Cost Savings

¾ Manufacture Turbines, Components, Cables in U.S.¾ Manufacturing Tax Credits¾ Offshore Submarine Cable Backbone for Many Wind Farms¾ Construct U.S. Construction Vessels; Train U.S. Crews¾ Extend Production & Investment Tax Credits¾ Competitive Long Term Contract RFPs¾ Broad Net Benefits Standard of Review for PPA for PUC OKs¾ Increase Ocean Renewable Energy Credits (ORECs-NJ)¾ Federal and State Loan Guarantees¾ Federal and State Low Interest Loans¾ Accelerated Depreciation¾ Federal R&D (foundations; turbines, e.g.,floating)

¾Future U.S. Offshore Wind Project Prices¾ Deepwater projects low teens/kwh for 1000 MW wind farms¾ DOE & U.Maine project 10 cents/kwh by 2030

Statoil Floating Wind Turbiney Hywind Mainey Hollow Cylinderseawater & sand

y Siemens 2.3 MWTurbine – 2 yearsoff Norway at50% capacity

y Maine Pilot: 4Siemens 3 MW23 miles offshore500 feet deep

Questions? ? ?Contact Info:Michael Ernst, Esq.Director, Regulatory AffairsTetra Tech Energy Programy 617 443-7520y Michael.Ernst@tetratech.comy 160 Federal StreetSuite 300Boston, MA 02110

Overcoming Challenges: Cross Sound Cable CT-NYy 25 Mile Submarine Cable connecting New Haven, CT to Shoreham, NYy 4 Shellfishermen asked for $8 million for minor, temporary impactsy CT Attorney General became interested and then outspoken opponenty CT Siting Board rejected initial project routey Army Corps agrees to Permit 1st Cable under Fed Navigation Channely CT Siting Board approves new route and mitigationy Unanticipated Bedrock Prevents Full Compliance with Permitsy Negotiated Settlement with Shellfishermen then State Officialsy State lawsuit, DOE Order, FERC Application, partial reburial: $25M 4 yrs

y LESSONS:

y Appropriate siting and thorough initial and final environmental analysesy Early PR & Education Campaign for public officials, stakeholders, publicy Negotiate settlement with well-funded opposition earlyy Negotiate sufficient community compensation in PILOT agreement early

Massachusetts – Cape Windy Cape Wind

y USACE Application 2001y BOEM FEIS, Lease &

Construction & Ops Plany MA Energy Facilities Siting Bd

y Approved interconnectiony Chapter 91 Tidelands Licensey Development of Regional

Impact (Cape Cod Com’n)y Barnstable & Yarmouth OKsy Environmental Impact Report

y Appeal to State Supreme Courty Challenge to delegation of DEP

Chap.91 authority to EFSCy Appeal denied

Massachusetts – BOEM Cally BOEM Request for Information Dec.2010y 11 Bids for leases >2,000 sq. naut. milesy Commercial fishermen objected: => 1,000 milesy Call for Nominations

February 2012y Competitive

process 2013

Rhode Islandy Special Area Management Plan (SAMP)y RI-MA Area of Mutual Interesty 2 Unsolicited Nominations

y Deepwater Windy Neptune LLCy Both Qualified

y Call for Nominationsy February 23, 2012y Competitive Process?

BOEMWind Energy Area

New Jerseyy BPU RFP

y 3 Biddersy BOEM Call

y Nominations andComments dueJune 6

y Ocean RECs for1100 MW

y Barrier Beachesy Pinelandsy CAFRAy [NEW MAP OF WEA]