Kaye Scholer Designs "First of its Kind" Offshore Wind Regulations
Washington, DC/New York: Kaye Scholer represented Staff to the Maryland Public Service Commission in assisting with the design and drafting of regulations to implement the development of significant offshore wind capacity off the coast of Maryland. After two lengthy days of hearings and deliberations, the Commission formally adopted the regulations on May 12, 2014, which are expected to be codified later this summer.
In April 2013, the Maryland State legislature passed the Maryland Offshore Wind Energy Act of 2013 (OWEA), which established the general framework for the development of offshore wind off the coast of Maryland. OWEA mandated that the Public Service Commission adopt regulations to implement the statute by July 1, 2014. Kaye Scholer, along with a team of technical, economic and procurement consultants, worked with Staff to the Public Service Commission to design and draft a comprehensive set of regulations covering each step in the process, including receiving applications, evaluating the applications, and creating a structure to enable the financing of large offshore wind projects.
The regulations are the first of their kind in the United States that create a funding mechanism for new projects through the sale of renewable energy certificates to electricity suppliers in Maryland, as opposed to the sale of energy through traditional power purchase agreements. OWEA requires a certain amount of each electricity supplier’s portfolio to include energy from offshore wind generation. The regulations create a mechanism through which suppliers make scheduled payments into an escrow account over a period of up to 20 years. In exchange they receive offshore wind renewable energy certificates (ORECs) generated by the offshore wind project that satisfy OWEA’s annual OREC purchase requirements. Offshore wind projects receive regular payments over a period of up to 20 years in exchange for creating ORECs; through this system, developers and their financiers receive a consistent and reliable stream of payments.
During the design and drafting period, Commission Staff and the Kaye Scholer team held 12 public and several other private stakeholder meetings and solicited feedback from electricity suppliers, utilities, financiers, federal and state agencies, project developers and other interested parties. The resulting framework leverages the knowledge and expertise of the industry, policy-makers and consumer advocates and was described by various stakeholders who submitted comments to the Public Service Commission as a “balanced approach” in dealing with public policy objectives, protecting consumers, and creating a financeable structure.