GEAC Meeting Minutes of December 17, 2009

GEAC Meeting Minutes of December 17, 2009

Governor’s Energy Advisory Council Meeting

Of December 17, 2009

PRESENT:

ARABIN, STEVENNRG

BACHER, DAVIDNRG

BRYANT, JACQUELINEDNREC/DEO

CHANDLER, PRISCILLAPJM

CHERRY, PHILDNREC

HODAS, DAVIDWIDENER SCHOOL OF LAW

LAMPTON, CARADNREC

MAUCHER, ANDREAPSC

MCRAE, ARNETTAPSC

MOORE, GLENNDPL

NELSON, BOBDELDOT

O’MARA, COLLINDNREC

PATTERSON, GARYDPC

SAMPLE, PAULSAMPLE, INC

SEBASTIAN, SUZANNEDNREC/DEO

SHEEHY, MICHAELDPA

SMISSON, CHARLIEDNREC/DEO

THOMPSON, STEVECHESEAPEKE UTILITIES

WINSLOW, DALLASPSC

I.CALL TO ORDER AND WELCOME – CHAIR DAVID R. HODAS:

The Governor’s Energy Advisory Council Meeting was brought to order at 9:40am by Chair David R. Hodas on December 17, 2009 in the Conference Room at The Department of Agriculture, 1221 College Park Drive, Dover, DE. Chairman David Hodas welcomed everyone, introductions were made, and handouts were available including copies of the March 26, 2009 GEAC Meeting Minutes.

II. REVIEW OF LAST MEETING ACCOMPLISHMENTS – CHAIR DAVID R. HODAS:The minutes of March 26, 2009 needed to be corrected. A copy will be sent to all council members for review prior to the next meeting via email for feedback.

III. REMARKS BY SECRETARY COLLIN O’MARA:

First off let me introduce myself, I am Collin O’Mara. I have met most of you and have had the pleasure of working with you on different things. I am the new guy, the crazy idea that the Governor had to lead DNREC. DNREC is a wonderful place to work but obviously a challenging department in a lot of ways. One of the things that I am excited about is this Governor understands the issues that you all are working through every day and has Energy front and center in his view of how we are going to hopefully get off this economic malaise. I am excited that we have a meeting now, because I would like this group as a resource to really help drive State policy. One of the most helpful documents that I received when I came on board was the Energy Plan. The ideas contained and the amount of work that everyone put into that is incredible. The Energy Plan gave me a quick crash course for what the best thinking is in a lot of different areas and the subcommittee work was really great. Hopefully you saw a lot of the ideas that were put forth in the document bubble up to the top of legislative session last year, a lot of the things that the Governor has been talking about and the way we are trying to pursue it. One of the challenges that I would like to bring back to thisgroup is how do we take the next steps with that plan and make sure we are taking the best thinking and prioritizing some of the things that are having the biggest economic impact and using it as a road map as much as we can for where we need to get at the State. The Energy conversation in the Country for a long time has been about reliability and cost and in Delaware it needs to be the same thing. We are facing some of the highest charges in the Country. Down south where there are some concerns about reliability in different parts but at the same time we need to move to the other part of the energy equation, looking at the environmental impact and potential cost and benefits as well as the public health cost and benefits. So how do we look at those four things together; cost, reliability, environmental impact and health outcomes? I would use that as a starting point as we are looking at different choices. One of the issues I would like to talk about with all of you is the cost challenges we are facing because of the payments to PJM. The combination of increased efficiency to reducing demand, we are looking at transmission capacity and new generation and what that new generation should be from and making sure it’s a healthy mix but also not making investment that are going to have a long term adverse impact. Having those tough conversations that I think you all have been having for a long time, but I am sure it has been raised to the level of the Governor as frequently has it should be. Then looking at the economic opportunities from different sources, there is incredible opportunities involved building infrastructure, whether its transmission or an actual base load facilities in different fossil fuels or renewables. Obviously the Governor is extremely interested in making sure we have an all of the above solution on the renewable side. There has been a false debate, in my eyes at least in the State between distributed solutions or utility scaled solutions, like off shore wind. We are going to need both and more, but at the same time as we are bringing things on line. How do we deal with some of the transmission issues, some of the liability concerns and being thoughtful has we are trying to bring new generation on line from renewable sources? And then at the end of the day for us it’s about job creation. Energy is accentual to the economy andfinally people in DC are seeing that. Whether it is working with fossil fuels plants becoming cleaner and making sure we have a steady supply of power or moving into renewables. The job creation opportunities in this economic down turn are incredible. We need to not just be a consumer of technology but actually start manufacturing, all the better for the economy. You have seen this kind of thinking in the way the Governor went about trying to fill the GM plant after it went down. There are a bunch of ideas out there; Hummer was looking for another location at one point.We made a conscience play to look at different companies likeFisker and others that we think will have a long termmarket, because they are trying to be ahead of the curve where Federal policy is. Obviously it is an incredible opportunity if we can get Blue Water Wind off the ground and we are extremely excited about NRG’s leadership instepping in. Between David, Ray and Drew really making that happen is really incredible. So we are very, very excited about that. But how do we not just become a consumer of technology like Bremerhaven in Germany, England or in Denmark and actually start making things here and not just become perpetual importer of technology. If you do that in that market, you have to create market demand. If have to have sufficient demand to warrant the capital investments to actually build the turbines here otherwise there is not enough demand to just ship from overseas. Which is fine, but now we are trading our dependants on one kind of imported good to another one. So how do we actually get the job benefits? We would like to thank the folks on my team; Phil Cherry has done an incredible job helping on the offshore wind conversations. We were just down with FERC the other day talking about beginning transmission planning and how does the MAPP line intersect withthe need for a transmission backbone for perhaps offshore wind, how do we do this in a smart way. Creating jobs but also reducing our capacity challenges and also being sure in moving electrons efficiently and reliable resource. The SEU is off to a pretty good start. The rebate program, which was the first program that was launched, has been an incredible success, over 2,500 participants. Charlie and his team have done a great job making sure that’s moving. A lot of work left to do, a lot of opportunities still to see and a lot of money from the stimulus package that I would like to have some conversation with you all, about making sure we are using it wisely. Actually this is an incredible opportunity to do some innovative things. I think the challenge is how do we make sure we are moving money as quickly as possible in this economic down turn to get people to work and seize the opportunity for some efficiency and renewables. And also making sure we are on the same page, when we are putting forth application to the Feds for some of the competitive grants. We have not been as successful as maybe we should have been as a Region so far with some of the competitive pools. The incredible work that Delmarva is doing on the Advanced Meters is absolute cutting edge. And in some ways I think they are being penalized in the vetting process because it seems like it was going to happen anyway. So let’s fund a project in Alabama that probably is not going to happen using the stimulus money instead of funding great projects here. And we are in good company, my former Utility in California;PG&E is the same way. They were left out of the Smart Grid pot of money as well. There are great ideas that come from Chesapeake Utilities as well. They are looking at increasing our distribution capacity and moving towards cleaner fuels, which makes a lot a sense. So how do we do this in a more coordinated way as we are working with the Federal delegation? There is a lot of money left over and DOE how no idea how to get a lot of it out quickly. I think if we are all on the same page and we could actually make a pretty big impact. The exciting thing for me is that everyone in their own way around this table is doing a lot of innovative things right now, whether it’s the work that NRG is doing to put the controls on units three and four, whileunits one & two go to Blue Water. Some exciting ideas coming out of the Petroleum industries in different ways, obviously there are a lot of opportunities. But the question is how we use this forum to find a way that we all are on the same page to try to have a collective vision. I think the State Energy Plan is a good first stepwith a lot of good ideas. I am not confident that it took the next step of becoming a kind of natural road map for priorities. How do we sift through the 50 to 100 recommendations and say these are the five that we are going to try and get done this year? Last year we made a big energy efficiency play. For me that’s a no brainer, that’s the cheapest, quickest, fastest way to solve a lot of our challenges. Particularly if we decouple at the same time as we do incentives. If there are a handful of recommendations that come out of this group, then that becomes our legislative agenda because most of our stakeholders that would be involved in this debate in Legislative Hall are in this room. We can have the debates here instead of having all lobbyists duke it out over there. Hoping to come to a consensus and hope to add some additional sanity to some conversations. That’s a little bit on how I view the world. Obviously, my background is as much in Energy as it is in the Environment. So, I am very excited that this group has it together. I think the work and produce you guys have put together is actually top shelf. You have a lot of people in good places. The folks over at the Public Service Commission are fabulous and they are doing great work. I was just with Brue, Phil and some other folks to meet with FERC on some issues that I mentioned. I think there is strategic alignment as much as there can be and the more we can be on the same page and meet fairly frequently. Every other month, even every month or quarterly, whatever you guys decide. I am trying to have that constant checking so we don’t run in separate rooms. One opportunity for that kind of collaboration is Senate Bill 106 which is on the agenda today. What’s exciting about that is rather than have the legislature be overly prescriptive in the legislation, we say look, we are going to set some bold targets and then we are going to bring the experts to the table and come up with a consensus plan to get it done. The work groups from the Energy Plan last year are from the same model, so how do we bring folks together and have a conversation? Have the legislature play the policy direction setting and the bold vision part and let the experts (everyone around this room), figure out the details. I like that model and hopefully we can make that work. I’d like to thank Cara Lampton, who’s doing a great job coming from Dr. John Byrnes shop at UD in her master program, to now working for the DNREC and doing a great job. I’m trying to get that off the ground and have that kind of broad stakeholder process. So I think there is a lot of exciting things. It is exciting to have a Governor that knows what decoupling means and talk intelligently about transmission planning and knows what PJM is as an entity. There is a lot of opportunities for the ideas that we come up with collectively to be right at the forefront of the policy agenda and those that create jobs, all the better. I just wanted to thank David for giving me a couple of minutes and I will be happy to answer any questions. I am looking forward to participating fully in this and you will see me around a lot more than maybe some of my predecessors. Working with this group specifically, because I think the work that you all do and the groups that you represent are extremely important tothe environmental future but also the economic future of the State, particularly the other challenges around here; sea level rise and the changing climate. Thank you

David Hodas: I have to catch my breath. Laughter…No one can talk as fast a Collin, except this guy out in California I know. Do people want to open up a little conversation and talk with Collin about what we can add and how we can try to provide some concrete direction and assistance to the State and the Governor?

Michael Sheehy: I’d like to ask a question that came out of the Energy Plan and I thought it was really my perspective and a most important one. A single place where the various parties can coordinate and this maybe the committee that does that, I don’t know. But there are three or four different areas that are all playing in the Energy field and in order to get this plan together, sometime it may be consensus, sometimes it may simply have to be jammed down somebody’s throat, (excuse the expression). Are you looking for this organization to be a lead or are you expecting some other level organization to take the lead?

Collin O’Mara: We are working on that now. I know the recommendation was to create an office in the office of the Governor. Given the economics of our fiscal situation, that’s not going to happen, so bringing me in helped for that. So I think the goal is to have myself working with the Energy office to play that central role. I would like to take the direction to use myself at a Cabinet level for folks to be a point of contact. There is kind of two pieces underneath this; there is a programmatic side that the Energy office is doing very well with the SEU, obviously playing the programmatic function. Then there is the Oversight Board providing programmatic strategic guidance. On the other side you have the policy shop, which is fairly scattered; you have some folks in your shop, Phil Cherry and a couple of other folks doing their day to day and some of Charlie Smisson’s folks are serving multiple functions. I would like to formalize some of those relationships a little more. And this would be an oversight for that. So, then as ideas are coming through we can run them through this committee before we pass them out. I think we are going to be using the Governors Cabinet Committee on Energy a little more frequently then we have in the past. That would be the structure; the programmatic side, that’s the Energy office working with the SEU and the Oversight committee Then have a policy side that needs to be built and coordinated amongst our shop and your shop, having this body serve as an oversight for that and we come forward with recommendations together to the Governor. And hopefully, it’s functionally gets that top concern that came out of the report.

Michael Sheehy: Any thoughts to having legislative involvement in this program?

Collin O’Mara: At which level?

Michael Sheehy: Our level.

Collin O’Mara: That’s a good question. I think it’s worth having that conversation. At least having the Chairs of the two respective committees be exofficio, I think that makes a lot of sense. I think one of the challenges is that the SEU process ran in parallel with the Energy Plan. I guess there was one presentation when they came in and talked, there isn’t that kind of strategic link. They should be completely corporate and they should make a lot of sense. The policies that are coming out of this group should be driving some of their thinking. So if we are looking at investment strategies as such, I think we should look at that. I don’t think we would need legislation for that, would we? The Governor can appoint?

Michael Sheehy: My interest is to get someone in legislation here periodically.