Md. Code Regs. 20.61.06.03

Current through Register Vol. 51, No. 18, September 6, 2024

Section 20.61.06.03 - Evaluation Criteria

A. An application must demonstrate the proposed offshore wind project meets the following minimum threshold criteria, as specified:

(1) The proposed offshore wind project complies with Public Utilities Article, §7-701(k)(1) and (2), Annotated Code of Maryland;

(2) The term of the proposed OREC price schedule is not longer than 20 years, and commences no earlier than January 1, 2017 for Round 1 projects and no earlier than July 1, 2017 for Round 2 projects;

(3) The OREC price on the proposed OREC price schedule do not exceed $190 per megawatt hour in levelized 2012 dollars for Round 1 projects, as measured using a nominal discount rate equal to the long-term composite Treasury Bond rate (or equivalent) and a deflation rate equal to the near-term average GDP Deflator (or equivalent), notified by the Commission to potential OSW applicants;

(4) Demonstration that the proposed project, including the associated transmission-related interconnection facilities, will be constructed using commercially proven components and equipment available to the OSW applicant;

(5) Demonstration that the project COD is reasonable in light of the permitting, technical, construction, operational, and economic challenges generally faced by offshore wind project developers; and

(6) Evidence of site control or demonstration of a feasible plan to obtain site control.

B. For each application that meets the minimum threshold criteria, the Commission shall conduct independent qualitative and quantitative analyses that considers the criteria enumerated in Public Utilities Article, §7-704.1(d)(1)(i) through (xiii), Annotated Code of Maryland.

(1) The qualitative analysis shall use a ranking system to identify applications with characteristics that contribute to the likelihood of successful development and to the net economic, environmental, and health benefits to the State.

(a) The following factors shall be considered as part of the qualitative analysis:

(i) Qualifications of the OSW applicant's project team, including but not limited to experience in project development, environmental permitting, engineering and construction, operations, maintenance and financing;

(ii) Project characteristics, including but not limited to project design (for example, demonstration that turbine layout is consistent with best practices for optimal output and maintainability), turbine technology (for example, commercial availability, certification status, compatibility with project service life, warranties), foundation and support structure (for example, suitability for site conditions, design standards), converter station and interconnection (for example, appropriateness of equipment for site, turbine ratings, and number of turbines; reasonableness of interconnection and delivery points; interconnection designs consistent with best practices), and reasonableness of claimed net capacity and annual energy output;

(iii) Financial plan, including but not limited to completeness and reasonableness of the plan, financial strength of the developer, sources of debt and equity and firmness of commitments, plan for addressing cost overruns and other development risks, evidence of best efforts to identify and access State or federal grants, rebates, tax credits, loan guarantees or other similar benefits available to the proposed project and future commitments to seek out future benefits;

(iv) Demonstration of site control such as a BOEM lease or, alternatively, adequacy of plan for obtaining site control, as well as arrangements for interconnection right-of-way;

(v) Project COD and schedule, including but not limited to reasonableness of the proposed schedule (acknowledging, for example, weather delays), construction plan (reasonableness of plan and level of detail, for example, port, storage, lay-down and staging-areas, as well as evidence of consistency with procurement plan, supply chain descriptions, and contracting strategy), and testing and commissioning plan;

(vi) If applicable, the reasonableness of the proposed transmission upgrade cost allocation methodology, taking into account whether the proposed methodology fairly serves the interest of ratepayers;

(vii) Operations and maintenance plan, including but not limited to reasonableness of proposed management plan and mitigation strategies and evidence of unique requirements in the context of a large offshore wind facility (for example, port, maintenance vessel, staffing, spare parts supplies);

(viii) Decommissioning plan, including but not limited to quality and completeness of plan, and assurance of available funding to decommission the plant, interconnection facilities and associated equipment;

(ix) Transmission improvements, including but not limited to quality and completeness of analysis, and consideration of benefits created by associated transmission and distribution upgrades such as improved reliability or reduced congestion;

(x) OSW applicant's input-output analysis required by Public Utilities Article, §7-704.1(c)(3)(i), Annotated Code of Maryland, including completeness of descriptions and documentation, verifiability of model inputs and reasonableness of outputs, and extent to which the analysis demonstrates positive net economic benefits to the State;

(xi) OSW applicant's analysis of the net environmental and health impacts, including impacts on the affected marine environment based on publicly available information, to the State including impacts during construction, operation and decommissioning of the proposed project, including completeness of descriptions and documentation, verifiability of model inputs and reasonableness of outputs, and extent to which the analysis demonstrates positive net environmental and health benefits to the State;

(xii) Extent to which OSW applicant's proposed project will assist in meeting the renewable energy portfolio standard, considering the expected generation confidence level associated with the proposed OREC amount;

(xiii) Unique attributes that distinguish a proposed project from another;

(xiv) Adequacy of the OSW applicant's plan demonstrating engagement of small, women-owned, local, veteran-owned, and minority businesses, commitment to the use of skilled labor, and labor compensation plan;

(xv) Evidence of serious, good-faith efforts to solicit participation of minority investors, should the proposed project have sought capital investment, and evidence of serious, good-faith commitment to solicit minority investors in future attempts to raise capital;

(xvi) OSW applicant's analysis of impacts on residential, commercial, and industrial retail electric customers, including consideration of whether the analysis properly reflects proposed OREC pricing and unique character of the applicant's pricing proposal; and

(xvii) OSW applicant's analysis of long-term changes to the wholesale electric market associated with the project, including consideration of the quality of analysis showing contributions to regional system reliability, fuel diversity, competition, transmission congestion, and other benefits.

(b) The qualitative analysis may result in the elimination from further consideration of an application that the Commission determines represents a significant risk of not achieving successful commercial operation or is not likely to provide net economic, environmental, and health benefits to the State.

(2) The quantitative analysis shall measure the impact of a proposed project and, as applicable, a combination of proposed projects, expressed in monetary terms.

(a) The quantitative analysis of the projected net rate impacts for an average Maryland retail electric customer based on an annual consumption of 12,000 kilowatt hours and nonresidential retail electric customers shall include consideration of the proposed OREC price schedule (including the proposed additional OREC prices for a further period of 5 years referenced in Regulation .02M(3) of this chapter) and proposed OREC amount, the value of energy, capacity, and ancillary services generated by the proposed project, the value of avoided Tier 1 REC costs, and any consequential impacts on wholesale market energy, capacity, ancillary service, and REC prices, to determine the following:

(i) Whether the projected net rate impact for applicable classes exceeds the limitations established in Public Utilities Article, §7-704.1(e)(1)(iii)(1) and (2), Annotated Code of Maryland; and

(ii) The forecasted net rate impact to ratepayers over the initial term of the proposed project;

(b) The quantitative analysis of the economic impacts on Maryland associated with the proposed project shall assess the projected impact of the proposed project on in-state income, employment, taxes, and local spending associated with the project lifecycle including construction, operations, maintenance, and equipment purchases.

(3) The independent analysis of the environmental and health benefits on Maryland associated with the proposed project, quantitatively expressed in tons of avoided air emissions and qualitatively expressed in terms of health impacts associated with avoided air emissions and impacts on the affected marine environment based on publicly available information.

C. Subject to §B(1)(b) of this regulation, the Commission shall rank proposed projects (and combinations of proposed projects, if applicable) based on the qualitative and quantitative evaluation described by §B of this regulation. The Commission shall not approve an application that does not meet the requirements of Public Utilities Article, §7-704.1(e)(1)(i) through (iii), Annotated Code of Maryland.

D. The Commission shall evaluate all applications received by it prior to the end of the application period and apply the same evaluation criteria to each application without discrimination among the applications.

E. The Commission order approving an application shall be conditional upon completion of the following:

(1) The Commission and the OSW applicant execute a memorandum of understanding by which the OSW applicant agrees to make serious, good-faith efforts to interview minority investors in any future attempts to raise venture capital or attract new investors to the qualified offshore wind project;

(2) The Commission and the OSW applicant execute a memorandum of understanding that requires the OSW applicant to use best efforts and effective outreach to obtain, as a goal, contractors and subcontractors for the project that are minority and veteran-owned business enterprises, to the extent practicable, as supported by a disparity study and as follows:

(a) The memorandum of understanding shall include a provision whereby the applicant agrees to comply with Public Utilities Article, §7-704.1(i)(3), Annotated Code of Maryland, and develop a tracking methodology to report workforce diversity in the reports required pursuant to that Article;

(b) The memorandum of understanding shall include a provision whereby the applicant agrees to develop a tracking methodology to report its progress establishing and implementing veteran-owned business enterprise goals and procedures that shall be submitted to the Commission every 6 months following the issuance of an order approving an OREC application; and

(c) The memorandum of understanding shall include a provision whereby the applicant acknowledges and agrees that the Commission, or a third-party designated by the Commission, may audit the applicant to verify the applicant's MBE, VSBE, and local business expenditures and any information provided in reports to the Commission regarding the implementation of MBE and community benefit plans. The Commission reserves the right to request additional information from the applicant to verify reported information;

(3) As described fully by Regulation .06B of this chapter, the OSW applicant and the Governor's Office of Small, Minority & Women Business Affairs, in consultation with the Office of the Attorney General, establish a clear plan for setting minority and veteran-owned business enterprise participation goals and procedures for the proposed offshore wind project;

(4) To the extent any portions of the applicant's plan relate to the criteria set forth in Public Utilities Article, §7-704.1(d)(1)(viii) and (ix), Annotated Code of Maryland, the Commission, the OSW applicant, and skilled labor organizations shall sign a memorandum of understanding that requires the applicant to follow such portions; and

(5) Any other conditions the Commission determines to be appropriate.

Md. Code Regs. 20.61.06.03

Regulation .03 amended effective 41:18 Md. R. 1010, eff.9/15/2014 ; amended effective 50:13 Md. R. 514, eff. 7/10/2023