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MotiontoExtendConstructionStartDeadline_July31_2013(CaseNo.9164)

MotiontoExtendConstructionStartDeadline_July31_2013(CaseNo.9164)

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Motion of Dan’s Mountain Wind Force, LLC to Extend Construction Start Deadline for Industrial Wind Facility
Motion of Dan’s Mountain Wind Force, LLC to Extend Construction Start Deadline for Industrial Wind Facility

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BEFORE THE PUBLIC SERVICE COMMISSION OF MARYLAND

IN THE MATTER OF THE APPLICATION OF DAN’S MOUNTAIN WIND FORCE, LLC FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO CONSTRUCT A 69.6 MW WIND GENERATION FACILITY IN WESTERN ALLEGANY COUNTY, MARYLAND ________________________________ ______________ CASE NO. 9164 ______________

MOTION OF DAN’S MOUNTAIN WIND FORCE, LLC TO EXTEND CONSTRUCTION START DEADLINE
Dan’s Mountain Wind Force, LLC (“Dan’s Mountain” or the “Applicant”) hereby respectfully moves to extend the September 12, 2013 deadline for the start of construction set forth in the Commission’s September 4, 2012 Letter Order (the “Letter Order”) in this proceeding to December 31, 2014—an additional extension of approximately sixteen months.1 Dan’s Mountain is not seeking an extension of the deadline to have at least one functioning wind turbine in place by September 12, 2015. On March 12, 2009, in granting Dan’s Mountain’s application for an exemption from the certificate of public convenience and necessity (“CPCN”) requirement for a 69.6 MW wind generation facility to be constructed in Allegany County, Maryland (the “Project”), the Commission imposed certain conditions, including a start of construction deadline of March 12,

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The requested additional extension actually is fifteen and one-half months, but for convenience this motion will refer to the extension as sixteen months.

2012. The Letter Order granted Dan’s Mountain’s motion to extend that original construction start deadline. As detailed in the Affidavit of David K. Friend, the Manager of Dan’s Mountain (“Friend Affidavit”), during that extension period Dan’s Mountain encountered long and unexpected delays beyond its control, associated with the declining financial condition and eventual descent into bankruptcy of its joint developer/investor Edison Mission Energy (“Edison”). Given the restrictions in Dan’s Mountain’s agreements with Edison, it was necessary for Dan’s Mountain to extricate itself from those agreements before moving forward.2 Edison, however, did not cooperate in unwinding the relationship. Dan’s Mountain has now entered into agreements with Exelon Wind, LLC, a subsidiary of Exelon Corporation (Exelon Wind and Exelon Corporation referred to hereinafter a “Exelon”) that provide critical development support and funding. With Exelon’s assistance, Dan’s Mountain is diligently pursuing the development of the Project. We respectfully request that the Commission grant the instant motion because, absent such relief, the State of Maryland will not realize the recognized benefits of a substantial, new, renewable wind generation resource.
I. BACKGROUND AND INTRODUCTION

On November 5, 2008, Dan’s Mountain filed an application, pursuant to § 7-207.1 of the Public Utility Companies Article, Annotated Code of Maryland, for an exemption from the CPCN requirement for the Project. On March 12, 2009, the Commission issued the Letter Order granting the application, subject to a number of conditions. Among the conditions was the

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It was also necessary to obtain new sources of funding to support additional necessary preconstruction development activities.

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requirement that Dan’s Mountain commence construction on the Project within three years of the issuance of the approval—i.e., no later than March 12, 2012.3 On March 8, 2012, Dan’s Mountain filed a motion to extend the March 2012 deadline for eighteen months, from March 12, 2012 to September 12, 2013. In response to the motion, the Commission received comments from the Office of People’s Counsel, the Maryland Department of Natural Resources Power Plant Research Program (“PPRP”), and the Commission Technical Staff, all of which recommended that the motion be granted, subject to various conditions. Key among these conditions was PPRP’s recommendation that Dan’s Mountain be required to prepare, as applicable, an Avian and Bat Protection Plan and to adopt an Eagle Conservation Plan, as provided for in voluntary guidelines for siting land-based wind turbines issued by the U.S. Fish and Wildlife Service (“USFWS”). On April 20, 2012, Dan’s Mountain submitted, in accordance with a Commission request, a detailed listing of all of the conditions and voluntary commitments it had made with respect to the Project. On September 4, 2012, six months after the extension request was filed, the Commission issued a letter order granting the requested extension of the construction start deadline to September 12, 2013, and incorporating the conditions and commitments detailed by Dan’s Mountain.4 When Dan’s Mountain sought an extension of the March 2012 deadline one and one-half years ago, it offered three reasons why it believed an eighteen-month extension of the
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Letter from Terry J. Romine, Executive Secretary, Maryland Public Service Commission, to Kenneth G. Hurwitz, Counsel for Dan’s Mountain Wind Force, LLC (March 12, 2009), at 2, 3. It should be noted that, prior to submitting its application for exemption pursuant to § 7-207.1, Dan’s Mountain commissioned and submitted to PPRP an Environmental Review Document assessing the anticipated environmental and ecological impacts of the Project. Inasmuch as none of the elements of § 7-207.1 addresses environmental issues or criteria, the preparation and submission of the study were strictly voluntary. The same can be said of the numerous environment-related commitments and conditions that Dan’s Mountain made and accepted in connection with both the order granting the exemption and its first extension request.

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construction start deadline could be met.

First, the prospects in Maryland for wind farm

development had become extremely favorable, especially because of the Commission’s February 17, 2012 order requiring Exelon, as a condition of the Commission’s approval of Exelon’s merger with Constellation Energy, to develop or assist in the development of a substantial amount of renewable energy, including a specified amount of wind energy. Second, Dan’s Mountain’s restrictive Joint Development Agreement with Edison had expired and Dan’s Mountain had resolved certain communications interference issues with United States Cellular Corporation. Finally, there had been a complete turnover of Allegany County’s Board of County Commissioners, which in its former composition had promulgated stringent zoning regulations apparently designed to inhibit the development of wind power projects in the County.5 However, contrary to Dan’s Mountain’s expectations last March, it took over a year for it to bring Edison to the point where it would give Dan’s Mountain’s owner, Laurel Renewal Partners, LLC (“Laurel”),6 clear title to the Project and thus enable it to enter into agreements to further develop and ultimately sell the Project. As alluded to above, the delay was associated with Edison’s poor financial condition and descent into bankruptcy, a situation that Dan’s Mountain was not entirely aware of until December 17, 2012, when Edison formally made a Chapter 11 filing. As detailed in the Friend Affidavit, on May 8, 2013, the same day Dan’s Mountain exited its arrangements with Edison, Exelon entered into an Acquisition Agreement with Laurel to

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Friend Affid. at ¶ 5. US Wind, which owned Dan’s Mountain and the Other Project Companies, was owned by seven individuals. In April 2013, two of those Individuals, James Cookman and Mr. Friend, formed Laurel Renewable Partners, LLC and became the owners of all of the ownership interests in that entity.

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purchase and assist in the development of the Project.7 The purpose of the arrangement, from Exelon’s perspective, is to set the stage to satisfy the merger condition.8 Further, Dan’s

Mountain has now completely disentangled itself from its previous relationship with Edison, which, notwithstanding the expiration of the Joint Development Agreement in December 2011, persisted for some time in the form of liens that certain Edison entities held on the ownership interests in Dan’s Mountain, its sister project companies and their parent, US Wind. In addition, the composition of the Board of County Commissioners appears to continue to be more favorably disposed to wind energy development than its predecessor. Because of these and other large strides forward that Dan’s Mountain has made in the last two months, what boded well for the Project last March bodes well for the Project today. The Project is now poised to move forward and start construction by December 31, 2014.
II. ARGUMENT

A.

Why the September 12, 2013 Deadline Could Not be Met

Along the critical path for the Dan’s Mountain Project are three major milestones. First, financing for project development costs needs to be in place. Second, authorizations from adjacent and nearby property owners need to be obtained in order to enable Dan’s Mountain to petition the County for variances from the stringent setback and separation requirements contained in the 2009 Allegany County zoning ordinance revisions.9 Third, Dan’s Mountain needs to file the appropriate requests with the Allegany County Board of Zoning Appeals and
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Friend Affid. at ¶ 7. July 31, 2013 letter from Saul Ewing on behalf of Exelon Wind, LLC and Exelon Corporation to the Commission (“Exelon Letter”) at 1. The Exelon Letter is attached hereto as Attachment “B.” See generally CODE OF ALLEGANY COUNTY, MARYLAND §§ 360-92(A) (describing new separation requirements), 360-92(B) (describing new setback requirements). See, also, Friend Affid. at ¶ 4.

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undergo the requisite hearing and appeal procedures.10

Because substantial funds must be

expended to make lease payments and consummate negotiations with property owners to obtain the necessary authorizations, Dan’s Mountain could only undertake limited development activities until a major source of funding to replace the Edison debt financing was obtained.11 The start of construction had to be delayed. As stated above, contrary to expectations, it took approximately one year to induce Edison to release certain liens on the Dan’s Mountain ownership interests so that the Acquisition Agreement could be entered into with Exelon.12 In this connection, it should be noted that Dan’s Mountain’s owner at the time, U.S. Wind Force, had commenced discussions with Exelon in the last half of 2011 and continued them into the first half of 2012, leading to the execution of a term sheet in March 2012 for a joint development arrangement and the purchase of the Project by Exelon.13 Unfortunately, while Exelon was ready and willing to enter into a definitive

agreement, and while Dan’s Mountain had every reason to believe that Edison would be willing
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Absent the grant of a variance from the setback and separation requirements, the ordinance would dictate significant reductions in the number of turbines that could be located at the site. As a consequence, continuous design and construction activities cannot commence in earnest until the County agencies have laid these issues to rest. Prior to filing this Request, Dan’s Mountain entertained the idea of initiating limited construction activities at the Project site. These activities arguably would have constituted “construction” as defined by Public Utility Companies Article § 7-207, and would have consisted of site improvements, such as road grading to the access road to and on the site. Dan’s Mountain elected not to pursue this approach because it could have complicated the interplay between local and Commission approvals for the Project and was perceived as potentially inconsistent with the spirit of the Commission’s start of construction condition. Instead, Dan’s Mountain chose to file the instant motion.

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These activities included a meeting with USFWS and PPRP, a meeting with the Allegany County Planning Department, and communications with PJM Interconnection, L.L.C. (“PJM”) concerning the interconnection of the Project to PJM’s transmission system. Friend Affid. at ¶ 10. Id. at ¶¶ 4, 11. As explained by Mr. Friend, the liens were created at the time of the development agreement. Id. at ¶ 7. Id.

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to proceed, Edison appeared to be unwilling to move forward with arrangements to release its lien.14 For example, documents that should have taken one or two weeks to review instead took several months for Edison to address.15 At the time, the cause for Edison’s protracted approach was not entirely apparent, but it later became clear, in retrospect, that during the relevant period Edison had severe financial problems of its own.16 In December 2012, Edison filed a Chapter 11 bankruptcy petition.17 B. How Conditions Have Changed—the Signing of the Exelon Acquisition Agreement and Ensuing Diligent Risk Mitigation Activities

Finally, on May 8, 2013, US Wind, Edison, Exelon and several other parties executed a series of agreements that resulted in Edison’s releasing US Wind from the development liens on Dan’s Mountain and its sister companies, and enabled the purchase of these entities by Laurel and the simultaneous purchase by Exelon from Laurel of all of its interests in Dan’s Mountain pursuant to an Acquisition Agreement, provided the Project meets its development milestones. The Acquisition Agreement sets the stage for Exelon to assist in the development of the Project from its current stage all the way to commercial operation, and ultimately to purchase the Project. As required by the Acquisition Agreement and related agreements, on the signing of the Acquisition Agreement, Exelon made a substantial initial payment and reimbursed Laurel for certain prior third party development expenses paid in connection with the Project. The

Acquisition Agreement also requires Exelon to reimburse Laurel for certain project development

14 15 16 17

Id. at ¶¶ 8-9. Id. at ¶ 9. Id. at ¶ 8. Id.

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expenses for the Project. While a portion of the purchase price is earmarked for payments to Edison to release the liens, a substantial portion of the proceeds will be devoted to the development of the Project.18 From entry into the May 2013 agreements until the date of this motion, Dan’s Mountain proceeded with the development of the Project on a number of important fronts. Dan’s Mountain began by addressing key project risks in order to ensure that the Project could still go forward. These activities included (1) conducting negotiations with certain property owners to obtain written authorizations to seek variances from certain setback and separation requirements imposed by the Allegany County zoning ordinance; (2) execution of an Interconnection Service Agreement (“ISA”) and the related Interconnection Construction Service Agreement (“CSA”) with PJM and the payment of security (in the amount of $257,227) in connection with the ISA; and (3) the resumption of lease payments, and the payment of rental fees in arrears, to the landowners who have leased Dan’s Mountain the land associated with the site.19 As a result of these activities, several project risks have been mitigated or eliminated. First, while negotiations with leaseholders and other landowners are ongoing, Dan’s Mountain believes that it has obtained a sufficient number of written authorizations to ensure that the Project is viable.20 Second, the cost of interconnecting with PJM has been substantially

reduced—in its revised System Impact Study and Facilities Study, which Dan’s Mountain received on May 2, 2013, the cost of network upgrades was reduced to $910,200, less than one-

18 19 20

Id. at ¶ 12. Id. at ¶¶ 13-17. Id. at ¶ 15.

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tenth of PJM’s prior estimate.21 Third, even though some lease payments were in arrears, the site is still intact inasmuch as the pertinent landowners remain in support of the Project.22 With Exelon’s commitment to provide development assistance in place, and in light of Dan’s Mountain successes in addressing the above short-term and time-sensitive risks, the Project is poised to make further strides along the critical path described above. But the Project must first obtain a further extension of the construction start deadline from this Commission.23 We believe that the extension is justified for the simple reasons that the delays in obtaining financing were beyond Dan’s Mountain’s control, and that, once new funding was obtained, Dan’s Mountain has been moving rapidly and diligently to pursue critical development activities. To put a price tag on its efforts, $3.1 million has been invested in the Project from its inception, of which approximately $500,000 has been spent since March 2012, when Dan’s Mountain first sought an extension of the deadline to begin construction. The lion’s share of the $500,000 expenditure has been made since the signing of the Acquisition Agreement on May 8, 2013—Dan’s Mountain has been able to spend approximately $337,000 to advance the development of the Project during this critical period.24 C. Why a Sixteen-Month Extension is Both Necessary and Advisable, and Why the December 31, 2014 Deadline Would be Eminently Achievable

Based on its assessment of current circumstances, Dan’s Mountain believes that a sixteen-month extension of the construction start deadline is both necessary and advisable. In
21 22 23

Id. at ¶ 17. Id. at ¶ 19. In that connection, Exelon recently approved Dan’s Mountain’s request to incur reimbursable legal fees to prepare and file this motion for extension. Id. at ¶ 20. In contrast, from the beginning of April 2012, around the time when Dan’s Mountain sought an extension for the construction start deadline, until the closing, Dan’s Mountain could only spend less than one-half that amount on development activities. Id. at ¶ 25.

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addition, in light of Exelon’s strong interest in fulfilling the renewable capacity condition of the Commission’s February 2012 merger order, and the critical role it is playing in connection with the Project, as well as other factors, we believe that a December 31, 2014 deadline is eminently achievable. The need for a sixteen-month extension arises from the need to obtain favorable zoning for the Project and to begin construction after the summer season, which is generally off-limits because trees can be summer habitat for tree-roosting bats. In addition, as stated above, Dan’s Mountain is still negotiating with some of the landowners from whom Dan’s Mountain soon hopes to receive written setback- and separation-related authorizations. Once Dan’s Mountain receives those authorizations, in light of the procedural provisions of the Allegany County Code, it may take 75 days (45 days to hold the hearing and another 30 days to issue a decision) from the date of Dan’s Mountain’s application for the Board of Zoning Appeals to issue its decision, and any person who considers himself aggrieved by the decision may appeal to the Circuit Court of Allegany County. The combined time to obtain a positive decision from the Board of Zoning Appeals and defend an appeal could be six months or more. While certain limited and temporary construction activities could be undertaken without a final decision, ongoing construction could not begin until final decisions on variances are obtained. Dan’s Mountain believes it may well be possible to obtain the necessary zoning rulings and begin tree-cutting and other construction activities during the first few months of 2014. However, if it is not able to finish the clearing of the trees on the Project site before the end of March 2014, Dan’s Mountain may well need to wait until November 2014 to avoid removing trees during the summer, when they are potential summer habitat for tree-roosting bats.

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A December 31, 2014 construction start deadline would be eminently achievable. The political atmosphere at the County appears to be supportive. First, on a “micro” level, landowner support for the Project has been consistently strong. While exceptions might arise in the future, residents in the vicinity of Dan’s Mountain and other landowners seem to be in favor of the economic development that the wind farm would bring to the area, and appear willing to grant the necessary authorizations. Second, as we stated in our March 2012 motion for extension, there has been a complete turnover of Allegany County’s Board of County Commissioners. Dan’s Mountain is hopeful that the new Board members will be willing to work with the Applicant towards a flexible application of the amended zoning ordinance. Finally, Exelon will play a critical role in advancing the Project, contributing both financial resources and development expertise. As confirmed in the attached July 31, 2013 letter from Exelon to the Commission, Exelon is committed to provide funding for the Project, assist in its development, and ultimately purchase the Project from Laurel, provided the Project timely meets its development milestones.25 Because the February 17, 2012 merger order requires to develop at least 62.5 MW of wind capacity, Exelon has every incentive to work with Dan’s Mountain to ensure that the Project can begin construction by the extended start-of-construction deadline.
III. CONCLUSION

For all the foregoing reasons, Dan’s Mountain requests that the Commission grant its motion to extend the construction start deadline set forth in the Commission’s September 4, 2012

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See Exelon Letter at 1.

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ATTACHMENT “A”

BEFORE THE PUBLIC SERVICE COMMISSION OF MARYLAND
IN THE MATTER OF THE APPLICATION OF DAN’S MOUNTAIN WIND FORCE, LLC FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO CONSTRUCT A 69.6 MW WIND GENERATION FACILITY IN WESTERN ALLEGANY COUNTY, MARYLAND ________________________________ ______________ CASE NO. 9164 ______________

AFFIDAVIT OF DAVID K. FRIEND
David K. Friend, being first duly sworn, deposes and states as follows: 1. I am Chief Executive Officer of Laurel Renewable Partners, LLC

(“Laurel”), a developer of wind-powered renewable energy generating facilities. I also serve as Manager of Dan’s Mountain Wind Force, LLC (“Dan’s Mountain”), which, on November 4, 2008, submitted a request for approval for the construction of a proposed 69.6-MW wind generation facility (the “Project”) and an exemption from the requirement to obtain a certificate of public convenience and necessity prior to commencement of construction of the Project. Dan’s Mountain is a wholly owned subsidiary of Laurel. 2. I was Chairman and Chief Executive Officer of U.S. Wind Force, LLC

(“US Wind”), the previous parent company of Dan’s Mountain and several other wind project companies (the “Other Project Companies”), from December 2010 to May 2013. From April 2001 to December 2010, I held the position of Vice President, Sales and Marketing of US Wind.

3.

I have read Dan’s Mountain’s motion for an extension of time to

commence construction by fifteen and one-half months—from September 12, 2013 to December 31, 2014—and the letter of support by Exelon Corporation (“Exelon”), which accompany my affidavit, and I am fully familiar with the Project and all aspects of this proceeding. I affirm that the factual statements in these documents are true to the best of my knowledge, information and belief. 4. I have prepared my affidavit in connection with Dan’s Mountain’s motion.

In my affidavit, I will (1) lay out the circumstances that have resulted in the need for an extension, (2) describe the progress made since September 4, 2012, when the Commission granted Dan’s Mountain’s request for an eighteen-month extension of the construction commencement deadline from March 2012 to September 2013, and (3) explain the rationale for the requested term of the extension through the end of 2014. The bottom line is that Dan’s Mountain was unexpectedly prevented from obtaining financing to develop the Project for seventeen months, and that on May 8, 2013 Dan’s Mountain finally obtained funding for the Project through entering into an Acquisition Agreement with Exelon and is now moving forward, with Exelon’s assistance and participation, with the development of the Project. 5. When Dan’s Mountain sought an extension of the March 2012 deadline, it

gave three reasons why it believed an eighteen-month extension of the construction start deadline should be sufficient. First, the prospects in Maryland for wind farm

development had become extremely favorable, especially because of the Commission’s February 2012 order requiring Exelon, as a condition of the Commission’s approval of Exelon’s merger with Constellation Energy, to develop or assist in the development of a

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substantial amount of renewable energy, including a specified amount of wind energy. Second, Dan’s Mountain’s restrictive Joint Development Agreement with Edison Mission Energy (“Edison”) had expired and Dan’s Mountain had resolved certain

communications interference issues with United States Cellular Corporation. Finally, there had been a complete turnover of Allegany County’s Board of County Commissioners, which in its former composition had promulgated stringent zoning regulations apparently designed to inhibit the development of wind power projects in the County. 6. In one critical respect, Dan’s Mountain’s expectations were gravely

disappointed. While the Joint Development Agreement with Edison had expired, US Wind Force continued for many months to be subject to various entanglements with Edison from which it needed to be extricated in order to proceed with the Project. Some context is necessary to understand the situation. 7. On December 12, 2006, US Wind entered into the Joint Development

Agreement with Edison for a five-year term to jointly develop domestic wind projects. To finance the projects, Edison also entered into a Development Loan Agreement with US Wind, which was secured by US Wind’s 95 percent ownership interests in Dan’s Mountain and the Other Project Companies (Edison owned the other 5 percent). After the Joint Development Agreement expired in December 2011, US Wind fully expected that its financing arrangement with Edison would be quickly wound down because takeout arrangements for the projects were available in the utility and financial market. Indeed, at the time, US Wind negotiated with several large and highly qualified wind developers and utilities who were interested in investing in the projects. Most

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significantly, beginning in the last half of 2011 and the first half of 2012, US Wind was in communication with Exelon, which had expressed an interest in purchasing Dan’s Mountain. Exelon and US Wind executed a term sheet for a joint development

arrangement in March 2012. 8. Although a preliminary arrangement with Exelon and potential

arrangements with other companies were on the table, Edison, which held a lien on Dan’s Mountain and the Other Project Companies, seemed to be unable or unwilling to finalize release of the lien or to sell its 5 percent interest in the project companies to US Wind. As a consequence, US Wind was unable to obtain clear title to sell Dan’s Mountain and the Other Project Companies. It later became clear that, from approximately December 2011 onward, Edison had severe financial problems of its own—specifically, its financial fortunes were plummeting, and it was approaching the brink of a Chapter 11 bankruptcy petition, which it ultimately filed in December 2012. 9. Unfortunately, during this entire period, Edison refused to cooperate with

US Wind to release the project company lien, which was a key transactional ingredient of any effort to obtain substitute financing. Edison was extremely slow in its

communications with US Wind leading up to the eventual release of the Project company lien. For example, documents that should have taken one or two weeks to review instead took several months. Because of Edison’s pre-bankruptcy slowdown, through no fault of its own Dan’s Mountain was precluded from going forward with any aspects of the Project’s development that required substantial financial commitments. 10. Dan’s Mountain did push forward, however, to the extent it was able, by

engaging in discussions with PJM Interconnection, L.L.C. (“PJM”) relating to the

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interconnection of the Project to the PJM transmission system (notifying PJM that Dan’s Mountain would exercise its option, under PJM’s tariff, to self-build the switchyard and substation for the Project), by convening a joint meeting with the Power Plant Research Program/Department of Natural Resources and the U.S. Fish and Wildlife Service (to update these agencies as to the status of the Project and to consult with them regarding to the preparation of various bird, bat, eagle and Allegheny woodrat protection plans), and meeting with the Allegany County Planning Department (to seek input on the County’s views concerning Dan’s Mountain’s ability to obtain the necessary zoning variances for the Project). 11. Finally, on May 8, 2013, US Wind, Edison, Exelon and several other

parties entered into a series of agreements that resulted in (1) Edison’s releasing US Wind from the development liens on Dan’s Mountain and the Other Project Companies and the cancellation of the Development Loan Agreement by transferring the US Wind ownership interest in these companies to Edison; (2) the purchase of these entities by Laurel;1 and (3) the simultaneous purchase by Exelon from Laurel of all of its interests in Dan’s Mountain pursuant to a comprehensive Acquisition Agreement. The Acquisition Agreement sets the stage for Exelon to assist in the development of the Project from its current stage all the way to commercial operation, provided certain Project milestones are met. Exelon ultimately will own and operate the Project. 12. Under the Acquisition Agreement and related agreements, upon

satisfaction of certain conditions, Exelon is committed to purchase Dan’s Mountain. In
1

US Wind, which owned Dan’s Mountain and the Other Project Companies, was owned by seven individuals. In February 2013, two of those Individuals, James Cookman and I, formed Laurel Renewable Partners, LLC and became the owners of all of the ownership interests in that entity.

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addition, on the signing of the Acquisition Agreement, Exelon made a substantial initial payment and reimbursed Laurel for certain prior third party development expenses paid in connection with the Project. Exelon is also committed to fund development expenses for the Project. All proceeds from the sale of the Project will either be used for

development purposes or be shared with Edison in return for release of various liens. 13. Immediately after the signing of the Acquisition Agreement, Dan’s

Mountain proceeded with the development of the Project on a number of important fronts. Dan’s Mountain began by addressing key project risks in order to ensure that the Project could still go forward. These activities included (1) conducting negotiations with certain property owners to obtain written authorizations to seek variances from certain setback and separation requirements imposed by the Allegany County zoning ordinance; (2) execution of an Interconnection Service Agreement (“ISA”) and the related Interconnection Construction Service Agreement (“CSA”) with PJM and the payment of security in connection with the ISA; and (3) the resumption of lease payments to the landowners who have leased Dan’s Mountain the land associated with the site. I will address each of these in turn. 14. The Allegany County zoning ordinance requires that “industrial wind

energy conversion systems” (the base, tower, generator, blades and other components of an individual wind energy generation unit) adhere to certain minimum “separation distances” from various specified structures and minimum “setback requirements” from certain property lines. The separation distances can be eliminated and the setback

requirements reduced by obtaining variances from the Allegany County Board of Zoning Appeals (“BZA”). Under the zoning ordinance, in order to submit an application for a

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variance, Dan’s Mountain needs the written authorization of all affected property owners. Lease amendments were also necessary in order to include certain standard provisions that Exelon uses in connection with other wind projects, and easements needed to be granted to ensure the availability of the wind resource. 15. Dan’s Mountain was not able to conduct negotiations with landowners

until it obtained replacement financing, because such negotiations require funds that Dan’s Mountain simply did not have. In Dan’s Mountain’s case, zoning authorizations had to be acquired from ten property owners who own residences and fourteen who own communications towers. While the negotiations are as yet ongoing, in light of the initial responses we are getting, I am confident that Dan’s Mountain will be able to obtain a sufficient number of written authorizations to ensure that the Project is viable. 16. The second key risk-mitigation activity conducted by Dan’s Mountain

since the May 2013 signing of the Acquisition Agreement with Exelon was to finalize the ISA and the CSA. Recent developments along this front have been substantial and highly favorable to the Project. 17. First, Dan’s Mountain received an ISA and an CSA from PJM on May 2,

2013. On June 25, 2013, Dan’s Mountain executed the ISA and provided the required security to PJM in the amount of $257,227. Dan’s Mountain executed the CSA on July 29, 2013. PJM and the transmission owner, Potomac Edison Company, have indicated that they, too, will execute the ISA and the CSA. 18. In addition, the cost of interconnecting with PJM has been substantially

reduced. In its September 2009 System Impact Study for the Project, PJM estimated that the cost to Dan’s Mountain of constructing network upgrades on the PJM transmission

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system necessary to interconnect the Project would be approximately $12.2 million. In PJM’s revised System Impact Study and Facilities Study, both received by Dan’s Mountain on May 2, 2013, the cost of network upgrades was reduced to $910,200, less than one-tenth of PJM’s prior estimate. It is my understanding that this cost reduction stems from other projects in the Dan’s Mountain area dropping out of PJM’s interconnection queue and from transmission system upgrades completed by PJM. 19. The third risk-factor activity related to ensuring that the site leases were

brought up to date. Because Edison had cut off development funding, Dan’s Mountain ceased making lease payments to Project site landowners in June 2012. After entering into the Acquisition Agreement with Exelon in May of this year, Dan’s Mountain paid the lease payments that were in arrears and has resumed making all scheduled lease payments. I can report that all of the landowners who own portions of the site continue to support the Project. 20. Overall, with Exelon’s assistance and now having addressed the above

short-term and time-sensitive risks, the Project is positioned to move forward with various additional development activities. To put these efforts into perspective, to date, $3.1 million have been invested in the Project, and approximately $500,000 has been spent since March 2012, when Dan’s Mountain sought an extension of the deadline to begin construction. Clearly, one additional time-sensitive risk needs to be addressed, and that is the need for a further extension of the construction start deadline from this Commission. In that connection, Exelon recently approved Dan’s Mountain’s request to incur reimbursable legal fees to prepare and file the accompanying motion for extension with the PSC.

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21.

Dan’s Mountain believes that such an extension is fully justified in light of

the delays the Project encountered, as a result of the Edison bankruptcy, in obtaining substitute financing. In addition, with Exelon’s support, we believe that a successful project is achievable. Based on current circumstances, it appears that an extension of the construction start deadline of fifteen and one-half months—until December 31, 2014—is both necessary and advisable. The rationale for the additional extension is closely tied to the need to obtain favorable zoning for the Project and to begin construction after the summer season, which is generally off-limits because of the need to avoid cutting down trees as they are potential summer habitat for tree-roosting bats. 22. Our ability to achieve our zoning goals depends on our success in

obtaining authorizations from landowners, and variances of the setback and separation requirements of the zoning ordinance from the County. Overall, the political atmosphere appears to be supportive. First, on a “micro” level, landowner support for the Project has been consistently strong. While exceptions might arise in the future, residents in the vicinity of Dan’s Mountain and other landowners seem to be in favor of the economic development that the wind farm would bring to the area, and appear willing to grant the necessary authorizations. Second, as we stated in March 2012, there has been a complete turnover of Allegany County’s Board of County Commissioners, which as I mentioned above in its former composition had promulgated stringent zoning regulations applicable to wind power projects in the County. 23. As stated above, Dan’s Mountain is still negotiating with some of the

landowners from whom Dan’s Mountain soon hopes to receive written authorizations. Once Dan’s Mountain receives those authorizations, in light of the procedural provisions

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of the Allegany County Code, it may take 75 days (45 days to hold the hearing and another 30 days to issue a decision) from the date of Dan’s Mountain’s application for the BZA to issue its decision, and any person who considers himself aggrieved by the BZA’s decision may appeal the decision to the Circuit Court of Allegany County. The combined time to obtain a positive decision from the BZA and defend an appeal could take six months or more. While certain limited and temporary construction activities could be undertaken without a final decision, ongoing construction could not begin until final decisions on variances are achieved. 24. Dan’s Mountain believes it may well be possible to begin construction

during the first few months of 2014. However, if Dan’s Mountain is not able to finish the clearing of the trees on the Project site before the end of March 2014, it may well need to wait until November 2014 to avoid removing trees that might house roosting bats without expensive advance work by biologists. As I stated above, the summer period is generally considered off limits for the clearing of trees. 25. I have demonstrated that Dan’s Mountain could only engage in certain

limited development activities during the time when Edison’s lien on Dan’s Mountain’s assets prevented Dan’s Mountain from obtaining replacement financing, and that Dan’s Mountain is now moving forward on all fronts to develop the Project. This is amply illustrated by before and after data concerning Dan’s Mountain’s expenditures. From the beginning of April 2012, around the time when Dan’s Mountain sought an extension for the construction start deadline, until May 8, 2013, the date of its Agreement with Exelon, Dan’s Mountain spent approximately $151,000 on developing the Project. From May 8 until now, Dan’s Mountain has been able to spend approximately $337,000 to advance

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the development of the Project. The inference is clear: if this Commission grants an additional extension, project development will proceed rapidly. 26. Dan’s Mountain is confident that it will be able to successfully develop the

Project and achieve commercial development by September 2015, the existing deadline to have at least one turbine in commercial operation. Of course, this will be a success for the State of Maryland, whose policies plainly support that clean renewable wind energy should constitute a significant portion of the State’s electric generation portfolio.

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July 31 , 2013

Westmoreland County Commonwealth of Pennsylvania Sworn to and Subscribed before me This 31 ~r day of July, 20 13
COMMONWEALTH OF PENNSYLVANIA Not.aria! Seal Melissa M. Lenhart, Notary Public Hemplleld 1Wp., Westmoreland C.OUnty MV c.omm19S1on ecpns Feb. 8, 2011
MEMBER. PEHNSVlVAHIA ASSOCIATIOfl Of NOTARIES

My commission expires

feh. g1 2DI 7

he Commonwealth of Pennsylvania

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ATTACHMENT “B”

David A. Dorsey Acting Planning Coordinator Planning & Zoning Commission County Office Building 701 Kelly Road Cumberland, MD 21502-2803 (301) 777-2199 Email: ddorsey@allconet.org

Delegate Kevin Kelley House Office Building, Room 410A 6 Bladen St., Annapolis, MD 21401 Email: kevin.kelly@house.state.md.us Delegate LeRoy E. Myers, Jr. House Office Building, Room 215 6 Bladen St., Annapolis, MD 21401 Email: leroy.myers@house.state.md.us

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