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l FROM: John Fitzpatrick, Faectitive Director
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D.- IT: March 9, -'M0
St 1 BJ F.C] : R.cquest t'or Proposal to Conduct Carbon Offset Projects
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MAR 1 02010
CITY OF LAUREL
.\tt?ill cd please find a Request 1i?r Proposal document seeking applicants interested in
pertOrming carbon oft'Set projects for Northwestern F ncrp.
Project ?r nt> will he axt•arded to successtid applicants those proposals either reduce carbon
cntissions or ?%hich enhance it capture and scquestratiott.
Prolkcct ftuldin,, ?%ill be prionti/ed depending upon the location ofthe protect applicant with
prcferencc heim, ?A,i1cn to applicants from:
I . 1 he sip counties closest to the \1111 Creek C;enerating Station (Beavcnccad, Deer Lod`cc..
61 mlic. Jeftcrson. Powell. and Silver Bo??
' ( )ther locations ti? 'thin the \i?rth\l esters F:nert, service territory.
y. Locations served by electric cooperatives connected to Northwestern Energy (c.g., Park.
\lissoula, Rava1h Electric, etc.).
-t. Locations served by another rove tor-oWllCd utility (e.g., MDt.' Resource.), 11Wnieipal
utilities. or electric cooperati%cs not connected to Northwestern l:,ncrtuy.
Please c:olltact John 1=itzP.ftrick at (400) t # - 9ti for further informatiol7.
Im.
Request for Proposal
To Conduct
Carbon Offset Projects
solicited by
Northwestern Energy
208 N. Montana Ave., Suite 205
Helena, MT 59601
March 5, 2010
Introduction
NorthWestern Energy is soliciting proposals from interested parties to conduct carbon
offset activities in the State of Montana.
Background
Section 69-8-421, MCA, provides a process by which NorthWestern may acquire
electric generating resources and place such facilities in rate base.
Section 69-8-421(6)(e), MCA) requires:
(e) When issuing an order for the acquisition of an equity interest or lease
in a facility or equipment that is constructed after January 1, 2007, and
that is used to generate electricity that is primarily fueled by natural or
synthetic gas, the commission shall require the applicant to Implement
cost-effective carbon offsets....
On May 19, 2009, in Docket No. D2008.8.95, the Public Service Commission approved
NorthWestern Energy's application to construct the Mill Creek Generating Station, a
natural gas-fired power plant near Anaconda. The Generating Station is currently under
construction. The PSC's order in the Mill Creek case also included approval of
NorthWestern's proposed carbon offset plan.
Carbon Offsets
State statute defines "cost-effective carbon offsets" as:
any combination of certified actions that are taken to reduce carbon
dioxide emissions or that increase the absorption of carbon dioxide, which
collectively do not increase the cost of electricity produced annually on a
per-megawatt-hour basis by more than 2.5%, including:
(a) actions undertaken by the applicant that reduce carbon dioxide
emissions or that increase the absorption of carbon dioxide from a facility
or equipment used to generate electricity; or
(b) actions by a carbon offset provider on behalf of the applicant.
Carbon Offset Providers
State statute identifies a "carbon offset provider" as "a qualified third-party entity that
arranges for projects or actions that either reduce carbon dioxide emissions or increase
the absorption of carbon dioxide."
Eligible Projects
The list below identifies 15 types of projects that would be eligible for carbon offset
funding. However, this list is not intended to be exclusive. Additional types of projects
may be considered for funding provided the project either reduces carbon dioxide
emissions or increases the absorption of carbon dioxide and does not conflict with other
parts of NorthWestern Energy's carbon offset plan.
Agriculture and Forestry:
1. Tree planting/reforestation.
2. Efforts to minimize tillage and other cultivation methods to conserve and
increase soil carbon.
3. Technology to manage or use farm waste to minimize emissions of
methane.
4. Technologies to reduce methane emissions from ruminants.
5. Technologies to make more effective use of forest and farm residues (e.g.,
for heating).
6. Non-plantation forestry and land use projects, non-commercial woodland
creation, community forestry, methane capture projects, community or small
farm methane generation and capture for energy.
General Conservation:
7. Parkland acquisition to enhance the quality of life for residents located within
a radius of 25 miles of the Generating Facility.
8. Funding for conservation easements in perpetuity on agricultural and
forested lands subject to conversion to small unit subdivision.
9. Funding to permanently protect lands that support critical wildlife species
and habitats, particularly those found in or near riparian and wetland
ecosystems, that are subject to conversion to small unit subdivision.
Energy Conservation:
10. Increase energy efficiency in buildings (e.g., heating, cooling, lighting).
11. Retrofitting of buildings to improve energy efficiency.
12. Measures to increase the efficiency of energy used in manufacturing
(heating, cooling, compression, drying, sorting, cutting, shaping, chemical
processes).
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13. Measures to reduce the emission of greenhouse gases from manufacturing
processes.
14. Combusting or containing methane generated by landfills or other industrial
waste.
15. Utility Energy Loss Reduction Projects.
Ineligible Projects
The activities listed below are not eligible for carbon offset funding:
1. Any form of political advocacy.
2. Generally funding the administration of organizations or agencies.
3. Generally funding forest cover maintenance projects.
4. Generally funding the acquisition of wildlife habitat or conservation
easements designed to promote wildlife preservation.
5. Energy or conservation education programs.
6. To finance projects or activities currently funded through the Universal
System Benefits program (USB).
7. Energy efficiency projects for which funding is available from another source
within NorthWestern Energy, such as USB or other demand side
management programs.
8. Fuel switching projects if the project fails to reduce carbon dioxide
emissions.
9. Electric generation projects.
Priorities for Funding
1. Twenty percent (20%) of the carbon offset funding Is reserved for counties
within a 25-mile radius of the Mill Creek Generating Station (i.e., Deer
Lodge, Silver Bow, Powell, Granite, Jefferson and Beaverhead Counties).
2. Eighty percent (80%) allocated throughout Montana with preference given to
projects in the following order:
a. First Preference: Projects located within NorthWestem's service
territory in Montana.
b. Second Preference: Projects located within the service territory of a
rural electric cooperative exclusively connected to NorthWestern's
Montana control area (e.g., Park Electric, etc.)
c. Third Preference: Projects located within the service territory of a rural
electric cooperative partially connected to NorthWestem's control area
(e.g., Tongue River Electric, etc.)
3
d. Fourth Preference: Projects located within the service territory of
another investor-owned utility, a municipal utility, or an electric
cooperative not connected to NorthWestern's control area.
Matching Funds
Whenever feasible, applicants should endeavor to leverage the amount of carbon offset
funding requested under this program with matching financial resources from other
sources.
Projects conducted by "for profit" carbon offset providers or which benefit private
property may be subject to a requirement for matching funds as recommended by the
Advisory Board or required by NorthWestern Energy.
Application Process
Parties interested in applying for carbon offset funds shall submit the following
information to NorthWestern Energy:
Complete the form entitled Carbon Offset Provider Information (attached).
It is recognized that carbon offset activities are largely a new undertaking in
Montana, and few potential applicants are likely to have that type of
experience. Lack of carbon offset experience per se will not cause an
application to be disqualified.
2. A detailed description of the proposed carbon offset activity, Including:
a. The specific actions to be undertaken by the project.
b. An estimate of the number of tons of carbon dioxide that would be offset
by undertaking the proposal. Include a clear description of the carbon
offset calculations methodology.
3. A detailed operating budget identifying at a minimum the capital cost,
personnel costs and operating expenses of the project.
4. A project schedule indicating the approximate dates the project would
commence and be completed.
4
Review and Approval Process
All applications received by NorthWestern Energy will be reviewed by a three-member
advisory council to determine whether the proposal complies with state law, the
guidelines for the carbon offset process as explained in this document, and whether the
proposal actually offsets carbon production.
Projects seeking carbon offset funding must be "additive" in nature. That is, they either
increase the absorption of carbon dioxide or reduce carbon dioxide emissions. Projects
are unlikely to be funded if they merely preserve the status quo.
The advisory council will transmit its recommendations to NorthWestem Energy, which
will prepare a priority list for funding. That priority list will, in turn, be forwarded to the
PSC for approval. Once a project is approved by the PSC, NorthWestern and the
successful applicant will enter into a contract for the implementation of the project.
Application Deadline
The deadline for filing a carbon offset proposal for the 2010 plan year is April 30, 2010.
Please send completed applications to NorthWestem Energy at the address listed
below.
Questions
Please contact
John S. Fitzpatrick
Executive Director
NorthWestem Energy Governmental Affairs
208 North Montana Avenue, Suite 205
Helena, MT 59601
(406) 443-8963
John. Fitzeatrick5northwestem.com
5
Carbon Offset Provider Information
Applicant Information
Name
Address
Street Address
P.O. Box (if any)
City State ZIP Code
Telephone Fax
Email Address
Below, or on an attached sheet, provide a brief description of the applicant entity.
(Go to next page)
Type of Carbon Offset Project applicant anticipates undertaking. (Check all that
apply.)
Agriculture and Forestr
y
1. Tree planting/reforestation.
2. Efforts to minimize tillage and other cultivation methods to conserve and increase
soil carbon.
3. Technology to manage or use farm waste to minimize emissions of methane.
4. Technologies to reduce methane emissions from ruminants.
5. Technologies to make more effective use of forest and farm residues (e.g., for
heating).
6. Non-plantation forestry and land use projects, non-commercial woodland creation,
community forestry, methane capture projects, community or small farm methane
generation and capture for energy.
General Conservation
7. Parkland acquisition to enhance the quality of life for residents located within a
radius of 25 miles of the Generating Facility.
8. Funding for conservation easements In perpetuity on agricultural and forested lands
subject to conversion to small unit subdivision.
9. Funding to permanently protect lands that support critical wildlife species and
habitats, particularly those found In or near riparian and wetland ecosystems, that
are subject to conversion to small unit subdivision.
Energy Conservation
10. Increase energy efficiency in buildings (e.g., heating, cooling, lighting).
11. Retrofitting of buildings to Improve energy efficiency.
12. Measures to increase the efficiency of energy used in manufacturing (heating,
cooling, compression, drying, sorting, cutting, shaping, chemical processes).
13. Measures to reduce the emission of greenhouse gases from manufacturing
processes.
14. Combusting or containing methane generated by landfills or other industrial waste.
15. Utility Energy Loss Reduction Projects.
Other (aiease soecify)
(Go to next page)
2
Serving Utility
Please identify the name of the electric utility or electric cooperative serving the location of the
proposed project. If electric service is not available at the project location, identify the
utility/cooperative whose poles and wires and closest to the project site.
Name of electric utility/cooperative
Type of Organization
Profit Status (check one)
Organizational Structure
(check one)
Non-Profit
Federal Government Agency
State Agency
Local Government
Elementary/High School District
College/University
Special District
Non-profit Corporation
For Profit
Sole Proprietorship
Partnership
LLC/LLP
Corporation
Project Management
List individuals responsible for management of the organization and who would implement a
carbon offset project.
Address
1
2
3
4
5
Please attach copies of personal resumes of all listed individuals.
(Go to next page)
3
Bank/Depository Institution .
Provide name, address and contact information for your organization's bank or financial
depository information. Units of Government should list the appropriate treasurer or
financial office (e.g., County Treasurer).
Bank/Depository Name
Address
Street Address
P.O. Box (if any)
City State ZIP Code
Telephone Fax
Email Address
Name of Account Manager
Accountant/Auditor
Provide name, address and contact information for your organization's accountant
and/or outside auditor.
Accountant/Auditor Name
Address
Street Address
P.O. Box (if any)
City State ZIP Code
Telephone
Email Address
Name of Account Manager
(Go to next page)
Fax
4
Grant Management Experience
In the space provided below, describe the applicant's experience managing grants. Provide the date the grant was
received, title of the grant, the grant amount, grant location, and name and address of the grantor.
Grant Location
Grant Date Grant Title Grant Amount (City or County, State Grantor Name/ Address
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Relevant Project Experience
6
In the space provided below, describe the applicant's experience conducting resource conservation or energy efficiency
projects. Provide the date of the project, the project title, the project budget, and the location where the project was
conducted. Projects completed using grant funds which were described in the preceding item do not need to be repeated
here.
Carbon offset Experience
in the space provided below, describe the applicant's experience conducting projects specifically designed or identified as
carbon offset projects. Provide the date of the project, the project title, the project budget, the location of the project, and
the names of the client for whom the project was conducted or other participating parties.
oject Title
P
Pro ect Budget Project Location
(City or County, Rate Project Client
and/or co-participants
Date r
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