BEFORE THE

PUBLIC SERVICE COMMISSION

OF MARYLAND

IN THE MATTER OF THE MERGER
OF FIRSTENERGY CORP. AND
ALLEGHENY ENERGY, INC.
)
)
)
Case No. 9233


DIRECT TESTIMONY
OF
MALCOLM D. WOOLF

ON BEHALF OF THE STATE OF MARYLAND
AND THE
MARYLAND ENERGY ADMINISTRATION





December 13, 2010
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STATE OF MARYLAND
BEFORE THE
PUBLIC SERVICE COMMISSION
IN THE MATTER OF THE MERGER
OF FIRSTENERGY CORP. AND
ALLEGHENY ENERGY, INC.
)
)
)
Case No. 9233

DIRECT TESTIMONY
OF
MALCOLM D. WOOLF
ON BEHALF OF THE STATE OF MARYLAND
AND THE MARYLAND ENERGY ADMINISTRATION

Q. PLEASE STATE YOUR NAME, OCCUPATION AND BUSINESS ADDRESS. 1
A. My name is Malcolm Woolf. I am the Director of the Maryland Energy Administration 2
(MEA). My business address is 60 West Street, Suite 300, Annapolis, Maryland 3
21401. 4
Q. WHAT IS YOUR EDUCATIONAL BACKGROUND? 5
A. I hold bachelors degrees from Tufts University and Pembroke College, Oxford 6
University. I also have a J.D. and a Masters of Public Administration and Public Policy 7
from the University of Virginia. 8
Q. WHAT IS YOUR PROFESSIONAL BACKGROUND? 9
A. Since 2007, I have served as the Director of the Maryland Energy Administration. 10
Before my appointment to that position, I was Director of the National Governors 11
Associations Natural Resources Committee, which shapes federal policy on energy, 12
agriculture, the environment, and natural resources. I have also served as Counsel to the 13
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United States Senates Environment and Public Works Committee and as a Senior 1
Attorney with the U.S. Environmental Protection Agency. I have also worked as an 2
associate at the law firms of Winston & Strawn LLP and Piper & Marbury LLP (now 3
known as DLA Piper). 4
Q. PLEASE DESCRIBE YOUR WORK AS DIRECTOR OF MEA. 5
A. As Director of MEA, I am responsible for implementing the energy policy of the State of 6
Maryland, including the promotion of affordable, reliable and clean energy. I oversee 7
departments within MEA devoted to energy efficiency, energy planning and renewable 8
energy development. Part of my objective at MEA is to create, promote and support 9
renewable energy initiatives that comply with the EmPower Maryland Act, including 10
helping the State achieve the goal of 20% renewable energy usage by 2020. In an effort 11
to spur market transformation and achieve that goal, the Clean Energy department at 12
MEA designs and implements grants for various sub-sectors of the States green 13
economy, including wind, solar, geothermal, electric vehicle and residential markets. 14
MEA works with developers, installers, industry stakeholders, and grant recipients 15
(hosts) to disburse grants from the State in support of projects in all of these sub-sectors. 16
In the course of my work, I frequently meet with renewable energy advocates, developers 17
of renewable energy projects, and other stakeholders regarding specific proposals to 18
develop renewable energy projects, as well as long-term clean energy planning, 19
initiatives, and policy. 20
Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE THIS COMMISSION? 21
A. No, I have not testified before this Commission. 22
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Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? 1
A. The purpose of my testimony is to explain the significance of the commitment made by 2
FirstEnergy Corp. and Allegheny Energy, Inc. in the December 1, 2010 Joint Petition for 3
Approval of Settlement to assist in the development of a new Tier I renewable energy 4
facility in Maryland and to describe the impact that such a facility might have on the 5
economy and environment of the State. 6
Q. WHAT IS YOUR UNDERSTANDING OF THE COMMITMENT TO 7
RENEWABLE RESOURCE DEVELOPMENT CONTAINED IN THE JOINT 8
PETITION? 9
A. If the Commission approves the Settlement that certain parties, including the State and 10
MEA, have proposed in the Joint Petition, the surviving company after the merger, First 11
Energy, would catalyze the development in Maryland of a new facility, capable of 12
generating at least 13,000 MWh of electricity or the MW equivalent annually, from a 13
Tier I renewable source, as that term is defined in Maryland law. See Md. Code. Ann., 14
Pub. Util 7-701(l). Such Tier I sources include the sources of energy that the General 15
Assembly has determined to be the most highly-preferred from an environmental 16
perspective, such as solar, wind, and geothermal. FirstEnergys participation in the 17
development of the facility could take the form of ownership, development or financial 18
support, or it could take the form of a long term agreement to purchase power from the 19
facility. The facility that FirstEnergy and Allegheny would assist in developing must 20
apply for applicable permits within 24 months following the consummation of the 21
proposed merger and must have a projected in-service date within 45 months after 22
consummation of the merger. 23
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Q. PLEASE DESCRIBE THE ECONOMIC IMPACT OF THE RENEWABLE 1
ENERGY PROJECT DESCRIBED IN THE PROPOSED SETTLEMENT, 2
ASSUMING THAT THE APPLICANTS ELECT TO FULFILL THEIR 3
COMMITMENT BY SUPPORTING THE DEVELOPMENT OF A SOLAR 4
PHOTOVOLTAIC ENERGY FACILITY. 5
A. A basic ground mount solar photovoltaic installation would require approximately 10 6
MW to produce 13,000 MWh on an annual basis. If the facility utilized the more 7
efficient one axis tracking system, 8 MW of generation capacity would be sufficient to 8
produce the same amount of energy. While the one axis tracking system is more 9
expensive up front on a per kilowatt basis, the total costs including energy generation 10
would be similar to those of a standard ground mount installation. While there are many 11
site- and project-specific variables that could affect the cost estimate, $40 to $50 million 12
is a reasonable estimate of the cost to construct a 10 MW solar photovoltaic facility or an 13
8 MW tracking solar photovoltaic facility. Building either type of solar facility would 14
create approximately 50 construction jobs for a year, including laborers, electricians, civil 15
engineers and electrical engineers. During operation, the equivalent of one to two full 16
time positions would be required to operate and maintain the facility, including an 17
electrical and mechanical technician. 18
19
20
21
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Q. AGAIN, ASSUMING THAT THE APPLICANTS ELECT TO SUPPORT THE 1
DEVELOPMENT OF A SOLAR ENERGY FACILITY, HOW WOULD THE 2
FACILITY DESCRIBED IN THE PROPOSED SETTLEMENT COMPARE TO 3
OTHER TIER I RENEWABLE ENERGY FACILITIES IN MARYLAND, 4
WHETHER IN DEVELOPMENT, UNDER CONSTRUCTION, OR ALREADY IN 5
EXISTENCE? 6
A. An 8 to 10 MW solar photovoltaic facility would be among the largest solar installations 7
in the State. Currently, the largest solar facility in Maryland is a 1.5 MW ground mount 8
installation located at a Staples distribution center in Hagerstown. A 2 MW system at the 9
University of Maryland, Eastern Shore, is nearing completion, and a 17.1 MW system at 10
Mt. St. Marys College in Emmitsburg, which would be among the largest solar facilities 11
in the country, is in the planning stages. Further, an 8 to 10 MW solar photovoltaic 12
facility would be comparable to or larger than most other solar systems along the Eastern 13
seaboard. The largest solar photovoltaic project in the region of which I am aware is a 20 14
MW plant in New Jersey, set to come on line in April or May of 2011. (Photovoltaic 15
systems are predominant on the Eastern seaboard because of the regions climate.) 16
Q. PLEASE DESCRIBE THE IMPACT OF THE DEVELOPMENT OF SUCH A 17
FACILITY ON THE RENEWABLE ENERGY INDUSTRY IN MARYLAND. 18
A. In the past few years, Maryland has experienced a surge of interest in solar energy, with a 19
significant number of new solar installations and a corresponding growth in solar energy 20
expertise. This has occurred for several reasons. First, the carve-out for solar power in 21
State-mandated renewable portfolio standards has created an economic incentive for solar 22
development. Second, MEA has itself utilized a significant amount of federal stimulus 23
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funds to support solar installations on government-owned buildings adding a total of 10 1
MW of additional solar generation capacity in the State. And third, federal stimulus 2
funds also permitted the State to expand its residential solar grant program from 200 3
recipients per year to 200 recipients per month. As a result of these efforts, the number 4
of solar installation companies participating in grant-funded projects in the State has 5
expanded from approximately 30 to approximately 100. 6
The success of both the 8 to 10 MW solar project described in the proposed Settlement, 7
and the 17.1 MW Mt. St. Marys College project that I mentioned earlier, would further 8
establish Maryland as a national leader in renewable energy. These projects have the 9
potential to solidify and expand the States pool of skilled workers, giving the State an 10
advantage in promoting additional renewable energy development; to develop supply 11
chains for specialized components necessary for renewable development in Maryland; 12
and, along with other contemporaneous efforts to encourage renewable energy in the 13
State, to enhance Marylands supportive green business climate, attracting investment in 14
additional projects. 15
Q. WHAT IS THE ENVIRONMENTAL IMPACT OF THE GENERATION OF 16
13,000 MWHS OF ELECTRICITY FROM A TIER I RENEWABLE SOURCE AS 17
COMPARED TO THE ENVIRONMENTAL IMPACT FROM THE 18
GENERATION OF THE SAME AMOUNT OF ELECTRICITY FROM A 19
FOSSIL-FUEL-FIRED POWER PLANT? 20
A. The annual 13,000 MWhs output of the proposed facility would be enough energy to 21
power 1,048 average-sized Maryland homes each year. The energy output from the 22
facility would avoid 6,703 tons of CO2 emissions annually from fossil fuel-fired power 23
plants. This is the equivalent to removing 1,291 cars from United States roadways. 24
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Q. WHAT IF FIRSTENERGY ELECTS TO SUPPORT A PROJECT THAT 1
GENERATES POWER FROM A TIER I SOURCE OTHER THAN SOLAR? 2
A. It is my understanding that the project would most likely utilize solar generation, because 3
the scale of the project described in the proposed settlement average annual output of at 4
least 13,000 MWhs is smaller than has been typical for commercially viable wind 5
projects. Whatever new project FirstEnergy elects to support, the project will have the 6
capacity to generate an average of at least 13,000 MWhs annually, and it will have 7
meaningful economic and environmental benefits for the State and its citizens; if 8
FirstEnergy chose to support a project utilizing a fuel source other than solar, such as 9
poultry litter, the project would in any event stimulate the development of the sub-sector 10
associated with that technology in Maryland. 11
Q. WOULD THE PUBLIC IMPACT OF THE COMMITMENT CONTAINED IN 12
THE PROPOSED SETTLEMENT BE DIFFERENT IF FIRSTENERGY ELECTS 13
TO FINANCE A PROJECT, OR TO SUPPORT A PROJECT BY ENTERING 14
INTO A POWER PURCHASE AGREEMENT WITH THE DEVELOPER, 15
RATHER THAN DEVELOP THE PROJECT ITSELF? 16
A. No. FirstEnergy and Allegheny have committed to support the development of a new 17
renewable energy project. The economic and environmental impact of that project 18
would be the same, regardless of the manner in which FirstEnergy supports its 19
development. In my experience working with developers of renewable energy projects, I 20
have learned that perhaps the most significant obstacle to successful development is the 21
need to obtain financing. Moreover, before financing a new renewable energy project, 22
most investors and financial institutions require the developer to obtain substantial 23
commitments, in advance of project construction, for purchase of the energy that would 24
ultimately be generated. Whether FirstEnergy develops a new project itself, or supports a 25
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new project by providing financing or entering into a long-term power purchase 1
agreement, the support would be such that it would effectively enable a new facility to be 2
built and come on line in Maryland. 3
Q. DOES THIS CONCLUDE YOUR TESTIMONY? 4
A. Yes, this concludes my direct testimony at this time. 5