SOS Hill Country

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Save Our Scenic Hill Country Environment, Inc.

Annual Report on Operations
November 1, 2015 – October 31, 2016

In its ninth year of operation, Save Our Scenic Hill Country Environment (SOSHCE) remained involved in current and future industrial wind and transmission developments. We continue to strongly believe that industrial wind energy development and the directly related transmission system additions do not make sense in Gillespie and surrounding counties. The overall level of activity remained relatively high due primarily to the on-going support provided to help oppose the possible wind farm development in Mason and Menard counties.

A local group of landowners has been vigorously opposing the Mason/Menard project under the leadership of the Texas Hill Country Heritage Association (THCHA) for several years. Those efforts have now produced great results with THCHA being informed in May 2016 that the wind farm developer had decided to not proceed with that project. While we are not aware of any current wind development activities in Gillespie or Llano counties, there apparently have been some initial leasing inquiries in Kimble County.

We also continue to monitor wind farm developments in areas near the Hill Country. In addition to the 149 MW Goldthwaite Wind Farm in Mills County and the 200MW Logan's Gap 1 project in Comanche County that started up in 2014 and 2015, respectively, other projects appear to be under consideration in those and neighboring counties. A 160MW project that is now owned by an affiliate of a Chinese corporation is progressing in McCullough County with a possible second phase. The wind turbines for these additional projects could be ~500 feet tall or even taller. On a statewide level, a large amount of industrial wind is under development. While there is a significant level of development in other areas, by far most of the new capacity is being installed in the Panhandle. ERCOT data indicates that the design capacity of the $6.9 billion CREZ transmission additions will be exceeded this year. ERCOT is implementing a plan to expand the transmission system in the Panhandle even further.

Industrial wind developers remain highly dependent on the federal production tax credit (PTC) which is roughly equivalent to the value of the power they produce. Late in 2015, the PTC was extended through 2019. Projects that commence construction in 2016 will receive 100 % of the PTC. The credit "phases down" to 80%, 60% and 40% for projects commencing construction in 2017, 2018 and 2019, respectively. With liberal IRS rulings, projects have at least four years to be completed. The wind industry is hopeful that the PTC extension will bridge them to the renewables requirements that will be inherent in the EPA's Clean Power Plan. That plan has been stayed by the courts and is being litigated by a number of states and other parties.

ERCOT projects that an increasing level of future renewables installations will be solar. This increase is due to declining costs and a better fit with peak summer day afternoon demand. A number of commercial solar projects are under development. Far West Texas has by far most of the possible projects. Development in that region could result in additional high voltage transmission through the Hill Country.

For near term transmission developments, we have continued to monitor the annual ERCOT Regional Planning Group (RPG) Regional Transmission Plan. The annual LCRA TSC Business and Capital Plans have also been reviewed.

The one major project that is now proceeding is the new LCRA TSC Blumenthal (east of Fredericksburg area) substation and interconnecting 138-kV transmission line from Kendall County. The Public Utility Commission (PUC) selected the final substation location and transmission line route on December 4, 2015. While we did not oppose the project as it meets local demand, we have closely monitored the project and have provided information to some of the potentially affected landowners when requested to do so.

Regarding potential future transmission developments, SOSHCE has participated in most of the monthly ERCOT Regional Planning Group (RPG) meetings via webex/phone. Of particular interest is the bi-annual ERCOT Long Term System Assessments (LTSA) which looks out 15 years. We will review the 2016 LTSA which will be published at year end. In addition to monitoring the possibilities of any high voltage transmission lines that could impact the Hill Country, we continue to emphasize the need to consider the reliability and back-up costs associated with wind generation.

We continue to monitor the status of the United States Fish and Wildlife Service Great Plains Wind Energy Corridor (GPWEC) Habitat Conservation Plan (HCP). The plan could provide blanket taking permits to wind developers for a number of endangered species for as long as 45 years. Several Hill Country counties will likely be impacted. SOSHCE submitted comments on the Environmental Impact Statement (EIS) scoping document in October 2011 and will review the draft HCP.

Other activities included being represented at the annual University of Texas Law School renewables conference. SOSHCE activities and key developments were communicated to members and others at the November 17, 2015 Annual Membership meeting. The 2016 Annual Membership meeting has been scheduled for November 15. SOSHCE currently has more than 500 members.

The support that was provided to the Mason/Menard opposition effort included sizeable financial contributions. Contributions from the membership are greatly appreciated.

We plan to continue to monitor key industrial wind and transmission activities in the coming year. We will also continue to pursue more lasting solutions to the threats that these activities pose to the Hill Country.