Brief: Renewable Energy Investment Fund

EXECUTIVE SUMMARY OF PROPOSED RULE AND RECOMMENDATIONS The staff recommends the creation of a revolving loan program, The Renewable Energy Investment Fund, dedicated to the development of new renewable electricity generation. The staff recommends that the Department adopt the proposed rule (attached) in its entirety. The proposed rule’s objective is to establish the primary agency obligations, mechanism for accountability and oversight, operational guidelines and the parameters for the management of the loan program, such as basic loan conditions and requirements for applicants, which the Secretary reserves the right to modify. 1. Introduction Increased emission standards and the probability of a national electricity generation portfolio standard provoke action be taken quickly in preparation (for these measures).1 Given Louisiana’s slow growth in comparison to other states in the renewable energy arena, the urgency of a statewide response becomes all the more realized. The benefits of adding renewable generation include energy security by diversified energy resources, cleaner energy, market (and job) creation, and potentially lower costs of energy in the long run. The Department of Natural Resources (department) will be the sole administrator of the loan program and will designate an Advisory Board to provide accountability and the consensus of interest by the various stakeholders. Much like other state administered renewable programs and lending from the structure of an existing Louisiana revolving loan program, the Renewable Energy Investment Fund (fund, REIF) will direct funds from the Department to eligible projects that will pay back the loan at a low interest which is then deposited into the fund. 1 http://www.dsireusa.org/Index.cfm?EE=0&re=1 Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD Figure 1: Revolving Fund Cycle 1. Procedural History Currently there is no formal procedural history in Louisiana on the creation of a Renewable Energy Investment Fund. Aside from emissions reduction targets, no state mandates exist to drive the establishment of incentives for alternatives to conventional sources of electricity generation. Louisiana has incentives to promote the use of some selective renewable technologies but no specific program to make renewable technologies competitive in the electricity market. 2. Cost Recovery Practices Cost Recovery for the development of renewable electricity in other states historically varies between a utility charge to ratepayers, the system benefits charge (much like the utility charge but applies to all distribution utilities), and taxes. Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD The Renewable Energy Investment Fund will not be reflective of historical cost recovery practices for similar programs (in other states), but will be initially funded by monies from the American Recovery and Reinvestment Act (allocated to the Louisiana Department of Natural Resources) and will take the form of a revolving loan program to maintain the continuation of its goals and mission, while reserving the right to include grants, should the program acquire sufficient funding and policy support to do so. Additional income may accrue to the REIF from other monies, such as emerging emission trading programs and compliance payments. In Minnesota, for example, funds for renewable energy programs are collected from a utility operating nuclear power plants in the state in exchange for permission to store spend nuclear fuel at the sites. In effect, the state is taxing this activity and using the funds for clean energy. 2 3. Administrative Models Other states that administer similar renewable energy loan funds with the “state model”3 include New Jersey, Maine, and Ohio. Others, such as New York and Massachusetts, use the state model as part of a hybrid (Utility, State, and Third Party) administrative model. The hybrid models have “successfully implemented both market transformation and resource acquisition programs and are widely viewed as more agile and efficient than traditional state agencies.”4 Maine’s program funding relies on the voluntary payments of rate payers and has seen little implementation of projects since its inception. New Jersey has a robust program with primary funding from a System Benefit Charge. Its renewable programs are heavily geared toward meeting Renewable Portfolio Standards and other mandates. Where Louisiana should consider New Jersey programs as designs to model after, it might be served better initially by considering the a more simple design, as in the state of Ohio. Renewable programs administered using the state model, whether by an existing or newly created state entity, typically intimately involve agencies in the program design and details. Some of the advantages of using this model include: 2, 4 - Avoiding redundant administrative costs that occur when multiple utilities run their own programs - Removing the potential or real conflict of interest inherent in utility program administration http://www.epa.gov/solar/documents/clean_energy_fund_manual.pdf 3 State Administrative Model – In the state model, programs are administered by an existing or newly created state entity. In this model, the state typically relies on contractors to perform some functions but retains overall program administration and financial responsibilities. Under this model, state agencies are intimately involved in program design and details. Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD (However, the state model is not immune to the effects of utility rate increases and other stakeholder concerns faced by utilities and third party administrators) - Ensuring that all residents and businesses within a state are eligible for services - Facilitating the creation of competitive and experienced energy service companies, because program implementation is typically accomplished through private contractors (This same effect can be achieved through utility or third party models, but in practice states are more likely to rely on outside contractors) There are, however, some common disadvantages to the state administered programs in comparison to other administrative models that should be recognized (and that will trustfully be avoided). Some of these include: - Creating conflicts and raising political issues, as the state can be positioned in the electricity market as a competitor to supply-side providers and energy service companies. - Suffering from higher levels of bureaucracy and operation restrictions than other models, as agencies may not have the speed and flexibility to change program goals with changing market climates, especially for market transformation programs. - Suffering from a lack of effective evaluation and ability to timely correct deficiencies in program design or scale particularly when there is no separation between the program administrator and the oversight agency (as in Maine). - Susceptibility to influences by external politics that have little to do with renewable energy or that are in contradiction to the Fund’s objectives. Many of these disadvantages are avoided in the creation of a third party administrator. The third party model creates an independent entity whose sole purpose is to administer renewable energy programs. The state may be involved in evaluation, measurement, and verification, but day to day operation is left in the hands of the third party. Third party administrators are capable of reacting swiftly to changes in the marketplace and maintaining flexibility while avoiding bureaucracy. They eliminate redundant administrative mechanisms and the funds collected and distributed under contract are typically harder to raid for extraneous purposes than with a state model. Regardless of the administrative structure, renewable energy programs can overcome administrative disadvantages by achieving the following recommended characteristics: “ Clarity. Well outlined policy rationale and clear, objective goals are critical, as are a clear administrative and decision making framework. Performance metrics should be explicitly Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD stated to facilitate evaluation and to provide oversight and guidance to inform interventions or redesigns. Consistency. It takes time to build an effective program infrastructure and even more time to realize the full savings of a program. Frequent changes to program infrastructure, goals, and design can significant weaken results. A program administrator who is assured or a certain period of stability during which programs can mature and begin to demonstrate success will typically perform better than one who is concerned that funding will be removed or program goals modified if results do not materialize in an unrealistically short timeframe. Consensus. Key stakeholder should be in agreement about important issues. At the very least, utilities, regulators, various customer classes (e.g., industrial, low-business, businesses), and environmental stakeholders should be engaged in discussion about important structural questions. This is likely to generate a more robust and sustainable outcome.” 5 5 http://www.epa.gov/solar/documents/clean_energy_fund_manual.pdf, http://www.raponline.org/Pubs/RatePayerFundedEE/RatePayerFundedEEPartI.pdf Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD 4. Outline and Explanation The Proposed REIF rule is composed of 6 Sections. (1) Purpose: This section outlines the purpose of the rule. (2) Definitions and Abbreviations: The section defines the terms that are associated with the rule. (3) Agency Obligation: This section establishes the initial and essential functions of the DNR before delegating duties to fund managers and staff administrators. (4) Accountability and Oversight: This section plots measures to prevent inefficiencies in the state administered program. (5) Operational Guidelines: This section provides a foundation of principals serving as bylaws to the management of the fund. (6) Loan Program Conditions and Application Requirements: This section stipulates specific design functions and requirements of the loan process. This includes the following: Eligible Projects; Project Priority Rating for selected eligible projects; Loan Repayment plans; Fees; Restrictions on Out of State Generation; Failure to Complete a funded project; Pre-Application Conference to adequately communicate terms of contract; Application Package; Evaluation Criteria; and Miscellaneous functions Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD RENEWABLE ENERGY INVESTMENT FUND – PRELIMINARY RULE LOUISIANA DEPARTMENT OF NATURAL RESOURCES DOCKET ________________ In re: Administrative Rules, Funding Rules and Operational Guidelines RENEWABLE ENERGY INVESTMENT FUND - PROPOSED RULE FOR NEW RENEWABLE ELECTRIC POWER GENERATION 1. Purpose: The purpose of the Proposed Rule for New Renewable Electric Power Generation is to define the governing functions of the Renewable Energy Investment Fund. The Renewable Energy Investment Fund shall be formed to direct the expenditure of funds for new cost-effective local renewable generation, new market transformation efforts, and the above-market costs of new renewable energy resources. Whereas the Department of Natural Resources shall be responsible for the conservation, management, and development of water, minerals, and other such natural resources of the state, including coastal restoration and management, except timber and fish and wildlife and their habitats [RS 36:351 (B)], And as natural resources applies to renewable resources, the use of renewable resources falls under the authority to conserve and prevent “… the use of natural resources in such a manner and in such quantities as will threaten with premature exhaustion, extinction, and destruction of the supply of these resources in the state…[RS 36:354 (13)]” And “…Toward the energy policy of this state, and to prepare and implement plans and programs in relation thereto…” the Secretary will exercise the authority to determine whether the use of state property and resources meet current policies regarding the development and/or use of such property Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD and resources, to formulate programs, and take the necessary action to implement his findings [RS 36:354 (16)]. There is hereby established in the state treasury the Renewable Energy Investment Fund (REIF), into which shall be deposited all American Recovery and Reinvestment Act monies remitted to the Secretary of the Department of Natural Resources for the exclusive purposes of funding the renewable energy investment fund program and paying the programs administrative costs. Interest on the fund shall be credited to the fund. Additional revenue directed to the fund shall be determined by the Secretary. The Department of Natural Resources, through the renewable energy investment program will seek loan applications to implement renewable energy projects for commercial, industrial, institutional and government entities in Louisiana. Qualifying applicants will be eligible to apply for loan assistance to cover a portion of the costs of eligible projects located in the Louisiana service territories. 2. Definitions and Abbreviations: For purposes of this rule, the terms listed below will have the following meaning: 2.1. Applicant – Any person who submits an application for financial assistance 2.2. Biologically-derived methane gas - means landfill methane gas; or gas from the anaerobic digestion of organic materials, including animal waste, municipal wastewater, institutional and industrial organic waste, food waste, yard waste, and agricultural crops and residues. 2.3. Biomass energy - means energy produced from organic material derived from plants or animals and available on a renewable basis, including but not limited to: agricultural crops, tree crops, crop by-products and residues; wood and paper manufacturing waste, including nontreated by-products of the wood manufacturing or pulping process, such as bark, wood chips, sawdust, and lignin in spent pulping liquors; forestry waste and residues; other vegetation waste, including landscape or right-of-way trimmings; algae; food waste; animal wastes and by-products (including fats, oils, greases and manure); biodegradable solid waste; and biologically-derived methane gas. 2.4. Commission – means the public service commission of Louisiana 2.5. Construction – preliminary planning, engineering, architecture, legal, fiscal, and economic investigations and/or studies, surveys, designs, plans, working drawings, specifications, erection, building, acquisition, alteration, remodeling, improvement, or extension of the project. 2.6. Department – means the Department of Natural Resources 2.7. Effective date - The date on which an agreement, such as a contract or insurance policy, takes effect. Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD 2.8. Energy storage – refers to a hydrogen facility or technology that permits the storage of energy for future use as electricity. 2.9. Fund – The Renewable Energy Investment Fund 2.10. Geothermal energy - means hot water or steam extracted from geothermal reservoirs in the earth’s crust and used for electricity generation. 2.11. Hydroelectric energy - means electricity generated by a hydroelectric facility. Hydroelectric facilities are all powered by the kinetic energy of flowing water as it moves downstream. Turbines and generators convert the energy into electricity. 2.12. LDEQ – Louisiana Department of Environmental Quality 2.13.Loan or Loans – a disbursement of money from a fund made by the department to a person in accordance with a loan and pledge agreement 2.14.Person – any individual, partnership, firm, corporation, company, cooperative, association, society, trust, or any other business unit or entity, including the state, its political subdivisions, or any agency thereof, Indian tribes, and combinations of government entities. 2.15. REIF – Renewable Energy Investment Fund, the Fund 2.16.Secretary – the secretary of the Department of Natural Resources 2.17.Solar energy resources - means solar photovoltaic and/or solar thermal resources. 2.18.Solar photovoltaic - means energy from devices which generate electricity directly from sunlight through the movement of electrons. 2.19.Solar thermal - means the concentration of the sun’s energy, typically through the use of lenses or mirrors, to drive a generator or engine. 2.20.State – the State of Louisiana or any agency or instrumentality thereof 2.21.Strategic Plan – the document containing the necessary plans, specifications, and studies relating to the construction of a complete project 2.22.Wave energy - power extracted directly from surface waves or from pressure fluctuations below the surface and converted into electricity through both offshore and onshore systems. 2.23.Wind energy - means electricity generated from wind turbines, windmills, or other technology that converts wind into electricity. 3. Agency Obligations 3.1. General Authority in the Expenditure of Funds. The Secretary and/or designees will be the exclusive party administering the Funds to accomplish the purposes stated in this section. Funds expended by the department will be spent in compliance with these rules and to accomplish the stated purposes (including reasonable administrative expenses to accomplish) on the date the Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD department receives the Funds. No part of the Funds may be expended by the department for lobbying or for any other political purpose, such as endorsing or opposing candidates for public office or ballot measures. Nothing contained herein will be deemed to prevent the department from receiving funds from other sources for activities that are consistent with its purposes, provided such funds are accounted for separately from the Funds. 3.2. Administrative Policies and Procedures. The department will establish and administer accounting policies and procedures, internal controls, and systems for the development, preparation, and safekeeping of administrative and financial records and books of account relating to its business and financial affairs, all of which will be prepared and maintained in accordance with generally accepted accounting principles. 3.3. Advisory Board. The Secretary will appoint members of the Advisory Board. Members will include the Commissioner of the PSC, or a designee, the Treasurer of Louisiana and the Chairs of the House and Senate Committees on Natural Resources and Environment, or their designees. The remaining positions will be appointed to major stakeholders and industry and civic representatives. 4. Accountability and Oversight 4.1. Strategic Plan. No later than the effective date, the Secretary will have approved an interim strategic plan for expenditure of the funds to accomplish the stated purposes. The REIF will publish a final strategic plan that clearly describes its mission, the goals it seeks to accomplish, and programmatic and organizational strategies it intends to employ. In addition, the REIF will regularly provide a two year action plan that describes specific actions the REIF will pursue to accomplish its strategic plan. The first such action plan will be provided to the Secretary no later than the start of the period it intends to cover. After initial publication of the final strategic plan, the strategic plan will be revised at least once every five years. The action plan will be revised annually, on each anniversary of the Effective Date. The REIF will actively seek public and agency comment before finalizing and publishing any such strategic or action plans. 4.2. Budget. The REIF will develop an annual fiscal year budget and a final budget, approved by the Secretary. The budget will include projected revenues received and proposed expenditures in such manner as may be requested by the Secretary. The budget will also contain information that may permit the reader to evaluate the REIF’s total administrative costs and whether such costs may be considered reasonable, and (except for the first such budget) provide a comparison of actual revenues and expenditures received, as compared to the current fiscal year’s budget. 4.3. Annual Report. The REIF will provide the Secretary with an annual report which will include: Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD 4.3.1. Financial statements for the most recently completed fiscal year, with particular attention to administrative costs. 4.3.2. A list of the Advisory Board and Staff directly managing the program. 4.3.3. Summaries of program accomplishments, including a portfolio of the investment package(s). 4.3.4. A description of any changes to the strategic action plans since the previous annual report. 5. Operational Guidelines 5.1. Investment Operating Principals. The Secretary will develop operating principles for deployment of the REIF. The principles should include: 5.1.1. Financing proposals should be commercially viable and generate at least a modest return. 5.1.2. The quality of a company’s management team and its market opportunities are the first considerations in evaluating an investment opportunity. 5.1.3. Financing decisions are based on agreed upon underwriting and investment criteria, not on political or other special considerations. 5.1.4. The capital base is leveraged where possible by attracting mainstream investors and lenders to companies or projects in which risk has been reduced by the REIF’s participation. 5.1.5. Investments and loans are diversified among several industry sectors and types of projects to reduce risk. 5.2. Fund Initiatives, Services, Activities. The REIF anticipates providing a range of market-based initiatives, financial products and services to companies and projects that further the Fund’s mission. These will include: 5.2.1. Incentives and loans for medium and large-scale renewable energy projects greater than 10 KW with funding awarded via competitive solicitations. 5.2.2. Commercial loans to manufacturers, distributors, retailers, and service companies regarding renewable energy technologies. These loans will be made at a competitive interest rate and will frequently be made in conjunction with other financing partners. 5.2.3. The REIF will have full access to the DNR and the Treasurer in investment underwriting and structuring, investment strategy, operating procedures and portfolio servicing. 5.3. Use of Funds. Funds expended for new renewable resources will be utilized to offset all or a portion of their above market costs to provide short- and long-term benefits to users of electricity in Louisiana service areas. 5.4. Competitive Markets. All parties will seek to encourage development of competitive markets for new renewable generation as long-term outcomes. Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD 5.5. Competitive Bids. When deemed appropriate, The REIF will employ a nondiscriminatory competitive solicitation process prior to entering into binding agreements for expenditures of Funds. 5.6. Benefits. After consideration of the sources of public purpose funding, all classes of electricity users and their related geographic areas should benefit from renewable energy and renewable program expenditures. 5.7. Coordination. Each program will be designed to recognize and coordinate with existing local, state and regional programs that are related in purpose. 5.8. Administrative Costs. The cost of operating the REIF will be reasonable and support efforts toward cost effectiveness. Costs of operation the REIF will balance the lowest possible administrative costs with overall organizational effectiveness. Subject to generally accepted accounting principles, the REIF will allocate administrative costs in a manner to avoid crosssubsidies between programs that are supported by the Funds and programs that are not. 5.9. Standard of Conduct. The REIF will operate under professional standards of conduct and organizational effectiveness, consistent with the public interest and mandates of the Statute. 5.10.Input. The REIF will seek comment from the appropriate regulatory authorities and from the public on issues related to its performance of services. 6. Loan Program Conditions and Application Requirements Loans for projects for new renewable electricity generation will be made only to eligible applicants who comply with the conditions and requirements established by the department. 6.1. Eligible Projects. New electricity generated utilizing the following types of energy may be considered renewable electricity projects/technologies: 6.1.1. Wind energy. 6.1.2. Solar photovoltaic and solar thermal energy. 6.1.3. Wave, tidal and ocean thermal energy. 6.1.4. Geothermal energy. 6.1.5. Biomass and biomass byproduct, including but not limited to electricity generated from: 6.1.5.1. Organic human or animal waste; 6.1.5.2. Spent pulping liquor; 6.1.5.3. Forest or rangeland woody debris from harvesting or thinning conducted to improve forest or rangeland ecological health and to reduce uncharacteristic stand replacing wildfire risk; 6.1.5.4. Wood material from hardwood timber grown on land Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD 6.1.5.5. Agricultural residues; 6.1.5.6. Dedicated energy crops; and 6.1.5.7. Landfill gas or biogas produced from organic matter, wastewater, anaerobic digesters or municipal solid waste. 6.1.6. Electricity generated by a hydroelectric facility. 6.1.7. Electricity generated from hydrogen gas derived from any source of energy described in subsections 6.1.1 – 6.1.6 of this section. 6.1.8. If electricity generation employs multiple energy sources, that portion of the electricity generated that is attributable to energy sources described in subsections in this section. 6.1.9. The Secretary by rule may approve energy sources other than those described in this section that may be considered sources of renewable electricity generation. 6.2. Project Priority Rating. The Secretary shall set priority for loans on the basis of the costeffectiveness of the proposed project, with the most cost-effective projects receiving highest priority, projects whose feasibility studies show the greatest economic justification (in the state) and the greatest engineering feasibility, as determined by the Secretary. 6.3. Loan Repayment. There shall be a level annual repayment of principle and interest on the loans, except in the event of project failure or cancelation. The amount of principal shall include the administrative fee described in section 6.6 of this section. 6.4. Loan Interest. The interest rate for the loans made for projects to be funded shall be set at a rate equal to the interest rate paid by the state on the most recent sale of state general obligation bonds. The interest rate set for each contract shall be applied throughout the repayment period of the contract. 6.5. Loan Period. Standard loans shall be made by the department for a period of time not to exceed 15 years from the completion date of the project. Interim construction financing shall not exceed ____ years without written approval from the department. 6.6. Fees. The Secretary shall establish a reasonable schedule of administrative fees for loans. Borrowers shall be responsible for all closing costs. 6.7. Restrictions on out of state generation. The Secretary shall not make loans pursuant to this section for otherwise eligible projects whose out of state generation is greater than 50 percent. Generation outside of the state of Louisiana will be subject to a substantially higher interest rate, to be determined by the Secretary and articulated during the application process. 6.8. Cancellation/Failure to Complete Project. Cancellation or failure to complete the project is subject to 1% cancellation fee and the pay back of the loan at the state bond rate. The Secretary may set a premium on a case-by-case basis that is applied to the remaining principal. Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD 6.9. Pre-Application Conference. Applicants whose pre-application project falls in the fundable portion of the annual priority list, and who have demonstrated a commitment to proceed with the application process, shall be invited to an application conference with the department in order to insure the applicant is acquainted with program requirements and to assist the applicant in preparing an application. 6.10.Application Package. Specifications of requirements will be articulated and documented clearly in Requests for Proposal and throughout the Loan Application process. The contents of the application must contain all applicable information required by the department including, but not limited to, the following: 6.10.1. Organizational, Financial, and Legal Information. Applicants will be required to prepare a proposed project budget and financing information. Applicants will report installed and total cost of the project, requested payment terms, existing debt and amounts funded by the REIF and external sources. Sufficient information is required to demonstrate its legal, institutional, managerial, and financial capability to ensure the construction, operation, and maintenance of the facility and repayment of the loan, interest, and administrative fees. 6.10.2. Project Description. Applicants will be required to produce a detailed description of the proposed project including a map of the project area and a project timetable. 6.10.3. Engineering and Feasibility. Applicants will be required to provide relevant certification to be determined by the Secretary and/or identified in the application process. Applicants must show that the applicant has acquired all property sites, easements, rights-of-way, or specific use permits necessary for construction, operation, and maintenance of the project described in the project description. Previous reports, preliminary plans prepared for the project must be submitted as well as a construction inspection plan. The department will perform a technical review of the strategic plan to insure that the proposed construction is necessary and eligible for program funding, and that the completed project will result in compliance with all applicable regulations. 6.10.4. Economic Justification. Applicants must provide detailed explanation for the cost effectiveness (where primary benefits exceed primary costs) of the project. Justification of project performance must be provided and project costs must be clearly documented to allow efficient review. The Secretary may determine a specific formula for which costs will be calculated. 6.10.5. Statewide Benefits. A section will be devoted to allow the applicant to account for secondary benefits that could not be claimed in section 6.10.4. Applicants must indicate the physical need by the community and the financial need of the applicant. Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD 6.10.6. Environmental Documentation. The proposed project must be circulated through the State’s environmental clearinghouse process. Applicants are required to list and include all required permits, easement rights, land acquisitions, and certification of approvals of federal, state, and local agencies. A demonstration of community support and/or opposition will also be required. 6.11.Evaluation Criteria. 6.11.1. Financial Viability. Projects must demonstrate financial viability (i.e. adequate collateral and/or cash flow to service related financing) so as not to pose an unreasonable risk of loss to the REIF, as determined by the Secretary. 6.11.2. Financing Leverage. To maximize use of the available funds, the degree of financial leverage (through funding obtained from the federal government, private investors, companies and consumers, etc.) will be a component of investment decisions. 6.11.3. Energy Available to Louisiana Ratepayers. Programs and projects will be evaluated in terms of the degree to which they are likely to contribute to an increase in the renewable energy generating capacity available to Louisiana ratepayers. 6.11.4. Economic Impact. The extent of the additional economic value created by support of a project will be evaluated. The creation of well-paying jobs is also fundamental to REIF’s mission. Evaluation of the number and quality of jobs the applicant expects to create or retain is crucial in the REIF’s evaluation of a project. 6.11.5. Market Impact. The Fund will be used to increase renewable energy capacity, reduce barriers to market entry, and to create new markets in Louisiana. 6.11.6. Public Benefit. Projects will be evaluated in regards to the benefit to Louisiana ratepayers, and in meeting state renewable energy objectives and policies. 6.12.Miscellaneous. 6.12.1. Inspection During Construction. By making application for financial assistance to the department, applicants consent and agree to allow the department the right of reasonable access and opportunity for inspection as follows. 6.12.1.1. From the time a completed application for financial assistance is received by the department, throughout all stages of construction, and at any other time while financial assistance from the department to the applicant is outstanding, the department shall have the right to inspect any and all projects, and any and all incidental works, areas, facilities and premises otherwise pertaining to the project for which application is made. 6.12.1.2. The department shall further have the same right of inspection to examine any and all books, accounts, records, contracts, or other instruments, documents, or information Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD in the possession of the applicant or its contractors, agents, employees, or representatives which relate in any respect to the receipt, deposit, or expenditure of project-related financial assistance funds. 6.12.2. Project Changes/Modifications. The applicant shall receive approval from the department prior to effecting any changes which: 6.12.2.1. Alter the project performance standards; 6.12.2.2. Alter the type or degree of water treatment provided by the project; 6.12.2.3. Substantially delay or accelerate the project schedule 6.12.2.4. Substantially alter the design plans and/or specifications; or the location, size or capacity; or quality of any major part of the project. Brief to the Department of Natural Resources (DNS), LA 12 June 2009 Jordan Lane Gilmore, RA David Dismukes, PhD