Save Our Scenic Hill Country Environment, Inc.

Annual Report on Operations
November 1, 2010–October 31, 2011

The fourth year of operation of Save Our Scenic Hill Country Environment (SOSHCE) was very active and productive. The organization continued to be involved in current and future transmission line developments and in on-going efforts to ensure that industrial wind energy development does not occur in areas where it does not make sense. SOSHCE's positions, related strategies and activities continued to evolve as circumstances changed. We strongly believe that industrial wind energy development and the directly related transmission system additions do not make sense in Gillespie and surrounding counties due to the:

aesthetics and natural beauty of the Texas Hill Country
economic value that our area derives from tourism and smart growth
reduction of land values that inevitably follows the construction of wind farms
sensitive environmental integrity of our area (including birds, bats and other wildlife)
fact that ours is a low-wind area

Based on a number of factors, we question whether wind development makes sense in other parts of Texas even where they have better wind resource and more compatible land use. These factors include the heavy reliance on government subsidies and questionable long term sustainability.

We believe the challenge for the future will be to ensure that industrial wind development and the directly related transmission system additions are made only if they make sense from all aspects. Key aspects include environmental, historic, scenic, land use, efficiency and economics. The on-going involvement of landowners, local and state officials and other organizations will continue to be critically important.

Consistent with the transmission position, SOSHCE continued to actively support the evaluation of the alternatives to the three new high voltage Competitive Renewable Energy Zones (CREZ) lines that could have impacted the Hill Country. We were extremely pleased when the Public Utility Commission (PUC) eliminated the Gillespie (Fredericksburg area) to Newton (Lampasas County) and Kendall (Comfort area) to Gillespie transmission line segments and instead chose to use much lower cost alternatives. The alternatives include adding transformer capacity at the Kendall substation and upgrading or replacing existing transmission lines and structures in Travis, Bell, Blanco and Kendall counties.

We were equally disappointed that the McCamey D (Eldorado/San Angelo area) to Kendall CREZ line is proceeding following ERCOT's September 2010 conclusion that there were not cost effective alternatives. SOSHCE continued to closely follow the PUC route selection process and to help keep the large number of involved landowners, public officials and others informed of key developments. It appears that the final PUC-related issue pertaining to the routing may be nearing settlement. The approved route runs cross-country from McCamey D (Big Hill) to IH-10 west of Junction and then follows IH-10 through the Junction and Kerrville areas to near the Kendall substation.

Regarding future transmission line possibilities, SOSHCE is actively monitoring Electric Reliability Council of Texas (ERCOT) planning activities. Our efforts include participating in ERCOT Regional Planning Group (RPG) meetings. The RPG is responsible for the annual development of the Five Year Transmission Plans (5YP) which is the key process for identifying additional transmission projects.

The 2010 5YP did not show any additional high voltage projects in the Hill Country through 2015 other than the McCamey D to Kendall CREZ line and another CREZ-related upgrade between Mason and Llano. SOSHCE will be reviewing the 2011 5YP that is scheduled to be released before year-end 2011.

We are also monitoring the ERCOT 2010-2030 Long Term Transmission Analysis. The analysis will address a number of possible generation and transmission scenarios. SOSHCE was one of 14 organizations that submitted comments on the interim report that was issued in early September. We support thorough consideration of the reliability and economic effects of the high wind generation scenarios. Our involvement will continue through the completion of the analysis in mid-2013.

Regarding industrial wind development, we were actively engaged in opposing the possible wind farm project in Mason and Menard counties. A wind developer obtained lease options there for about 14,000 acres in 2008 and 2009. There were indications that the project might be proceeding in early 2011. SOSHCE sent a letter to the developer in April that listed some of the key reasons why industrial wind development does not make sense. It also documented the need for the development of a federal Environmental Impact Statement (EIS) for endangered species in that area. The SOSHCE letter followed one sent by an attorney representing directly affected neighboring landowners. The developer responded to both letters and indicated there would be public information meetings if they decided to proceed.

Concerned that the industrial wind development could proceed with little or no advanced warning, SOSHCE provided information packets to about 70 nearby landowners and conducted an informational meeting in Mason in June. It subsequently became known that the developer would not be one of those selected by a key municipal utility for long term renewable energy contracts. SOSHCE continues to work with our Mason members to monitor the possibility of the project proceeding and is prepared to take additional action if warranted. Wind developers face the possibility that the critically important federal production tax credit will not be extended beyond the end of 2012.

SOSHCE became even more heavily involved in federal environmental impact developments pertaining to both transmission and wind development projects. After having submitted scoping comments in April 2010 to the U.S. Fish & Wildlife Service (USFWS), we are in the process of reviewing the recently released draft Environmental Assessment and draft Incidental Take Permit application with a draft Habitat Conservation for LCRA TSC's CREZ projects.

In addition, SOSHCE submitted scoping comments in October for the Great Plains Wind Energy Corridor (GPWEC) EIS that USFWS is planning to prepare at the request of a number of wind developers. Due to the massive nature and impact of industrial wind developments, species/project/area/developer/operator specific permits were supported. The GPWEC EIS would cover a 200 mile wide whooping crane migration corridor from Canada to the Texas Coast and part of the historic range of the lesser prairie chicken. Parts or all of Gillespie, Llano, Lampasas, Burnet and Mason counties are currently included. Other species, including the golden-cheeked warbler and the black-capped vireo, would be covered.

SOSHCE activities and other developments were communicated to members and others with 11 updates during the year. SOSHCE's Directors and Officers continued to be actively involved with a total of 6 meetings. The organization's website was updated periodically.

SOSHCE continues to grow and currently has almost 600 members.

Based on the voluntary contributions of members and its Directors and Officers, SOSHCE continued to be adequately funded. With no paid staff, the most significant expenditures were related to legal expense associated with the Mason industrial wind activities. We are now in a position where additional contributions are needed.

The coming year promises to continue to be very active, both on the future transmission and the industrial wind development fronts and the related environmental impacts. On-going support and involvement of the membership is extremely important in light of the on-going challenges we face.