Don’t blame wind, officials say
Power producers have installed more than 500 megawatts of wind energy generation in Wyoming in the past year. One driver behind the wind boom presumably is action by other states in the West to require that utilities use certain percentages of renewable energy in their power supplies — called renewable portfolio standards.
Rocky Mountain Power, which has installed several hundred megawatts of wind power in Wyoming in recent years, is asking for a 13.7 percent rate hike for its Wyoming customers in 2010.
That has many speculating whether renewable portfolio standards in other states are driving up rates in Wyoming, where there is no such requirement.
“I contend, by and large, Wyoming commercial and residential customers are not driving the systemwide demand for wind and other generation and transmission assets to the extent other states and other types of customer classes are,” said Sen. Cale Case, R-Lander.
PacifiCorp, which operates as Rocky Mountain Power in Wyoming, says renewable portfolio standards in the other states it serves are not to blame for Wyoming’s rising rates.
“Our wind energy acquisitions are not made for the purpose of satisfying renewable portfolio standard requirements,” said Rocky Mountain Power spokesman Jeff Hymas.
Case in point: Hymas said PacifiCorp’s sister utility in Iowa, MidAmerican Energy Co., has added nearly 1,300 megawatts of wind generation since 2004 and recently received regulatory approval to add up to 1,001 megawatts more — even though the Iowa renewable portfolio standard requirement is only about 50 megawatts.
“Our wind resources are economic for customers in part because the cost-effective standard used by state utility regulators considers ‘risk-adjusted cost,’” Hymas said.
He said new wind energy resources acquired by the utility have compared favorably with other resource options — coal and natural gas plants — when considering both the costs and the risks to customers. In the case of wind, customers should enjoy a savings over the long term.
“While there’s a large up-front cost for wind, there isn’t a power cost component for company-owned wind projects once they’re in the ground, as opposed to a coal or natural gas plant where you have to continue paying for that fuel,” Hymas said.
Bottom line: Wyoming customers pay only their share of the costs of the utility’s wind energy resources, as well as other generation and transmission assets, based on the benefits they receive, according to Hymas.
That’s something the Wyoming Public Service Commission — along eight entities granted intervenor status in Rocky Mountain Power’s 2010 rate case — will scrutinize over the next several months.
Chris Petrie, secretary and chief counsel for the Public Service Commission, said the commission is directed to make sure any rate increase reflects legitimate costs of providing service.
“Meeting renewable portfolio standards applicable in some other state would be extremely dubious justification for increasing Wyoming ratepayers’ bills,” Petrie said. “As far as I know, that’s not happened.”
Case said he remains skeptical.
“I do hope to drill down on it more,” he said. “We are locked into a multistate sharing arrangement that allocates system costs to Wyoming. I am not at all sure that that level of sharing is appropriate now or over time.”
In 2000, Wyoming customers accounted for 14.9 percent of the electricity use across Rocky Mountain Power’s six-state service region. That means for those systemwide power costs and improvements, Wyoming ratepayers were expected to pay 14.9 percent.
In recent years, Wyoming has increased its share of use on the multistate system. In 2008, Wyoming’s portion of systemwide energy use increased to 16.7 percent, according to Rocky Mountain Power.
Case said he also wants to find out if the cost of providing service is being allocated to various customer classes equitably. For instance, Case said he’s heard complaints that industrial customers — oil, natural gas and coal extraction industries — are driving the cost of service higher but their rates are not in proportion to the additional costs they impose on the system.
“I do not know if this is true or not and am looking forward to finding out more in the course of the case,” he said.
By DUSTIN BLEIZEFFER – Star-Tribune energy reporter
20 November 2009
Tags: Wind power, Wind energy
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