DENVER – Black Hills Energy is asking the state Public Utility Commission to approve its plan for complying with the state’s heightened renewable energy standards.
However, the utility notes it isn’t yet sure how to meet one of the required components – the purchase of wholesale renewable energy – and, accordingly, it also has yet to determine how complying with that part could affect rates. Other potential rate impacts also remain under study, the utility says.
Under state law, Black Hills and other investor-owned utilities are required to boost their renewable energy usage each year with the goal of generating 30 percent of their energy from renewable sources by 2020. The utilities must file plans with the PUC on how they plan to achieve the goals.
Black Hills, in its plan submitted to the PUC on Friday, said it will not meet a 2011 threshold for wholesale renewable energy. Wholesale energy comes from third-party providers and, in the absence of a large-scale seller, Black Hills says it is at a loss about how to comply with that element of the law.
“That’s the challenging part of it,” said Christopher Burke, vice president of operations for Black Hills. “We’re still working to try to see how to meet that compliance standard but, as of right now, we’re not.”
The utility easily met its 2011 threshold for retail usage through its recently ended small-user solar rebate program, according to the plan.
Longer term, Black Hills thinks wind energy offers the most promise for meeting the final 2020 standards. “Among all (of the renewable energy sources), wind is clearly more cost-effective than solar,” Burke said. “So we’re looking closely at wind.”
A partnership with Vestas Wind Systems to buy the power generated by the single wind turbine at Vestas’ Pueblo tower-making plant is one step in that direction, Burke said.
The future also could bring more partnerships with Vestas, he said.“Anytime that you talk about developing wind, Vestas is likely to be involved,” Burke said.
Under the law, Black Hills can comply with the renewable energy standard through any combination of wind, solar or biomass energy sources.
The utility studied biomass as an option for meeting power plant emission standards at its W.N. Clark power station in Canon City but found conversion of the boilers – built in 1955 and 1959 – too costly.
As for whether compliance with the state renewable energy standards will eventually lead to rate hikes to cover costs, Burke would not rule out the possibility and says the matter remains under study.
“It’s part of the analysis we’re undertaking right now,” Burke said.
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