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SDG&E wind farm scaled back after protests; Consumer groups found risks to ratepayers were too high
Credit: Story by Onell R. Soto, The San Diego Union-Tribune, www.signonsandiego.com 11 April 2011 ~~
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Translate: FROM English | TO English
A San Diego Gas & Electric proposal to spend up to $600 million on a Montana wind farm has been pared back after consumer advocates complained it put too much customer money at risk.
The Rim Rock wind farm will still be built, but at less than two-thirds the size, and requiring less than half as much money from SDG&E electric bills.
The utility agreed to fund a big part of the project after financing problems caused construction delays, which in turn hurt its ability to meet state green-energy goals.
SDG&E President Michael Niggli said he’s happy with the deal, which also calls for the utility’s investors to put money into the farm.
The financing arrangement is unique, he said. “It’s the first of its kind in the nation.”
The utility investment will reduce financing costs, which will make the power it produces cheaper, Niggli said.
SDG&E originally planned to put up to $600 million of ratepayer funds – money that is paid for by its customers – into the farm, which was to be 309 megawatts.
But critics, including TURN, The Utility Reform Network, complained to the California Public Utilities Commission that the financing arrangement put too much of the risk on ratepayers.
They also didn’t like the fact that the power would actually be sold in Canada, with SDG&E getting certificates it could then use to claim fossil-fueled power it delivered to customers was green.
The deal was reworked following negotiations between SDG&E, TURN, the PUC’s Division of Ratepayer Advocates and NaturEner, the company building Rim Rock.
Now, customers will be putting in $250 million into a 189 megawatt farm.
Each megawatt is enough for about 650 homes.
And SDG&E’s shareholders will pay 10 percent of the cost, expected to be about $40 million.
The deal has a new wrinkle designed to make sure utility investors have an incentive in running the farm profitably, said Matthew Freedman, a lawyer for TURN.
“They’ll only get their full money back after ratepayers have been paid,” he said. “We feel pretty confident the utility will not let ratepayer money sit on the table.”
The scaled-down wind farm will now cost between $375 million and $425 million to build.
The deal is a compromise, said David Ashuckian, a lawyer for the PUC’s ratepayer division, a watchdog agency.
“It wasn’t like we would have wanted ratepayers to invest in a company like this in the first place,” he said.
Freedman’s group was critical of the project’s use of renewable energy credits, also know as RECs, to meet the state’s green power requirement.
“When you’re buying certificates from a facility in Montana, what value does that provide to California?” he asked. “The power is not being sent here.”
In the negotiations, SDG&E essentially agreed not to buy such certificates until after 2017, he said.
The use of certificates to meet those goals has been controversial because, critics say, they separate some of the benefits, such as jobs, from the green-power requirements.
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