Utilities again weighing wind power
Credit: ANDREW WINEKE, THE GAZETTE, www.gazette.com 28 March 2012 ~~
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Colorado Springs Utilities is working on a new wind power proposal that aims to provide 25 megawatts of wind generation to customers looking for renewable energy, but the idea is getting a tepid reception from some of the strongest supporters of “green” power.
The proposal is a do-over for wind power. In February, the Utilities board rejected a plan to buy 50 megawatts of wind power in a long-term contract because of concerns about costs, particularly the impact rate hikes might have on local manufacturing.
Utilities estimated that the 50-megawatt proposal could lead to increases of up to 2 percent for the average customer, although the impact would have been reduced if enough people and businesses were willing to pay a premium to get more of their power from renewable energy.
Under the new plan, Utilities would buy wind power from another utility under a short-term contract, said John Romero, Utilities general manager for energy acquisition. In the short run, he said, it would be cheaper than the 20-year contract Utilities had been looking at because there would be no long-term financing costs. It would also be more flexible: The 25 megawatts is an estimate and the actual contract could be for more or less, depending on demand, he said.
“It takes a lot of risk out of our end,” he said. “It would be excess capacity that someone might already have that they could send to us in the short term.”
The trade-off, Romero said, is that the deal would lack the stability of a long-term contract: Wind power prices could climb in the future, or coal or natural gas prices could jump and Utilities wouldn’t have a fixed-cost hedge to help offset the impact.
“The advantage of a longer term contract is, you fix the price and you know what the price is for 20 years,” Romero said. “With this arrangement, you’re looking at what the market price is at that particular time.”
Scott Hente, Utilities board president, said he needed to see the details of the deal, but he was hopeful it would meet everyone’s needs.
“If we can structure this in such a way so that people who want the wind power pay the extra amount and don’t impact the rest of the rate payer base, then I’m happy with that,” he said. “If they can bring in a smaller amount, maybe we can sell that and we don’t have any excess that we have to push off to the rest of the base that don’t want it.”
However, advocates for renewable power gave the new proposal a lukewarm welcome. Several said they are still smarting over the rejection of the 50-megawatt contract, which they feel wasn’t given a fair shake.
“We’re going to have to renegotiate this deal within just a year or two,” said Bryce Carter with the Sierra Club’s Beyond Coal campaign. “There’s no guarantee of what the price is going to be then. The stability of having a 20-year contract for wind is just that: stability.”
Carter said military bases and other big electricity customer who might have been willing to pay a premium for renewable energy were given only a short window to commit to the earlier plan. With more time and better cost estimates for potential green energy buyers, he said, Utilities could have significantly reduced the cost of the bigger project for the average customer.
“We agree that 25 megawatts of wind is a step forward, but it just doesn’t seem that the 50-megawatt proposal was given the chance it deserved,” Carter said.
Colorado Springs Utilities is required under the state’s renewable portfolio standard to generate 10 percent of its power from renewable sources by 2020, a goal it is on pace to reach. For-profit utilities, such as Xcel Energy, are required to generate 30 percent of their power from renewables by 2020. Xcel plans to have more than 2,100 megawatts of wind power by the end of 2012 and it’s ahead of schedule to meet the 30 percent standard.
Romero said he hopes to give the Utilities board more details of the plan in April and, if approved, to sign a contract to begin delivering the wind power Jan. 1.
The rates for the new program could be lower than Utilities’ existing Green Power program, Romero said. That program, which delivers 1 megawatt of power from a wind farm on the Colorado-Wyoming border, has been sold out for more than seven years and has a waiting list of 475 customers. It charges customers an extra $2.05 for a block of 100 kilowatt-hours of electricity, adding roughly 20 percent to the typical residential rate.
Romero encouraged customers interested in the new wind power program to get on the waiting list by calling 448-4800.
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