SAINT PAUL – The Minnesota Public Utilities Commission is waiting to hear from Xcel Energy and New Era Wind in Goodhue County about what changes have taken place in the controversial wind project’s power purchase agreement.
Due to an unprecedented permitting process that has stretched more than four years – a typical project is approved in 6-12 months – New Era was issued notice of default in December by Xcel. Peter Mastic’s company proposed curing numerous defaults by assigning or transferring the PPA to other sites, but that proposal was formally declined in April by Xcel.
New Era was given until May 11 – last Saturday – to cure the defaults. Xcel reported having no contact with New Era since the April decision in a PUC filing made May 8, but repeated calls this week seeking updates from both parties have not been returned.
The PUC approved New Era’s PPA with Xcel in 2010, requiring the project to be in operation by the end of 2012.A PUC spokesperson said Thursday that the parties are required to report an amended or terminated agreement with the state agency, per a PUC order. Nothing has been filed as of Friday morning, nearly a week since the deadline passed.
Details surrounding a PPA are protected as “trade secret.” It’s unclear what specific penalties New Era would be subject to for a breach of contract. It has already spent more than $14 million seeking the necessary state permits.
“The amount of delay damages incurred is in dispute and depends upon how the force majeure clause is interpreted,” Xcel wrote in its May 8 PUC filing. “Delay damages could range from a relatively low amount to a very significant amount, depending upon whether delay damages are tolled during or after a force majeure.
“At one point in the discussions, (Xcel) offered to accept a lower compromise amount of delay damages. (New Era) did not accept this amount and no settlement was reached.”
The PPA has long been a point of contention among project critics. Because the project was initially approved as a community-based energy development (C-BED) by the PUC in 2010, Xcel was required to purchase the power at increased rates – to the benefit of the wind developers.
However, the $180-million, 48-turbine project currently faces an increasingly uncertain future.
The PUC decided in February to re-open the project’s certification of need, while tabling other issues – including re-evaluating C-BED status – that could force the project to undergo months, if not years, of additional scrutiny.
While some project critics feel the project is dead, another hearing at the PUC is expected to be held on June 20 after it was previously pulled from the May 2 agenda.
“I think it’s going to open a crazy can of worms,” said Minneapolis attorney Dan Schleck, who represents an opposition group called the Coalition for Sensible Siting. “I think this project, in this incarnation, is going to have a tough time trying to re-establish a need.”
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