COLUMBUS – Nebraska Public Power District won’t be purchasing any more wind energy in 2013.
The utility’s board of directors voted down a resolution Friday that called for the addition of up to 200 megawatts of wind-generated power by the end of the year.
The resolution, defeated 6-3, was introduced by Director Gary Thompson of Beatrice following months of board discussion and public input from those supporting the expansion of wind-generated power, including representatives from agricultural and environmental groups as well as the developers of Nebraska wind farms.
These developers have been flooding NPPD with unsolicited proposals, hoping the state’s largest electric utility would commit to long-term purchase agreements before the federal production tax credit available for the projects expires Dec. 31.
Proponents of the wind plan pointed to the income tax credit – $23 per megawatt-hour for developers of large-scale wind farms over the first 10 years of electricity production – as the main driver behind the need for immediate action.
Thompson said NPPD can purchase electricity from wind developers looking to take advantage of this credit at prices lower than any other current generation option.
The wind proposals include purchase prices around $20 per megawatt-hour, but the fear is this cost could double if Congress fails to extend the production tax credit beyond 2013.
NPPD is paying nearly $40 per megawatt-hour on average for its current wind energy, and the average cost of electricity generated by the utility’s coal-powered plants is approximately $30 per megawatt-hour.
Director Mary Harding of Denton called the addition of more wind energy a “good business deal” for NPPD since it would allow the utility to lock in competitive prices over a 20- or 25-year contract period, providing a hedge against potential increases in the costs of coal and natural gas, as well as any expenses associated with stricter environmental regulations.
“You’ve got to plan for the future,” said Harding, who voted in favor of the resolution along with Thompson and Director Fred Christensen of Lyons.
Thompson said the public “overwhelmingly” supports the addition of more wind energy, which he believes would provide immediate and long-term economic benefits to the state through investment and employment opportunities and higher property tax payments on land where the wind farms are built.
“The governor is now trying to find ways of granting tax relief,” he said. “This is a way that we can do that.”
These potential economic benefits also were highlighted by a half dozen people who addressed the board prior to Friday’s vote.
Nebraska Farmers Union President John Hansen told the board members they won’t have a better opportunity to take advantage of wind projects that take years to develop.
“This is a buyer’s market,” he said. “It’s a historic opportunity.”
Hansen urged the directors to invest money in Nebraska wind projects that benefit rural communities “hungry for an opportunity” instead of spending ratepayer dollars on Wyoming coal.
Norfolk City Councilman Josh Moenning agreed.
Moenning, who also works in U.S. Rep. Jeff Fortenberry’s Norfolk office, said wind-generated electricity can play a key role in Nebraska’s rural development by creating good-paying jobs that make the state attractive for young workers.
Third Planet Windpower, which completed a 40.5-megawatt wind farm near Petersburg in late 2011, is currently eyeing Madison County for a similar project.
Opponents of the resolution brought before the NPPD board last week weren’t contesting the potential economic benefits or the overall importance of wind energy.
But, they argued, now is not the right time for the utility to add more generation of any kind.
NPPD CEO and President Pat Pope said Friday’s decision was about resource planning, not a “referendum on wind.”
The utility generated 16.45 million megawatt-hours of electricity last year, but needed only 13.17 million megawatt-hours to serve its in-state customers.
Pope said agreeing to purchase more electricity at a time when the district isn’t seeing high load growth would be a “speculative” venture since the excess power must be sold on the wholesale market at a fluctuating price.
NPPD also must maintain reliability, the opponents said, which can only be guaranteed using sources such as natural gas, coal and nuclear power.
“If we don’t have wind, we don’t have power,” said Director Virgil Froehlich of Norfolk.
And the wind often isn’t blowing on hot summer days, when the demand for electricity is the highest, Director Dennis Rasmussen of Hickman said.
The opposing directors, including Chairman Ron Larsen of Kearney, who was absent from Friday’s meeting along with Director Ken Kunze of York, agreed there will be opportunities to purchase more wind power in the future.
Hopefully, they said, the technology needed to generate, and perhaps store, this electricity will improve between now and then.
“I don’t see the urgency to do something now,” said Director Ed Schrock of Elm Creek, who noted that a lack of support from some NPPD customers made it difficult to support the resolution.
The Nebraska Electric Generation and Transmission Cooperative Inc., which represents 21 public power districts and one cooperative served by NPPD, previously told the NPPD board its members don’t support adding more wind energy at this time. That group is primarily concerned about additional costs that could be passed down to end users.
NPPD currently purchases 207 megawatts from six Nebraska wind farms and is committed to another 105 megawatts from wind farms near Steele City and Broken Bow that are expected to be in service in November and late 2014, respectively.
By the end of next year, NPPD will be just 45 megawatts short of reaching a goal established by the board in 2008 that calls for 10 percent of the utility’s generation to come from renewable sources by 2020.
“We are going to be adding wind in the future,” said Thompson. “ … I don’t think any of us doubt that.”
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