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Headwinds for massive wind power project

An energy giant wants to bring a massive sweep of renewable power to New Mexico.

Hundreds of new wind turbines would deliver emissions-free energy to more than 100,000 homes, the company says. Customers would save a few billion dollars in coming decades. Hundreds of construction jobs would come, and then more than two dozen full-time operational jobs, too. Outside dollars would flow into the eastern part of the state.

The appeal of the project – regional economic development layered on top of an environmentally sensible energy alternative – has drawn a coalition of varied bipartisan supporters.

Town leaders, educators, state legislators, village councilors and county commissioners wrote to the state Public Regulation Commission this summer to support regulatory approval for the Sagamore wind project by Minnesota-based Xcel Energy in Roosevelt County.

On the other side of the ledger: The lesser prairie chicken, the rare grasslands grouse threatened by encroaching industry, which has wildlife advocates in its corner.

And there’s utility staff at the PRC, who have blasted the proposed project as “fraught with risks,” with the onus on the ratepayers rather than Xcel’s subsidiary, Southwestern Public Service Co., which provides electricity to much of Eastern New Mexico.

Indeed, the Sagamore project, for all its heralded economic benefit, has faced headwinds. And as the parties prepare to go before a hearing examiner later this month, the utility has offered revisions to its ambitious proposal, hoping to allay regulatory staff reservations and conservationist concerns and ultimately gain approval for what would be the largest wind farm in New Mexico.

“That’s kind of the threshold question: Does the [Public Regulation] Commission believe the proposal will benefit customers and benefit the state?” said Brooke Trammell of Southwestern Public Service Co. “We think it checks all the boxes.”

Southwestern Public Service Co. currently delivers 1,600 megawatts of wind energy to its New Mexico and West Texas customers through purchase power agreements with other wind generators (its parent, Xcel, calls itself the nation’s top wind energy utility). The Sagamore project, proposed for 150,000 acres in Roosevelt County some 20 miles southeast of Portales, would represent another 522 megawatts – more than double the state’s next highest-producing wind farm. The Southwestern proposal includes a 478-megawatt wind farm in Hale County, Texas, too, and an agreement to purchase 230 megawatts from existing Texas wind farms.

Southwestern has said the Sagamore wind farm would create up to 300 construction jobs and as many as 30 full-time jobs once turbines are operational in 2020. Their proposal projects costs at $1.6 billion.

Trammell called the project a “win-win-win,” with the state and area benefiting from gross receipts taxes during construction, Southwestern customers saving up to $2.8 billion in the next 25 to 30 years and the utility itself earning savings from lower-cost power, too. Not to mention, she added, the energy is clean. “What we save, you save,” Trammell said.

But Southwestern is seeking to recover revenues and tax credits from the time the wind system is operational to when it would be included in the rate base. John J. Reynolds of the PRC utility division testified that staff was opposed to the proposal, saying that while it represented potential savings, “there are no assurances that customers would realize [Southwestern’s] claimed benefits” and ratepayers were “being asked to make a significant leap of faith.”

“In effect, [Southwestern] is telling customers: ‘I have a deal for you. Give me $1.6 billion for a project you don’t need and you may be able to save more than the cost of that project, but there’s no guarantee that you will,’” Reynolds wrote in his testimony.

The proposal is unusual for its discretionary nature, as well, Reynolds wrote. Southwestern is not proposing to expand resources for enhanced capacity or greater customer need. “Instead, [Southwestern] proposes to create opportunities for cost saving.”

Reynolds suggested an “independent evaluation mechanism” could ensure the utility be held accountable for estimated benefits to the ratepayer.

Southwestern has since offered revisions to its proposal that Trammell, director of customer and community relations, said should help alleviate some concerns about the certainty of the savings for customers.

“To help find some middle ground, we added more protections, more guarantees on the savings side, but we still hold the position that that needs to be balanced with reasonable cost recovery,” Trammell said, mentioning a cap on the recovery of construction costs and a minimum annual net capacity factor of 44 percent, meaning customers would receive that rate of energy return even if weather anomalies left it below that threshold.

Meanwhile, lesser prairie chicken advocates have expressed anxiety about the proposal’s proximity to the habitat of the vulnerable grouse, whose regional range has been shrunk and degraded by industry and grazing.

A few public commenters wrote to the PRC to warn against the proposed locations for the turbines. The lesser prairie chicken has an aversion to vertical structures, associating them with predator perches, said Robert Findling of the New Mexico Nature Conservancy. Such structures threaten to further fragment their habitat, he said.

“The number of wind projects which are being proposed in the vicinity of this kind of focal point of remaining lesser prairie chicken-occupied habitat is concerning because it has a tendency to isolate populations and limit the bird’s ability to move across its range,” Findling said.

“What unfortunately seems to happen is that often the industry begins to negotiate with private land owners and generates all this enthusiasm about prospective income before ever really studying what siting issues and conflicts may exist,” he added. “I’d like to think that wasn’t a calculated strategy.”

The application for the location of the proposed turbines says the generation project would minimize impacts on the birds by adjusting the project boundaries north to avoid identified leks, or where the chickens breed.

The application also says the transmission line for the wind farm would not “unduly impair” the birds; there will be a buffer of at least 1.25 miles between the transmission line and any active leks, the application states.

But Blake A. Grisham, an assistant professor at Texas Tech who has published extensively on the ecology and management of lesser prairie chickens, wrote to the PRC that “Proposed wind farms would have direct, negative consequences for this species.”

“People will have different positions about how far away you need to be, but it is a significant move out of the primary lesser prairie chicken habitat,” Trammell said, adding she hoped the shift northward in turbines would be “viewed positively” by advocates for the bird.

A public hearing on the case is scheduled to begin either Nov. 28 or Nov. 29. After an examiner makes a recommendation, the commission will later decide.