By Jordan Larimore | The Joplin Globe | February 9, 2018 | www.joplinglobe.com
Officials with the Missouri Public Service Commission staff and the Office of Public Counsel are skeptical of the Empire District Electric Co.’s proposed $1.5 billion plan to generate 800 megawatts of electricity with a wind farm, according to testimony filed in the case this week.
In documents filed with the PSC, regulators from both organizations expressed concerns about the amount of money the company says it can save its customers by retiring its Asbury coal plant more than 15 years early and more than tripling its wind generation.
The sticking points appear to be: Money that would have to be repaid to a tax equity partner that Empire plans to have finance $800 million of the project; the company’s reliance on the ability to resell surplus energy; and requiring customers to continue paying rates that reflect upgrades to the Asbury plant that would be closed.
The role of the PSC’s staff in regulatory proceedings is to look out for the general public interest, including shareholders and communities. The Office of Public Counsel attempts to ensure that rate cases, acquisitions or other plans will not have a negative effect on utility customers.
Natelle Dietrich, PSC staff director, said in testimony filed Wednesday that Empire’s customers will see little of the savings Empire has said the plan will generate in the first 10 years “while the equity partners achieve their anticipated returns, and after 10 years, the expected savings for customers are extremely uncertain.”
The reason for the uncertainty, Dietrich and others say in testimony, is that Empire’s plan calls for the company to sell energy generated above its customer load and required reserves into the Southwest Power Pool, where it must be able to sell the power for more than the cost to generate it to realize savings.
Lena Mantle, an OPC analyst, said in testimony this week that the Southwest Power Pool only began operating in March 2014 and that its own market monitoring reports indicate its market had been mature for less than two years when Empire made the wind project request last fall.
Regulators say that uncertainty presents risk for customers, despite a secure investment for the company and its partner.
“Based on my review, Empire’s claimed $325 million of benefits to its retail customers over 20 years is uncertain,” OPC accountant John Riley testified this week. “While those same customers will almost certainly guarantee that Empire and its tax equity partner(s) will reap not only the return of their $1.5 billion investment, but also a return on that investment of over 7.75 percent per year, likely substantially more than 7.75 percent.”
Empire has not yet filed testimony in response to the regulators’ criticisms, but told the Globe in a statement that it welcomes a thorough review of its plan.
“This is a normal part of the regulatory process,” Julie Maus, director of corporate communications, said in the statement. “We are committed to working with the parties to review the data and analysis and come to a consensus on any issues. The goal is to move forward with a plan that ensures our customers have the opportunity to benefit from a low-cost, fuel-free resource within a time frame that maximizes savings opportunities.”
James Owen, the director of environmental nonprofit Renew Missouri and a former acting OPC director, testified in favor of the plan this week, saying the plan will save Empire from having to pay millions of dollars for additional environmental upgrades to the Asbury plant in coming years.
Empire has previously said those upgrades mean it makes more economic sense to close the plant and pivot more heavily toward wind power, and has included the cost of completed upgrades at Asbury in its cost-savings estimates.
The Public Service Commission will have to rule on the Empire application by June 30, and the project will need to be completed before the tax incentives run out in 2020.
URL to article: https://www.wind-watch.org/news/2018/02/10/regulators-question-empire-wind-plan/