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Facebook deal spurs PacifiCorp’s rush to build a Montana wind farm

Facebook, it turns out, is a key reason PacifiCorp moved quickly this year to acquire and begin work on a proposed Montana wind farm that had been kicking around for nearly a decade.

The social media giant agreed to buy the renewable energy credits generated by the 239.8 megawatt Pryor Mountain Wind Project, according to a PacifiCorp filing with utility regulators in Oregon.

That helped make the project a better deal for PacifiCorp and by extension its ratepayers, about a quarter of whom reside in Oregon, while potentially benefiting PacifiCorp’s Berkshire Hathaway parent by adding to the utility’s rate base.

The deal is similar to Facebook’s agreement last year to purchase RECs from several new solar projects on PacifiCorp’s system, including two near Prineville, Oregon, where Facebook has a big data center complex.

But Portland-based PacifiCorp said there was one other thing the wind project needed in order to make it a winner for ratepayers – it had to be operating by the end of 2020, qualifying it for the full value of a lucrative federal incentive.

PacifiCorp said that necessity justified acquiring the project outside Oregon rules adopted in August 2018 that are intended to “establish a fair, objective, and transparent competitive bidding process.”

The utility also said it began discussing the project with Facebook in October 2018, bought the project’s assets and development rights in May, finalized a deal with Facebook in June and signed on a contractor and a turbine supplier in September. Construction began this month.

“PacifiCorp has prudently and appropriately pursued this opportunity, which requires executing the agreements and developing the Pryor Mountain Wind Project in a time frame that could not have been achieved through a (request for proposals) process,” the company said in the September regulatory filing.

PacifiCorp pointed specifically to an exception allowed to the competitive bidding rules when there “is a time-limited opportunity to acquire a resource of unique value to the electric company’s customers.”

The cost of the project was redacted in the filing. But PacifiCorp said an analysis under a couple of different scenarios for natural gas and greenhouse-gas emissions costs showed the project “reduces nominal revenue requirement during a majority of its depreciable life.”

Public Utility Commission staff who reviewed PacifiCorp’s filing complained that it didn’t give them a whole lot to work with.

“Staff finds it difficult to assess the project’s economics without an opportunity to evaluate modeling inputs and workpapers, and does not find an exception to the competitive bidding rules to be warranted based on the limited information provided in PacifiCorp’s filing,” they wrote last week.

That objection still left PacifiCorp free to continue to pursue the project. But by going outside the usual process, the company will do so without the “acknowledgement” that utilities hope to get from regulators in order to bolster their case for recovering the cost of a project from ratepayers after it comes online.

Representatives from the ratepayer watchdog Citizens’ Utility Board and the Alliance of Western Energy Consumers, an industry group, said they would scrutinize the project at that point. The Northwest & Intermountain Power Producers Coalition would typically sound the alarm about a monopoly utility making a move like PacifiCorp’s. But longtime leader Robert Kahn passed away suddenly in August, and the group, which represents companies who compete to build energy projects, hasn’t raised an objection.

For Facebook, the wind farm will move it closer to a goal of “supporting all of its operations with 100 percent renewable energy in 2020,” said Melanie Roe, a company spokesperson.

Many green-focused corporations today – including Facebook – do power purchase agreements with renewable energy projects that give the companies energy and the associated renewable energy credits together, “bundled” as it’s known. That’s seen as an especially impactful way to green the grid, and the deals can also provide a hedge against rising electricity costs.

In this case, though, the deal is for “unbundled” renewable energy credits.

Nevertheless, PacifiCorp has found a way to draw enough of a connection to specific renewable energy projects in the program it calls “Blue Sky Select” to keep Facebook from going outside the utility’s system for renewables, the way Apple did on major wind and solar projects a few years ago.

[rest of article available at source]