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Mixed message from the South -- More utility wind ownership

Duke Energy, a power giant based in the Southeast, has joined a growing body of large US utilities entering the wind generation business with its purchase of Tierra, a small Texas-based wind developer. Tierra boasts a 1000 MW pipeline of projects in development and three nearing construction. It becomes part of Duke Energy Generation Services (DEGS), the deregulated arm of the North Carolina utility.

Duke Energy, however, is also on the list of US utilities speaking out against any kind of national green power mandate at a time when a federal renewables portfolio standard (RPS) is being debated in the US Congress. In a public plea, Ellen Ruff, president of Duke Energy Carolina, last month argued against a nationwide minimum standard for the proportion of renewables in supply portfolios: "We believe these standards should be set by state legislators and be tailored for each state's circumstances. We are concerned that a federal one-size-fits-all approach would fail to recognise that what works in California or Texas may not work in North Carolina," she said. Ruff wants energy efficiency to be part of any green power law.

Utilities that operate in the South and Southeast, where wind resources are poor, have been particularly outspoken against a federal mandate. Georgia's Southern Company has been lobbying aggressively on Capitol Hill against a proposed 15% RPS, arguing it would cost the company $4 billion to go from zero renewables today to compliance with the law.

About 80-85% of Duke's earnings come from its regulated utilities in North and South Carolina, Ohio, Kentucky and Indiana, according to Wouter van Kempen of DEGS. But because of the growing number of states with green mandates, he sees vast opportunity elsewhere in the country through DEGS, which is unregulated and sells to wholesale power markets. "If you want to build a renewables business for Duke, you really have to go after it on a coast-to-coast basis and really go after it on a deregulated basis," Van Kempen says. "A lot of the renewable activity is outside our five service territories."

Not yet proven

Tierra has yet to complete a project, but two are expected to bring Suzlon turbines online before the end of next year: Ocatillo, a 60 MW development in Howard County, Texas; and Happy Jack, a 30 MW plant in Laramie County, Wyoming. A third, Notrees in west Texas, is planned for 300 MW. Although Notrees is still in search of turbines, a first phase is expected online in 2008 or 2009. Duke intends to spend $400 million on the three wind farms combined. "We are focusing on some other technologies, but we're pretty intrigued by wind overall," says Van Kempen.

Tierra will keep its offices in Austin, Texas, while its staff of six will become part of Duke, including David Marks, former boss of Tierra, who becomes a senior vice president with DEGS. "Having resources to key into the turbine and construction end of the business means everything," Marks says. "Duke gives us the resources." Marks says that future projects will be in Texas, New Mexico, Colorado and Wyoming. "We describe it as a western pipeline of projects," he says.

Duke continues to push into renewable energy on other fronts. Last year, the regulated side of the company signed up to buy power from Indiana's first commercial wind project, a 100 MW development in Benton County, expected online this year. And this spring Duke Energy Carolinas issued a renewable energy request for proposals in North and South Carolina that seeks resources for connection to its delivery system by January 1, 2012.

Duke, one of the largest electric power companies in the US, supplies and delivers energy to approximately 3.9 million customers. The company owns more than 37,000 MW of generating capacity in the Midwest and the Carolinas, along with 4000 MW in Latin America.

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