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United States

Coal firm takes on coast to coast wind -- Consolidation and growth

Edison Mission Group (EMG) and US Wind Force (USWF) are in the process of carving out a new partnership that includes plans to build at least 1000 MW of wind projects across the Mid-Atlantic region of the US over the next several years. EMG, traditionally a coal plant operator, already maintains a wind energy portfolio of 14 sites, with 654 MW in operation or under construction in Iowa, Minnesota, New Mexico, Oklahoma and Texas, making it the fifth largest owner of wind generation in the US. It invested in its first wind project in 1998. USFW, based in Pittsburgh, began operations in 2000 and has nearly two dozen projects in development.

The partnership deal is part of a wide ranging wind development business plan devised by EMG, which has also inked joint wind development agreements with Endless Energy of Maine, Midwest Wind Energy of Illinois, Generation Resources Holding Company of Kansas and Reunion Power of Vermont. "We're aggressively expanding our portfolio in the wind market and we're doing it from coast to coast," says EMG's Charlie Parnell. "We've signed a number of turbine agreements in the last several years from several different vendors. This is a model we've established and it has worked for us. The USWF deal is just a continuation of that."

Both companies point to the Mid-Atlantic region and the power pool operated by PJM Interconnection as a huge potential playing field. The PJM power grid feeds Pennsylvania, New Jersey, Maryland, West Virginia and parts of North Carolina and is the largest market for electricity trading in the world. Demand is growing at 1.5% a year, requiring about 25,000 MW in the next five years. "We feel that it's going be a very fertile ground for wind power," says US Wind Force's David McAnally, naming a potential of 1000 MW. "We feel the opportunity in the Mid-Atlantic is such that you shouldn't be in a rush to get things built."

Synergies

EMG's plan is to roll out 250 MW a year in the next five years. "The relationship is that EMG is providing the development capital we need," says McAnally. If you look at the process of putting a wind farm online, a company as large as EMG has expertise in financing, turbine procurement and legal support. And from a standpoint of recognising that a wind farm is a local process and requires relationships with regulators, with state and local governments -- that's an area that's our greatest strength."

Parnell says that timetables for specific new USWF projects are pending. "We're still analysing which projects will come online first," he says. "We're just now in the phase where we're looking at the engineering, economics, power purchase agreements and everything else. Our technical team is sitting down with the USWF team and taking a fresh look at all their projects."

First three

The first three in the new pipeline are likely to be Savage Mountain, a 30 MW project in Maryland, along with a pair of West Virginia projects -- Liberty Gap at 100 MW and Mt Storm at between 100-125 MW. McAnally guesses that Mt Storm will be first.

"That one is ready to go tomorrow," he says. "It has a power purchase agreement and all the requisite permits -- everything needed to put a shovel in the ground. And it will probably be followed by Liberty Gap, where we're working through the permitting processes. But the timing is really Edison's prerogative. They're out there buying turbines in such a fashion that we're comfortable that when they think a project is ready to go, there will be turbines."

EMG, based in Irvine, California, owns seven coal-fired power plants with a capacity of about 7500 MW in the PJM marketplace. The company also manages the unregulated subsidiaries of Edison International, an electric power generator and distributor with more than $36 billion in assets. "The commitment they're making to wind power is very admirable and very exciting. We believe they're going to be a force in this industry and we're ready to go," says McAnally.

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