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Rumours fly around US industry leader

Enron Wind is in the news with reports of its Zond turbines apparently not operating optimally at the Buffalo Ridge wind farms in Minnesota, with rumours circulating that its parent, Enron Corp, is hoping to sell the wind company, and with news of the recent dismissal of ESI's lawsuit against Enron Wind. Any hint of a problem at America's flagship wind project, or with its largest turbine manufacturer, immediately draws attention.

According to eyewitness reports, the availability of Zond turbines at the 107 MW Lake Benton I project has been perhaps 70% to 90% in recent months. It is still wind season there. And at Lake Benton II, where almost 150 turbines are seen to be in the ground, most are not operating. Enron Wind failed to respond to repeated interview requests for confirmation or denial of the reports.

The projects are being watched closely because of their size, because Enron Wind seldom comments publicly, and because its Z-series of turbines is both relatively new and the only large modern turbine that is US designed and manufactured. Northern States Power (NSP), the utility that buys the electricity, could not comment immediately on whether Lake Benton I is producing power as expected, and whether Lake Benton II is on track for its start date. NSP's wind purchases are mandated by state legislation in a deal allowing NSP to store nuclear waste. NSP announced on March 25 a merger with New Century Energies, the holding company for Public Service Co of Denver and Southwestern of Amarillo, Texas.

Lake Benton I, also known as NSP II, was completed last July. On a day last month, 128 turbines out of the 143 installed were operating, an availability of some 90%. A minimum standard in the industry today is 95%. Most of those not operating were in the northern section of the project. Availability has often been seen to be lower in recent months -- and some eye-witness analysts question Enron Wind's own availability reports. On the same day only four or five turbines in the Lake Benton II (NSP III) project were operating out of 148. The project is under construction. One unit was broken and had a blade dangling from the root and a crane had been brought in. NSP is reported to be concerned about the power quality. Apparently the utility has said it will only accept more turbines on line once power factor correction has been made at the sub-station, a job expected to be complete by April 4. On the same day the availability at NSP Phase 1, the 25 MW Kenetech project, was 100%.

Sale and court talk

Meantime, well placed sources say Enron Corp is trying to sell Enron Wind. The giant Houston based energy company has apparently asked a First Boston-Credit Suisse consortium to handle the sale. It is expected to take two months for the "book" about Enron Wind to be compiled. At least one major wind company, NEG Micon of Denmark, was reportedly interested, but declined the opportunity. Siemens-Westinghouse -- the power unit of Westinghouse bought by Siemens -- is the latest name to emerge as a suitor.

Also last month, on March 4, the US district court in San Diego, California, dismissed a $15 million ESI Energy lawsuit accusing Enron Wind of fraud, breach of contract, and misrepresentation of facts during a co-operative business deal to develop wind projects worldwide. The court ordered the parties into arbitration. The suit by ESI Energy Inc, now known as FPL Energy and part of the large Florida based FPL Group, had pitted America's two highest profile wind companies against each other (Windpower Monthly, September and October 1998). ESI is the main equity partner in Lake Benton I, the wind farm that seems to have been experiencing lower than expected availability.

Outstanding between the companies is one smaller lawsuit in New York over the Vansycle wind project in eastern Oregon. Zond Development Corp, a subsidiary of Enron Wind, accuses ESI Vansycle Partners in New York State court of breach of contract and fraud over the wind farm, only recently energised. Zond says the ESI subsidiary owes it $695,250 -- half the purchase price -- punitive damages, and that a receiver holds the wind farm until the dispute is over.

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