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Canada

INDUSTRY FEELS MISLED AND DECEIVED FOLLOWING UTILITY BETRAYAL

Instead of announcing the winning bid, Canadian utility SaskPower cancelled its request for proposals for 3 MW of wind power, saying the project's cost premium could not be justified. In an angry reaction, the Canadian Wind Energy Association (CanWEA), says the wind industry has been grossly misled and deceived by SaskPower. The utility blames its withdrawal on market uncertainty caused by deregulation and increased competition. It had originally requested 10 MW in 1991.

In an announcement which has enraged the wind industry, Canadian utility SaskPower cancelled its request for proposals for 3 MW of wind power on August 15. The industry had been expecting the utility to announce the winning bid.

Saskpower president Jack Messer said the new provincial government, elected in June on a fiscal restraints programme, had conducted a review and discovered that the project's cost premium could not be justified. "In today's rapidly changing business environment, it is critical to SaskPower's customers that efficiencies are achieved wherever possible," he explained.

His tone last month was in marked contrast to earlier in year when bids were submitted by three groups of firms (Windpower Monthly, March 1995), including Kenetech of San Francisco and Dutch Industries of Saskatchewan. Then he said that although the costs of the project would exceed revenue, Saskatchewan would benefit from the economic and technical knowledge gained, including the chance to evaluate future wind projects.

In an angry reaction to Saskpower's cancellation, the Canadian Wind Energy Association (CanWEA), says the wind industry has been grossly misled and deceived by SaskPower. "SaskPower has clearly demonstrated with this decision that it has no vision for a long term, sustainable future using the rich wind resource of the province," says CanWEA president Bernard Saulnier. "SaskPower has lost all credibility in the international electric energy industry." CanWEA estimates that project proponents have spent over $500,000 preparing bid documents. One of these, Dale Johnson of Wind Power Inc in Calgary, Alberta, comments: "It looks like SaskPower never did want to do it, they were merely on an information gathering expedition."

SaskPower originally requested 10 MW of wind power in 1991, a project it scaled back to 3 MW, claiming that detailed wind data were lacking. At the time CanWEA pointed out that 3 MW was one-tenth the size of a commercially viable wind facility. Bids were requested for the 3 MW project in October 1994 from the nine original respondents after a joint SaskPower-Natural Resources Canada wind resource study monitored ten sites in south-west Saskatchewan and established the region has good potential.

Explaining the reason for the cancellation, SaskPower's vice president of operations, Tony Harras, says the cost of 10 GWh of wind power from the 25 year, 3 MW project would have been $1 million annually, though its value to the utility would have been just $500,000. The value calculation included a capacity credit, about equal to plant capacity factor. The sites on which this projection was based, were not disclosed.

CanWEA states the premium for the project would only have been $0.0007 or less per kWh, or about $2 per customer per year. Harras comments that SaskPower was originally willing to pay an "acceptable" cost premium for the value of wind power, but that deregulation of the power market and increased competition in the electricity industry put paid to that goodwill. Negotiations on an Internal Trade Agreement in the Canadian power market will likely lead to inter-utility wheeling, and then retail and wholesale wheeling. SaskPower is concerned because it has the highest cost electric power producing utility in western Canada.

The province's about turn on energy policy is further evident in a letter from Saskatchewan's deputy energy minister, Ray Clayton, received earlier this year by CanWEA. In it Clayton highlights the role of the 3 MW project in Saskatchewan's plans to reduce greenhouse gas emissions. The cancellation of the wind RFP "calls into question Saskatchewan's commitment to Canada's National Action Program on Climate Change," says CanWEA.

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