United States

United States

Pressure on utility to keep to agreement

The Minnesota Department of Public Service is expected to issue a recommendation in early September that could ultimately force Northern States Power (NSP) to build an additional 400 MW of wind power on top of the 425 MW it is currently mandated to develop. The department, a consumer advocate, is to make its recommendation to the Public Utilities Commission (PUC), which will decide whether to implement a state law saying the 400 MW should be built if it is in the public interest.

Environmentalists are arguing in favour of the move, saying new wind plants will be less expensive than natural gas. NSP, however, insists natural gas is cheaper than wind even though the utility recently slashed by 80% its estimate of the difference in price between the two resources. NSP's initial resource plan said the 400 MW of wind power would be $409 million more expensive than the gas-fired option over the life of the resource. But more recently it noted the estimate was 80% -- or $328 million -- too high, according to documents filed with the PUC by Minnesotans for an Energy-Efficient Economy (ME3).

At issue is a 1994 state law that allows NSP to store nuclear waste near one of its nuclear plants if the utility invests in wind and biomass. Under the law, the utility must acquire 425 MW of wind and 400 MW more if the PUC rules it is in the public interest.

NSP has thus far contracted for 265 MW of the 425 MW it is so far mandated to build. The most recent second phase of the project, 107 MW of wind turbines from Zond Energy Systems in California, is to be inaugurated this month on Buffalo Ridge in Minnesota. Phase I consists of 25 MW of Kenetech turbines.

In response to NSP's 1998 resource plan, the Izaac Walton League of America (IWLA) argues that new wind plants are 32% less expensive over the life of the plant than gas-fired resources. "It was our view that NSP's analysis showing the opposite was a rather contrived analysis," comments the IWLA's Bill Grant.

The league finds that the levelised cost of wind power is $28/MWh, while the levelised cost of a combined-cycle gas turbine is $41/MWh, says Grant. He notes that while NSP and the IWLA came up with similar figures for the price of wind power, they differ on gas prices. NSP argues that gas prices will remain the same or fall, while the IWLA predicts increases in gas prices, he says.

NSP will respond to comments from IWLA and others about the same time the Department of Public Service issues its recommendation, says Grant. That will be a significant recommendation, he adds.

No intervenors in the case have sided with NSP, points out J. Drake Hamilton, policy co-ordinator for ME3, a vocal proponent of wind power. "It is unconscionable that NSP uses this resource plan to snub the Minnesota legislature by clearly indicating that it has no plans to add the 400 additional megawatt of wind power that we believe are clearly required by the 1994Éstatute," states ME3.

The state Attorney General's Office was among the intervenors who questioned NSP's resource plan. The office says in its comments on the plan that NSP's plans for wind are inadequate given the potential. It notes that NSP's own plan finds the additional costs of the 400 MW of wind range from two-tenths of 1% to 1%, compared to a gas fired resource. And that analysis does not include the costs of potential policies to limit greenhouse gases and the environmental costs of fossil fired plants, factors that would likely tilt the equation towards wind power. The attorney general's office says NSP should take these and other factors into consideration.

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