"Although the current default portfolio has worked for us the past couple of years, we don't trust it in the future," says Northwestern's Claudia Rapkoch. Today, Northwestern gets 28% of its energy from spot market purchases.
The utility, which serves 300,000 electric customers in Montana as well as gas and electric customers in South Dakota and Nebraska, released a solicitation for 150 MW of wind power in early 2002 and again in January 2003. But the bankruptcy of its parent company caused negotiations to stall when investors in the wind projects got nervous about the utility's ability to pay its bills (Windpower Monthly, October 2003). The bankruptcy has been a sticking point for some in the negotiations, Rapkoch admits, but that concern is diminishing as the utility is "cleaning up" its financial situation.
Montana has partially deregulated its electricity industry, requiring retail utilities to divest themselves of generation, but to continue to serve customers who do not want to leave Northwestern's system. The utility serves these customers from its default supply portfolio. Since it owns no generation itself, Northwestern is completely dependent on contracts with other suppliers to provide the roughly 650 MW of electricity demanded by default customers.
Northwestern, which is still subject to bankruptcy court oversight, will take the two wind contracts before both the court and the state's Public Service Commission for final approval in the next several months. Also up for review are 100 MW from coal and more than 300 MW of dispatchable natural gas and small hydro generation. Of that amount, the company will need a 50 MW natural gas generator to fill the valleys of wind generation, Rapkoch says. This lowest cost and lowest risk scenario would cost about $192.6 million each year, while one of the highest cost, highest risk scenarios was estimated to cost $231 million.
Northwestern completed negotiations with FPL Energy for the 75 MW WindPark Solutions project, located in central Montana at Judith Gap, but it is still negotiating with Navitas Energy for a 75 MW project at an abandoned gold mine near Whitehall. Other wind projects could be negotiated in the future. "This plan is a living and breathing document and will always be subject to review. We're always open to more wind as long as it fits," says Rapkoch.