Minnesota utility Northern States Power (NSP) is mandated to build an additional 400 MW of wind power in return for being allowed to store nuclear waste. Yet though this power is already being paid for by utility ratepayers, the utility has had no qualms about selling it for a second time -- and at a premium price. NSP is wheeling the wind kilowatt hours from its Buffalo Ridge wind plants to supply the green pricing program of United Power Association (UPA), a generation co-operative in Elk River, Minnesota.
The action has raised the ire of state environmental groups and a state senator, Janet Johnson, to the point where UPA is now talking to developers about new wind projects to supply its program. Johnson attempted to formulate a bill to specifically prohibit such transactions. But because the provision touched on too many issues tied up with utility restructuring, and legislators had agreed not to consider restructuring until next year, the attempt was abandoned. Instead Senate File 2818 now requires power companies to disclose generation sources, emissions and nuclear waste production.
According to Michael Noble of Minnesotans for an Energy Efficient Economy (ME3), the original intent of the bill was to "put a shot across UPA's bow." ME3 and the Izaak Walton League have been outspoken critics. "We didn't see what value it had for anyone," says the league's Bill Grant. "There was a premium cost to UPA ratepayers with no new benefits resulting. It was bad for NSP ratepayers since the power was sold at cost, and it just wasn't moving the ball forward on renewables. It was just shifting renewables around without creating new capacity."
The state utility regulator, the Public Service Commission, had no jurisdiction over the deal, since it was a wholesale transaction regulated by the Federal Energy Regulatory Commission. Also, since UPA is a co-operative, not an investor owned utility, its rates are not regulated by the commission.
Dale Thielen, marketing manager for UPA, is still smarting from the criticism. "Our marketing strategy didn't fit in with the legislative strategy of the environmental groups," he says. "Our business strategy is to gauge the market reaction before we invest in capital. The contract with NSP was an easy way to facilitate a test market." In 1997, UPA cut off negotiations with Northern Alternative Energy to install a single Micon turbine, in order to deal with NSP.
UPA is continuing to sign up customers for the "It's a Breeze" program, and is over a third of the way to its goal of 2% participation, despite limited promotion. The response has been sufficient that it is considering building its own wind farm, likely to be shared with other utilities, but not NSP. "We want to be as far green as we can get on the green scale," Thielen claims.
Similar controversy was sparked by the "Energy for Tomorrow" program of Milwaukee utility Wisconsin Electric Power (WEPCo), the largest green pricing program in the US with 7000 customers already signed up. Two environmental groups, Environmental Decade and Renew Wisconsin, had sued over the program, claiming the state utility commission had allowed the special green rate without a proper public hearing.
Of even greater concern to the advocacy groups was that WEPCo had not been planning any new green generation. Instead its program was reliant on existing biomass and large Canadian hydro plants, which the utility claimed were "under-utilised."
WEPCo and the two groups recently settled their differences, with the utility agreeing that at least 75% of the program will be supplied by new in-state renewables by 2000 and the environmentalists agreeing to endorse and "actively" market the program to utility customers. Last month WEPCo issued a request for proposals for 5 MW of new renewables capacity (story page 8).