United States

United States

Merger settlement nets wind benefits -- Environmental lobby victory

Wind is increasingly becoming a beneficiary of the various major power industry deals in the United States which are made conditional on environmental concessions. The latest deal confirming the trend is the merger of Niagara Mohawk (NIMO) and National Grid. Pressure from environmental and renewable energy groups helped forge a settlement with the two utilities that will give New York consumers the opportunity to buy green power. Until now NIMO has not given that choice to customers, even though the state has deregulated its electric utility industry -- and requires all state government agencies to buy 20% of their electricity from renewables by 2010.

"The merger agreement benefits the environment and the economy by providing customers with an easy way to purchase renewable energy products on their electricity bill and by stimulating a large new investment in wind energy generation in Upstate New York," says attorney David Woolly, who represented a series of groups, including the American Wind Energy Association, Environmental Defense, the Natural Resources Defense Council and Community Energy, a green marketer out of Pennsylvania, in the negotiations.

Under the proposed settlement, filed with the New York Public Service Commission in October, the merged company is to allow green power marketers to sell renewables products to customers through its billing system. The agreement also includes a new transmission line with a capacity of 220 MW into the Tug Hill Plateau in northern New York, an area ripe for wind power development.

James Tripp of Environmental Defense believes demand for renewables is strong in New York, but consumers could not express that preference until now. The settlement ensures that NIMO will publicise the new opportunity through bill inserts and its web site -- and establish green power certification.

Previous deals

With millions and often billions of dollars on the line, wind advocates across the US have had success in forcing settlements with electric utilities that are primarily seeking lower operating costs through mergers. When Scottish Power swallowed PacifiCorp, the Renewables Northwest Project and other environmental groups forced an agreement requiring the utility to invest in an additional 50 MW of renewable resources (Windpower Monthly, April 1999). PacifiCorp is completing that agreement almost three years later with Seawest and Shell Renewables' Rock River I project in Wyoming (Windpower Monthly, June 2001).

Another merger, between Northern States Power (NSP) and New Century Energies, was approved only after NSP said it will expand transmission capacity out of the prime wind area on Minnesota's Buffalo Ridge and remove barriers to future wind development, which were demanding that all new generation be selected on the basis of least-cost.

NIMO customers will benefit as well as wind from the latest merger. The settlement cuts residential electricity bills by 5% immediately, stabilises rates over the long term, provides discounts for low income customers and establishes conservation programs. Once the Public Service Commission approves the settlement, the merger's final hurdle is with the US Securities and Exchange Commission, which should be cleared by early 2002.

Niagara Mohawk has 1.5 million electric customers and 540,000 natural gas customers in New York. After the merger it will become a utility owned by National Grid, which also owns four utilities in New England and a transmission business.

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