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Nebraska governor pushes for action -- No private development allowed

The Nebraska state governor has challenged electric utilities to put a business plan together to figure out how to develop more of its wind resource. Nebraska is one of America's windiest states and about to get its first large-scale wind farm of 20 MW. But in Nebraska, both the wind farm and the business plan must follow the state's rules: no private developers allowed.

In one of America's windiest states -- which is about to get its first large-scale wind farm -- the state governor has challenged electric utilities to put a business plan together to figure out how to develop more of its wind resource. This is Nebraska, however, and both the wind farm and the business plan must follow the state's rules: no private developers allowed.

One of the barriers that has kept most wind development out of Nebraska is the success of public power and the state's low electricity rates, says Gary Thompson, a director of the Nebraska Public Power District. Public power serves 100% of the state and has a lock on how energy is developed. That means private developers are not welcome.

The Municipal Energy Agency of Nebraska (MEAN) initially looked for a private company to help it build a 20 MW wind project near Kimball in north-west Nebraska. That idea came to an abrupt halt when the publicly owned utility was pressured to stick with public control and ownership of the project, says the agency's John Krajewski. "Now we've had a change in direction," Krajewski continues. "MEAN will own the project or we may take on the Nebraska Public Power District as a possible partner."

Governor's challenge

But it is not just public pressure that makes it difficult for private companies to site generating plants in Nebraska. Bill Mayben of the Nebraska Power Association (NPA), which serves 91 of 93 counties in Nebraska, says the state's laws dictate that a new plant has to be deemed necessary and useful inside the state to be sited. If it is developed and the output is exported, electric assets located in the state are subject to condemnation for use in the state, something that makes developers and lending institutions a little nervous, he says. Nebraska Governor Mike Johanns, a Republican, is putting pressure on the public power industry by challenging it to quickly find a way to develop more wind while it remains consistent with the state's public power structure. "We have a pro-active governor that is putting pressure on the Nebraska Power Association," says Thompson. "Basically, he's saying 'You do something about this or I will introduce legislation to allow private investors in.' That really scares the hell out of us."

Johanns told Nebraska's Energy Office last year to put together a report to define the issues that could prohibit or could lead to more wind development in the state. Once the report was complete, he directed the NPA to develop a business plan for wind development "consistent with our public power structure." The NPA has to figure out how the state's utilities can develop, finance, own and operate wind power in Nebraska, and they have to figure out how to sell most of that power to markets outside the state, especially into the western transmission grid, all by June 15.

"We have seen that others in Kansas, Iowa and South Dakota are not waiting to tap wind resources in their states," states Johanns. "If we are serious about becoming a significant player in wind generated electricity within five years we should not wait any longer."

Even with the governor's support, several things will continue to work against marketing wind in Nebraska. Largely due to public power, the state has the fourth lowest retail electric rates in the nation and a 15-20% generating capacity margin, according to Larry Pearce, director of Nebraska's Energy Office. It also has statutory provisions that require utilities to develop only least cost resources and right now wind is more expensive than coal, he says.

Up against coal

NPA's Mayben says power from coal is about $8-9/MWh, while wind costs about $30/MWh. That is still a good price and probably less than natural gas generation, he says, but with a power surplus, it makes no sense to develop wind resources that would simply displace the lower cost coal. That is not to say public power is against wind development. Mayben says he is "philosophically pushing wind as a way to hedge against NOx and SOx, mercury and CO2," for the coal and nuclear power plants located in the state.

Nebraska has four commercial wind turbines now, two in the north near Springview and two northwest of Lincoln. The new Kimball wind farm will likely be the first large project when it adds 14-15 MW, or more, in the first quarter of 2002. Krajewski says MEAN is considering larger turbines, like the Nordex 1.3 MW unit or Enron's 1.5 MW turbine. The wind farm will be adjacent to the interconnection with the western transmission net, so most of that power will be exported.

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