20110318American Wind Group Comments.pdf

WIND GROUP r~ r::('i" ~ ,k""";;,~,"
'ìfH i i'1a.p I' pq ,L." rot,,, ! jll Ii: 58
, j, ¡i , ¡",' .i i--. f ~, ;
:.,.. c¡. ! r
'--, (-!:~ .. . , "
""';';";;"..__: J.',,-,.'
March 17,2011
PUBLIC COMMENTS FOR IDAHO PUBLIC UTILITIES COMMISSION -
BRIAN D. JACKSON
2792 Desert Wind Road \.
Oasis, Idaho 83647-5020
CASES: MURPHY FLAT WIND LLC CAE IPC-E-l0-56
MURPHY FLAT ENERGY LLC CAE IPC-E-l0-57
MURPHY FLAT MESA LLC CAE IPC-E-l0-58
Dear Commissioners:
This letter is to provide public comments in support of the IPUC decision to approve the firm energy
sales agreements with the above community wind projects.
These are excellent projects and are great examples of a true community development. They have
been studied and developed with local teams of consultants and landowners to get to the point of
commercial development for a period of almost two years. These projects represent a valuable energy
resource and supply for the Idaho Power customers and the terms and conditions of the contract are
not only fair and justified, but they represent the standard offer terms and conditions these projects
were entitled to at the point of execution of the agreements.
It would be totally accurate to state these contracts were finalized before the conditions for such
contracts were changed. In fact they were finalized the week before and executed by the projects on
December 13, 2010. The other point is these are standard contracts that were simply filed out and not
really negotiated or disputed by the projects themselves. These agreements clearly represent the
standard offer terms and conditions that the projects agreed to and the only effort required on both
parts of the agreements to finalize them consisted of accurately filing in the contact and exhibit
information before formal contract agreement execution. Historically, the IPUC has required projects
to demonstrate a burden of proof of activity and negotiations with the Utilty and American Wind
Group did provide such documentation for the projects to submit. However, in this case such a
demonstration is beneficial from an overall understanding of the situation, but clearly the contracts
were not simply being negotiated, they were finalized and executed.
2792 Desert Wind Road Oasis, Idaho 83647-5020
www.AmericanWind.net 208-859-1882
WIND GROUP
Jobs and Economic Prosperity
I believe these projects are significant and special in many ways. I believe that a significant amount of
wind energy on the local and nation grid is critical to help stabilze the energy security and energy
supply on a local, regional, and national basis. The Department of Energy has consistently been
supporting a goal of 20-30% of the nation's supply from wind energy and even discussed a goal of
50% by 2050. That push was started and initially promoted by President Bush and carried forward with
President Obama. The Federal government has created special incentives for wind projects to be built
now and not only provide the needed jobs and employment for construction in the regions like Idaho
that have wind, but also support a growing manufacturing industry for the United States based on
orders and jobs where those plants have been located. More than that, however, the United States
has an increasing number of manufacturers that are supplying wind turbine components and providing
specialized services in environmental services, analysis, finance, testing, blade repairs, welding, and
other associated industries that aren't as obvious.
The incredible, tangible benefit that comes from this development activity is a rural America economic
machine that keeps providing benefits for 20-30 years as long as the wind blows. It provides
operations, maintenance, accounting, environmental, consulting, communications, painting, weed
control, site maintenance, road upkeep and many other jobs that would not otherwise exist. This local
wind project economic machine of today is extremely high technology on a rural farm that preserves
and protects the rural way of life. They provide high value jobs in some places that would never exist
and create incentives and opportunities for rural school children to grow up, go to college and return
to the farms or rural areas with entirely different employment options. Agricultural land with
productive wind farms provide a completely new revenue stream to the landowner with almost zero
land taken out of production. It also guarantees that land wil stay rural agricultural land for the next
few decades.
The direct financial contributions are indisputable for rural counties. Each 20MW wind project is
expected to contribute over $100,000 per year in property taxes the first couple years with an
escalating payment that is almost $200,000 per year after 20 years. In total that contribution directly
to the county wil be about $2.4M based on 8 turbines turning in the wind. A significant amount of
that money goes directly to the schools and their budgets in a stable and yearly increasing payment
that doesn't go away when a company sells their operation or moves their plant. Wind projects are a
gift that keeps on giving. In fact, most wind projects are repowered after the turbines get older and
produce more revenue over time.
A few wind projects in a few places provide a few meaningful jobs and significant tax benefits.
I
2792 Desert Wind Road Oasisi Idaho 83647-5020
www.AmericanWind.net 208-859-1882
WIND GROUP
Multiple projects in a region, however, can become a significant rural economic growth instrument
that is virtually impossible to replicate with any other business or technology. The number of projects
has to reach a critical mass where the industry can justify a local presence and support businesses. The
key to this growth wil be local support. Counties like Cassia are encouraging wind development by
passing laws and zoning rules that encourage developers in areas that are zoned for development.
Other counties are considering ways to attract renewable energy manufacturing and development that
create sustainable employment and tax revenues.
Wind projects also pay back milions of dollars in income taxes that are often more than twice the
value they receive in incentives and credits up front.
Energy Supply Issues
Energy and energy prices are at the core of our economy. The future of energy prices and supply is
dependent on decisions made years earlier. Idaho Power secured the Hells Canyon hydroelectric plant
opportunity before they needed the resource or the energy and it has been the anchor point for their
low costs for the past several decades. The company leaders at that time had the foresight and
developed an extremely expensive local resource at that time that paid off for Idaho. I believe that the
wind opportunities that these projects represent are like the hydro plants were then. They are a local
resource that provides a competitive advantage for Idaho.
The successful energy mix for the future clearly wil involve a significant amount of renewable energy
and these projects are a meaningful part of that solution for Idaho. Wind energy isn't the only answer
just like Hydro wasn't the only answer 50 years ago. Wind is one of the most significant parts of new
generation and energy supply for our country and our state. Natural Gas plants are a critical part of
the balance. Utilties across the nation are going to be sourcing a substantial amount of energy from
wind over the next two decades and new technologies wil be implemented to take advantage of that.
Cost of Wind
There appears to be ample evidence in recently approved contracts and energy supply resources such
as the Geothermal contract and the langley Gulch gas plants that these 20 year contract rates for wind
projects are lower than other project rates. It seems in other stories across the nation that the cost of
generation from other sources than wind is going up faster than expected. In Colorado, the people
who signed up to pay a premium for the renewable energy program with wind power are getting
rebates back off of their power bils compared to others that are on the standard utilty energy
program.
What we are finding is that the cost of wind energy (and every other source on the planet) is
I
2792 Desert Wind Road Oasisi Idaho 83647-5020www.AmericanWind.net 208-859-1882
AMERICAN
WIND GROUP
significantly higher than the embedded cost of old hydroelectric plants and old coal plants. Those have
been the lowest cost resources for years but we can't build any more of them, just take care of what
we have. The cost of energy from new coal or new hydro is much more than wind. The rates that have
been set and approved by the Idaho PUC for these wind projects is in fact based on the expected
avoided cost for new gas fired generation so actually the PUC has set the rates in these contracts.
Increasing regulations on burning fuels for energy are guaranteed to raise the costs of energy from
those sources in the future. It is really naïve for anyone to pretend that won't affect future prices. I
believe it is irresponsible to not take steps now to implement solutions like these wind projects that
can help alleviate some of those risks. Wind certainly isn't THE answer, but is definitely one of the
main parts.
What isn't obvious to most people is that these contracts end up paying much lower rates in the spring
when energy prices are low and higher rates on peak times when the utilty needs the energy and costs
are often higher. The contract rates follow the relative pricing. In fact these contracts pay a reduced
rate at nighttime, Sundays, and holidays also.
The most important part about these wind contracts is that the rates are fixed based on the formula
set by the utilties and the Idaho PUC for the next 20 years. If energy rates double or triple in the
future, these wind projects wil keep providing energy at the agreed upon rates in this contract. The
value that wind provides is a hedge or protection against future rate increases for that portion of the
supply. The utilties wil learn new skils and integrate increasing amounts of wind across the nation.
Some long outdated transmission lines and facilities in some areas wil be improved and upgraded also
across the nation as increasing wind projects are developed.
Conclusion
The bottom line is that these agreements should be approved. They were finalized, printed, and
executed by the projects under the rules, conditions, and rates that existed at that time. They are
good for the future energy mix of the ratepayers of Idaho and they are good for the local economy and
energy security of Idaho and the nation.
Sincerely,
Brian . Jackson
President, American Wind Group LLC
2792 Desert Wind Road Oasisi Idaho 83647-5020www.AmericanWind.net 208-859-1882