AEP looks again to wind after $4.5B plan flops

Source: Edward Klump, E&E News reporter • Posted: Wednesday, January 9, 2019

Two units of American Electric Power Co. announced requests for wind energy proposals yesterday, less than six months after the company decided to cancel its $4.5 billion Wind Catcher project.

The new approach reflects continued interest in wind at AEP’s Southwestern Electric Power Co. (SWEPCO) and Public Service Company of Oklahoma (PSO), despite Texas regulators’ rejection of a Wind Catcher application last year.

That AEP project called for acquiring a 2,000-megawatt wind farm that Invenergy LLC had been working on in Oklahoma, with about 1,400 MW slated for SWEPCO and 600 MW linked to PSO. The plan also envisioned a 765-kilovolt power line, which would have run hundreds of miles in Oklahoma.

Now, SWEPCO is requesting proposals for as much as 1,200 MW of wind energy that would be in commercial operation by Dec. 15, 2021. The plans must have a nameplate rating of at least 100 MW and are due March 1, SWEPCO said. The company said it’s looking to acquire new or existing projects that qualify for at least 80 percent of a federal production tax credit.

Another requirement, according to SWEPCO, is that projects will need to be interconnected to the Southwest Power Pool grid in Arkansas, Louisiana, Texas or Oklahoma. The new approach to wind expansion is different from Wind Catcher in part because it involves a competitive process.

“It’s intended to go out in the market and identify the potential for projects that could benefit our customers,” said Peter Main, a SWEPCO spokesman.

Main said any projects that are selected as beneficial to customers would be presented to regulators for review. Regulatory filings for selected projects could take place in the third quarter of this year, he said.

SWEPCO said its customers are tied already to 469 MW of wind resources in Texas, Oklahoma and Kansas through power purchase agreements, while Main said the new proposal will examine the potential acquisition of projects. SWEPCO operates in portions of Arkansas, Louisiana and Texas.

PSO, which operates in parts of Oklahoma, said yesterday that it’s also seeking proposals for wind resources that would be operating commercially by late 2021.

Stan Whiteford, a PSO spokesman, said the amount of wind pursued by the company will depend on what the responses show and could be in the hundreds of megawatts. Whiteford said PSO already has more than 1,100 MW of wind under contract through power purchase deals.

“We’re requesting proposals that will meet customers’ expressed interest in renewable energy, diversify our energy supply and provide cost savings,” Peggy Simmons, president of PSO, said in a statement.

In a slide presentation last November, AEP listed up to 1,200 MW of potential wind additions for SWEPCO and up to 1,000 MW of possible wind additions for PSO in the 2021-23 time frame. Both are subject to regulatory filings. A news release yesterday said SWEPCO’s integrated resources plans (IRPs) include “significant increases in renewable energy, including wind and solar, over the next 20 years.”

In the past, critics of AEP’s Wind Catcher project said there wasn’t a traditional need for it. And DeAnn Walker, chairwoman of the Public Utility Commission of Texas, said last year she didn’t think there were sufficient safeguards for ratepayers in a proposal for decision (Energywire, July 27, 2018).

Wind Catcher had been positioned to take advantage of a federal production tax credit, and AEP envisioned having the project completed by the end of 2020. State regulators will have new wind proposals to digest depending on how the exploration process goes for SWEPCO and PSO.

Andrew Bischof, a senior equity analyst with Morningstar Inc., said there had been difficulty in trying to attribute a benefit to each state from Wind Catcher. The new process for exploring wind options in the region may allow a more tailored approach from AEP businesses.

“They’re going to go in [with] each commission specifically showing the value proposal, the value proposition,” Bischof said.

Logan Atkinson Burke, executive director of the Alliance for Affordable Energy in New Orleans, said in an email yesterday that the alliance had supported Wind Catcher. It would have enabled tremendous savings for customers, she said, and the Louisiana Public Service Commission staff negotiated some good commitments.

Regulators in Arkansas and Louisiana gave the Wind Catcher idea a green light, with conditions, but AEP said it was canceling the project after Texas’ unfavorable decision in July.

Burke offered support yesterday for AEP’s new request for proposals (RFP) process as a way to help ensure that customers get the best deal.

“We know all utilities are showing increasing amounts of renewables including wind in their IRPs, and by conducting this RFP customers will get the benefit of market competition and transparency,” Burke said.

What does Invenergy say about Wind Catcher now that AEP is moving on?

“We do not have any updates on project status at this time, but we continue to see opportunity in the Oklahoma Panhandle, where we have a sizable land position with one of the strongest wind resources in the country,” Patrick Whitty, a vice president of communications at Invenergy, said yesterday in an email.