Group opposes Nebraska Public Power spending on wind, energy efficiency

Source: By Tyler Ellyson, Columbus Telegram • Posted: Monday, May 13, 2013

COLUMBUS — A group of Nebraska electric utilities is asking the state’s largest power supplier to eliminate proposed investments in wind energy, emissions-reduction measures and energy efficiency programs to lower costs passed on to customers.

The Nebraska Electric Generation and Transmission Cooperative Inc., which represents 21 public power districts including Cornhusker, Polk County Rural and Butler and one cooperative, made its case for the cuts Thursday after hiring a consultant to complete an independent review of Nebraska Public Power District’s 20-year integrated resource plan.

That review, which was also backed by the Loup, Southern and Norris power districts, shows NPPD is not pursuing the “least-cost plan” for its wholesale customers, George Evans of Sage Management Consultants LLC told the NPPD Board of Directors during its monthly meeting.

Specifically, Evans targeted $2.1 billion in wholesale revenue requirements dedicated to greenhouse gas reductions at coal-fired power plants and additional wind generation and energy efficiency programs. Eliminating these costs, he said, would reduce the total wholesale revenue requirements of the plan by 12 percent, from $17.82 billion to $15.72 billion.

Evans argued the proposed investment in wind power, an additional 650 megawatts at a cost of $300 million, isn’t necessary because NPPD has a good supply of electricity to serve its customers.

“We believe the wind generation is driving up the rates unnecessarily,” said Evans, who told the board replacing wind energy with other sources would have saved nearly $20 million over the past two years.

Bruce Pontow, general manager of Nebraska Electric Generation and Transmission Cooperative, backed up the consultant’s statements.

He said the cooperative didn’t oppose NPPD’s goal of generating 10 percent of its electricity from renewable sources by 2020, but they can’t support another self-imposed mandate for more wind energy at this time.

NPPD currently generates 42 percent of its energy from carbon-free sources, mainly Cooper Nuclear Station, and 9 percent of its power comes from renewable sources.

The cooperative supports a proposal to boost the output at the nuclear plant near Brownville as the most cost-effective option if more generation is needed. The NPPD Board of Directors approved the $243 million extended power uprate in December, but spokesman Mark Becker said Thursday the utility continues to review the schedule and cost estimate for the project, which will be revisited by the board later this year.

If implemented, the project is expected to increase Cooper’s generating capacity by 18 percent, from 800 to 946 megawatts, following the refueling outage in late 2018.

Evans said other assumptions in the NPPD plan are “skewing” the results to make investments in renewable energy and energy efficiency appear more favorable.

The $1.6 billion in revenue requirements included to reduce emissions at coal-fired plants may not be needed, he said, because tighter regulations proposed by the Environmental Protection Agency have yet to make it through the legal system.

Evans also questioned whether a $200 million investment in NPPD’s energy efficiency programs will lead to a large decrease in customers’ energy use, calling the utility’s projection of a 143-megawatt reduction in peak demand by 2032 “unverified” and “too optimistic.”

“We’d like to see some verification that that program is actually going to produce those energy savings before we’re going to buy into that,” he said.

The NPPD Board defended its plan during the nearly hour-long discussion.

Director Ken Kunze of York said it would be “very naive” to not anticipate stricter emissions standards to be mandated by the federal government at some point.

“When the EPA comes in, there’s not much discussion,” Director Virgil Froehlich of Norfolk added.

The board shared similar expectations regarding wind power.

Director Dennis Rasmussen of Hickman said he isn’t a wind advocate, but the reality is we’re living in a society that’s “going green.”

Without self-imposed renewable energy goals, Rasmussen said the state Legislature would likely set a mandate for NPPD that’s even higher.

“I think we’ve handled this wind problem, as I call it, in about the best manner that we can do,” he said.

Froehlich said there is also pressure from towns that benefit economically when large wind farms are constructed nearby. In Petersburg, for instance, he said the recent addition of a 13,000-square-foot retail store wouldn’t have happened without the two wind projects in the area.

“You go to these small communities and they’re all excited about wind,” said Froehlich. “ … You can’t just sit here and shake your head no when you’re trying to serve the public.”

Ultimately, the 20-year integrated resource plan is a guide that steers NPPD in a general direction, President and CEO Pat Pope said, so adjustments can be made if certain expectations don’t become reality.

Pope said each proposal will be studied further before it’s enacted. Additional investments in wind energy and energy efficiency programs, he said, likely won’t happen unless load growth reaches 2-2.5 percent annually, and it’s currently around 1 percent.

NPPD plans to seek board approval of the plan next month.