Nebraska: Deal will give big boost to LES wind energy resources

Source: By ALGIS J. LAUKAITIS / Lincoln Journal Star • Posted: Monday, July 22, 2013

The Lincoln Electric System has signed a contract to buy power from a future wind farm in south-central Oklahoma, a move the utility says will save customers $160 million over 20 years.

LES will receive all 100 megawatts of electricity from the Arbuckle Mountain Wind Farm, which will be developed by EDP Renewables.

With headquarters in Houston, the company has a worldwide reputation and is the third largest wind developer in North America.

The wind farm will be built on 15,000 acres on both sides of Interstate 35, said Jason Fortik, vice president of LES’ power supply division.

Construction could be in full swing next year, and the project is scheduled to go into commercial operation in January 2016. The wind farm will be made up of 50 turbines, each producing two megawatts of electricity. One megawatt can power about 250 homes.

LES spokeswoman Kelley Porter said LES and EDP Renewables agreed not to disclose the cost of the project because it is proprietary information.

EDP Renewables was one of 13 companies that submitted 19 proposals to LES, many of which were in Nebraska. LES has been evaluating the proposals since this spring and the contract with EDP Renewables was finalized on Thursday.

EDP Renewables was selected for its highly competitive costs, strength of existing electric transmission connections, company experience, reputation and qualifications, and the project structure and timeline, LES officials said.

Proposed wind farm projects in Nebraska, which would boost struggling rural economies, were considered, but the Arbuckle Mountain Wind Farm rose to the top of the list after a lengthy evaluation of all the proposals, the utility said.

“When we first started down the process, our primary responsibility was to get the best project for our customers. And essentially, regardless of where it would be located we were trying to get the best deal for our customer owners,” said Scott Benson, manager of resources and transmission planning for LES.

State Sen. Heath Mello of Omaha, however, criticized the deal, saying LES should have found a project in Nebraska.

“While it is encouraging to see a renewed commitment to wind energy from our public utilities, I find it deeply disappointing that LES found it necessary to seek wind from out of state as opposed to taking advantage of the world-class wind we have right here in Nebraska,” he said in a statement.

To promote more wind development in Nebraska, the Legislature passed LB104 this past session to offer more incentives and remove barriers for companies. The law went into effect when it was signed by the governor June 4.

“Our state continues to lag behind our neighbors in reaping the economic development benefits of wind energy, and this latest announcement makes it clear that there is still more to be done to make Nebraska wind projects competitive with states like Iowa, Kansas and Oklahoma,” Mello wrote.

Benson noted that EDP Renewables and not LES will own the wind farm. After 20 years, both entities can negotiate an extension of the power purchase agreement if they choose to do so. Power from the wind farm will be moved over lines within the Southwest Power Pool, a regional transmission network.

The LES Administrative Board received the news at its Friday meeting, which was attended by several groups and individuals who urged the city-owned utility to add more wind, solar and other renewable energy projects to offset the effects of climate change.

Representatives from the Power Lincoln Locally Advisory Board, Lincoln Green By Design, the Nebraska Chapter of the Sierra Club, Nebraska Interfaith Power & Light, and noted Lincoln author Mary Pipher were among those who spoke to the board briefly.

Kevin Wailes, administrator and CEO of LES, said the long-term contract with EDP Renewables will help reduce the utility’s future power costs and help offset future rate increases.

“We expect to begin realizing these savings in the first year, with the benefits increasing throughout the life of the contract,” Wailes said.

Without the EDP Renewables contract, LES was projecting to have 11 percent of its energy produced from renewable energy by 2016. The addition of the contract will boost that figure to about 23 percent. Those renewable sources include wind, solar, hydro and landfill gas.

“Aside from the environmental benefits, increasing the amount of renewable energy in our power resource portfolio will help mitigate the adverse impact that additional regulations on power plant emissions and fuel and electric market volatility can have on our low rates,” Wailes said.

LES currently is waiting for the outcome of talks between the state of Wyoming and the U.S. Environmental Protection Agency over adding air pollution control equipment at Laramie River Station. LES is a part owner and could be responsible for up to $60 million in future costs.

LES currently gets 1.3 megawatts of wind power from its two turbines north of Lincoln, 6 from Elkhorn Ridge Wind Farm, 10 from Laredo Ridge, 10 from Broken Bow and 3 from Crofton Bluffs — all in Nebraska.

In other business, the LES board:

* Heard that no more funds will be added this year to the utility’s popular Sustainable Energy Program, which helps residents and businesses reduce power costs. However, between $3 million and $4 million could be added in 2014.

* Learned that LES rates ranked 13th lowest among 106 cities in an annual national survey. Last year, the utility ranked 11th. LES officials attributed some of the drop to a 2.6 percent rate increase earlier this year.