Xcel wants out of Goodhue wind deal 

Controversial plans to build a $180 million wind farm in rural Goodhue County appear to be on life support.

Minneapolis-based Xcel Energy told the state’s Public Utilities Commission last week that it is “unable to wait any longer” and wants to break a 20-year power purchase agreement with New Era Wind Farm LLC, the developer behind the long-stalled 78-megawatt wind project.

In a May 24 filing with the PUC, the utility said it wants New Era to voluntarily drop out of the agreement and that it would “have no choice” but to take its case to court if the company declined to break ties.

Jim Alders, Xcel’s directory of regulatory affairs, said Wednesday that Xcel had been committed to the agreement but informed New Era in December that it needed to resolve outstanding issues with the project by early May.

“We gave them [New Era] until now to cure those problems and they have not,” he said. “We finally reached the point where the contract gives us the right to terminate.”

Plans to build as many as 50 turbines across 32,000 acres in the Belle Creek and Minneola townships of Goodhue County have faced a series of setbacks since being introduced four years ago.

Turbines were set to spin by the end of 2011 but questions over appropriate setbacks and wildlife impacts delayed construction. Late last year, concerns were raised when it was revealed the project’s ownership had changed without notice being given to the PUC.

New Era owner Peter Mastic did not return calls requesting comment this week. But in an April 17 letter to the PUC, he said he had “no confidence that due process for this project will ever end.” Among the outstanding issues: an avian and bat protection plan that Mastic did not believe would ever be approved, “however comprehensively and carefully drafted.”

Mastic said he was working with three project owners interested in assuming the power contracts in hopes of recovering part of the $15 million invested in the project to date. The owners were identified only as “large, well-funded and capable” and as being in a community that is “far more receptive to wind energy than is Goodhue.”

Alders said Xcel had never been asked to transfer a purchase agreement before and rejected the idea.

“When everything is said and done, that seemed to amount to a new project, and we concluded that wasn’t acceptable,” he said.

In February, Xcel issued a request for proposals seeking plans for up to 200 megawatts of wind capacity but that move was “completely separate” from the Goodhue case, Alders said.

The utility is trying to take advantage of the Production Tax Credit, a key federal incentive scheduled to expire at the end of 2013. Wind projects under construction this year will qualify for the tax credit.

Xcel hopes to choose a developer in the coming weeks so that it can reach agreements this summer and meet the tax credit deadline. After a record year of construction in Minnesota, Xcel’s RFP could lead to the largest wind project the state sees in 2013.

Minnesota added 267 megawatts of wind energy last year, bringing the state’s total to 2,987 megawatts and providing nearly 15 percent of the state’s energy supply, according to the American Wind Energy Association. There are no wind projects now under construction in the state, according to the group, and other planned projects are considerably smaller than the one Xcel has in mind.

“Things are not all that huge for the wind industry right now,” said Lisa Daniels, executive director for St. Paul-based Windustry, a wind energy promoter.

Geronimo Energy is among those still looking to get in the ground this year. The Edina-based company has four planned wind projects in Minnesota, together totaling nearly 350 megawatts, which it says could be under construction in time to get the PTC.

What happens in 2014 and beyond is less clear, said Betsy Engelking, vice president at Geronimo Energy.

“The question becomes what should start happening beyond this, and I think a lot of the utilities will tend to take a wait-and-see approach,” she said.

Whether the Goodhue case will also spoil the appetite for wind energy remains to be seen.

Daniels acknowledged the situation makes wind “a little more of a sensitive issue in some parts of the state,” but said Minnesota has largely embraced wind energy.

“It [the Goodhue project] had the opposite of good will from the get-go and it just never seemed to overcome the negative press and the negative feels,” she said. “But I don’t think that’s universal.”

Though the debate was divisive, Goodhue County Attorney Stephen Betcher said he thought the process highlighted important concerns he hoped led officials to make the right decision.

“We’ve always argued this isn’t about wind power but about whether this manifestation is properly serving the public interest,” he said.