No easy way to settle debate about cost of wind energy 

HELENA – If Montana is serious about wind power, those who control and regulate the state’s electricity need to answer what may seem a simple question: What’s the cost of wind-generated power?

You’d think the answer would be easy: The wind farm owners calculate their costs, add some profit, negotiate a contract to sell the power to your local utility, and off we go.

But it’s not that simple. Wind power, unlike electricity generated by a coal-burning plant or a hydroelectric dam, is intermittent. It comes and goes with the blowing wind.

It’s not entirely unpredictable, but it cannot be controlled by a switch. Therefore, when wind is added to the mix of electricity on our local grid or power system, the system operator – in much of Montana, NorthWestern Energy – has to be able to call on additional power from a ready, reliable source to keep the system in balance when the wind power abates.
Montana utility managers and regulators must determine the true cost of acquiring and managing this additional power if we’re going to have more wind on our system and more wind power projects in the state.

Again, you’d think figuring this out would be reasonably simple. Again, you’d be wrong, because the question is fraught with politics and energy-interest power struggles.

We’ll get to the politics later. But first, a few numbers on the current price and cost of wind power as we know it in Montana:

The state’s only major wind farm is the Judith Gap project north of Harlowton, owned and operated by Invenergy, which sells the wholesale power to NorthWestern Energy.

NorthWestern, which sells power to 320,000 retail customers in Montana, pays Invenergy $30 to $31 per megawatt-hour for the power. NorthWestern also has to buy additional power and pay some other costs to integrate or balance the power on its system. The average household consumes about 9 mwh per year.

All told, the cost for Judith Gap power should be about $41 to $42 per mwh this year, said John Hines, chief of supply for NorthWestern, assuming Judith Gap produces power about 40 percent of the time.

The utility’s customers currently pay $56 per mwh for electricity, which includes Judith Gap power and electricity purchased elsewhere, so the Judith Gap power is relatively cheap by comparison.

Hines said buying additional power to balance wind power is getting more difficult, as market prices increase and other utilities in the region are adding wind, increasing demand for the balancing power.

In addition to Judith Gap, NorthWestern buys wind power from a few small projects. Some other small wind developers would like to add new projects to the mix and some larger projects also have been discussed.

But here’s where it gets sticky. Using the wind integration costs it says are associated with Judith Gap, NorthWestern wants to require other wind power project owners to pay those costs.

The project developers say they’re willing to pay, but only if NorthWestern or someone produces credible data that determine those costs accurately for a given project. Data from Judith Gap, a large wind farm in one location, are not applicable to projects of varying size around the state, they say.

One study is nearly complete, looking at how much wind could be added to the NorthWestern system and its integration costs. It’s being financed by NorthWestern, some wind developers, builders of a new power line to Canada and the federal Western Area Power Administration.

Producers of small wind power projects aren’t sure the study will answer questions about the integration cost for their projects.

Meanwhile, the five-member state Public Service Commission should decide this week what NorthWestern gets to charge one small project, Two Dot Wind, for integration of its power. That decision could be used as a model for future decisions on other projects.

Now the politics: Republicans on the PSC, and Republicans in general, often say adding wind power creates hidden costs that aren’t being charged to wind power developers and therefore end up being paid by consumers.

Public Service Commissioner Brad Molnar, R-Laurel, said the intermittent nature of wind forces NorthWestern to buy more power on the expensive spot market, in addition to the cost of “balancing” power, and reserve more open space on transmission lines.

NorthWestern officials say these costs, if they exist, are negligible. Molnar acknowledges he has no documented numbers on these costs or their significance, but said NorthWestern could produce the numbers if it wanted to.

Democrats, including Gov. Brian Schweitzer, are vocal boosters of wind power.

Public Service Commissioner Ken Toole, D-Helena, said it’s vital for NorthWestern and the PSC to decide how wind can be accommodated on the system, and at what price for consumers and the wind-power producers.

The longer the company and regulators wait to resolve this issue, the less likely that wind power will take hold in Montana, Toole said.

“My opinion is that the traditional world of utilities does not want wind (or other alternative energies),” he said. “We need to be actively moving away from fossil fuels. We just sit here and are buffeted by the winds of changing energy markets, and that buffeting is running us up into the clouds of price.”

By MIKE DENNISON
Gazette State Bureau

Sunday, April 20, 2008
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