Wind farm project most likely to result in higher utility bills in Minden
With its recent support from the Louisiana Public Service Commission, it would appear as if Wind Catcher Energy Connection, a program facilitated by Southwestern Electric Power Company (SWEPCO), will gain all the necessary approvals to move forward.
However, it also could mean higher electric rates in Minden, at least initially.
Wind Catcher Energy Connection is a major wind farm and a dedicated power line that will bring energy to AEP/SWEPCO customers in Louisiana, Arkansas, Texas and Oklahoma.
To pay for the $4.5 billion project, “SWEPCO will follow the traditional utility model and carry the debt for the gen-tie (power line) during its construction,” said Carey Sullivan, Director of Communications for SWEPCO in Shreveport.
“SWEPCO will have no debt to carry during the construction of the wind farm. This is a turn-key project, meaning that SWEPCO will purchase it from Invenergy once it has been completed.”
According to Minden Mayor Tommy Davis, there will be costs passed through to Minden utility customers as a result of the current Power Service Agreement. That agreement is currently the subject of a lawsuit with the Federal Energy Regulatory Commission (FERC.)
“We have a pass-through contract,” Davis said. “So that means they get to pass through those costs to us. And that’s part of our FERC filing.”
Sullivan said the cost to SWEPCO customers will be minimal. “Customers will see the benefits of Wind Catcher immediately after it goes into service in 2021 as there is no fuel cost for wind energy,” she said.
“The cost to SWEPCO customers of the wind farm and power line will be offset by the reduced fuel costs and federal Production Tax Credits.”
Sullivan added that SWEPCO has agreed to many guarantees to lower the risk to customers. “And more guarantees were added by the Louisiana Public Service Commissioners,” she said. “Given the most favored nations clause across the jurisdictions, the customers are well protected.”
Those guarantees include a cap on construction costs, a minimum production level of energy, and qualification for 100 percent of the federal Production Tax Credits available for the construction of new wind farms.
In addition, Sullivan said SWEPCO has reached agreements with a majority of its wholesale customers that will allow the company to recover its costs for the wind farm and power line.
“We have not worked anything out with them,” Davis said. “Some of their wholesale customers have, but we have not.”
Davis said the city has obtained a timeline of the increases and subsequent decreases.
“The schedule that they gave us, for the first few years of the Wind Catcher Project, our costs would increase,” Davis said. “After a period of time, they would begin to decrease. That period of time does not start until our contract is over.”
The project includes the acquisition of a 2,000-megawatt wind farm under construction in the Oklahoma Panhandle and construction of an approximately 350-mile dedicated power line that will carry the wind energy to the Tulsa area, where the existing grid will deliver it to customers. SWEPCO will own 70 percent of the project. SWEPCO’s sister company, Public Service Company of Oklahoma (PSO), will own 30 percent.
“It’s important to know SWEPCO’s other power plants will not sit idle,” Sullivan said. “SWEPCO makes off-system sales, for which 90 percent of profits are typically returned to retail customers across SWEPCO’s jurisdictions.
Also, SWEPCO continues to need the capacity from existing resources – Wind Catcher is an energy project, not a capacity project.”