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Hoosiers may bear $16B cost of wind turbines

Over the next few years, the development of wind energy could cost Indiana households more than $40 million per year, adding at least $2 per month on average to the typical bill for the state's 1.5 million homes. The new cash would help pay for about $16 billion worth of new transmission.

Hoosier consumers are likely to pay bulk of $16B for lines to transport wind power

The rural Midwest is booming with wind turbines these days -- but guess who's going to pay the $16 billion it will cost to move all that clean electricity to the cities that need it?

Probably you.

Officials are trying to figure out how much wind developers should pay to build the transmission lines to get their energy to market. But because other regions have shifted the entire cost to utility rate payers, the Midwest officials likely will feel pressure to do the same.

If they don't, industry analysts say, it could hurt the development of green energy in the region.

The Midwest -- with its heavy reliance on coal-fired power plants -- can ill-afford that, as federal regulations clamp down on carbon emissions.

Over the next few years, the development of wind energy could cost Indiana households more than $40 million per year, adding at least $2 per month on average to the typical bill for the state's 1.5 million homes.

The new cash would help pay for about $16 billion worth of new transmission lines that wind developers say are needed. The lines would move... more [truncated due to possible copyright]  

Hoosier consumers are likely to pay bulk of $16B for lines to transport wind power

The rural Midwest is booming with wind turbines these days -- but guess who's going to pay the $16 billion it will cost to move all that clean electricity to the cities that need it?

Probably you.

Officials are trying to figure out how much wind developers should pay to build the transmission lines to get their energy to market. But because other regions have shifted the entire cost to utility rate payers, the Midwest officials likely will feel pressure to do the same.

If they don't, industry analysts say, it could hurt the development of green energy in the region.

The Midwest -- with its heavy reliance on coal-fired power plants -- can ill-afford that, as federal regulations clamp down on carbon emissions.

Over the next few years, the development of wind energy could cost Indiana households more than $40 million per year, adding at least $2 per month on average to the typical bill for the state's 1.5 million homes.

The new cash would help pay for about $16 billion worth of new transmission lines that wind developers say are needed. The lines would move wind energy into the electric grid -- the interlaced power lines that tie utilities into a massive network.

Paying for the new lines raises an issue of fairness because households in, say, Indianapolis could subsidize electricity made by North Dakota wind turbines and used in cities such as Milwaukee, Chicago or Fort Wayne, experts say.

That could happen because the electric grid that covers Indiana is monitored by a Carmel-based nonprofit organization whose territory includes a wide swath from Ohio to the Dakotas.

"Equity has always been an issue" in utility matters, said Doug Gotham, director of the State Utility Forecasting Group, a Purdue University unit that advises the Indiana General Assembly on electricity issues.

"But wind energy has brought the cost allocation to the forefront," Gotham said. "There's not enough transmission capacity in order to get the substantial amount of wind from Minnesota and the Dakotas into the load centers where the demand is."

Higher costs

Even if wind were not harnessed for energy, higher power costs likely are unavoidable in the future.

Energy specialists say that's because stricter clean-air rules expected to take shape in the coming years will force changes in the Midwest's old coal-burning electric plants.

So the wind, green advocates and energy industry officials say, represents a satisfactory way of partially diversifying away from coal.

But the new focus on renewable energy has put Indiana in the middle of the debate of who should pay for getting the power from where it's made to where it's consumed.

Not since the existing Indiana power plants went up in the 1960s and '70s have utility economics concerned the state. Now it is coming to a head.

"We are advocating for assurance that . . . Indiana consumers end up with, as close as possible, the least-cost solution to get the job done," said David Stippler, Indiana's utility consumer counselor, whose office represents homes and businesses when electric rates are being decided in Indianapolis.

A federal issue

The cost of tapping this Midwest wind will be aired next week, not in Indianapolis by state regulators, but in Washington by the Federal Energy Regulatory Commission.

The commission will discuss transmission cost allocation -- deciding who will pay the billions of dollars needed to build transmission lines.

For months, the Carmel nonprofit that monitors the electric grid in Manitoba, Canada, and 13 states has wrestled with the controversial issue.

"Within 25 years, we expect wind will be 16 percent" of our power, said John Bear, president of the Midwest Independent Transmission System Operator.

Bear's group, known as Midwest ISO or MISO, is largely funded by utilities. It is scheduled to present its transmission cost allocation plan to the federal regulators Thursday. The regulatory commission will rule on the plan in determining transmission cost allocation for the 13 states in MISO's district.

Wind farm operators had feared MISO would stick to its long-held proposal of having power generators pay for 20 percent of the cost for building the transmission lines from the wind farms to the grid. Consumers, including homes and businesses, in the 13 states would have paid 80 percent.

Last month, however, MISO changed course. It tentatively proposed consumers handle the full 100 percent. This means households most likely will pay more than $2 per month.

Although MISO has no final proposal before the federal regulators, its course change was lauded by Wind on the Wires, a Minneapolis-based trade group for wind developers.

"It's not a matter of we don't want to pay this 20 percent. It's that we can't pay," said Jamie Karnik, a spokesman for the trade group. "It's too expensive."

Assuring progress

Early on, the Wind on the Wires warned that wind developers might favor regions such as Texas and the southern Plains.

"We want to be careful that we don't drive renewable development out of the Midwest," said Beth Soholt, the group's director.

Months ago, the Southwest Power Pool, MISO's counterpart in Texas, Kansas and neighboring states, proposed spreading the full cost of building the transmission lines among that region's consumers.

The regulatory commission approved that plan last month.

Spreading the costs made sense, wind developers said. Whether in the Southwest or the Great Plains, new transmission lines might stretch for miles to reach the grid in the thinly populated states. That calls for expensive construction.

"If you make the developers pay for transmission, that cost is enough to make wind energy uneconomical," Gotham said. "If you make the local utility in Minnesota pay, they get no benefit. Why pay for a transmission line so some wind farm can sell power to customers east of you?"

What's fair?

One solution: spread the cost of transmission lines over the 13 states, even though a question of fairness follows, Gotham said. It is not clear where the power will be consumed, though with Indiana generally in balance in terms of energy supply and demand, much of the Great Plains electricity will most likely end up being used elsewhere.

When MISO presents its allocation plan to federal regulators next week, the state regulators expect to be fully versed on the proposal.

"The major issue now is to try to put together a plan and get it right so everyone involved in the system comes out in fair and equitable fashion," said Stippler, Indiana's utility consumer counselor. "We don't find ourselves in an untenable position."

In Wisconsin, the Public Service Commission regulating that state's utilities has gone on record favoring the former proposal by MISO -- the one allocating 20 percent of the transmission line costs to the power generators.

Stippler, the Wisconsin regulators and their counterparts can't overrule the regulatory commission. But each could file a lawsuit against the commission to oppose its decision. That happened recently when Illinois regulators clashed with the commission on a separate wind energy issue.

Experts say the federal agency is trying to make sure its decisions are balanced.

"We're just at a weird time. We don't have an official federal policy on renewable energy," said Brian Rybarik, executive assistant to Wisconsin Public Service Commissioner Lauren Azar, head of the cost allocation regional planning committee for the Organization of MISO States.

Now, the regulatory commission, groups such as MISO, state utility regulators, utilities and their big customers are trying to grapple with a solution. Hanging over them: the notion that coal and the environment are in conflict.

"As long as coal was cheap, there was not a lot of value to diversification," said Gotham at Purdue's forecast unit. "But there's a lot of uncertainty now over what the environmental rules are going to be over the next 10 to 100 years. In the Midwest, where we burn a lot of coal, we're kind of exposed when it comes to those rules."

Keeping the nation plugged in

The Midwest Independent Transmission System Operator is an independent nonprofit that supports the reliable delivery of electricity in 13 states, including Indiana, and the Canadian province of Manitoba. It was approved as the nation's first regional transmission organization in 2001. It is headquartered in Carmel, with operations in that city and in St. Paul, Minn.


Source: http://www.indystar.com/art...

JUL 9 2010
http://www.windaction.org/posts/27122-hoosiers-may-bear-16b-cost-of-wind-turbines
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