Library filed under Impact on Economy from Minnesota
Xcel Energy has asked a court to allow the utility to pull the plug on a 20-year deal to buy power that's never been generated from a proposed Goodhue County wind farm that may never be built after four years of nonstop controversy.
But Great River Energy, the state's No. 2 electricity provider to 650,000 customers in 28 electric cooperatives, said renewable energy cost it $20 million extra last year because it often lost money selling wind power to the grid. The loss works out to $24 per household, the company said.
Minnkota President and CEO Dave Loer said with a soft economy, there are few buyers. The company is buying energy at an average price of $.045 from wind developers and selling to the surplus energy market at about $.02, Loer said. "That translates for us into about a $20 million loss," Loer said.
Minnkota Power Cooperative, which supplies electricity for a wide swath of eastern North Dakota and northwest Minnesota, has been delivering a jolt to its member rural electric cooperatives. A combination of factors involving the economics of wind power in Minnesota have led the power provider to tack on a surcharge adding almost 10 percent at the wholesale level.
Outside of manufacturing, wind jobs are not so much in demand. One example: on the new Prairie Wind development near Minot, N.D., there are 77 turbines but the project requires just eight operations and maintenance employees, or about one for every 14 megawatts. As a job-creator, wind proponents themselves admit that coal plants put many more people to work.
Minnesota Power is seeking an almost 20 percent increase in rates for its residential customers to cover investments made in cleaner, greener energy. For the average residential customer, that amounts to $13 per month. "We know this is unwelcome news at an unwelcome time," said Pat Mullen, the company's vice president of marketing and public affairs. "These are improvements that need to be made. ..."The average citizen in Duluth is not going to be able to afford an increase like that," said Sue Siverson of Duluth.
Only 15 months ago, Duluth-based Minnesota Power asked for its first rate increase in 14 years. Now, it wants another one. In seeking a new rate increase before the end of 2009, the utility is citing, in part, the cost of increasing renewable-energy generation; under 2007 state legislation, utilities must generate a quarter of their energy from renewable resources by 2025.
Austin Democrats are hammering out a compromise with party leadership that would boost wind tax revenue for townships at the expense of school districts. Reps. Robin Brown and Jeanne Poppe have been fighting to restore a wind tax benefit for schools set to expire on July 1. Last year, Minnesota schools received $146,000 from the wind energy production tax.
Minnesota's wind-energy industry is about to get a turbo-charged boost from the $789 billion economic stimulus package ...An extension of the production tax credit to three years plus the addition of an investment tax credit will inject new life and urgency into projects that were starved for financing, tax experts said. And the Energy Office in the Minnesota Department of Commerce estimated the bill could inject about $220 million into Minnesota.
Denouncing a proposed $45 million Minnesota Power rate hike as "exorbitant," Minnesota Attorney General Lori Swanson on Friday encouraged the Duluth utility's customers to attend public hearings and make their opposition known. "Families and small business are struggling to make ends meet in the face of rising prices for energy, health care, gas, food and a troubled economy," Swanson said in a news release, which characterized the utility's proposal as unnecessary.
Public Service Commission President Ken Norman said he sympathizes with environmental concerns. "I've got grandchildren," he said. "I think long term, anything we do to clean up the environment" is good. But he's also concerned about the implications of the measure. Wind power is one of the primary renewable power sources now available, though there are other renewables such as solar power and the burning of biomass. But the reliability of wind power - or the lack thereof - is an issue. Wind power only works when the wind is blowing, Norman said. There are no giant batteries to hold the power. It has to be used as it's produced. When the temperatures reach 30 below zero as they do in this area, the power source has to be there, Norman said. "Up here, it's a matter of survival." Complicating matters is the proposed Global Warming Mitigation Act in Minnesota. A provision of that bill would block the Big Stone II coal-burning plant project, State Rep. Morrie Lanning, R-Moorhead, said. Lanning and State Sen. Keith Langseth, DFL-Glyndon, supported the "25 by '25" initiative, but also say that plants such as Big Stone II are needed to supply the on-demand power availability that wind can't. The Big Stone II project includes construction of transmission lines that could also be used to transmit wind power, Lanning said. The kind of renewable sources of energy production proposed by the "25 by '25" initiative are more expensive to operate than coal-burning plants, MPSC officials say. And a great deal of infrastructure will be necessary to supply the requirements of the "25 by '25" legislation.