More savings for ratepayers in Southeast as Louisiana utility ups wind purchases

American Electric Power subsidiary Southwestern Electric Power Co. (SWEPCO), based in Louisiana, said in a press release that it has signed long-term power purchase agreements for a total of 358.65 megawatts (MW) of renewable energy from wind projects in Texas, Oklahoma and Kansas, and that it expects the agreements to reduce the cost of electricity to its customers.

SWEPCO said it estimates the decrease will average about 0.1 cents per kilowatt-hour over the next 10 years starting in 2013.  The announcement is the third in recent months in which a utility in the Southeast has announced plans to purchase wind from the Plains states and said that the economics of the purchase are favorable.  SWEPCO also accounted for one of the other purchases, while the third was by Alabama Power Co., a subsidiary of Southern Co.

The federal Tennessee Valley Authority (TVA) has been active on the wind front as well. As of December, TVA had entered into nine contracts with eight wind farms in Iowa, Illinois, South Dakota and Kansas for the purchase of 1,565 MW of wind power (enough to power the equivalent of more than 400,000 average American homes).

The new purchases by SWEPCO underline wind's status as the low-cost renewable energy source.  With its key federal incentive, the Production Tax Credit (PTC), wind is close to cost-competitive with natural gas despite current unsustainably low gas prices, and there is evidence that electricity prices rise much more slowly in states with large amounts of wind power than in those with none (see "Is wind power holding electricity costs down?," January 3).
Together with a 49.2-MW agreement signed by the Oklahoma Municipal Power Authority (OMPA), SWEPCO and its affiliates have exceeded a 400-MW renewable energy commitment the utilities made in a recent settlement of legal issues involving the John W. Turk, Jr., Power Plant.

The agreements will more than quadruple SWEPCO's wind energy portfolio. The new series of 20-year agreements includes:

–Three contracts totaling 201.25 MW from Canadian Hills Wind, LLC, owned by Apex Wind Energy Holdings, LLC, and located in Canadian County, west of Oklahoma City, Okla.
–79.6 MW from High Majestic Wind II, LLC, owned by NextEra Energy Resources, LLC, and located in Carson and Potter Counties in the Texas Panhandle.
–77.8 MW from Flat Ridge 2 Wind Energy, LLC, owned by BP Wind Energy and Sempra U.S. Gas and Power and located in Barber, Harper, Kingman and Sumner Counties, southwest of Wichita, Kan.

Separately, OMPA, a co-owner of the Turk Plant, has signed a 25-year agreement for 49.2 MW from the Canadian Hills Wind project.

"With these long-term power purchase agreements, we have added a substantial amount of wind energy to serve SWEPCO customers in Arkansas, Louisiana and Texas, and we have combined efforts with a Turk Plant partner to exceed the 400-megawatt commitment in our Turk Plant settlement," said Nicholas K. Akins, AEP president and chief executive officer.

SWEPCO announced on Dec. 22, 2011, that it had settled all legal actions brought against it by the Sierra Club, the National Audubon Society and Audubon Arkansas related to the Turk Plant under construction in southwest Arkansas. The settlement included a provision that SWEPCO and its affiliates would construct or secure 400 MW of new renewable energy resources by the end of 2014. The SWEPCO and OMPA agreements total 407.85 MW.

"Through the Louisiana Public Service Commission's recent Renewable Energy Pilot Program and our ongoing efforts to expand our renewable energy portfolio, we were in a good position to pursue additional renewable resources at a good price for customers. I'm pleased that we could secure these agreements in a fairly short time frame to put more wind power to work for our customers," said Venita McCellon-Allen, SWEPCO president and chief operating officer.

The wind resources will be interconnected to SWEPCO through the transmission facilities of the Southwest Power Pool, the regional transmission organization that includes SWEPCO and other utilities across parts of nine states. "Some of the best renewable energy available to serve our customers comes from wind farms in Texas, Oklahoma and Kansas," McCellon-Allen said.

Flat Ridge 2, High Majestic Wind II and Canadian Hills Wind are expected to come on line by the end of 2012.  When the new projects are on line, SWEPCO's total wind capacity will be 469.15 MW.

SWEPCO serves 520,400 retail customers in three states, including 113,700 in western Arkansas, 225,700 in northwest and central Louisiana and 181,000 in north and eastern Texas.

(The Southeast's growing prominence in the wind power supply chain will be a major focus of the WINDPOWER 2012 Conference & Exhibition, scheduled for June 3-6 in Atlanta, Ga.  Atlanta is a manufacturing hub, and holds tremendous potential to play a major role in the further expansion of wind development as a source of competitive energy for America. Atlanta’s global access, innovation, and talent create an unparalleled logistics network that could prove to be an important link in the wind industry supply chain, helping to supply demand and boost the efficiency, predictability, and consistency of wind project development in the U.S.)

Related articles:

With new technology, Sunshine State is windy too, January 17, 2012
Southeast sees consumer savings, jobs from wind, but tax credit extension needed, January 10, 2012
Is wind power holding electricity costs down?, January 3, 2012
Renewable energy adoption and the increasing cost of electricity in the U.S., December 20, 2011
Fact check: Politico op-ed gets it wrong on wind costs, December 19, 2011
Fact check: Kavulla off target on wind's cost, December 12, 2011
Wind power increasingly competitive and productive, new reports find, November 10, 2011
National lab report: Wind turbine prices drop as designs improve, U.S. supply chain develops, November 1, 2011
Xcel Energy: More wind, less cost, October 31, 2011

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