Colorado Springs Utilities has the wind at its back for its plan to add 50 megawatts of wind power by the end of the year.
The Utilities board Wednesday gave John Romero, Utilities’ general manager, the go-ahead to pursue a contract for the wind energy. The contract would have to be approved by the board, likely in February, before the deal would be finalized.
Utilities has been working on what would be its first large wind power deal for months, winnowing a list of 13 proposals to two finalists. Utilities didn’t release details on the location of either finalist. Romero said both projects are offering power for roughly $40 a megawatt-hour for a 20-year contract.
That price would raise the average customers’ utility bill by about 2.2 percent, but Utilities is eyeing plans to offer renewable power packages to customers willing to pay a premium to get much or all of their electricity from renewable sources, which would lower the burden on other customers. Those plans would target both residential customers and large electricity users such as the local military bases, Romero said.
Depending on fuel prices for coal and natural gas, transmission costs and the costs of integrating renewable power into Utilities’ grid, the final cost impact could fall to 1 percent, he said, or lower if the green power programs are successful.
Board member Merv Bennett said he was worried about how that increase would affect the city’s large employers, such as Atmel, many of which are also large power consumers.
“They are really hesitant to accept any kind of rate increase,” Romero answered.
One advantage of adding renewable power to the portfolio, Romero said, is that if natural gas and coal prices rise more than expected in the coming decades, having a mix of energy resources would limit the impact on customers, Romero said. Most of Utilities’ current 1,100 megawatts of generation capacity now comes from coal-fired power plants, for which fuel prices have fallen in the past year.
“Basically, it’s a hedge against fossil fuels,” Romero said.
Utilities board member Jan Martin said it made sense to look at the long term.
“I really believe it’s prudent for us as we look 20 years out to bring some diversity into our portfolio so we’re not so dependent on coal prices and natural gas prices,” she said.
The state’s renewable portfolio standard requires investor-owned utilities such as Xcel Energy to produce 30 percent of their power from renewable sources by 2020, but municipal utilities such as Colorado Springs Utilities have only a 10 percent requirement, which Utilities has nearly met already. Utilities recently adopted a voluntary goal of generating 20 percent of its power from renewables by 2020.
Scott Harvey, who chaired the Utilities’ Electric Integrated Resource Plan advisory group last year that recommended pursuing wind, said $40 a megawatt-hour is a good deal. The 2008 energy resource plan also recommended Utilities buy wind power and it was $85 a megwatt-hour then, Harvey said.
“I don’t think you’ll get any better pricing than this,” he said.
It’s important to move ahead with getting the wind turbines up and spinning soon, Romero said, because of federal tax credits that expire at the end of 2012.
Former Mayor Lionel Rivera has been a critic of adding wind power, both because of the added costs and because of Utilities’ investment in clean coal technology with local company Neumann Systems Group.
“I think since we’re spending millions of dollars on a new technology that cleans coal, we should not cut back on coal power,” he said. “Having a low-cost source of electricity here is a huge advantage for Colorado Springs. You’d hate to lose that because you want to have wind energy in the portfolio.”