NorthWestern Energy (NYSE: NWE) has closed its purchase of the 40-MW Spion Kop wind project in Montana from Compass Wind LLC.
“We’re pleased to add Spion Kop Wind to our growing portfolio of owned electric generation resources in Montana,” said NorthWestern Energy President and CEO Bob Rowe in a statement. “This project enables us to meet our 2015 renewable portfolio standards obligation while maintaining a balanced resources mix that contributes to long-term rate stability. Our thanks to Compass Wind for bringing forward an environmentally sound project that adds real economic benefit to the local area.”
The Montana Public Service Commission (MPSC) approved placement of the $86.1m project into the company’s regulated rate base in mid-February, and the project was placed into commercial operation earlier this month.
Both the energy and associated renewable energy credits will be used to meet the renewable portfolio standards (RPS) obligations in Montana law. Under Montana’s RPS, 15% of NorthWestern Energy’s total energy portfolio must be produced from renewable generation by 2015.
Under the terms of the filing with the MPSC, which included a 10% authorized return on equity, a 5% estimated cost of debt and a capital structure of 52% debt and 48% equity, this project represents an approximate levelized price of $54 per MWh for a 25-year period and is significantly less than the current Qualifying Facility rate for a project with similar attributes of $69/MWh.
Spion Kop Wind will now be subject to an MPSC prudency review of the project’s construction costs, and the company expects the review to be completed during 2013. NWE expects to recover the Spion Kop Wind project costs in customer rates beginning in December 2012.
The wind project will occupy approximately 4,000 acres in Judith Basin County, Mont., near the towns of Geyser and Raynesford. General Electric will supply 25 wind turbines and will operate and maintain the project for the first 10 years of operation. Project construction began in mid-April of this year.
Compass, a wind project developer in the western U.S., was formed in 2007 to build smaller utility-scale wind projects. Currently, Compass has a number of active projects in the Mountain States region with an established pipeline of approximately 1,000 MW.