Black Hills describes how it will evaluate bids in wind RFP

Black Hills/Colorado Electric Utility Co. LP on June 4 filed with the Colorado Public Utilities Commission more data supporting its plans for a request for proposals (RFP) for 30-MW of wind capacity.

Lisa Seaman, Manager of Resource Planning for Black Hills Utility Holding Co. Inc., which is a subsidiary of Black Hills Corp. (NYSE: BKH), wrote about what criteria that Black Hills will use in evaluating whether bids provide a net economic benefit. The method includes utilizing models developed for the 2013 Electric Resource Plan (ERP) to estimate the avoided costs of each wind resource bid. The RFP has a June 14 bid deadline.

The methodology used will include determination of avoided costs associated with the use of a wind resource rather than alternative resource- generated energy. Avoided costs are costs such as fuel expenses, variable operations and maintenance expenses, and purchased power expense not incurred when load is served by a renewable resource, Seaman noted. To estimate the avoided costs of the wind resource the company will compare two production cost models.

  • The first model will use existing resources to serve the load. This is the Baseline 1 Plan from the company’s ERP. This plan includes all existing conventional resources, the 2012 solar capacity that was reserved in 2012 but would be installed in 2013, the proposed 2013 and 2014 solar programs, and the Busch Ranch Wind Project.
  • The second model includes all of the resources included in the Baseline 1 Plan and a qualified wind resource bid (price and production profile) as a resource in the supply portfolio.

Black Hills’ existing renewable resources include modest amounts of on-site solar in the form of photovoltaics (PV) that have been installed by customers through the company’s solar programs, a customer-sited 1.8-MW wind turbine, and the Busch Ranch Wind Project. Between 2006 and 2012 approximately 9.6 MW of PV projects were installed by small and large customers in the company’s service territory. The 29.04-MW Busch Ranch Wind Project, located in eastern Huerfano County, Colo., became operational in October 2012. The company owns half of the turbines and purchases the energy produced by the remaining turbines.

Seaman noted that the coal-fired, 42-MW WN Clark Station will be retired at the end of 2013 as required by the company’s commission-approved emissions reduction plan under the Clean Air-Cleans Jobs Act (CACJA). Pending the outcome of the application for a retirement Certificate of Public Convenience and Necessity (CPCN), the gas-fired, 29-MW total Pueblo 5 and 6 units will be retired at the end of 2013.

Black Hills wants a quick turnaround on this RFP, since it is designed to take advantage of the federal Production Tax Credit extension by Congress, which says a qualifying project has to be in construction by the end of this year.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.