The Minnesota Public Utilities Commission is due to consider at its June 20 meeting the intertwined matter of a delay in the construction of the 78-MW AWA Goodhue LLC wind farm, and problems with power purchase agreements (PPAs) with Xcel Energy (NYSE: XEL) for this capacity.
Commission staff on June 13 filed a briefing paper in this docket that lays out the various issues that the commission will need to consider.
On Feb. 28, the commission met to consider several matters including the project’s request for approval of a delayed in-service date, the project’s request for approval of the Avian and Bat Protection Plan (ABPP), and the comments filed by the members of the public, local residents, organizations, and public officials. On March 20, the commission issued its order reopening the case.
On or before April 3, initial comments were received from New Era Wind Farm LLC (which acquired the project last year), the state Department of Commerce–Energy Regulation and Planning, local citizens group Goodhue Wind Truth, Goodhue County, and several members of the public. New Era stated that the commission’s March 20 order mentioned the importance of the PPA between New Era and Xcel and therefore, since PPA negotiations are still underway between the two parties (including negotiations on the proposed new in-service date), New Era requested that the commission delay the reply comment period and any further action on these matters pending resolution of the New Era proposals to Xcel.
Regarding a Certificate of Need extension request, New Era noted that this process has been lengthier and more expensive than other wind projects and it is needed due to delays caused by two separate force majeure events. New Era stated that it agrees with the Department staff that the Certificate of Need extension is unrelated to the ABPP and should be granted based on the demonstrated need for additional wind energy in the state.
In response to a question regarding Community-Based Energy Development (C-BED) status, New Era indicated that following the change in upstream ownership of the project in October 2012, New Era formed an Advisory Board comprised of eight families in the project footprint. If the project is allowed to proceed, the board members will become significant co-owners of the project and will continue to direct and manage the project. New Era indicated it remains committed to seeking a final C-BED determination once its financing is structured and prior to the start of construction, just as the C-BED regulations allow.
New Era lately has been looking to give up the two Xcel contracts
In response to the March 20 order, New Era relayed that it has no confidence that due process for this project will ever end, nor that an ABPP will ever be approved. Therefore, New Era initiated discussions with Xcel Energy to allow for assignment of its power contracts to a third-party wind project developer and site. Those discussions began in December 2012 and New Era proposed several options to Xcel, backed by three different project owners. Each developer has one or more projects that could receive assignment of the Goodhue power contracts and be operational in 2013 or 2014 and each is situated in a community far more receptive to wind energy than Goodhue County. New Era believes that each of the proposals would cure all of the defaults in the PPAs and would result in a power purchase rate substantially below the rate in the current contracts.
New Era noted that for reasons unknown to it, Xcel Energy rejected all of the proposals, and at the same time, issued a request for proposal (RFP) for more wind energy. New Era indicated that in a letter from Xcel Energy dated April 12, Xcel allowed New Era 30 days to cure the power contract defaults. As of the writing of its reply comments (April 17), New Era indicated it would continue to attempt to cure the defaults.
Commission staff issued an information request to Xcel Energy on May 17. Xcel indicated to staff that there had been no change since the April 12 letter was issued to New Era and Xcel had received no response to that letter. Xcel said it believed that waiting through the cure periods was the appropriate action and now determined that the best course of action is to seek New Era’s voluntary agreement to terminate the PPAs. Xcel said that if New Era does not respond to this request, Xcel will seek a declaratory judgment in Minnesota District Court. The purpose of the court action would be to resolve the controversy over whether the magnitude and quality of New Era’s defaults are sufficient to justify termination for default. Xcel told the staff that it believes that this will insulate the company and its customers from adverse legal consequences if the court ultimately determines the termination for default is not legally justified.