SunEdison’s Weaver Wind LLC on May 4 filed with the Maine Public Utilities Commission a request to withdraw its project from a case called “Request for Proposals for Long-Term Contracts For Capacity Resources and Associated Energy.”
Said the brief letter: “Weaver Wind, LLC hereby withdraws its proposal for a long-term contract for the Weaver Wind project that was submitted last year in response to the Maine Public Utilities Commission’s request for proposals in this docket.”
The request was written by Matthew Kearns, Vice President of Development for SunEdison.
In February 2014, the commission had issued a Request for Proposals (the 2014 RFP) for long-term contracts for capacity and associated energy from qualifying new renewable capacity resources. The objective of the 2014 RFP was stated to be “to acquire long-term contracts with new renewable capacity resources to reduce electricity costs for Maine consumers and to serve as a hedge against market price volatility.”
The commission received multiple submissions, including Weaver’s proposal for a long-term contract. As amended, Weaver proposed a 25-year long-term contract for its 72.6-MW Weaver Wind facility to be developed in the towns of Eastbrook and Osborn in Hancock County. The $157 million Weaver Wind project as proposed was made up of twenty-two 3.3-MW turbines. Weaver had anticipated that commercial operation would commence before the end of 2016.
On Jan. 8, the commission issued its Short Order (Part 1 Order) approving final Term Sheets for Weaver Wind and for the Highland Wind Project proposed by NextEra Energy, ordering Central Maine Power (CMP )and/or Emera Maine to enter into long-term contracts. On Feb. 6, the commission issued its Long Order (Part 2 Order). Shortly thereafter, the negotiations on the terms of the final Weaver Wind long-term contract were substantially completed.
Then on Feb. 18, the commission, for the first time, indicated that it may seek to terminate the pending RFP process and reverse its own Part 1 and Part 2 Orders approving long-term contracts for Weaver Wind and Highland Wind. The commission on that same date also issued a Request for Comments as to whether it should reconsider its approval orders. The commission said it was concerned that power and fuel prices had fallen lately and that these contracts might not be economic anymore.
Said NextEra Energy Resources (NEER) in a Feb. 23 filing with the commission: “NextEra’s Highland offering is structured as the sale of energy on a physical basis and a transaction for capacity on a financial basis. The contract is for a twenty-year term beginning with the commercial operation of the facility. The bundled contract price in the first year of the contract is $46.75/MWh. The contract price will escalate at 2% per year in each contract year thereafter. NEER put a significant amount of expertise and effort into the Highland offering and would not alter the arrangement in any way material to the interest of Maine’s ratepayers or in a way that would alter the value of the transaction as a hedge against future market volatility.
“The Commission Staff used [London Economics International]’s forward market forecast to determine that Highland advances a $15-$21 million present value benefit of the contract products, a price suppression value of ~$11 million, and hedging valued range of $4-$10 million. NEER acknowledges that in recent months, natural gas and oil price outlooks have declined and that current NYMEX futures are below the prices reflected in the LEI forecast. However, as participants in this proceeding are aware, natural gas and oil forecasts are in constant flux, such that by the time the Commission issues an order in this proceeding the Henry Hub index will certainly specify different future pricing than is currently indicated. For example, given the overwhelming arctic air that is currently gripping the region, it is highly likely that regional natural gas demand will increase, reserves in storage will be depleted and pipeline infrastructure will become more constrained, likely increasing prices. These types of near-term factors are informative of short-term pricing, but in no way dispositive of the value of twenty-year transactions. These types of short-term forecast changes should not serve as the basis for undermining the state of Maine’s established process for contracting long-term resources ‘to reduce electric prices and price volatility for the State’s electricity consumers.'”
The Portland Press Herald reported that on May 20, the commission agreed to extend negotiations for a long-term contract for the Highland project. The commission voted 2-1 to accept new terms from NEER, which proposes thirty-three 3.45-MW wind turbines in Highland Plantation. If the company accepts the new term sheet then it will continue negotiating with the PUC on final details of a 25-year contract. The newspaper report noted the SunEdison withdrawal from this process, and also said that critics had charged that the commission’s Feb. 18 decision to re-look at these contracts was due to pressure from Gov. Paul LePage, a vocal critic of wind power.