The Preferred Plan of Black Hills/Colorado Electric Utility Co. LP d/b/a Black Hills Energy does not include the addition of any new capacity resources during the 2016-2022 Resource Acquisition Period (RAP).
However, based on bid pricing that was received in the company’s 2014 All-Source Solicitation, the Preferred Plan does include the addition of 60 MW of wind resources in 2019. Based on the 2014 All-Source Solicitation bid prices, the forecasted cost of natural gas, and the forecasted electric prices, the model identified a 60 MW wind resource in 2019 as an economical option for energy. With the acquisition of 60 MW of wind resources in 2019, Black Hills will be able to acquire all of the renewable energy credits (RECs) necessary to comply with Colorado renewable energy standards through 2025.
Lisa Seaman, Manager of Resource Planning for Black Hills Utility Holdings Inc., a wholly-owned subsidiary of Black Hills Corp., made those points in June 3 testimony filed at the Colorado Public Utilities Commission. The purpose of her testimony is to provide information related to Black Hills’ Electric Resource Plan (2016 ERP) and the 2018-2021 Renewable Energy Standard (RES) Compliance Plan (RES Plan). For the 2016 ERP, she describes how the load forecast was developed, the assumptions used in the modeling for the 2016 ERP, and the 2016 ERP modeling process and results.
For the RES Plan, she provides an overview of the plan and the analysis of the retail rate impact of:
- the company’s solar resources;
- the Busch Ranch Wind Project;
- the Peak View Wind Project; and
- additional Eligible energy resources selected in modeling conducted in the company’s 2016 ERP.
In addition to the proposed acquisition of 60 MW of wind resources in 2019 included in the Base-with-RES Plan, Black Hills is proposing to add 1,500 kW of on-site solar and 2,500 kW of Community Solar Garden (CSG) annual capacity. The company is also proposing to lock-down the net incremental costs of these proposed solar programs and to reduce the RESA funding surcharge when the RESA balance becomes positive (beginning in approximately 2020).
The planning period is twenty-five years, from 2016 through 2040, for the ERP. Black Hills selected a twenty-five year planning period to provide a sufficiently long period to evaluate conventional and renewable resources relative to the lives of those resources. The RAP is seven years, 2016 through 2022. The Company chose a seven-year RAP because it complies with an existing rule and includes the years when Black Hills has identified a need for additional eligible energy resources to comply with the RES. The company will file its next ERP in October 2019.
Black Hills owns:
- Two LMS-100 units (90 MW each) at the Pueblo Airport Generating Station (PAGS); and
- Three diesel plants (30 MW total) located in Rocky Ford and Pueblo, Colorado.
Black Hills has two long-term firm power purchase agreements (PPAs) and two non-facility specific agreements.
- Black Hills has a long-term PPA with Black Hills Colorado IPP LLC to purchase all of the energy and capacity from two 100 MW combined cycle natural gas-fired units located at PAGS. This PAGS PPA expires in 2031.
- Black Hills has a long-term PPA with AltaGas expiring on Oct. 16, 2037, which provides up to 14.5 MW of wind energy and RECs from AltaGas’ owned interest in Busch Ranch.
Seaman noted that the Peak View Wind Project is currently under construction and is expected to begin commercial operation in November 2016. This 60-MW wind project was approved by the commission in a prior case.
The 29.04-MW Busch Ranch wind project, located in eastern Huerfano County, Colorado, became operational in October 2012. The company owns half of the turbines and purchases the energy produced by the remaining turbines and the RECs pursuant to the BR PPA. Performance parameters used to model Busch Ranch included a 38.04% capacity factor and 23% of the facility’s nameplate capacity for reserve margin. In other words, the capacity credited to Busch Ranch equals 23% of the facility’s capacity, or 6.6 MW.
The Peak View Wind Project, when complete, will consist of 34 1.8-MW wind turbines. Performance parameters used to model the Peak View Wind Project included a 41% capacity factor and 23% of the facility’s nameplate capacity for reserve margin.
Fredric C. Stoffel, employed by Black Hills Utility Holdings as Director–Regulatory Affairs, said in June 3 supporting testimony that under the state RES program, Black Hills is required to generate a minimum of 20% of its retail electricity sales from eligible energy resources through 2019. Black Hills will meet this requirement. However, when this requirement increases to 30% of retail sales in 2020, Black Hills’ then-existing eligible energy resources will not be sufficient to generate enough (RECs) to meet this standard absent acquisition of additional eligible energy resources or RECs, Stoffel added.
Because this need as of 2020, Black Hills is requesting a separate competitive solicitation process, or Phase II, for up to 60 MW of eligible energy resources following the completion of this proceeding. The company is proposing to update certain general planning assumptions including its natural gas and electric price forecast in the Phase II for the purpose of evaluating bids received in a Phase II and locking-down the net incremental costs of a new eligible energy resource.
Black Hills is one of two investor-owned electric utilities subject to the jurisdiction of the Colorado commission. Black Hills’ service territory is in southern Colorado along the Arkansas River Valley and neighboring regions encompassing all or part of Crowley, Custer, El Paso, Fremont, Otero, Pueblo, and Teller counties. The company provides electric service to 95,000 customers in 21 southeastern Colorado communities. The largest communities served are City of Pueblo, portions of Pueblo West, Cañon City, and Rocky Ford. The company achieved its system peak load of 400 MW in June 2012.