The members of the Michigan Public Service Commission on Dec. 20 approved a Nov. 18 application from DTE Electric for ex parte review and approval of the Pine River Wind Park Build-Transfer contract with Pine River Wind Engineering LLC.
The Build-Transfer contract requires Pine River to design, engineer, construct, install, start-up, and test the Pine River Wind Park. Upon completion of these activities DTE Electric, which is a unit of DTE Energy (NYSE: DTE), will purchase the facility.
The wind farm, to be sited in Pine River Township in Gratiot County and Coe Township in Isabella County, will result in a total of 161.3 MW of DTE Electric-owned renewable energy capacity. The commercial operation date for the wind farm will be on or before Dec. 31, 2018.
The contract was the result of a request for proposals (RFP) which DTE Electric developed in consultation with the commission staff. The bidding criteria used by the company for the RFP included scoring for experience, safety and quality, project feasibility, proposed technology, pricing, contract terms and conditions, scope and specifications, financial strength, and creditworthiness. The closed-bid RFP was issued on May 20, 2016. By the due date of July 1, 2016, DTE Electric received four proposals from three developers.
Utilizing an evaluation scorecard developed in consultation with the PSC staff, DTE Electric entered into negotiations with three developers and completed negotiations with Pine River. The executed contract is the result of the negotiations. The PSC staff concluded that the company’s RFP processes in this instance complied in all material respects with established procedures.
DTE Electric filed copies of the contract with certain sensitive portions redacted to protect confidential information that might negatively affect the competitive market. However, DTE Electric provided the staff the opportunity to review unredacted versions of the documents on Dec. 6, 2016.
In its application, DTE Electric stated that the installed cost for the Pine River Wind Park is $1,615 per kilowatt (kW), which is less than the installed cost of $2,116 per kW assumed in DTE Electric’s amended renewable energy plan (REP) approved on Sept. 23, 2016. DTE Electric contended that approval of the contract will result in lower incremental costs of compliance and lower overall cost of service to DTE Electric’s customers over the life of the REP.
Said the Dec. 20 order: “The Commission has reviewed the contract submitted by DTE Electric pursuant to Act 295 and finds that the contract should be approved. In accordance with MCL 460.1033(1)(a)(i), the company has demonstrated that it has competitively bid the contract. The Commission finds that the projected cost per kW under the contract is less than what was approved in DTE Electric’s amended REP; accordingly, the contract is consistent with DTE Electric’s approved REP. The Commission further finds that ex parte review and approval is appropriate, because the contract will not affect rates or rate schedules resulting in an increase in the cost of service to customers.”