PUD to Spend $77 Million on Wind
by Leif Nesheim
The Daily World, November 4, 2008
The Grays Harbor PUD last night authorized an estimated $77 million investment in wind power as it looks for a way to satisfy a citizens initiative requiring utilities to use a certain portion of renewable energy. The decision follows the collapse of its $27 million proposal to purchase power generation assets at the Cosmopolis Pulp Mill. That power would have been produced by burning wood waste.
"That's what I was trying to avoid with Cosi," PUD General Manager Rick Lovely said of the hefty price tag for the wind farm interest.
The utility district's commissioners unanimously approved increasing their share of the proposed Radar Ridge wind project from 5 to 10 percent to 64 percent - the maximum share of the project not yet claimed by other Northwest public utility districts.
"I'd take the whole thing if I could get it," Commissioner Tom Casey said. He said the proposal is the best wind power deal on the market.
Energy Northwest - a joint-operating agency comprised of 24 Washington public utility districts - generates electricity for public utilities and municipalities. It has a proposal to build the Radar Ridge wind farm on public land leased in Pacific County.
To finance the deal, the PUD would have to issue municipal bonds. It also hopes to obtain federal financing through low-interest Conservation Renewable Energy Bonds. If the utility district is able to fund 25 percent of its investment with the bonds, it should come out ahead once the project starts generating electricity, officials said.
PUDs in Grays Harbor, Clallam, Mason and Pacific counties agreed to participate in the project. Energy Northwest planned to seek additional investors this month to get enough support to begin construction by 2010.
To meet the renewable energy requirements approved by voters in Initiative 937, the PUD needs to have 50 to 60 megawatts of installed wind power by 2016 and 60 megawatts by 2020, Lovely said. It already has 20 megawatts from the Nine Canyons wind farm operated by Energy Northwest in Eastern Washington. Radar Ridge will produce a total of 48 to 60 megawatts of power, depending on the size of the turbines installed in each wind tower, Lovely said.
The PUD today notified Energy Northwest that it intends to buy 64 percent of the project. The PUD likely will have to come up with the money in about a year, Lovely said.
There are several advantages to the Radar Ridge project, Lovely said. Because it is in Western Washington, it will be less expensive to transport the power to Grays Harbor. Additionally, the wind profile is different from Eastern Washington wind farms. Radar Ridge is expected to provide peak power during the winter, with some peaking during summer, Lovely said.
Wind in Eastern Washington peaks in spring and fall, which makes it more difficult to integrate into the Bonneville Power Administration's grid. BPA provides electricity to much of the Pacific Northwest.
The district didn't have cost estimates available for the 64 percent share. A 50 percent share showed the utility district making nearly $3.5 million over the 25 years needed to repay the bonds. Without the low-interest federal Conservation Renewable Energy bonds, it would be in the hole $7.3 million with a 50 percent share in the wind farm.
In comparison, it is estimated to cost $71 million to purchase the required renewable energy credits over the life of the bonds.
The utility district announced two weeks ago that it had ended exclusive negotiations with Evergreen Pulp after Evergreen closed its California mill and its parent company announced the sale of all its U.S. assets, including Evergreen. Evergreen and the PUD had proposed partnering to acquire the defunct Cosmopolis Pulp Mill from the Weyerhaeuser Company. Weyerhaeuser and Evergreen say they are still in negotiations.
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