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Shepherds Ridge Wind Farm Mark Ohrenschall Con.Web, June 26, 2003

100-MW-Capacity Wind Project Approaching Construction in Northeastern Oregon

Construction is approaching on what would be the Northwest’s second-biggest wind farm, although the planned northeastern Oregon project lacks a known power purchaser and faces financing issues.

Shepherds Ridge Wind Farm is designed at 100 megawatts capacity, exceeded regionally in size only by the 299.6-MW-capacity Stateline Wind Energy Center. Shepherds Ridge would occupy private wheat farming land near Cecil, in Morrow County, about 14 miles south of the Columbia River.

"I’m still assuming we’re going to be in construction in the summer and be in operation in the first quarter" of 2004, Patricia Pilz, development vice president for developer Lifeline Renewable Energy, told Con.WEB in mid-June.

Shepherds Ridge has a conditional-use permit from Morrow County, and has generated no apparent local opposition. The site boasts a substantial wind resource in a sparsely populated area, proximity to high-voltage transmission lines and no significant environmental issues. The wind farm could generate electricity at a price "absolutely competitive" with any other resource except established hydropower, Pilz said.

However, she acknowledged, power-buying arrangements have not been announced for Shepherds Ridge.

Pilz also expressed concern about Oregon’s property tax structure for wind farms and the scheduled December expiration of the federal wind energy production tax credit. Both affect the project’s construction financing, she said.

Beyond Shepherds Ridge, Lifeline is contemplating additional wind development of several hundred megawatts capacity in the same general vicinity, according to Pilz.

Lifeline, Shepherds Ridge
Lifeline Renewable Energy came into existence in spring 2002 "specifically to develop these projects" in Morrow and neighboring Gilliam counties, Pilz told Con.WEB. "A landowner put out a couple of telephone calls and got people who were working in the wind industry together." Although the company is new, project manager B. Clare Lees, site manager Kirman Broadbent, general contractor Jack Dressel, civil engineer Allan Henderson and electrical engineer James Brodie all have extensive wind industry backgrounds.

Shepherds Ridge--named in honor of local shepherds--is planned for a site of about 7,800 acres on both sides of Oregon Highway 74. Lifeline’s conditional-use permit application described the geography as "rolling, arid hills bisected by canyons." Two strings of about 30 turbines each would be strung on plateaus above the Willow Creek Valley, according to Pilz. The privately owned land is cultivated in dryland wheat, which would continue, as the project would take up about 18 acres in total. Pilz said Lifeline has agreements with two landowning families for the project.

"I can tell you that we have a fine wind resource," she said, declining further details. Lifeline also has several transmission opportunities, with nearby Bonneville Power Administration, PacifiCorp and Columbia Basin Electric Cooperative lines. "It’s transmission central up there," said Pilz.

And, the project reportedly enjoys widespread support in Morrow County. "We’ve been welcomed into that community with open arms and we’re thrilled to be there," said Pilz.

Kristina Gray of the Morrow County Planning Department confirmed an absence of local opposition to Shepherds Ridge. "We were kind of expecting some, and there wasn’t," she told Con.WEB, noting that homes are "few and far between" in the proposed project area. Morrow County’s total population was about 11,000 as of 2000.

The county Planning Commission in April endorsed a conditional-use permit for Shepherds Ridge, as allowed under the Exclusive Farm Use zoning designation. Shepherds Ridge did not need approval from Oregon’s Energy Facility Siting Council; the threshold for EFSC jurisdiction is 105 MW capacity, according to John White of the Oregon Office of Energy.

Project Status
Lifeline has already engaged in considerable pre-construction work for Shepherds Ridge, such as turbine layout, road design and three seasons of environmental review, including bird studies. The plowed land raises no major environmental concerns, Pilz said. Morrow County received no comments on preliminary findings of fact on fish/wildlife habitat, threatened/endangered species or historic/cultural/archaelogical issues, according to the conditional-use request final findings of fact. The county document also noted that Lifeline is involved in an "on-going environmental assessment of the site evaluating environmental, ecological and historical impacts."

With conditional-use approval, Pilz said, "It was technically possible that we could have been in construction in June" and completed the project by December--the current on-line deadline for wind projects to use the 1.8 cents per kilowatt-hour production tax credit. "We were never aiming to finish by Dec. 31," she said. "We had in mind a more realistic number, more likely in the first couple of months of 2004" for completion.

However, the prospective energy output is yet to be publicly claimed. "We haven’t made any announcements," said Pilz, declining elaboration on power purchasing or the wind power market.

Two other circumstances also are influencing Shepherds Ridge development, specifically its financing, according to Pilz.

"The property tax situation, with respect to how wind facilities are taxed in Oregon, is problematic," she said. "It’s a unitary tax. The facility is taxed essentially on the cost to construct, and that’s because the cost of construction is considered to be a proxy for the market value." That means capital-intensive but fuel-free wind farms pay twice as much in property taxes as combined-cycle gas-fired combustion turbines, she said.

"There definitely needs [to be] a resolution to the property tax issue before the facility can be financed," she said, mentioning the possibility of state legislation.

Morrow County assessor Greg Sweek confirmed that Oregon wind farms are now assessed based on initial cost, as with other "centrally assessed properties," such as railroads and electric utilities. A bill pending in the state Legislature, House Bill 3610, would switch the taxation basis to energy production. But he said officials from Morrow and other Oregon counties oppose this change, as no other industry or utility in the state is taxed on production. "We agree that the tax structure in Oregon needs to be looked at for business, but it seems unfair to target one particular industry at this point," he told Con.WEB.

Morrow County commissioners also are concerned about the revenue implications, Sweek said. Based on a potential $100 million construction cost, Shepherds Ridge would generate about $1.5 million in annual property taxes for Morrow County, nearly 10 percent of the county’s current total property tax revenue. "It’s not a small number, and not a small number to [Lifeline]. I understand their concerns," said Sweek, adding that he and other county officials would "love to see the project go."

Meanwhile, the PTC’s uncertain future also affects Shepherds Ridge financing. "Developers can rarely use the tax credit themselves … It’s considered part of the financing package," Pilz said. A PTC extension is under consideration in Congress, but not yet approved. "We just usually say [financing] won’t happen until we know it’s being extended," she said.

Lifeline is eyeing even bigger wind plans for northeastern Oregon, according to Pilz. The company is reviewing about 50,000 acres in total, and on one parcel is "looking at the potential for a facility in excess of 500 megawatts," she said. "That takes a little longer to get to. The 100 megawatts [project] is just an appetizer."

PacifiCorp, Energy Trust, Eurus Sign Agreement for Oregon Wind Project

A northeastern Oregon wind project is heading for a July ground-breaking, after the recent announcement of a signed agreement between PacifiCorp, the Energy Trust of Oregon and developer Eurus Combine Hills.

The 41-MW-capacity Eurus Combine Hills 1 wind farm--scheduled for completion by year’s end in Umatilla County, west of Milton-Freewater--will provide energy to PacifiCorp. An Energy Trust payment of $3.8 million will lower power costs from the project, according to a news release.