Madison Gas & Electric’s reluctance to pay nearly three times the going rate for wind farm electricity could kill an estimated $20 million project planned for Springfield.
Sun Prairie-based Wave Wind LLC wants to build a six-turbine wind farm. But the cost of the project means MG&E would have to pay 8 cents per kilowatt-hour for electricity from the farm, said Dionne Lummus, Wave Wind’s business development coordinator.
MG&E can buy wind power at a market rate of about 2.9 cents per kilowatt-hour, said MG&E spokesman Steve Kraus. Furthermore, he said, renewable electricity represents about 12 percent of MG&E’s generation, putting the utility well ahead of the state’s 10 percent by 2015 goal.
If there is no need and the price is higher than market rates, Kraus said, ratepayers should not have to pay more.
“We have to be responsible to the customer,” he said.
Without an agreement with MG&E, Lummus said, Wave Wind, which does business in 11 other states, likely will pursue a project in New Mexico.
“And if we can’t make (the Springfield project) work,” she said, “you’re going to see small wind farms having trouble getting off the ground in the future.”
Wave Wind could sell the wind farm’s electricity to other utilities, but the project is in MG&E territory, and MG&E could charge fees if another utility steps in. For that reason, Lummus said, Wave Wind likely will not try to sell to other utilities.
Wisconsin utilities searching for renewable electricity sources are more likely to invest in large-scale wind farms or import from out of state, Lummus said. But, she said, that hurts Wisconsin because the state loses jobs and the money from land sales.
Roughly 25 percent of MG&E’s renewable electricity comes from Wisconsin, Kraus said.
“The issue here is the economics of scale,” he said. “When you’re looking at larger projects, the price comes down. And wind resources in northern Iowa and western Minnesota are better than they are in Wisconsin.”
Wave Wind has agreements from Springfield landowners to build the project, Lummus said. The project could create up to 100 construction jobs, which she said would be filled by union workers.
Dave Boetcher, president of the International Brotherhood of Electrical Workers Local 159 Madison office, said IBEW wanted to use the project to train apprentices. He said he understands MG&E’s cost and need concerns but said utilities need to show more foresight.
“It makes sense as a business model,” he said. “But it’s terrible for energy policy in this state. When you look at why companies are OK with their energy supply right now, it’s because the economy’s down. When it recovers, they’re going to be right back to where they were.
“You don’t build a generator the day you need it. You do it before, so you’re ready.”
Kraus said MG&E is willing to discuss the project if the asking price is reasonable.
“Anything more than market rate is going to be a burden on customers,” he said. “Why should customers pay more if we can save them that money by not buying the power?”