Customer Newsletter, October 2009

Examining the Challenges of Wind

With the Our Energy, Our Future campaign, we have been continuously asked "Why hasn't Nebraska put up more wind turbines?"

We do understand why this is a common question, after all wind is free, right? When you take a look at other states there are certainly a lot more wind turbines popping up on the landscape. Its working there, so why not here? Some people feel that public power in Nebraska has "balked" at the idea of adding wind generation.

Traditionally power generation in Nebraska is developed on as-needed basis, then on a least cost basis. Currently there is an excess of generation, not only in Nebraska but in our Midwest region. This is a recent change and may be the effect of conservation programs or or economic downturn. With excess generation and a wholesale market that is not attractive, there currently is not a need for any type of new generation, but certainly not a need for high cost generation.

Nebraska as a public power state has enjoyed lower retail rates from this structure, but it makes it hard for wind to compete. Other states with investor-owned electric utilities can take advantage of federal tax credits that are not available to us. Those are key credits which reduce the cost of generation to a point where installing wind creates a profit for their stockholders. Keep in mind the end use customer under this type of utility structure is still paying more for their own use than under a public power system.

But Nebraska is taking a hard look at putting into place an extensive wind generation system. During the 2009 Nebraska Legislature Session, Interim Study Resolution LR 83 was introduced, which calls for a study of issues related to expanding the development of wind energy in Nebraska. Of importance within this study is preserving Nebraska's public power system which serves our consumers with low-cost, reliable electricity-two factors that cannot be ignored. The study examines the expected outcome of building 7,800 megawatts of wind power with about one-third of the generation available for use in Nebraska, and the rest for export out of state. All of Nebraska's existing generation sources are nearly equal to this number. The intent is to harness wind resources in Nebraska and transport that generation to parts of the country where wind is not as abundant.

In order to get a project such as this up and running, the size of the investment will knock the wind out of you! The cost to build the wind generation facilities themselves is estimated at $16.38 BILLION. (That's right...billion with a letter "B".) This does not include the expense of a transmission system to transport the wind-generated power to our borders, which would tack on an additional $3.9 billion. Added together, this gigantic bill would equal over $20 BILLION, or over $11,000 per Nebraskan.

To develop a large-scale wind generation project in Nebraska, we ask that you consider a few questions. First of all, who will pay for a $20 billion project? Can you afford $11,000 to get the ball rolling? Private investors have already come into the picture on a large scale wind project, right here in Nebraska. Nebraska Public Power District has currently entered into contracts to purchase all the output of from several privately developed wind projects. When the wholesale market is as it is now, the cost of that wind energy exceeds the price that energy can be sold in the market, creating additional cost for you as a retail customer of Southern since our wholesale rate from them is affected. Southern has asked that NPPD reconsider additional such purchases especially in light of NPPD current ability to provide adequate energy supply from existing resources.

Here is another problem. This large scale wind generation project would seek to export energy to other states. In May of this year, governors from 10 Northeast and Mid-Atlantic states delivered a letter to US Senate and House Majority and Minority Leaders. In this letter, the governors expressed a strong interest in developing wind generation in their own backyard, rather than paying the added transmission cost that I mentioned previously. How comfortable are you with spending $20 billion to provide a service, for which we may not have a "buyer"?

If you would like to read for yourself the results of this study, visit Nebraska Power Association, and select the LR 83 link. The information outlines both the benefits and risks of a large scale wind project, and in reading the materials you will see that the challenges are monumental.

Other stories you'll find inside this edition:
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  • We'll Take Credit, Debit Cards!
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  • Take Action
    • Write a note to our elected officials in Washington, let them know you are concerned about the impact of climate change legislation to your electric bill. More>>>
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