Thursday, May 29, 2008

Why can't UPC Wind close a deal with Vermont utilities?

During the process leading up the Public Service Board (PSB) approval on August 8 last year of UPC's proposed 40-MW wind energy facility in Sheffield, Vt., Washington Electric Co-op (WEC) was a vocal supporter that hoped to benefit from the power. The Army Corps of Engineers halted activity on the project, however, until they could properly assess its effect on wetlands, and Ridge Protectors appealed the approval to the Vt. Supreme Court.

As reported in last week's Barton Chronicle, the PSB set several conditions for their approval, one of which was that UPC "seek" stable price contracts with Vermont utilities for all of the electricity production. It turns out that they have so far failed in their quest for such contracts, even with WEC.

UPC is arguing that they have indeed "sought" to secure the contracts (although I don't think any paperwork to prove even that contention has been presented), and that is all that the condition required.

But the failure reveals the Enron-type shell game essential to big wind's "success".

The rejected East Haven project gained the local utility's (Lyndonville Electric Dept. (LED)) support by essentially letting them skim some of the profits. The wind plant would sell its production to the New England grid, who would send the check to LED, who would take out 5% and send the money on to the wind company. The wind company (Mathew Rubin and Dave Rapaport) thus claimed that they were selling the electricity to LED at 5% below market rates.

A similar arrangement was apparently planned between UPC and WEC, but it fails the requirement for a stable price contract for two reasons. First, the market rate is not stable, and second, it would not be a contract for actually providing WEC with electricity. And there, apparently, is the rub. A direct contract for power is problematic, because power from the wind is variable, intermittent, and significantly unpredictable. What would WEC be contracting for?

Feeding the Sheffield plant's production into WEC's grid would seriously destabilize it, so it would have to go into the much larger New England (where it might represent a very small increase in voltage and could simply be ignored). So WEC would have to procure a stable price contract with the New England grid for an unpredictable amount of power (representing that fed into it by the Sheffield plant), or it would have to arrange a price with UPC above which UPC would pay the balance to WEC's charges from the grid for the amount of power fed in by the Sheffield plant.

Taking a cut to look the other way is so much easier!

tags: wind power, wind energy, wind farms, Vermont