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Wind Power to the South: AEP Contracts to Lower Electricity Costs

In a series of deals the investor-owned utility says is good for consumers' wallets, American Electric Power subsidiary Southwestern Electric Power Co. (SWEPCO) recently signed long-term power purchase agreements for a total of 358.65 MW of capacity from wind projects in Texas, Oklahoma and Kansas.

Together with a 49.2-MW agreement signed by the Oklahoma Municipal Power Authority (OMPA), SWEPCO and its affiliates have exceeded the 400-MW renewable energy commitment made under a recent settlement of legal issues involving the coal-fired John W. Turk Jr. Power Plant. What’s notable about the deal from a wind power industry perspective is that more of the renewable energy is being shipped to the South, a region that many have inaccurately assumed cannot benefit from wind power, at rates that are highly favorable. “With these long-term power purchase agreements, we have added a substantial amount of wind energy to serve SWEPCO customers in Arkansas, Louisiana and Texas, and we have combined efforts with a Turk Plant partner to exceed the 400-megawatt commitment in our Turk Plant settlement,” said Nicholas Akins, AEP president and chief executive officer.

The combined impact of the new power purchase agreements is expected to slightly lower SWEPCO’s projected overall cost to customers. SWEPCO estimates the decrease will average about 0.1 cents per kilowatt-hour over the next 10 years starting in 2013. Recently Alabama Power signed a contract for wind power, also pointing out that it would save consumers money.

The agreements will more than quadruple SWEPCO’s wind energy portfolio. The new series of 20-year agreements includes:

  • Three contracts totaling 201.25 MW from Canadian Hills Wind, LLC, owned by Apex Wind Energy Holdings, LLC and located in Canadian County, west of Oklahoma City, Okla.
  • 79.6 MW from High Majestic Wind 2 LLC, owned by NextEra Energy Resources, LLC and located in Carson and Potter Counties in the Texas Panhandle.
  • 77.8 MW from Flat Ridge 2 Wind Energy, LLC, owned by BP Wind Energy and Sempra U.S. Gas and Power and located in Barber, Harper, Kingman and Sumner Counties, southwest of Wichita, Kan.

Separately, OMPA, a co-owner of the Turk Plant, has signed a 25-year agreement for 49.2 MW from the Canadian Hills Wind project. Flat Ridge 2, High Majestic Wind 2 and Canadian Hills Wind are expected to come online by the end of 2012.

SWEPCO announced on Dec. 22, 2011, that the company had settled all legal actions brought against it by the Sierra Club, the National Audubon Society and Audubon Arkansas related to the Turk Plant under construction in southwest Arkansas. The settlement includes a provision that SWEPCO and its affiliates will construct or secure 400 MW of new renewable energy resources by the end of 2014. The SWEPCO and OMPA agreements total 407.85 MW.

“Through the Louisiana Public Service Commission’s recent Renewable Energy Pilot Program and our ongoing efforts to expand our renewable energy portfolio, we were in a good position to pursue additional renewable resources at a good price for customers,” said Venita McCellon-Allen, SWEPCO president and chief operating officer.

The wind resources will be interconnected to SWEPCO through the transmission facilities of the Southwest Power Pool, the regional transmission organization that includes SWEPCO and other utilities across parts of nine states.

Carl Levesque is the communications editor at AWEA. This article first appeared in the AWEA Windletter and was reprinted with permission from the American Wind Energy Association.

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