Noting that the contract would be cost effective for consumers, even in an environment of low natural gas prices, the Colorado Public Utility Commission (CPUC) approved a 25-year, 200-MW power purchase agreement (PPA) between Xcel Energy subsidiary Public Service Co. of Colorado and NextEra Energy for the power coming from NextEra's Limon Wind 2 project.
In a filing made with the CPUC in August, Xcel Energy proposed buying “additional low-cost wind generation” from the NextEra Energy Resources LLC Limon Wind Energy Center 2 following a request for proposals process. The CPUC order responding to that filing “asserts that the contract will save ratepayers $100 million on a net-present-value basis over its 25-year term under a base-case natural gas price scenario” while providing the opportunity to “lock in a price for 25 years.”
“We also find that it is more likely than not that the Limon 2 contract will reduce costs to consumers in the long run,” stated the Commission in its order. “The low 25-year fixed cost of the Limon 2 contract coupled with the Company’s conservative modeling assumptions suggest savings to ratepayers over the life of the contract.”
The CPUC approved a similar PPA in 2010 between Public Service and NextEra for a 200-MW facility known as Limon 1, after an RFP process yielded 43 wind bids at prices that were 45 percent lower than the prices received in the solicitation during the previous year. This success, coupled with the city of Boulder’s request for additional renewable energy, lead to the Limon 2 proposal.
It was noted that the pricing outlined in the Limon 2 PPA is dependent upon the project qualifying for the federal Production Tax Credit (PTC), meaning that the Limon 2 project must be constructed and delivering energy to the grid before the scheduled PTC expiration of December 31, 2012. AWEA and the wind industry are urgently advocating to get the PTC, wind power’s primary policy driver, extended.
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.