UTILTIES STILL BUYING WIND

Two utilities take different paths to the top in wind; MidAmerican Energy is building vast wind farms. Xcel Energy has mostly purchased its wind power.

David Shaffer, March 31, 2012 (Minneapolis Star-Tribune)

"Xcel Energy Inc… has the most wind power on its system of any U.S. electric utility…MidAmerican Energy Co…[is] the top utility in wind generation ownership…two distinct business approaches to harnessing wind power…MidAmerican owns almost all of its wind generation. Xcel…purchases much of its renewable power under long-term contracts from wind farm developers.

"There are pros and cons to each approach, as utilities weigh whether to tie up capital in wind technology or let others take the risks…Together, Xcel and MidAmerican Energy have a 17 percent share of the nation's wind power capacity…Most utilities have gone Xcel's way…[because] the companies didn't have any experience with wind power, especially in the 1990s, and turned to companies specializing in the technology…"

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"…[But] 2011 saw a major shift. For the first time, 23 percent of new wind capacity was utility-owned last year, up from a more typical 15 percent to 18 percent…It's too early to know if that was just a blip. But…some utilities want to own wind farms so they can get a return on their investment, rather than simply passing the cost of purchased power through to customers…MidAmerican Energy Holdings…[will] own 75 percent of their wind generation -- compared with 7 percent for Xcel…

"…[The ownership, risk-management] strategy is to take advantage of the federal production tax credit…and carefully manage wind power with the rest of the company's generation…The risk of future greenhouse gas regulation is another argument for owning, rather than purchasing, wind power…[But] wind power prices have been dropping. When Xcel faces the expiration of its first wind power purchase contracts in 2018, it's possible the utility could get a better deal on its next long-term contracts…[and] wind farms also will eventually need to be upgraded…But for a few years, after projects are paid off, wind farm owners could face only operation and maintenance costs…"