On one hand, Kilgore City Hall applauds SWEPCO’s commitment to clean energy for the future. On the other, local officials say, don’t put future rates at risk on a project that’s gusting toward the red.
The Wind Catcher Energy Connection planned for Western Oklahoma includes 800 turbines to add more clean power generation to SWEPCO’s existing resources – coal, natural gas and wind. The project’s been approved in Louisiana and Arkansas, now poised for consideration by the Texas Public Utility Commission this week with a guarantee Texas customers will see a drop in their electricity costs.
Last month, Kilgore City Manager Josh Selleck received council members’ go-ahead to oppose the project, along with other municipalities, when it’s taken up by state officials July 12. It’s a massive investment, he says, billions of dollars in construction that will add unnecessary excess capacity for the utility and, potentially, leave ratepayers on the hook if expectations and federal tax credits don’t pan out in the coming years.
“We’re not necessarily saying that we’re against wind energy,” Selleck said, “what we’re saying is we’re against this project.”
According to SWEPCO, Wind Catcher will provide significant benefits in Texas, namely lower electricity costs for customers – the utility calculates $1.7 billion in savings to ratepayers over the life of the project.
“For Texas customers, that means an estimated average decrease of about six percent on their electric bills over the first 10 years,” SWEPCO reports. “Customers will begin seeing savings in 2021, after the project is completed in late 2020.”
SWEPCO’s guarantees on the project include a cap on construction costs, a minimum production level of energy from the project and its qualification for 100 percent of the Federal Production Tax Credits available for the construction of new wind farms.
“SWEPCO is a long-time advocate of energy resource diversity, which helps moderate the sometimes volatile impacts of the energy marketplace.”
Selleck’s concerned those tax credits may not outlast the project in an ever-changing tax environment. Meanwhile, he says, the investors backing the work are being guaranteed a return on investment without assuming a fair share of the risk. “Billions of dollars is what we’re talking about in capital expenses,” Selleck noted. “SWEPCO doesn’t need additional power right now. There’s no need for this project from a demand standpoint. They have plenty of capacity for future growth.
With the excess capacity, “There’s nothing to keep them from early-retiring other coal and gas assets they have,” leaving ratepayers to cover the undepreciated value of those assets.
According to Brian Bond, SWEPCO vice president of external affairs, the utility already has federal approval for the tax credits and SWEPCO guarantees ratepayers won’t be on the hook for cost overruns from the project. “The average Texas customer will see a six percent reduction in their bills,” Bond repeated. “Six percent is six percent.”
“And it reduces our carbon footprint pretty significantly. It will make a difference. Zero emissions once it’s up and running.”
Officials in Arkansas and Louisiana have already approved the project, he noted, which is located in an area with reliable wind for the turbines.
“Supposedly this is the most prosperous wind resource in the country,” Bond said, the project expected to produce 48 percent of capacity. Granted, “We’ll still run the coal and gas units.”
According to Selleck, SWEPCO representatives have not been able to address his concerns, and he’s keen to weigh in with the PUC.
“Let your investors see more of the potential gain, but also let them take on some more of the risk,” Selleck added. “It isn’t fair that their investors get a guaranteed investment, a guaranteed gain, with the risk being entirely borne by our ratepayers.
He’s concerned about the assumptions and the assurances in the project: “If they’re wrong, that all starts to erode away.”