Wind Power Boondoggle Effects Averted Thanks To Smart Call By Entergy

About a month ago, we posted a piece here at the Hayride on Entergy’s decision to join the Midwest Independent System Operator (MISO) instead of the Southwest Power Pool (SPP) – which was something of an in-the-weeds story we’re following even though it’s outside our usual wheelhouse.

We decided to cover this stuff for several reasons, most importantly that (1) the decision might be the biggest issue involving the Louisiana Public Service Commission in the midst of an election year, (2) it’s Entergy, so it affects pretty much everybody in the state and (3) there are issues surrounding power production and transmission here that involve the larger question of energy – which as our readers know is a big one for us at this site.

As it turns out, something new has popped up on the radar involving the Entergy/MISO/SPP story worth delving into.

The big-ticket reason why Entergy went with MISO instead of SPP was this “Day 2 Market” MISO operates and SPP says they’re going to have by 2014, when this change supposedly would go live. We discussed that at length in the original post on this subject. But another big reason Entergy gave for going with MISO was the two organizations’ policies on allocating costs for new infrastructure.

As it turns out, SPP’s policy is to share the cost of production and distribution projects among everybody in their nine-state network. MISO does things differently; their philosophy is that if customers aren’t going to see any benefit from a given project, they’re not going to make them pay for it. So, for example, if somebody gets a wild hair which moves them to – oh, I don’t know – build huge wind farms in western Kansas and then string hundreds of miles of transmission lines from those wind farms, meandering around wilderness where chickens live, to places where the power they generate might actually get used, MISO wouldn’t stick consumers in Louisiana for the cost of such a project.

That’s a policy a lot of SPP’s customers wish it would adopt, I’ll bet.

The issue involves upgrades to the region’s grid of electric transmission lines to reliably move large amounts of power, often from state to state. The need for more transmission capacity has become especially critical in places such as Kansas that hope to become major exporters of wind energy to other parts of the country.

The projects have cleared several hurdles, including approval by the Southwest Power Pool, a regional group that oversees the electric grid in all or part of nine states including Kansas and Missouri.

The cost of the proposed high-voltage lines, including one $456 million project planned in Kansas and Oklahoma that’s being shifted to avoid prairie chicken habitat, has already reached $1.4 billion. Additional overruns or transmission projects yet to be approved could add additional billions.

But some backlash is rippling through the plans. Critics such as Jeff Davis, a Missouri utility regulator, said the approach being used has state regulators basically powerless to rein in the costs and no one else is doing the job. And he questions the fairness of having the cost of the projects shared by utility customers in the nine states covered by the regional group. Missouri residents, for example could be paying for transmission lines built to develop a wind energy industry in Kansas.

“It’s a boondoggle,” said Davis, a member of the Missouri Public Service Commission. “They’re going to pay for this and they’re not even going to get basketball tickets” — a joking reference to the sorts of perks people trade when they do business together.

Some similar criticisms are also coming from regulators in Nebraska and Texas although so far they haven’t been able to persuade enough other states to join an effort to change how the costs are allocated. But they have gotten the Southwest Power Pool recently to say it will work toward improving estimates for the projects, which could reduce cost overruns.

The prairie chicken workaround thing is one of those brain-splittingly stupid sagas all too common in America these days. It seems that there’s a species of prairie chicken called a Lesser Prairie Chicken, and the primary habitat for that species is in Western Kansas. The environmentalists have gone ballistic about the transmission lines running through that habitat, so re-routing the lines comes out to a cost breaking down to some $4 million per bird. But get this – there is a hunting season for prairie chickens in Kansas, and a $20 license will give you a pass to bag 40 of them.

It would be built by a partnership that includes Westar Energy, the state’s largest electric utility, and its costs eventually would be paid by utility customers in several states, including Kansas and Missouri.

Westar and the state wildlife agency have filed written testimony favoring the revised route as the one that is best for the lesser prairie chicken. Westar’s partnership changed the route after the wildlife agency and groups such as the Nature Conservancy opposed the original route because it would disrupt the birds’ habitat.

But Chermac Energy, an Oklahoma wind-energy developer that was counting on the line’s original route, is crying foul.

Chermac argues that it makes no sense to value the birds at millions apiece on one hand — the cost of rerouting the line — and a few cents on the other hand — the price of a license to kill dozens of the species.

Chermac also maintains that the shift would be worse environmentally, moving the line to an area that would interfere with the migration of the whooping crane, a species that the U.S. and Kansas have listed as endangered or threatened.

“This case cries out for reasonable consideration of all the issues,” said James Zakoura, an attorney representing Chermac.

The dispute comes as Kansas and other Great Plains states scramble to develop wind energy, whose growth depends on the ability to export electricity to more populous states. But the region’s electric grid is in such bad shape that billions of dollars in new transmission lines and upgrades are needed.

The partnership the article talks about?

SPP.

Meaning that if Entergy was currently part of SPP’s network, we’d be involved in this mess – we’d be on the hook for the preservation of prairie chickens and whooping cranes, and we’d see our contribution to the cause in the electric bill every month. Because everybody in their network pays for all the improvements. They spread the wealth around, so to speak.

If you’re looking at this and thinking that Entergy dodged a major bullet not joining up with SPP, you’re on the same wavelength we are. What. A. Disaster.

MISO actually uses more wind as part of their energy mix than SPP does – five percent of MISO’s portfolio is wind energy, while SPP is four percent. And while there haven’t been as many publicized run-ins with prairie chickens, MISO is playing around with lots of wind energy projects as well.

But the upshot is that we don’t really need wind power in Louisiana. Entergy has a heavy nuclear component to its power mix and we’re sitting on top of a massive cloud of natural gas in this state. Other than maybe some offshore wind farms in the Gulf, which have been talked about but don’t look like particularly good ideas once you consider what happens to a wind turbine when a hurricane comes happening along, it’s hard to imagine wind being useful in comparison to natural gas as a method for increasing the power supply.

And as such, if they want to put up windmills in Kansas, or Iowa, or North Dakota or Oklahoma, where the wind comes sweepin’ down the plains, nobody around here is going to be too fired up about paying for it.

Thanks to the choice Entergy made, we’re not going to get stuck with that bill. And this is one situation where it’s OK to count the chickens before they hatch.



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