Point & Counterpoint
are comments recently published in The Montana Standard newspaper
in Butte related to NorthWestern Energy's awarding of a 150-megawatt wind power project to Montana Wind Harness.
wind power contract
By Scott Mendenhall
Scott Mendenhall of
Whitehall is manager of Jefferson Local Development
By Scott Mendenhall
Having tracked Montana Power Company's (now NorthWestern
Energy) procurement methodology for obtaining the wind
power contract as an interested third party, I find it
interesting that they claim to have made a "prudent''
business decision. I'm wondering whose/what standard of
prudence they used?
You tell me.
Once the original group of 22 proposals was narrowed to a
field of four, MPC's wind guru, Dave Ryan, recommended
late last August to upper MPC management that the 150
megawatt contract be split between two of the firms:
Northern Alternative Energy (NAE), out of Minneapolis, and
Distributed Generation. NAE was committed to building a
wind farm near Whitehall in addition to a wind turbine
As he testified recently before the Public Service
Commission, Mr. Ryan's recommendations weren't accepted by
upper management and, in fact, he was pulled completely
off the project at that same time! Upper management "prudently'' decided to award all of the 150 megawatt hour
contract to a new (incorporated in July, 2001) Montana
firm, Montana Wind Harness (MWH) with no track record of
power generation and whose principal has had a very
As has been widely reported, MPC was under lots of
political pressure to award to Wind Harness since they
were a "Montana'' company. Isn't it interesting that,
when con fronted with the issue of Wind Harness' lack of
credibility and capacity to perform on the contract, MPC
said that Wind Harness is now a 99 percent out-of-state
owned company! Isn't it also interesting that NAE's
low-bid of $28 per megawatt hour was about 11.5 percent
lower than the Wind Harness bid, which translates to about
$29 million dollars more for Montana ratepayers? But MPC
still contends that it was the "prudent'' thing to
So now the PSC will rule on the prudence of this process.
Some have called for a rebid, which NorthWestern has said
will result in higher bids. Some have called for the wind
power contract to be completely thrown out which would be
a death-knell on all wind development in the state. I
suggest that the PSC arbitrate the final four bids, as
submitted, based on industry standards. The only ones
against this will be those that were part of the original
contract properly reached
By Doug Barba
Doug Barba is
executive vice president of Ameresco of Framingham, Mass.
By Doug Barba
Recently, the Montana Standard published an editorial
piece by Scott Mendenhall of Jefferson County suggesting
that the wind portion of the default supply portfolio
secured by Montana Power Co. (NorthWestern Energy) be
subject to arbitration. His article contained many
inaccuracies that need correction. In addition, there is
nothing to arbitrate because Montana Wind Harness LLC has
a signed contract with MPC.
There were 21 proposals for the wind request for proposal.
That confirms MPC received a good cross section of
proposals. The bid and negotiation process lasted five
months. Narrowing the process to four par ties and then to
one is a prudent way to carry on a bid process. You might
not like the results, but the process was a logical way to
get to one party to negotiate a con tract. MPC made it
very clear to all bidders in their bid package that MPC
had the right " in its sole discretion to reject any
or all proposals.'' Unfortunately, Mr. Mendenhall does not
like the outcome of the request for proposal. People have
told me that this is a voice of some "sore loser''
trying to create an issue when there is none. The fact
that elected officials and others in the state support
development of renewable energy should only be viewed
positively, not negatively. Recent hearings around the
state confirm this since dozens of citizens have asked
that the PSC approve the wind portion of the portfolio.
The statement that Northern Alternative Energy had a
"low bid of $28 per megawatt hour'' is inaccurate.
There was no such "bid.'' Early in the bidding
process when asked to "sharpen your pencil," NAE
fell short of MWH's price. Once NAE heard that a contract
had been finalized, it submitted a "low-ball
letter,'' not a bid. Upon questioning by MPC management of
the letter, NAE would not commit itself to price without
escalation. MWH's price of $31.65 for 20 years without
escalation is the lowest price in the portfolio for mid
and long-term contracts. Other bidders, including NAE, had
escalation in their pricing.
MPC did review Ameresco's management capabilities and
development skills and they were more than satisfied.
Ameresco's senior management team has a proven track
record of developing, financing, constructing and
operating generation projects. Mr. Mendenhall's accusation
of "no track record of power generation'' is an
inaccurate statement. We have developed over 1,000
megawatts of generation within the last decade in the
United States and Europe.
Contrary to Mr. Mendenhall's statement, MWH is a Montana
corporation with offices in Helena and has complied with
all state filings. Ameresco Inc. ("Ameresco'' )
through a wholly owned subsidiary, owns 99 percent of MWH.
Ameresco's ownership of MWH existed prior to signing the
power sales agreement with MPC. Accordingly, MWH was a
Montana corporation, not an "out of state company,''
as agreements were signed with MPC.
MWH has secured leases on a number of sites that will
allow it to build the $150 mil lion project. Anemometers
on our sites have confirmed that there is commercially
viable wind in Montana for our project. The data shows
that the wind is the strongest during the winter months
and during the peak hours of the day when MPC needs the
power the most. Equipment procurement is in final
documentation and financing is being arranged for the
We should not allow this "sour gapes'' attitude to
inhibit a project which will invest $150 million in
Montana, create 200 construction and 15 permanent jobs and
add much needed revenue to the tax base. Let's work
together to move Montana for ward with a positive attitude
and a well-founded renewable energy source.