winddebate

Wind Power Contract
Point & Counterpoint
Below 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.

Reconsider wind power contract
By Scott Mendenhall

Scott Mendenhall of Whitehall is manager of Jefferson Local Development Corp.

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 manufacturing plant.

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 checkered past.

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 do.

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 "prudent'' process!

Wind 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 project.

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.