EPHRATA — The future of power sales, and how that might affect Grant County PUD sales (and ultimately PUD power rates) was a topic of discussion at the regular meeting of the PUD Commission Tuesday.
Risk manager Devon Williams explained the coming challenge, which is a byproduct of the effort to increase wind generation. Windmill construction and generation qualifies for tax credits, and companies that want to use the tax credits either build a windmill, go into partnership with a company building a windmill or just buy the credits. “There’s a huge tax credit market out there.”
Some tax credits only apply to the power actually generated, so operators will keep the windmill running even when demand is low, Williams said.
The effort to increase wind generation has produced results, with windmill construction expanding in the Mississippi Valley and the slopes of the Rocky Mountains. The result has been lower prices – prices that in some cases are lower than the cost of production.
The subsidy is important to keeping those operations afloat. “We pay for it. We pay for it nationwide with a production tax credit,” Williams said.
The extra power has had an impact on the overall energy market, as producers have to find places to sell the electricity. “The huge swaths of wind power kind of flipped the script,” Williams said.
Lower prices affect Grant County PUD power sales, just like they affect all other power producers. Commissioner Larry Schaapman asked how long the tax credits will last. Utility district analyst Paul Dietz said the credits should phase out in about five years.
But, said general manager Kevin Nordt, the cost of building windmills has dropped as the technology has improved. Even after the tax credits expire, wind power could continue to be a competitor for producers like the PUD.
The current system puts public power producers at a disadvantage, said chief financial officer Jeffrey Bishop, so the PUDs are looking at ways to reduce that disadvantage.
Traditionally the PUD was the low-cost producer, Nordt said, and could sell its power at a good profit – but that’s not true any more. There could be opportunities for the PUD as the market changes, he said, but it’s going to be a more challenging environment.
Cheryl Schweizer can be reached via email at email@example.com.