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Wisconsin's Struggling Wind Sector Could Suffer Another Legislative Blow

Some advocates see a new bill that would end expiration of energy tax credits as strike three against Wisconsin's wobbly wind industry

Jun 6, 2011
Blue Sky Green Field Wind Farm

Includes correction added June 6

Wisconsin's clean energy industry is facing another rollback measure that could further stymie wind farm development and undermine the state's ability to meet renewable energy goals if it passes, advocates say.

Assembly Bill 146 would eliminate the four-year expiration date for renewable resource credits, also called renewable energy credits (RECs), that electricity providers can trade to meet state energy requirements within a given year. The measure would mean the RECs would never expire.

Wind industry officials say that a limited "shelf life" for RECs is necessary to encourage energy companies to commit to ongoing renewable energy development in the state. If RECs never expired, electricity providers could make a one-time purchase of credits and hold on to them indefinitely, they warn.

Under Wisconsin's renewable portfolio standard (RPS), 10 percent of electricity must come from renewables by 2015. Each credit represents 1 megawatt-hour of electricity generated from a cleaner energy source.

Supporters of the bill, which the Assembly's energy and utilities committee proposed in late May, say that the four-year cap is an unnecessary cost to ratepayers now that lawmakers have moved to restrict the location of wind turbines, essentially closing the door on new construction.

"When the RPS was originally passed [in 2006], the consensus was that allowing the credits to expire [after four years] would result in additional renewable generation being built in Wisconsin, such as wind farms, which would boost the 'green jobs' economy," Bill Skewes, executive director of the Wisconsin Utilities Association, said in a May 19 letter to legislators urging their sponsorship.

"Since that time, however, the environment for building wind in Wisconsin has changed dramatically. Rules for uniform wind-siting standards have been suspended and others have been proposed that would raise the bar even further, making Wisconsin a less attractive location than other states," Skewes said in a copy provided to SolveClimate News.

"Thus, the primary motivation for the expiration of RECs no longer exists."

Wind Siting Suspension Sets Stage

Skewes was referring to the March 2 suspension by a Republican-led legislative committee of new wind siting rules. The vote took place a day before the rules were set to take effect.

Wisconsin's Public Service Commission had finalized the rules last December after two years of information-gathering and strong bipartisan support for the measure. Under the measure, wind turbines would be built at least 1,250 feet from property lines, a distance meant to satisfy landowners concerned with noise and decreasing property values while still giving wind developers room to build.

The committee has yet to put forth new wind siting rules, though Republican Gov. Scott Walker is proposing a 1,800-foot setback rule that would be the most stringent in the nation and prevent any future wind projects from moving forward, the industry says.

Shortly after the suspension, Chicago-based wind developer Invenergy said "regulatory uncertainty" had led it to cancel plans for the 150-megawatt Ledge Wind Energy Center in Wisconsin's southern Brown County, as reported by SolveClimate News.

Just weeks after Invenergy said it was pulling the plug, Midwest Wind Energy (MWE), also a developer from Chicago, announced it would suspend efforts to develop a 98-megawatt wind project in Wisconsin.

"So long as there are states rolling out the welcome mat it doesn't make sense to devote significant dollars to a state that is creating unreasonable roadblocks for wind development," MWE president Stefan Noe said in a March 29 press release announcing the decision.

29 Other States Have Caps

Wind industry officials say they are concerned that the proposed REC bill would further destabilize Wisconsin's shaky investment climate, especially considering that almost all of the 29 states with compliance programs, plus the District of Columbia, include credit caps.

"The practical impact would mean that you wouldn't have continued investment in Wisconsin-based renewable energy generation," Lee Cullen, a lawyer who represents the Wisconsin Energy Business Association, told SolveClimate News. The 60-member association represents manufacturers, construction companies, service providers and developers in Wisconsin's renewable energy industry.

Cullen said that under the bill, energy providers could purchase RECs at low prices and bank them indefinitely.

"That is not really going to do anything for creating jobs or capital investment in the state," he said.

Jeff Anthony, director of business development for the American Wind Energy Association (AWEA), said: "The real concern that AWEA and a lot of other wind energy advocates has is that it is really an attempt by utilities to weaken the renewable energy standard and to do it in a surreptitious, backdoor maneuver.

"It frees them up to ... flood the market using ancient credits or out-of-state credits that have no real bearing on renewable energy being generated here in Wisconsin," he said.

Todd Stuart, executive director of the nonprofit Wisconsin Industrial Energy Group, said renewable energy projects spurred by the RPS and investments in power infrastructure were driving up electricity rates, and lifting the REC cap could help keep down the cost to ratepayers.

"Rates have been growing recently, in part due to needed investments in new generating and transmission infrastructure.  Significant rate increases have also come from the renewable mandate as well as declining electric sales," he told SolveClimate News in an e-mail.

"Easing compliance costs and giving the utilities more regulatory flexibility in meeting the renewable mandate makes a lot of sense."

Industry: Bill 'Frees Up More Money'

We Energies, a power company that serves more than one million customers in parts of Wisconsin and Michigan, supports the bill and says that eliminating the expiration date won't deter the company from adding more clean energy projects.

"If we can bank these credits and they don't expire, we don't have to purchase more credits in the future and that frees up more money that we could spend on more renewable energy," said company spokesperson Cathy Schulze.

Schulze said that the power company is on track to meet its individual requirement to provide 8.25 percent of electricity from renewables by 2015.

We Energies owns the 145-megawatt Blue Sky Green Field Wind Energy Center, the state's largest wind farm, and is set to complete the 162-megawatt Glacier Hills Wind Park later this year. It also has a 50-megawatt biomass-fueled cogeneration power plant in the works.

The company has spent around $2 billion to build two 615-megawatt coal-fired units at its Oak Creek power plant in Wisconsin. The project was completed earlier this year. In May, We Energies announced that it would end its commitment to spend $60 million over 10 years on small-scale renewable energy projects after five years into the program. (Paragraph includes correction added on 06/06/2011)

AWEA's Anthony was the manager of We Energies' alternative energy programs until 2007.

Third Strike This Year

Anthony said that the REC bill was the third strike against Wisconsin's clean energy industry, following the March wind-siting suspension and an earlier May measure that would allow large hydroelectric facilities to count toward the state's RPS requirements.

The current RPS includes hydropower plants with a capacity of less than 60 megawatts in its definition of renewable resources.

Under AB 114, facilities with more than 60 megawatts capacity — including a plant being built in Manitoba, Canada — would also count as of Dec. 31, 2015.  Manitoba Hydro said in late May that it had signed an agreement with Wisconsin Public Service Corp. of Green Bay to sell 100 megawatts of power from its new dam in the province.

The hydro bill passed in the Senate and is up for a final Assembly vote on June 7.  A committee hearing for the REC bill was postponed last week and has yet to be rescheduled.

"It is really sending a very strong signal that Wisconsin is not open for business for renewable energy development," Anthony said.

Cullen of the energy business group noted: "We're really experiencing a one-two-three punch here in Wisconsin regarding our clean energy policy.

"It is just very unfortunate that the legislature is considering these measures that could have no other effect but to ruin this prospect of clean energy development. And it is doubly unfortunate because the surrounding states are doing just the opposite," he said.

"Wisconsin is starting to stick out like a sore thumb in terms of its attitude toward clean energy."

Correction: An earlier version of this article incorrectly reported that We Energies would complete construction of two 677-megawatt coal-fired units at its Oak Creek power plant in Wisconsin later this year. The units, which are actually 615 megawatts each, were completed early in 2011.

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