Jill K. Cliburn Based on work for the DEED Program American Public Power Association and

1. Opportunities in Public Power Wind:Lessons Learned from SuccessfulDevelopment and Marketing Projects Jill K. Cliburn Based on work for the DEED Program American Public Power Association and Wind Powering America Program, US DOE June, 2006

2. Public power utilities:A unique market for wind development • 2000 systems, mostly city-owned • Serving 20 million customers—about 15% of the U.S. utility market • From < 1 thousand to > 1 million customers • Often working through (>60 nationwide) joint action agencies for energy supplies • Among America’s first utility wind programs and green power pioneers

3. Objectives • 9 case studies completed in 05 • 3 more in 06 • To support public power wind development • To inform potential development and marketing partners • To spot trends and identify concerns • Available in print or CD-Rom; summarized in this brochure

4. Arkansas River Power Authority/Lamar AMP Ohio/Bowling Green Austin Energy Platte River Power Authority/Fort Collins MEAN/Aspen Missouri River/ Worthington/ Moorhead Sacramento Municipal Utility Dist. (SMUD) Seattle City Light Waverly, Iowa Nebraska Public Power Dist. Energy Northwest Forest City Iowa/Community wind examples Joint-action agencies and utilities examined

5. Sample matrix: Project definition

6. New Case: Energy Northwest • Nine Canyon Wind Project • Developed, owned and • operated on behalf of local • public power subscribers • Marked Energy NW’s • return to bond market • 95.9 MW total with planned • expansion • Phase 1: 48.1 MW • Phase 2: 15.6 MW • Phase 3: 32.2 MW • (pending) • Also pending: A separate • 50 MW project

7. New Case: Nebraska PPD and Partners • 60 MW project near Ainsworth • Excellent siting for resource and transmission • NPPD and customers take 32 MW; other • partners include OPPD, JEA, Grand Island • Drivers included IRP, portfolio diversification, customer support. • Strong community support. Homecoming battle cry: Blow ‘em away! • Financed with municipal bonds over 20 years.

8. Trends A review of all 12 cases revealed trends in • Prominent drivers • Project design • Opportunities • Concerns

9. Prominent Drivers • Project economics have to work, but planners are driven • to make the economics work because of • Customer interest • Risk management (environmental and fuel cost risk) • Commitment to leadership in clean energy • Community/economic development • Regulatory response

10. Project Design • Preference for direct ownership, even among systems that currently have PPAs - Affords greatest control of the resource - Protects indigenous wind (community pride) - Satisfaction with PPAs depends on tailored benefits • Some munis and JAAs still use shorter-term or cash financing, but this is changing as projects grow - Popular financing approaches - CREBs and other options coming in strong • Types of projects under consideration is influenced by the cost and availability of wind equipment

11. Opportunities Changing economics influence project trends • Larger turbines and larger wind farms encourage development partnerships • Transmission costs discourage some projects; encourage distributed wind, but on a utility (> 8 MW) scale • Project partners may be geographically dispersed • Utilities and community wind advocates finding more common ground, though challenges remain • Cautious optimism about CREBs and other financing options

12. Financing Opportunities Municipal bonds CREBs and REPI Value of REC sales Taxable partners Green power subscriptions

13. A New Look at “Buy vs. Build” Source: LBNL

14. Concern: Subscriptions or Rate-based Wind? • Need to reach resource portfolio commitments as high as 20% -- Subscriptions can’t do it • Rate-based wind is perceived as a commendable, city-wide decision • Lower administration costs for rate-based wind • Lower risk when utilities don’t face monthly obligations to customers on contract • Some utilities believe in both green power marketing and rate-based wind, because marketing keeps customers educated and engaged. • Other utilities believe they cannot support both. If regulators require green power options, some systems say this discourages larger rate-based resource acquisitions.

15. Concern: Understanding RECs • Few munis have worked with RECs (green tags) so far • Customers believe that utilities that own wind generation are producing green power whether or not they retain the RECs • Need to recognize and encourage utilities that facilitate wind development through plant investments, while clarifying that wind generation disembodied from RECs is not “green power.” • Growing opportunities to sell RECs to IOUs or power marketers “Our customers believe they are getting all the green power from the turbine… We really don’t try to convince them otherwise, even though the RECs are sold throughout the (joint-action agency’s) system.” - Small utility manager

16. Concern: Integration issues • Diversity of viewpoints and experience • Distributed wind offers benefits, with costs • Integration services offer benefits, with costs • Better forecasting in the works • Most project sponsors say they are driven to solve problems in response to customer interest in wind

17. Conclusions: What is the outlook forpublic power wind? JAAs can partner with local utilities and with each other to leverage large projects Community wind partners (schools, etc) may work with local utilities Some JAAs allow local utilities to subscribe. This allows early-adopters to jump-start a region-wide program Great opportunities for utility-scale distributed wind are dampened by current wind industry conditions Public power utilities are just beginning to get savvy about financing opportunities: Again, can the industry respond?

18. Resources from APPA and Wind Powering America • Brochure and case studies • Collaborations with WIG • www.repartners.org Web site • See also, www.windpoweringamerica.com • Webcasts and technical assistance to COUs • Annual Public Power Wind Pioneer Award

19. Who will be this year’s top Wind Pioneer?