Sayanythingblog.com and AgWeek recently published Connie Krapp’s op-ed entitled “Before Permitting Another Wind Mill North Dakota’s PSC Must Publicize Costs for Taxpayers and Energy Consumers.” The op-ed specifically referred to Otter Tail Power Company’s involvement with EDF Renewable Energy’s Merricourt Wind Farm near Ellendale.
Ms. Krapp’s op-ed was decidedly negative. However, our company’s upcoming proceedings before the Public Service Commission will demonstrate the remarkable energy value Merricourt will yield for our customers. Together with new, state-of-the-art natural gas-fired generation (with natural gas sourced partly from North Dakota’s Williston Basin and Dakota Gasification Company’s plant near Beulah), Merricourt is part of our company’s two-part plan to reliably and economically meet our customers’ energy needs, replace expiring capacity purchase agreements, and prepare for the 2021 retirement of the 1950s-era 140-megawatt Powder River Basin coal-fired Hoot Lake Plant in Fergus Falls, Minnesota. Merricourt’s remarkable energy value is due, in part, to the federal Production Tax Credit (PTC) for wind energy—but it is also due to modern wind turbine technology and the excellent wind resource near Ellendale.
Ms. Krapp is correct that the PTC is scheduled to be phased out altogether by 2019. She also suggests Congress will again extend the PTC. We believe this is unlikely. The phase-down and expiration of the PTC is part of the impetus for our company’s participation in the Merricourt project. Because our customers have a need for low-cost energy, we believe it is prudent to capture the PTC’s value before it expires altogether.
There is certainly room for disagreement about the policy merits of the PTC. The PTC reduces federal corporate income tax revenue collected nationwide. Some may argue that federal corporate income taxes should be higher, but we generally believe that easing both federal corporate and individual income taxes yields additional investment and contributes to economic growth.
While we acknowledge the PTC does not enjoy universal support, over time it has yielded significant net benefits for North Dakota electric consumers in the form of lower energy costs. It has also stimulated investment and property tax base at places such as Merricourt, manufacturing investment and job growth at places such as LM Wind Power in Grand Forks, and service industry investment and job growth at places such as Wanzek Construction in West Fargo.
Ms. Krapp referred to the redaction of trade secret and proprietary project cost information from public versions of our company’s regulatory filings. It is customary to redact such sensitive information. Ultimately, this is for the protection of customers. Vendors and competitors would otherwise have an opportunity to use such proprietary information to their advantage in competing for project procurement opportunities or to leverage their rate positions in the marketplace, respectively, to the detriment of the customers we serve.
We believe North Dakota needs all kinds of energy to meet the needs of a growing economy. That’s why our company’s portfolio includes generation from coal (including a long-term commitment to lignite coal at Coyote Station near Beulah), natural gas, fuel oil (including at our Jamestown combustion turbine), wind (including wind generation at Edgeley, Langdon, Ashtabula, and Luverne), hydro, and solar.
Our company incorporated in 1907 and served its first customer at Wahpeton in 1909. Along with this proud North Dakota history comes our commitment to always do what’s right for customers. Our plan to add wind generation at Merricourt and additional natural gas-fired generation reflects that commitment.