Crook County Considers Rural Renewable Energy Development Zone
The Bulletin - March 13, 2008:

With housing projects in a slump and unemployment on the rise Crook County is looking to renewable energy as an industry that can provide a boost to its economy.

Proposed location of Crook County Wind Farm

The Crook County Court is considering a proposal that would make the entire county an Oregon rural renewable energy development zone. The designation, which would give wind, solar, biomass and other alternative energy-producing companies the chance to apply for up to five years of property tax exemptions, would be just the sixth in the state and the first in Central Oregon.

Prineville-Crook County Economic Development Manager Jason Carr, who brought, the idea to the Crook County Court at its regular meeting last week, said the proposal was prompted in part by interest from two businesses – Ochoco Power LLC (a division of La Pine-based Sylvan Power), which has plans to build a $40 million biomass power plant, and Pacific Wind Power, a California energy company looking into building a large wind farm – are seriously considering building in Crook County.

That interest, he said, is part of a larger, statewide movement to boost the economy and the environment with renewable energy projects. The Oregon Renewable Energy Act passed by the state Legislature last year will require large utility companies like Pacific Power, which operates locally, to provide at least 5 percent of their electricity generation from renewable sources by 2011 and 25 percent by 2025.

“There’s a big push by the state of Oregon for the production of renewable energy sources, especially in wind power, geothermal, biomass, solar – any unconventional sources,” Carr said. “And for Crook County, being a rural county that is more economically distressed compared to counties like Deschutes, this is another tool the county can use to help diversify and strengthen its economy.”

Rural renewable energy development zones began to pop up around the state in September 2005, when state officials approved Union County’s zone proposal and opened the doors for renewable energy businesses there to get a break on up to $100 million – the maximum amount allowed by the state – in property taxes over the three- to five year period. The idea was modeled after the state’s enterprise zones, which give tax breaks to businesses that move into areas considered “economically distressed.” Enterprise zones, however, can only cover an area of 12 square miles.

The rural zones, on the other hand, can cover all spaces in a county with an approved zone except for metropolitan areas with a population of at least 30,000. Those rural areas are typically the places fit for a large wind farm, solar project or other renewable energy facility, said Nathan Buehler, the marketing director for the Oregon Economic and Community Development Department.

“Our belief from the department is that the renewable energy projects … aren’t all contained in a finite geographic area,” he said. “The enterprise zone limited some of these newer renewable energy projects because they span out and have a wider space than the standard zone allows for – and that’s something we wanted to capture. The primary purpose of the (rural) development zone was to accommodate that.”
 
In Union County, Commissioner Steve McClure said having the zone in place played a key role in attracting a $175 million, 61turbine wind energy project in 2005. McClure said the company, Horizon Wind, was debating between Union and Baker counties and ultimately went with Union because of the tax incentive. The project has created more than 10 jobs in its first phase and has given the county’s construction industry a boost — last summer, McClure said the company spent more than $10 million in the county on building-related materials and services.

For the most part, the other counties with a rural renewable energy zone already in place – Harney, Wasco, Sherman and Malheur – haven’t yet had businesses apply or be approved for the tax breaks. But officials from several of the participating counties said they decided to apply to the Economic and Community Development Department for the zone to get a head start on the growing competition for business from other rural counties. Crook County is looking to become the sixth to implement a renewable energy zone that would extend countywide.

“It’s a future kind of thing with us,” said Malheur County Economic Development Director Jim Jensen. “As you see the emphasis shift on rural, renewable energy uses, there’s going to be more and more interest in our counties … when companies come and look at particular areas, they’re looking for incentives. And if that’s the game were dealing with today, do you want to delay a project because you have to go through 90 days of hearings just to designate a rural renewable energy development zone? Some companies will look someplace else.”
 
Crook County officials are currently in talks with Pacific Wind Power, a Santa Barbara, California-based company, for a $210 million wind energy project on 10,000 acres in the southern part of the county. John Stahl, the managing partner on the plan, which is being called the West Butte Wind power Project, said the facility would have between 80 and 90,1.5-megawatt turbines and could create 10 to 15 jobs. He said the company is now completing feasibility and environmental studies, negotiating a long-term lease with Bonneville Power Administration and could be ready to build as soon as next year.

The county’s acceptance of a rural renewable energy development zone, Stahl said, would help set it apart from other, more popular wind energy locations, like the Columbia River Gorge.

“These wind projects lose a lot of money for the first eight years or so – they don’t start even breaking even until then,” he said. “It’s competitive, and the renewable energy zone will probably make the difference in whether we can build there or not.”

Carr, Crook County’s economic development manager, said if the county gives the plan its OK, his department will put together an application for the state and eventually take the lead on decisions related to the zone. That decision could be made at the County Court’s next regular meeting on Wednesday.

Crook County Judge Scott Cooper said creating another incentives for nontraditional businesses is particularly important for the county as it looks toward an uncertain economic future. Though the county would lose funds in a new business’ first few years, Cooper said bringing in renewable energy will payoff in the long run.

“People don’t stop burning the lights and energy demand doesn’t cease – it’s pretty much recession-proof,” he said.

“I think (approving the zone) is about recognizing new technologies, getting ready with the economic development tools, getting ready to greet (renewable energy) companies if they come knock on the door.  We want to make the environment here as friendly as possible for all of them, especially as we look at the economic forecast and the job forecast – we need to be reaching out to these industries.”

Three electric utility companies serve Central Oregon: Pacific Power, a large regional corporation and two very small electric cooperatives – Central Electric and Midstate Electric.   Each utility is working towards meeting the requirements of the Oregon Renewable Energy Act that mandate that each of these companies to produce a certain percentage of their power from new renewable sources by 2025.  The following article explores how each company is approaching this task.

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How will utilities green up portfolios?
The Bulletin – February 25, 2008

Eight months after the Oregon Renewable Energy Act was signed into law, Pacific Power — the utility with the most customers in Central Oregon — is already working to meet the state’s mandate to deliver 25 percent of its power from renewable sources by 2025.

The utility, which provides power to 29 percent of the state, is building wind farms throughout the Northwest and hopes to generate 3,400 megawatts of energy by 2013.

Redmond-based Central Electric Cooperative, the utility with the second-most accounts in Central Oregon, is thinking about the goal, according to spokesman Alan Guggenheim, but doesn’t have any current plans to build new generating facilities. Because of its size — the utility makes up less than 1.5 percent of the state’s electric load — CEC only needs to deliver 5 percent of its power from renewable sources by 2025.

La Pine-based MidState Electric Cooperative, which serves less than 1 percent of the state’s electric load, also is mandated to deliver 5 percent renewable power by 2025.

The three utilities have different hurdles to clear, but the mandate will remake Oregon’s energy landscape.
Wind power, for instance, is likely to become a larger part of the state’s power-generation portfolio as it’s one of the more readily available forms of renewable energy and is much cheaper than power derived from photovoltaic solar sources.

How the mandate will affect electricity prices is unclear, said Guggenheim. He’s confident electricity will cost more in 2025, due to inflation and growth, but he said there are too many variables to predict how the mandate might impact consumers.

“This mandate creates a need and the marketplace, anticipating the need and wanting to make a profit, is expected to start building new, renewable power generation plants,” Guggenheim said.

“They may be solar and they may be wind, but that’s what the state had in mind.”

Representative Chuck Burley, R-Bend, believes customers will end up paying more for their energy, primarily because they will be financing the construction of new, renewable generating facilities.

“Overall, the ratepayers will end up picking up the tabs on these things,” Burley said.

Burley said he supports renewable energy, but he voted against the act because it didn’t include caps on rate increases.

Pacific Power has invested heavily in wind power. The utility operates a 140-megawatt wind farm near Dayton, Wash., a 100-megawatt wind farm near Arlington and a 41-megawatt wind farm in Carbon County, Wyo., and has plans to build three additional wind farms capable of producing 268 megawatts.

Pacific Power also purchases 155 megawatts of wind power from generation facilities in Milton-Freewater, Idaho Falls, Idaho, and Carbon County.

“Our customers want it, and we’re in the process of developing as much as we reasonably can,” said Pacific Power spokesman Tom Gauntt.

The utility offers its customers a voluntary program — called Blue Sky — that asks them to pay more for their energy in order to help subsidize renewable power generation projects. More than 20,000 Pacific Power customers in Oregon have registered with the program, according to the utility.

Pacific Power also operates in Washington state and California, and is owned by PacifiCorp, which operates as Rocky Mountain Power in Utah, Wyoming and Idaho.

PacifiCorp was acquired by MidAmerican Energy Holdings Co., a Berkshire Hathaway company, in 2006.

Gauntt said the utility will submit a rate increase request to the Oregon Public Utility Commission on April 1 that takes advantage of language in the energy act that allows utilities to request rate increases to help fund renewable power projects.

Any rate increase still has to be approved by the PUC, said Gauntt. If approved, the rate will show up as a specific line item on Pacific Power customers’ bills beginning Jan. 1, 2009.

Qualifying renewable energy projects are wind, solar, geothermal, biomass, hydropower or wave energy. Nuclear power is not considered renewable.

Of these, geothermal power is the cheapest, costing between $30 and $58 per megawatt hour (MWh), according to wholesale energy price data supplied by Guggenheim. Wind power costs $60 to $69 per MWh, biomass generation costs $60 to $75 per MWh, and solar (photovoltaic) power costs $76 to $250 per MWh.

By comparison, hydroelectric power costs $25 to $27 per MHw, coal power (without carbon dioxide sequestration) costs $40 to $62 per MWh, and nuclear costs $55 to $65 per MWh.

The state mandate excludes existing hydropower from the Bonneville Power Administration, which markets the electricity produced on the federally run dams on the Columbia River as well as at the Columbia Generating Station, a nuclear power plant, in Hanford, Wash.

Central Electric Cooperative (CEC) gets virtually all of its power from the BPA. Even though it has a zero-emission portfolio, the utility has to find or create new renewable energy projects to meet the mandate’s 5 percent target.

Guggenheim said the utility is thinking about its options, some of which depend on joint projects it’s undertaken with other consumer-owned utilities in the state. CEC, for example, is one of 12 consumer-owned utilities that has partnered to build the Coffin Butte Biomass Project, a 5.66-megawatt plant outside Corvallis that generates power by burning off methane from a landfill.

CEC doesn’t use any of the power generated by the Coffin Butte biomass project but instead sells it. According to the mandate, CEC might also be able to credit that production against the mandate target.

In addition, CEC — through its membership in PNGC Power, a Portland-based, cooperatively owned, power services business made up of 15 consumer-owned utilities in the West — is working on an experimental wave-energy plant near Reedsport that also could contribute to the utility’s mandate target in the future.

“We have lots of allies that make us optimistic we can hit these objectives,” Guggenheim said.

Guggenheim said the utility was already thinking about new power sources even before the energy act passed. Because of growth, Guggenheim said Central Electric Cooperative is forecasting its energy demand will increase by 50 percent in the next 10 years and that it will see a 30 percent increase in customers.

“It’s not a matter of choosing renewables, it’s where are we going to get the power for the system,” Guggenheim said.