Utilities violating state mandate on renewable energy

Utilities violating state mandate on renewable energy

Apr 12 - Las Vegas Review - Journal

Nevada Power Co. and Sierra Pacific Power Co. said Thursday that delays and terminated alternative energy projects are preventing them from meeting the requirements of Nevada's renewable-energy law.

The utilities, both subsidiaries of Reno-based Sierra Pacific Resources, contracted with independent power companies to build renewable energy facilities rather than build their own. But the two utilities have faced a series of "supplier delays, defaults and terminations" for renewable power, they said in filings with utility regulators.

Because of those delays and postponements, Nevada Power and Sierra Pacific will not meet the state's minimum requirements for renewable energy for 2003 and 2004, the companies reported.

The utilities are asking that they be exempt from the renewable energy requirements for the two years so they will not be fined under the 2001 so-called renewable portfolio standard law.

The renewable-energy law requires Nevada Power Co. and Sierra Pacific Power Co. to obtain increasing portions of their power supply from renewable resources, including the wind, the sun and geothermal wells that tap hot underground water, the wind and sun.

It mandated that the two electric companies obtain 5 percent of the power they sell from renewable or green power sources last year, increasing to 15 percent by 2013.

In their report, the utilities said many of the projects they were counting on to meet the requirements have been canceled.

"The ATS (Advanced Thermal Systems) geothermal project planned for Steamboat near Reno lost its ability and/or rights to use resources owned by third parties," the report said. "That project failed."

And the Desert Queen wind project, which was being developed at Goodsprings by Cielo Wind of Austin, Texas, depended on extensions of federal tax credits.

"When those extensions weren't granted, that project failed," the utilities reported.

Also, the MNS Wind project that was to be built at the Nevada Test Site was scheduled to start operation by the end of 2003, but the U.S. Air Force objected and the project was scuttled.

Those three terminated projects accounted for 60 percent of the green power Nevada Power needed to comply with minimum requirements under state law.

The two utilities reported that other projects have been delayed.

Earth Power Resources planned a geothermal project 60 miles north of Elko, but it "has experienced resource and permitting difficulties" and has been delayed one year or longer, according to the utilities.

The Ely Wind project near the city of the same name has been delayed two years. Solargenix Energy is developing a solar thermal project at a site 20 miles southeast of Las Vegas but that project has been delayed nine months or more. Ely Wind and Solargenix "experienced difficulty finalizing their financing arrangements," the utilities said.

Ormat provided some good news about its two geothermal projects near Fallon. Its 20-megawatt project is delayed three months, and a 10-megawatt project "is on time for commercial operation June 30, 2005," the utilities wrote.

Neither Nevada Power nor Sierra will satisfy requirements for solar generation in the two years, both having contracted with Solargenix for a plant in the Eldorado Valley, according to the report.

However, the utilities have issued requests for proposals for green power projects in 2005 and 2006.

"In addition, the utilities are working with developers who are dependent on the utilities' balance sheet to finance their projects on alternative financing structures ... ," the summary said.

Analysts explained that renewable power developers are having difficulty financing their projects because the two Nevada utilities have junk bond ratings and lenders fear that the utilities might default on power purchase contracts.