Oct 16 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Tu-Uyen Tran Grand Forks Herald, N.D.

Grand Forks and Fargo voters will be making a momentous choice for the two cities come, when they vote on a renewable energy initiative called City 20/20.

The initiative frightens the business community, with the exception of the wind industry, and elected officials, who believe it would raise energy costs for residents and cripple the region's economic growth.

The environmentalists pushing the initiative and the many voters -- 4,861 in Grand Forks -- that signed their petition believe City 20/20 will kick-start the state's torpid wind industry. Given North Dakota's enormous wind potential -- it's not known as the "Saudi Arabia of wind" for nothing -- that could mean a lot of growth.

That's two opposing predictions that, predictably, come with heavy rhetoric and technical arguments, making City 20/20 a potentially confusing choice for voters.

Here, then, is a quick rundown of the issue.

The initiative itself is simple. Voters will choose whether to require 20 percent of electricity sold in each city be from renewable sources by 2020 and 30 percent by 2030. Half of the renewables must come from North Dakota.

Not that Xcel Energy and Minnkota Power Cooperative, whose membership includes Grand Forks-based Nodak Electric Cooperative, would have to start from scratch. They already have plenty of wind turbines and are planning for many more within the next few

years, 1,230 megawatts for Xcel and 60 megawatts for Minnkota. They'll just have to keep doing that to comply with the initiative.

Should voters in Grand Forks and Fargo pass City 20/20, they wouldn't be alone, and they wouldn't be making an especially radical choice.

Many states and some cities already have similar requirements, known in the industry as "renewable portfolio standards," but are more aggressive. California requires 20 percent of its electricity come from renewables by 2017, Montana 15 percent by 2015, New York 25 percent by 2013. The city of Anaheim, Calif., requires 15 percent by 2017, and the city of Burbank, Calif., 20 percent by 2017.

Maine already has a 30 percent requirement in place, though much of the renewables come from hydropower.

On the other hand, electric rates in many of these states are much higher than they are in North Dakota, a fact utilities have implied is linked to renewable requirements. In 2004, North Dakota had the fifth-lowest rate in the nation while New York had the third-highest. On average, a resident here paid 6.79 cents per kilowatt-hour and a resident there paid 14.54 cents. California was No. 4 and Maine No. 10. Montana, the exception, was No. 34. Residents there paid 7.86 cents.

Choice argument

One of the most powerful arguments coming out of the City 20/20 movement is consumer choice. They say that, because the utilities have a monopoly on electricity, consumers can't choose to go with a utility that produces more wind energy.

A statewide poll they cited found that 69 percent of residents would pay more for wind energy if given a choice.

But Xcel and Nodak argue that they already are offering their customers the choice of subscribing to their wind energy programs, Windsource and Infinity respectively.

And there's a big difference between what people say they'll do, and what they'll really do.

A poll Minnkota took before starting Infinity found 62 percent of customers said they'd pay more. When the program started, only 2 percent subscribed, though that number has since gone up slightly.

The cost argument

Yet, cost is increasingly less of a consideration.

Infinity subscribers used to pay a premium of 1.5 cents per kilowatt-hour but, since June 20, they pay only half a cent. Minnkota said earlier the cost of wind energy is more competitive than before. Currently, it costs the cooperative 4.3 cents per kilowatt-hour to generate electricity with wind and at least 5 cents for natural gas. Coal is cheapest at 3.5 cents but expected environmental regulations would raise that cost to 4.3 cents, the same as wind.

City 20/20 proponents think wind will cost even less in the future. It's free, wind turbine technologies keep improving and coal prices are already rising without tougher regulations.

The main counterargument from the utilities is one of uncertainty. There is no price cap on the initiative's costs, they said, so their could be stuck with higher energy bills.

That sounds a lot like a scare tactic, but it's a little more complicated than that.

The problem for utilities is there's a mismatch between supply and demand. Wind is at its weakest in the summer and winter, when demand for electricity is highest. To meet the demand surge, the utilities say they'd have to build more turbines just for those few months, raising costs.

City 20/20 proponents say that's no problem because the initiative allows utilities to buy renewal energy credits.

RECs are not actually units of energy. They can be thought of as units of abstract "cleanliness" that renewable energy plants generate. Utilities would still have to make electricity with coal and add the REC on top. RECs vary anywhere from $1 to $25 per megawatt or 0.1 cent to 2.5 cents per kilowatt.

The other option is to buy renewable energy from another producer. That may require a regional grid more integrated with other grids than at present. Wind energy proponents blame the lack of transmission capacity to major markets for North Dakota's failure to exploit its wind potential.

Exactly how all these factors will affect electricity prices is a great unknown, especially when the 30 percent goal kicks in.

Growth argument

That great unknown is perhaps the biggest source of fear for the business community and elected officials, all of whom want nothing that could threaten job growth.

North Dakota already has a reputation as a cold, remote place, if it has any reputation at all. Cheap electricity is one of the advantages the state has against better-known competitors.

But initiative supporters think that City 20/20 will show investors that there is a commitment to wind power here and a market. North Dakota has the potential to provide a third of the nation's electricity needs, they argue, so a vote for City 20/20 is a vote for growth.

And if it all proves too costly, they said, the utilities have 13 years to find out and persuade voters to rescind the initiative.