Benton County Wind Farm LLC Loraine L. Seyfried Administrative Law Judge Indiana Utility Regulatory Commission WhyWhy WindWind Energy?Energy? More than 9,100 MW of wind power projects are installed in 30 states. This number will increase to approximately 12,000 MW by the end of 2006, with the equivalent of more than 3 million homes being served by wind-generated electricity. INSTALLED MW OF WIND POWER PER STATE Published by the American Wind Energy Association - Updated April 24, 2005 TOTAL INSTALLED U.S. WIND ENERGY CAPACITY: 9,149 MW as of Dec 31, 2005 Graphic: U.S. Installed Capacity, 1981 - 2005 Published by the American Wind Energy Association - December 31, 2005 WhyWhy WindWind Energy?Energy? Wind is free and inexhaustible Wind is a widely-available domestic resource Wind energy supports agriculture and rural areas − A second crop for farmers due to lease payments for placement of windmills. Generating electricity from wind does not pollute the air or water or emit greenhouse gases Cost of electricity from wind farms is competitive with costs from new fossil fueled power plants Wind is a hedge against continuing increases in the costs of fossil fuels and increasing restrictions on pollution from fossil-fueled power plants OrionOrion EnergyEnergy LLCLLC Orion’s management team has experience in the wind industry going back more than 20 years − Prior to founding Orion, Orion’s principals were integrally involved in the development, construction and operations and maintenance of wind energy projects in the U.S., Canada, Latin America, Europe and Asia Sister company RDC Development Ltd. in the U.K. − RDC recently completed the largest on-shore wind energy facility in U.K. history Projects operating in Texas, Wyoming, and Pennsylvania − Additional projects by year end 2007 in Illinois, Oregon, Texas, and Indiana Benton County Wind Farm LLC formed by Orion Energy to own and operate the project IndianaIndiana ProjectProject OverviewOverview Nearly 3 years of project development, engineering, and design 135 wind turbines Up to $350 million investment Approximately 70 landowners − Siting consents for all wind turbines and roads Electricity for more than 50,000 homes Project will be built in phases − First Phase, up to 130 MW, planned for 2007 − Subsequent phases dependent upon market conditions and transmission availability ProjectProject BenefitsBenefits New source of income for approximately 70 landowners − More than $20 million in payments over the life of the project − Helps preserve farmland and farming Construction jobs − Up to 200 jobs at peak of 6-8 months construction period − Average of 100-150 jobs during construction Operations and Maintenance Jobs − 8-12 full-time jobs Clean renewable energy − Electricity for more than 50,000 homes − No air or water pollution − No waste disposal problems − No depletion of fossil fuels BentonBenton CountyCounty WindWind FarmFarm ProjectProject FacilitiesFacilities Wind turbines − Tower height up to approximately 265 feet − Blade length up to approximately 145 feet Electrical System − 34.5kV collection system, substation, transmission line to NIPSCO transmission lines in Newton County Access Roads Operations and Maintenance Building Meteorological Towers − Three towers − Up to 265 feet tall Components of a Modern Wind Farm 3 Bladed Rotor Overhead Nacelle Powerline Pad-mount Transformer Hub Substation Tower Underground Elec. Cable Gravel Access Road (Haul Road) ter Operations & Maintenance Cen r Monitoring System and Compute Concrete Base ModernModern WindWind TurbinesTurbines Three Movements Nacelle & Generator Typical Dimensions (1) Wind Turbine Weathercocks into oncoming Wind (2) Wind Turbine Blades “Feather” to change “bite” out of oncoming wind (3) Wind Turbine Main Rotation generates electrical power (12-20 rpm) DeterminingDetermining LocationsLocations forfor WindWind Turbines:Turbines: AA MultiMulti--StepStep ProcessProcess Wind Energy Map Wind Rose Prevailing Direction = SW (Darker Blue = More Wind) DeterminingDetermining LocationsLocations forfor WindWind TurbinesTurbines Zoning Requirements: Other Requirements: House Setbacks Environmental Assessment Road Setbacks Wetlands Noise Setbacks Microwave Beams Archaeology Pipeline or Other Easements Computer Optimization, Wake Analysis and Maximum Energy Yield Analysis Landowner Preferences incl. Final Site Plan with Wind gravel access roads Turbine Locations TypicalTypical WindWind FarmFarm ConstructionConstruction (1) Tower parts arrive at wind (2) Offloading turbine parts (3) Moving lower section of (4) Power line construction farm site. tower base. also begins. (5) Reinforcing steel for (6) Fitting turbine tower (7) Aerial view of turbine (8) Raising the rotor. tower base. to base. assembly. Typical 100MW to 150MW Wind Farm Construction Time is 6 to 12 months Up to 200 jobs at peak of construction Average of 125-150 jobs during construction (9) Attaching the rotor. (10) Completed Wind Turbine Tower BentonBenton CountyCounty WindWind Farm,Farm, LLCLLC Wholesale provider of electricity Although a public utility and subject to Commission jurisdiction, the Commission determined it was in the public interest to decline to exercise jurisdiction over construction, operation, and financing of the wind farm Factors considered in declining to exercise jurisdiction − Commission oversight unnecessary − Benefits to energy utilities and State of Indiana − Promotion of energy utility efficiency − Effects on competition with other providers Commission retained jurisdiction to approve any sale of electricity within Indiana PublicPublic InterestInterest ReviewReview Compatibility with land use and natural resources Transmission interconnection Environmental issues and permitting Necessity for additional generating capacity in Indiana Financing and Management Affiliate transactions Ownership transfers Reporting requirements DukeDuke EnergyEnergy Indiana’sIndiana’s PurchasedPurchased PowerPower AgreementAgreement withwith BentonBenton CountyCounty WindWind FarmFarm Duke Energy entered into a 20-year Purchased Power Agreement with Benton County Wind Farm for 100 MW − Another Indiana utility has recently entered into a similar agreement with Benton County Wind Farm for the remaining 30 MW August 2006, Duke filed for Commission approval of Purchased Power Agreement and for timely recovery of costs through rates December 2006, Commission issued decision approving Purchase Power Agreement and authorizing recovery of costs through Duke’s quarterly FAC filing PurchasedPurchased PowerPower AgreementAgreement Fixed price beginning in 2007 Annual price escalation at fixed percentage No demand charge; only energy charge for actual energy produced Duke will own the renewable energy certificates (environmental credits) and will provide the net sale credits to customers Benton County Wind Farm responsible for construction, operation, and maintenance of wind farm Benton County Wind Farm responsible for providing replacement power during protracted outages DukeDuke EnergyEnergy IndianaIndiana IssuesIssues PresentedPresented toto thethe CommissionCommission Duke provided evidence demonstrating the energy produced by Benton County Wind Farm will: − Provide needed capacity in its service area − Add to diversity of Duke’s energy resource portfolio − Be economical over the 20 year term based upon market forecast for purchased power and estimated costs to comply with increasingly stringent environmental requirements − Be environmentally beneficial Duke also demonstrated that the 20 year term of the Agreement is necessary to finance construction costs Duke proposed to recover the retail portion of purchased power costs through the quarterly FAC filing CommissionCommission FindingsFindings Wind energy will provide needed capacity and is an economically reasonable addition to Duke’s portfolio of resources Renewable and environmentally beneficial energy source Beneficial to economy Terms of Purchased Power Agreement were reasonable Agreement Expected to be economical over the 20 year term Timely recovery of purchased power costs through quarterly FAC filings reasonable Benton County Wind Farm LLC Loraine L. Seyfried Administrative Law Judge Indiana Utility Regulatory Commission.