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Wind energy transmission raises equity questions

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The Midwest's booming wind energy industry could cost Indiana households more than $40 million a year in the coming years, but experts say it's a necessary expense as the region tries to move away from reliance on coal-fired power plants amid federal crackdowns on emissions.

Transmission lines costing about $16 billion are needed to move wind energy into the electric grid. But the cost has sparked a debate over who should pay for getting the power from where it's made to where it's consumed.

Most regions have placed that burden on rate payers. In Indiana, that could translate to utility bill increases of $2 or more a month for 1.5 million households.

But some question whether it's fair for someone in Indianapolis to subsidize electricity made by North Dakota wind turbines and used in cities like Chicago, Milwaukee or even Fort Wayne.

"We are advocating for assurance that ... Indiana consumers end up with, as close as possible, the least-cost solution to get the job done," said Indiana utility consumer counselor David Stippler.

The Federal Energy Regulatory Commission will discuss how to allocate transmission costs next week in Washington. Presenters will include the Midwest Independent Transmission System Operator, a Carmel not-for-profit that monitors the electric grid in Canada and 13 states.

MISO president John Bear predicts that wind will supply 16 percent of MISO's power within 25 years.

MISO initially proposed having power generators pay 20 percent of the transmission costs and consumers in the 13 states pay the remaining 80 percent. Now it says consumers should carry the full cost.

Jamie Karnik, a spokesman for Minneapolis-based Wind on the Wires, said the trade group prefers that approach.

"It's not a matter of we don't want to pay this 20 percent. It's that we can't pay," Karnik said. "It's too expensive."

Experts say having developers pay the transmission costs could drive them to regions willing to shift the cost to consumers. The Southwest Power Pool serving Texas, Kansas and other states is placing the full cost of building the transmission lines on consumers.

"If you make the developers pay for transmission, that cost is enough to make wind energy uneconomical," said Doug Gotham, director of the State Utility Forecasting Group, a Purdue University unit that advises the General Assembly on electricity issues. "If you make the local utility in Minnesota pay, they get no benefit. Why pay for a transmission line so some wind farm can sell power to customers east of you?"

Gotham acknowledged that spreading the cost equally among 13 states raises some fairness issues. But with environmental concerns over coal and clean air regulations rising, experts say finding a successful plan for wind energy transmission is becoming more urgent.

"As long as coal was cheap, there was not a lot of value to diversification," Gotham said. "But there's a lot of uncertainty now over what the environmental rules are going to be over the next 10 to 100 years. In the Midwest, where we burn a lot of coal, we're kind of exposed when it comes to those rules."

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  • Great Investment!
    Where to begin... well go back to the time of Edison and Tesla. Edison is credited with most current innovation, but it was Tesla who convince the world to convert from direct current to alternating current. This means that all you are doing is bouncing electrons back and forth, not pushing them back and forth over long distances. The result is extraordinary abilities to transmit electricity over very long distances. Tesla's dreams, in fact were to beam electricity from one side of the world to the other - so when the sun is shining in the US, power could go to China (this being the case with solar, which is directly related to wind). So, what we are talking about is a grid. The real obstacle is getting everyone on board so that electrons can be bounced back and forth between states. We are already exporting electricity to Canada, which then re-sells it to America at a profit. So, keep an open mind on this. Wouldn't it be great to be able to eat home-grown Indiana fish again once we are free of the mercury emissions from power plants?
  • Blows
    All of this is just ridiculous. Power generated by wind has to be backed up 100% by conventional means. Or, if the wind doesn't blow hard enough, or at all, does everybody just goes without power? If any of this was feasible it would have been done years and years ago. Now, government money is all that is propping these ventures up. What a mess things become when politics run into reality.

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  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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