IBJNews

Wind farm says Duke violated contract

Back to TopCommentsE-mailPrintBookmark and Share

The owner of a northern Indiana wind farm says Duke Energy Indiana Inc.—which had agreed to buy energy the 87-turbine operation produces—breached its contract, “proving disastrous.”

Benton County Wind Farm LLC, based in Earl Park, is suing Duke in federal court in Indianapolis for unspecified damages, claiming the power company has not honored its agreement.

wind-farm-factbox.gifThe suit alleges the company’s actions have resulted in the wind farm “frequently [being] forced to curtail operations. As a result, the Wind Farm’s electrical output and revenues have been sharply reduced.” But many of the details of Duke’s alleged contract breach are redacted in the 23-page complaint.

An executive for one of the wind farm’s parents, Orion Energy Group in Oakland, Calif., would not say whether the alleged payment shortcomings put the farm’s future in jeopardy.

“If it was not significant, we would not have filed the complaint,” said Jim Eisen, Orion’s general counsel.

A Duke spokeswoman would only say, “We’re reviewing the filing.” The utility’s attorneys had not filed an official court response to the lawsuit by IBJ deadline.

In 2006, the companies set up a 20-year contract in which Duke would buy 100 megawatts of electricity the wind farm produces once it went online in 2008. A 2007 agreement gives another 30 megawatts to Vectren, but Vectren’s obligations are “not an issue,” according to the lawsuit.

Orion Energy Group LLC began running the wind farm in 2008 as the state’s first commercial-scale operation. The farm’s 87 turbines tower over the 350-resident town of Earl Park northwest of Lafayette.

The wind farm has needed Duke’s business from its launch to cover the construction costs, the company says in its lawsuit. The project cost about $150 million.

Duke signed up to receive the energy as it was looking to diversify its energy portfolio with more renewable resources. The utility began searching as early as 2004 for a developer to build a 100-megawatt wind farm.

“Clean, carbon-free, wind-generated energy is a good addition to our power sources,” Jim Stanley, then-Duke Energy Indiana’s president, said in a statement soon after the wind farm began operating.

“The agreement was the first significant, long-term purchase of wind power in Indiana. It’s also a boost to the local economy.”

Duke takes the electricity and sells it onto the power grid through Midcontinent Independent System Operator Inc. in Carmel.

“The MISO re-sale prices are affected by many factors and fluctuate constantly, often within a single hour,” the lawsuit says. “Under the [contract], Duke bears all risks arising from these market fluctuations.”

Duke has to pay a fixed price, the amount of which was redacted from court records, to Benton County Wind Farm, regardless of what Duke earns reselling through MISO. Duke is only excused from its obligation to pay the wind farm in “narrowly defined” emergencies, the lawsuit says.

MISO’s pricing system and a glut of wind energy appear to be at the root of the court case.

A computer algorithm bases prices on two “significant factors”: bids that utilities submit when selling energy and costs relating to congestion on the grid.

Duke and other power sellers had to submit price bids for traditional forms of energy, such as coal and natural gas.

Companies selling wind energy did not have to bid until recently, when the renewable resource surged in popularity in Indiana.

Wind farms popped up around northern Indiana, which has become a hot spot for the energy source.

BP and Dominion Energy started the 600-megawatt Fowler Ridge Wind Farm, also in Benton County. And the county is now home to EDF Renewable Energy’s 106-megawatt Hoosier Wind Farm.

MISO’s transmission grid wasn’t able to handle the burst of new wind energy, according to an August 2012 report by Synapse Energy Economics Inc. in Cambridge, Mass.

“This leads to costly congestion and uneconomic curtailment, or spilling, of available wind,” the report said.

An oversupply congested the grid and drove down the prices at which utilities could sell the energy, which has happened nationally. In some cases, companies have to pay to dispense their power onto the grid. They will often claim tax credits that turn their upfront losses into profits.

MISO changed its rules in March, requiring sellers to submit bids for their energy, like they did for fossil fuels.

When bids are too high, MISO’s automated system electronically signals the energy producer—in this case, the Benton County Wind Farm—and tells it to reduce its output.

The lawsuit redacts what Duke specifically did, only noting the utility “curtail[ed] electrical production by refusing to offer the Wind Farm’s power to MISO at competitive prices and then refusing to compensate [the wind farm] when the Wind Farm is directed by MISO not to produce power.”

Eisen, from parent company Orion, would not elaborate on the situation beyond what documents say.

Contract terms say the wind farm is set up to produce 100 megawatts for Duke, so Duke must buy all 100 megawatts, without refusal.

“Duke’s refusal to [redacted] or to compensate BCWF for generation lost due to Duke’s bidding practices has proven disastrous for BCWF,” the lawsuit says. “As a result, the Wind Farm has produced substantially less power than it is capable of producing with a corresponding collapse of the Wind Farm’s cash and tax revenues.”•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. The Affordable Care Act is not the reason for the slow recovery and lack of high paying jobs for low skill workers. This is a trend that has been going since the early 80's. The recovery is real in the sense that GDP has been growing steadily at a rate of roughly 2.5% since the recession ended in late 2009 (newsflash, the stimulus worked) and the unemployment has been steadily dropping. The reason issue we are facing deals with a skills gap (not enough workers with the right credentials / experience) and wage stagnation due to corporate America being focused solely on maximizing profits for shareholders and not caring about the American middle class. Why should they? Multi-billion dollar mutlinational companies keep offshoring their profits in order to avoid paying taxes (which makes our deficit worse) they convince Americans to fight amongst themselves. If you want to create jobs and reduce the deficit, raise the minimum wage and change corporate tax laws. Of course, if you want to continue to belive that tax cuts for wealthy create jobs (which they don't) and allow corporations and the wealthy to continue to make you cover more and more of the costs of maintaining infrastructure, funding the military and other government services, then keep voting Republican. Hopefully someday you wake up and realize what's been going on since Reagan took office.

  2. Helloooooo, my name is Kate. I am so joyous to share this wonderful testimony about what Dr. Osoijiakhena, a great spell caster, did for me and my family. I wedded a year and 6 months ago, we were very happy during this whole period, i really love my husband so so much. I started noticing changes when he started coming home late at night, he stop paying attention to me, i later found out that he was having an affair with another lady, i dont know what she did to get to him but she really got a hold on him. He started spending weekends with her, and threaten for divorce. I was so heart broken and devastated, i spent many night thinking on how to get my husband back. A friend took it upon herself to to introduce me to one Dr. Osoijiakhena, a great spell caster, who once helped her with a spell that reunited her family and helped her husband secure a very prolific job. Though i had my doubts and never believed, but i decided to give it a try because i was helpless. I contacted Dr. Osoijiakhena, the Spell caster, to help me reunite my family by bringing back my husband from that other woman and break whatever hold she had on him. He only just told me that it's a minor issue, once i provide and do everything he will ask me to do, then i will have my family back again. I did everything he required. And he did it!!!!! My husband returned back to me and pleaded for forgiveness, and i also secured a well paid job in a big company, just as the great spell caster, Dr. Osoijiakhena said. I am so so happy to share my testimony on this wall. I am using this medium to tell every one that has same or similar problem to try the great Dr. Osoijiakhena through his mail: drosoijiakhenaspell@gmail.com......he is so real!!!!! He can also help you with: (1) IF YOU WANT YOUR EX GIRL/BOYFRIEND TO RETURN BACK TO YOU (2) IF YOU WANT YOUR HUSBAND/WIFE BACK (3) IF YOU WANT TO BE PROMOTED IN YOUR OFFICE (4) IF YOU WANT YOUR MAN OR WOMAN TO LOVE YOU (5) IF YOU WANT A CHILD (BARREN) (6) IF YOU WANT TO BE RICH/WEALTHY (7) IF YOU WANT YOUR HUSBAND/WIFE TO BE YOURS FOREVER (8) IF YOU'VE BEEN SCAMMED AND WANT YOUR MONEY BACK (9) IF YOU ARE HAVING DELAY IN GETTING MARRIED (10) IF YOU HAVE A COURT CASE AND WANT TO WIN (11) IF YOU'RE A DRUG ADDICT AND YOU WANT TO REALLY STOP (12) IF YOU CANNOT IMPREGNATE A WOMAN (STERILE) (13) ALL TYPES OF DISEASES I advise you to contact the great Dr. Osoijiakhena, the spiritualist for solutions via his email: drosoijiakhenaspell@gmail.com

  3. Sergeant McNally is buried in Cathcart Cemetery on a hill known as McNally%u2019 Hill. The Cemetery is in a natural bushland setting and is very well maintained.The emergency department at Ararat Hospital is known as the John McNally Emergency Department. Cathcart is approx. 4.6 km from Ararat and is approx. 345 m above sea level.

  4. My spring chicken of a Mom is turning 75 years young. She is a big fan of Frankie and I think she would get a big kick out of the film. I wanted to take her to the Broadway play but am priced out. Thanks for your time and consideration. Oh yea, Wildwood! Joie

  5. I thought this company would go bankrupt in 2013/2014. I predicted that four years ago. I was wrong. It will take another couple of years, but they will get there.

ADVERTISEMENT