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HEBER CITY, Utah (AP) -- Six years ago, Tracy Livingston sold his $8 million medical device company and "went looking for the next big thing." An engineer, he settled on energy, and was drawn to the mouth of Spanish Fork canyon south of Provo, where winds blow 30-40 mph almost like clockwork every night.
He offered the owners of a gravel pit royalties on wind production, got a zoning change and approached Utah Power, the state's utility.
That's when things started getting complicated for Livingston, as it has for other entrepreneurs looking to sell electricity to Utah's power company.
Utah produces 94 percent of its power from polluting coal-fired plants. Only now is the Utah Public Service Commission deciding how the utility will have to pay for power from a new class of alternative energy projects in compliance with a federal law passed in 1978. Technological advances in wind technology have made projects of between 3 and 100 megawatts more practical to build -- the class at issue in the proceedings.
But Livingston and other wind-farm developers aren't cheering in anticipation of a ruling, expected within weeks after more than two years of deliberations. They expect the Public Service Commission to adopt a rate structure that could make their projects uneconomical, even as PacifiCorp, the parent company of Utah Power, buys other states' wind power and offers it to Utah customers willing to pay a premium for "green" energy.
They blame Utah's rock-bottom pricing system for scaring off alternative energy projects, a reluctant utility backed by a price-sensitive consumer watchdog agency and compliant regulators, and conservative Republican legislators unwilling to mandate a mix of renewable energy.
"What's their motivation to do this? They could just go build another coal plant," Livingston said at his office here for Wasatch Wind.
Utah is practically surrounded by states aggressively developing wind power: Wyoming, Colorado and New Mexico each boast more than 200 megawatts of it, California more than 2,000 megawatts. Utah, beside a derelict windmill here and there, has a mere 0.2 megawatts of wind capacity, from a pair of turbines that help power the National Guard's Camp Williams. A megawatt is enough to power about 300 homes.
"There's a perception that we don't need wind power," said Utah State University marketing professor Edwin R. Stafford, who is designing a public campaign to promote small, independent wind farms by appealing to Utah's celebrated entrepreneurial spirit and de-emphasizing the environmental benefits. Stafford's team was awarded $500,000 in July for the effort from the U.S. Department of Energy.
"If we can get something on the ground, the evidence will speak for itself," said Cathy L. Hartman, another Utah State marketing professor. They enlisted economics professor Terry Glover to analyze the potential for wind farms in Utah, which has many promising sites but lacks a regulatory framework giving certainty to ranchers, farmers and others on return on investment for power that Utah Power is obligated to buy under federal mandate.
At the adversarial PSC proceedings, "everybody's jockeying for position," Glover said. Utah has no energy policy -- no vision for a reliable supply of affordable energy to support the state's economy over the long term. Gov. Jon Huntsman, a Republican who took office in January, says he's putting a priority on developing such a policy. On Sept. 1, he hired an energy adviser, Laura S. Nelson, who said the governor wants the policy "yesterday."
"We are very interested in having a diverse portfolio and hearing from wind developers what some of their issues are," said Nelson, a former Idaho Public Utilities Commission staffer. "Governor Huntsman sees energy as one of his prime initiatives, key to economic development -- a reliable energy supply at reasonable prices." She expects to deliver a policy by early next year.
Utah has long depended on its coal reserves for cheap power. But difficult underground mining, labor disputes and mine closings underscore a dwindling supply of available coal that's expected to run out in 12 to 15 years, the Utah Geological Survey reported earlier this month.
PacifiCorp's strategic plan calls for acquiring 1,400 megawatts of wind power, but it's turning to big players or its own operations in the first steps to reach that goal. The company, a ScottishPower subsidiary that also operates in Oregon, Washington, Wyoming and northern California, most recently signed a contract in August for up to 17.5 megawatts of wind power from an Idaho ranching family.
In that contract, Pacificorp agreed to pay a schedule of rates climbing from 5.1 cents this year to 8.2 cents per kilowatt-hour in 20 years, with a gradual increase in prices over the period.
"We've been begging for that kind of deal," said Gary Tassainer, president of Tasco Engineering Inc. in Lehi, Utah, who set out before Livingston to develop Utah's first commercial wind farm, along a ridgeline in Utah's west desert. That project is on hold.
Tassainer said he wasn't holding out hope the Utah Public Service Commission will establish rates making his or other wind projects viable.
Utah Power says it has a duty to keep electric rates as low as possible for ratepayers. It's willing to buy from wind farms in Utah "at the right price" and for a reliable supply, utility spokesman Dave Eskelsen said.
Tassainer and Livingston said they need rates averaging about 6 cents a kilowatt-hour to make a go of their projects. Utah Power reportedly is offering small operators 4.7 cents, although Eskelsen said he couldn't confirm a figure. He said Utah Power was waiting for the PSC ruling before starting active negotiations with Livingston and Tassainer.
PacifiCorp is offering varying prices to different wind farms based on regulations in each state and for power produced at peak or off-peak times. Wasatch Wind would get most of its power at night, when its power would be less valuable.
The Public Service Commission won't set a base rate for power from small energy projects, but will decide which costs Utah Power must cover to support the operations, setting a framework for negotiation, commission secretary Julie Orchard said.
Some wind advocates want Utah Power to pay for the cost of transmission from a wind farm, but Livingston said he doesn't need that. His proposed 16.8-megawatt Spanish Fork wind farm -- enough to power about 5,000 homes -- sits next to a power substation.
"We have everything we need," he said. Except a contract from Utah Power.
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On the Net: PacifiCorp: http://www.pacificorp.com Wasatch Wind: http://www.wasatchwind.com Tasco Engineering Inc.: http://www.tascoengineering.com Utah Public Service Commission: http://www.psc.state.ut.us Energy Department wind page: http://www.windpoweringamerica.gov
(Copyright 2005 by The Associated Press. All Rights Reserved.)
