Wasco rides with the wind
Eileen M. Garvin
Portland Business Journal
2 September 2005
PPM Energy's wind projects boost city's bottom line
When President George W. Bush signed the nation's new energy bill in New
Mexico in August, the reverberations were felt far north in the small town
of Wasco, Ore. (population 381).
That's because the Energy Policy Act includes tax breaks for the
development of renewable energy sources, which have been a boon to the
agricultural community east of The Dalles.
This summer, Portland's PPM Energy Inc. launched the second phase of a wind
farm that has been encouraged by the federal Energy Production Tax Credit,
which provides a 1.8 cent-per-kilowatt-hour tax credit for electricity
generated through wind turbines.
PPM Energy has invested $90 million in Klondike II, a 50-turbine project
expected to create 75 megawatts of wind power.
"That's a $90 million investment in steel and concrete and turbines," says
Jan Johnson, PPM Energy spokeswoman.
That investment also translates into revenue for Sherman County, which saw
a 10 percent increase in property taxes in the year following the first
phase of the project, Klondike I.
For PPM Energy, Klondike II is another success story for an Oregon company
that grew from 12 employees to 300 in just four short years. This year, it
posted operating profits of $98 million, up from $35 million last year.
PPM Energy is a U.S. subsidiary of international energy company
ScottishPower. A wind power wholesaler, PPM Energy also deals in natural
gas generation and storage.
When ScottishPower purchased the company in 1999, it was then a small
division of electric utility PacifiCorp., which operates as Pacific Power
in Oregon. Interested in pursuing non-utility business, ScottishPower spun
out PPM Energy in 2001.
It quickly grew to employ approximately 300 people, and ScottishPower now
plans to invest $1.6 billion in building its wind capacity in the next five
years. The company is in the process of selling PacifiCorp. to MidAmerican
Energy Holdings Co. for $9.4 billion in a deal subject to approval by the
SEC and other regulatory bodies.
PPM Energy got its start in the wind business through marketing when it
agreed to buy the power produced by the Stateline Wind Farm -- FPL Energy's
454-turbine wind farm straddling Umatilla County, Oregon, and Walla Walla
County, Washington.
"We took all the power," says Johnson. "(FPL) would not build it until they
had someone who would take all the power."
PPM Energy warehoused the power produced at Stateline and sold it to
customers such as Seattle City Light and the city of Eugene. Success in the
marketing business naturally led to operating and building its own wind farms.
PPM Energy now owns or controls wind power projects in seven states --
Oregon, Colorado, California, Iowa, Washington, Wyoming and Minnesota --
representing 830 megawatts of wind power, and is building new farms in New
York and Kansas.
Customers include utilities such as Alliant Energy, Xcel Energy and San
Diego Gas and Electric, public power authorities like Southern California
Public Power Authority and the Bonneville Power Administration, and such
public entities as Seattle City Light and Sacramento Municipal Utility
District.
Klondike I came online in 2001 with just 16 turbines producing up to 24
megawatts of electricity, enough to power 6,100 homes. PPM Energy has been
selling that power to the Bonneville Power Administration.
Last December, Portland General Electric signed a 30-year agreement with
PPM Energy to purchase the output from Klondike II. According to the
American Wind Energy Association, 1 megawatt of wind generates as much
electricity as 300 households would use in year.
More than one kind of green
Wind power is hailed as a clean and green energy source, but it makes money
too, and not just for the company. The Klondike project also has created
local jobs. Local farmers also collect leasing fees for the land used by
the turbines, and the wind farm does not disrupt their traditional farming
practices.
"It is a very positive story for Oregon," says Rachel Shimshak, director of
Renewable Northwest Project, an organization that promotes the development
of renewable energy in the Northwest. PPM Energy is a member of the
organization, which provides a meeting place for environmentalists,
consumer groups and businesses.
In a report last December, Renewable Northwest Project hailed the wind farm
as a sound choice for economic diversification for Sherman County.
"Sherman County was dead last in terms of per capita income in the state,"
says Shimshak. "We think it is a great story. It is something welcomed by a
community that is desperate for economic development."
Sherman County Judge Gary Thompson is enthusiastic about the potential for
tax revenue brought by PPM Energy.
"The economy in Sherman County has been down in the doldrums for so many
years because it has been primarily agriculture-based," says Johnson, a
fifth generation farmer. "This is something new that is really going to
help us."
The county granted PPM Energy a three-year tax abatement for Klondike II.
It will continue to collect property taxes from Klondike I, and PPM Energy
has agreed to donate the approximate amount that it would have paid in
property taxes into a 501c3 to fund county schools, fire districts and
economic development.
Thompson says that translates into approximately $700,000 year.
"That is quite a boon for economic development," he says.
Looking to the future
The American Wind Energy Association, a national trade association, says
PPM Energy is ahead of the curve in planning for the future.
"They are seeing that wind energy is going to be a big part of the future,"
says Wind Energy Association spokesperson Christine Real de Azua.
Real de Azua says PPM Energy has been a leader in 2005 -- a record year for
wind power development -- and is the fourth largest wind power purchaser in
the country.
The strong track record has encouraged the company to pursue more wind
power projects in the Pacific Northwest. PPM Energy is currently in the
permitting stage for projects in Arlington, Ore., and Bickleton, Wash.
Klondike III is also on the horizon.