NorthWestern Energy and Compass Wind closed on the purchase of the 40 MW Spion Kop Wind Project near the central Montana community of Geyser.
The Montana Public Service Commission (MPSC) approved placement of the $86.1 million project into the company’s regulated rate base in mid-February, and the project was placed into commercial operation earlier this month.
Both the energy and associated renewable energy credits will be used to meet the renewable portfolio standards (RPS) obligations in Montana law. Under Montana’s RPS, 15 percent of NorthWestern Energy’s total energy portfolio must be produced from renewable generation by 2015.
About $8 million was spent on Montana services during construction including transportation, lodging, food, labor, materials, permitting and siting. In addition to those economic benefits, the project will generate an additional $566,000 in property taxes and fees in the local area during its first year of commercial operation.
Under the terms of the filing with the MPSC, which included a 10 percent authorized return on equity, a 5 percent estimated cost of debt and a capital structure of 52 percent debt and 48 percent equity, this project represents an approximate levelized price of $54 per MWh for a 25-year period and is less than the current qualifying facility rate for a project with similar attributes of $69/MWh.
Spion Kop Wind will now be subject to an MPSC prudency review of the project’s construction costs, and the review will be completed during 2013. Spion Kop Wind Project costs will be recovered in customer rates beginning in December 2012.