Austin City Council in Texas approves 25-year PPAs for wind power from Duke Energy's 200-MW Los Vientos II, MAP Royalty's 91-MW wind projects, also authorizes talks with Iberdrola for 200-MW Penascal III output

AUSTIN, Texas , September 12, 2011 (press release) – The Austin City Council today approved two new wind contracts totaling 291 megawatts (MW) and authorized Austin Energy to negotiate a third wind contract of an additional 200 MW which if approved will bring Austin Energy’s renewable energy portfolio to 30% of its generation needs by the end of 2012 – well within reach of its 35% by 2020 goal.

The new wind projects are near the Texas coast and will produce their highest output during peak demand times in the afternoon throughout the year when generation is needed the most as opposed to West Texas wind that blows primarily during evening hours during the spring and winter. The location of the new wind projects also is in an area with sufficient transmission infrastructure and Austin Energy does not foresee transmission congestion issues similar to wind power from West Texas.

The new projects are priced in the $35 to $45 per megawatt-hour range which is comparable to current and near-term pricing for natural gas power. These prices reflect a significant drop in power prices in general and in wind since 2008. The prices are indicative of the declining demand due to the economic downturn and lower natural gas prices because of increases in shale gas supplies.

"These contracts assist our clean air and sustainability goals, better positions the utility for increasing federal emissions requirements and delivers more wind-generated power on hot summer afternoons — all of which will reduce overall costs to our customers," said Austin Energy General Manger Larry Weis.

The first contract is a 25-year purchase power agreement totaling $675 million with Duke Energy Generation Services for 200 MW from a wind farm (Los Vientos project) located in Cameron County. The second 25-year agreement approved for $375 million is with MAP Royalty Inc. for 91 MW from the White Tail project in Webb County near Laredo.

The City Council also authorized Austin Energy to negotiate a 25-year purchase power agreement with Iberdrola Renewables Inc. for 200 MW from the Penascal III project in Kenedy County. The projected cost of the contract is estimated at $725 million and is scheduled to be considered by the City Council on Sept. 22.

The Duke and Iberdrola projects are within 15 miles of the coast while the MAP project is 75 miles from the coast. The contract prices are on a per megawatt-hour basis, are fixed and will not change over the term of the agreements. Austin Energy is only obligated to pay for the energy produced.

With a purchase power agreement for 30 MW from a solar project in Travis County scheduled to come online late this year and another purchase power agreement for 100 MW of biomass from East Texas scheduled to come online next year, the three wind contracts due online next year will increase Austin Energy’s renewable energy generation to 30% by the end of 2012 with almost 1,000 MW of renewable energy generation.

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