Indiana Michigan Power plans to buy electricity from a wind farm being developed in Madison and Tipton counties as part of the utility’s effort to diversify its power sources.
The deal still needs approval from regulators in both Indiana and Michigan before it can be finalized.
Company officials said buying wind power from E.On Climate and Renewables North America’s Wildcat Wind Farm I meets its goal of locating a wind project in its service area without a significant increase in energy prices to its customers.
E.On is developing a similar project in Grant County, dubbed Wildcat Wind Farm II.
Both are initial phases of a much larger E.On wind farm that could span more than 100,000 acres in central Indiana’s Grant, Howard, Madison and Tipton counties.
The company has agreements to lease 35,000 acres so far.
The entire project could have the capacity to generate as much as 1,100 megawatts of electricity once complete. That’s slightly more than what I&M can produce today at its coal-fired Tanners Creek plant in Lawrenceburg.
E.On hopes to also sell the power that will be generated in Grant County to I&M, which provides electricity to nearly 583,000 residential, commercial and industrial customers in eastern Indiana and southwest Michigan.
I&M officials can’t comment on pending negotiations.
E.On Development Manager Andy Melka said I&M’s recently announced agreement to purchase 100 megawatts of electricity from Wildcat I in Madison and Tipton counties is good news.
“We are excited they are adding more wind power to their portfolio,” Melka said.
Melka cautioned that reaching a deal with I&M for Grant County wind power is many months away.
Although both wind farms bear the Wildcat name, negotiations to sell their power are separate.
“They’re only associated in name and location,” Melka said.
E.On still has to find a buyer for another 100 megawatts of capacity expected from the Wildcat I farm in Madison and Tipton counties, he noted.
Wind power currently represents 2.5 percent of I&M’s electricity capacity. The company currently buys 150 megawatts from the Fowler Ridge wind farm in Benton County.
If approved by regulators, the E.On deal will increase I&M’s share of wind-generated electricity to 4 percent.
In a statement announcing the agreement, I&M President and Chief Operating Officer Paul Chodak III said: “The proposal from E.On allows I&M to make more wind power available to our customers at the most reasonable cost.”
Company spokesman David Mayne explained that if utility were to build its own farm, those capital costs could be passed on to its customers as higher rates.
In buying wind power from E.On, customers likely will only see a difference in the fuel cost adjustment by “less than a penny on their bill,” Mayne said.
The fuel cost adjustment is the cost of fuel used to generate electricity that utilities can pass through to customers.
I&M service in the areas where E.On will be building its wind turbines is concentrated in Grant County, where I&M has 30,000 customers, and Madison County, 17,000 customers. I&M only has 500 customers in Tipton County and 20 in Howard County, Mayne said.
The bulk of I&M’s electricity, about 61 percent, comes from coal-burning plants, primarily in Rockport and to a lesser degree in Lawrenceburg.
The other major source of I&M electricity is from the nuclear-powered Cook plant in Bridgman, Mich., which generates 36 percent of the company’s power.
Construction for Wildcat I is supposed to begin before the end of the year, with power being ready by the end of 2012.
In the development agreement E.On signed with Grant County officials, construction will begin by September 2012 with wind turbines on line by 2013.
In the next two weeks, E.On plans to put up one or two meteorological towers to continue studying wind speeds in Grant County, which will affect the size of the wind turbines that will be placed here.
Melka said Phase 3 will be developed mainly around Greentown in Howard County and near Converse and Swayzee in Grant County.
Phase 4 would put more wind turbines further west of where turbines will be built this year in Tipton County.
Together, the third and fourth phases could generate as much as 800 megawatts, Melka said.
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