Idaho Public Utilities Commission

Case No. AVU-E-09-04

June 4, 2009

Contact: Gene Fadness (208) 334-0339, 890-2712

Website: www.puc.idaho.gov

 

Commission asked to resolve Green Tag ownership question

 

Avista Utilities, which operates in northern Idaho, is asking state regulators to determine who owns the Green Tags associated with small, renewable power projects that enter into contracts with regulated utilities.

 

A Green Tag, or Renewable Energy Credit, is issued to power generators for every megawatt-hour of electricity generated by an eligible renewable energy resource. An active market exists for the purchase and sale of Green Tags.

 

Avista is currently negotiating five small-power, or PURPA, projects and wants the Idaho Public Utilities Commission to determine whether the Green Tags associated with those projects belong to the project owners or to the utility buying the power. It is also asking the commission for a stay of any requirement to award Green Tags to any PURPA developer before the commission rules on the ownership question.

 

In a separate motion, a wind developer, Exergy Development Group of Idaho LLC, has asked that Avista’s motion be dismissed, maintaining that the Legislature, not the commission, must determine a Green Tag program for Idaho. Oral arguments for Exergy’s Motion to Stay are scheduled for June 17.

 

Avista is concerned that the rising costs it must pay for the generation from renewable small-power projects that qualify under the Public Utility Regulatory Policy Act of 1978 (PURPA) will be even higher if Avista is not able to claim the Green Tags.

 

Passed by Congress during the energy crisis of the late 1970s, PURPA requires electric utilities to buy power produced from qualifying small-power projects or cogenerators. The rate the utilities must pay the project developers, called an “avoided-cost rate,” is determined and published by state commissions. The avoided-cost rate is to be equal to the cost the electric utility avoids if it would have had to generate the power itself or purchase it from another source.

 

In 2004, the commission, in response to a petition filed by Idaho Power Co., declined to issue an order declaring who owned the environmental attributes of such projects because the state had not yet created a Green Tag program, had not established a trading market for Green Tags and did not require its regulated utilities to meet a renewable portfolio standard (RPS). An RPS would require utilities to generate a certain percentage of power from renewable resources. Because none of those conditions existed in 2004, the matter was not ripe for a decision, the commission said.

 

Avista claims circumstances have changed since 2004. The utility says it must pay a qualifying PURPA project developer $90.64 per megawatt-hour in levelized payments over a 20-year contract that begins in 2010. That compares to the $64 per MWh Avista claims it would pay to non-PURPA developers of renewable energy. If each of the five PURPA contracts Avista is now negotiating is signed and the Green Tags are not transferred to Avista, the utility’s customers would overpay by about $310 million over the 20-year span of the contracts, Avista claims. Transferring ownership of the Green Tags to Avista would considerably lessen the disparity between the market rate for wind power and the PURPA rate, Avista says.

 

Further, Avista claims that since the last commission order on this matter in 2004, there is now more interest in PURPA projects, some states have adopted Renewable Portfolio Standards, a robust market exists for Green Tags and the value of the tags have increased dramatically.

 

Exergy claims none of those issues have changed since the commission’s 2004 order. Avista’s petition should be dismissed, Exergy says, because the Federal Energy Regulatory Commission did not expressly give state commissions the authority to determine Green Tag ownership, instead saying that authority must be found in state law. “Avista has not cited Idaho state law or policy giving this commission such authority,” Exergy argues. Absent that authority, the matter of Green Tag ownership is left for the utility and the project developer to negotiate.

 

Exergy claims Green Tags are the private property of the developer and an “ancillary asset” of the small-power project over which neither Avista nor the commission has any claim to. Further, Exergy claims, Avista’s petition is a collateral attack on a final order already issued by the commission.

 

Parties who want to intervene in Avista’s petition to determine Green Tag ownership and its request that the commission not issue any Green Tags to PURPA developers until the ownership issue is resolved may do so by filing a Petition for Intervention by no later than June 12. Parties intervene to participate in hearings by presenting evidence, cross-examining witnesses and participating in settlement discussions.

 

Regarding Exergy’s Motion to Stay, the commission has set oral arguments for June 17 at 1 p.m. in the commission hearing room at 472 W. Washington St.

 

Documents related to this case are available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to Case Number AVU-E-09-04.