Idaho Public Utilities Commission
Case No. GNR-E-08-02, Order No. 30738
Case No. GNR-E-09-01, Order No. 30744
March 17, 2009
Contact: Gene Fadness (208) 334-0339, 890-2712
Commission updates rates to be paid developers of small-power projects
Developers of qualifying renewable small-power projects will be paid considerably more for their generation as a result of new rates published by state regulators that became effective Monday.
The Idaho Public Utilities Commission updated both the fuel and non-fuel components of a mechanism used to calculate the rates that Idaho’s three major regulated utilities must pay to small-power or cogeneration project developers whose projects qualify under the federal Public Utility Regulatory Policies Act, or PURPA.
PURPA, passed by Congress during the energy crisis of the late 1970s, requires electric utilities to offer to buy power produced by qualifying small-power producers or cogenerators. The rate that utilities must pay project developers, called an “avoided-cost rate,” is determined by state commissions. The avoided-cost rate is to be equal to the cost the utility avoids if it would have had to generate the power itself or purchase it from another source. In Idaho, projects cannot be larger than 10 megawatts to qualify for the published avoided-cost rate.
The commission recently issued two orders; one that updates the non-fuel components of the avoided-cost rate, such as capital costs and operations and maintenance and another that updates the always varying fuel components of the rate. The fuel component is adjusted shortly after the Northwest Power and Conservation Council releases a new natural gas price forecast, which it did in late December.
The result of both orders is an avoided-cost rate that is considerably higher than the former rate paid by utilities to small-power producers. For example, the developer of a wind farm or geothermal facility with a capacity of less than 10 MW would be paid $88.67 per megawatt-hour (or about 8.87 cents per kWh) for a 20-year levelized (same rate all 20 years) contract with Avista Utilities. That compares to the former avoided-cost rate of $70.12 per MWh.
The three major investor-owned utilities in Idaho – Idaho Power, PacifiCorp and Avista Utilities – participated in the case as did Black Canyon LLC, which is developing a wind generation facility in Bonneville County.
PacifiCorp, which does business in eastern Idaho as Rocky Mountain Power, filed a motion to delay implementing the new avoided-cost rate and, in the absence of a delay, asked the commission to decrease the size of projects that can qualify for the published rate from 10 MW to no larger than 1 MW. PacifiCorp contended the Northwest Power and Conservation Council natural gas price forecast was too high given the recessionary economic environment.
The commission said PacifiCorp did not present enough evidence that the rate is not reasonable. Further, the commission said, any utility can petition the commission at any time if it believes the mechanism used to calculate the rate is unreasonable.
The order updating the published rates is available on the Commission Web site at www.puc.idaho.gov. Click on “File Room,” then on “Recent Orders and Notices,” and scroll down to Order No. 30744. The order updating the non-fuel component of the avoided-cost rate is Order No. 30738.
Petitions for reconsideration must be filed with the commission by no later than April 2.