Idaho Public Utilities Commission

Case No. GNR-E-09-03, Order No. 32091

October 15, 2010

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



PUC workshop to address proposed wind-based cost rate


The Idaho Public Utilities Commission has scheduled a public workshop to discuss a possible new mechanism for determining the rates that utilities – and eventually the utility’s customers – must pay certain small-power producers.


The rates utilities must pay small-power producers who qualify under the Public Utility Regulatory Policies Act, or PURPA, is called an “avoided cost rate,” and is based on the costs the utility avoids by not having to generate or buy the power itself. Currently, the commission uses costs associated with a surrogate natural gas-fired plant to determine the avoided-cost rate.  


However, using a hypothetical natural gas plant as the surrogate may no longer be appropriate given the nature of many of the newer PURPA projects, which are primarily wind. The operating and generating characteristics of these types of projects may be significant enough as to warrant a different or second surrogate to determine avoided cost.


When the commission opened a case in August 2009 to examine this question it said: “Based on recent filings at the commission by Idaho’s electric utilities, we are concerned that a disparity exists between Idaho’s published avoided-cost rate established using a natural gas-fired surrogate resource and the cost to a utility of developing and operating its own wind generation project.”


Earlier this year, commission staff issued a “straw man” proposal that includes a new wind surrogate and invited comments from interested parties. The commission has received a number of comments, with wind developers generally opposed to the wind surrogate and utilities generally favoring it.


A workshop scheduled for Wednesday, Nov. 3, will give interested parties an opportunity to discuss the strengths and weaknesses of the straw man proposal and to entertain new proposals. The workshop begins at 9:30 a.m. in the commission hearing room at 472 W. Washington St. in Boise.


The commission adopted the natural-gas surrogate in 1993. Before that, the surrogate was a coal-fired plant.


PURPA requires regulated utilities to buy the output from qualifying small-power generators, such as small-hydro and wind projects. Although PURPA is a federal act, state commissions determine and publish the rate utilities pay developers of PURPA projects. Projects of 10 average megawatts or smaller qualify for the published avoided-cost rate. PURPA projects can also be larger than 10 megawatts, but rates for those projects are determined by a different mechanism and are not at question in this case.


The straw man proposal and other documents related to this case are available on the commission’s Website at . Click on the electric icon, then on “Open Electric Cases,” and scroll down to Case No. GNR-E-09-03. The straw man proposal can be accessed by clicking on the “Notice of Public Workshop Order,” dated October 6.


The commission is also taking written comments through Nov. 23 regarding this proposal. Click on the "Comments & Questions About a Case" icon on the Website, fill in the above case number and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.