Idaho Public Utilities Commission

Case No. GNR-E-10-04, Order No. 32131

December 6, 2010

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

Website: www.puc.idaho.gov

 

Commission to examine renewable power issues

 

Idaho’s three major investor-owned utilities are petitioning the Idaho Public Utilities Commission to investigate a number of issues related to small-power projects that qualify for a rate published by the commission. The utilities are also asking that the eligibility cap on the size of projects that qualify for the posted rate be reduced from 10 average megawatts to 100 kilowatts while the investigation is under way.

 

The commission set December 17 as the deadline for parties who want to intervene in the case, is taking public comments through Dec. 22 and is hearing oral arguments on Jan. 27. Several parties, representing primarily wind developers, have already filed petitions to intervene.

 

The three utilities – Idaho Power Company, Avista Utilities and PacifiCorp – all contend that a rapidly expanding number of wind projects is having a profound impact on customers and on utility transmission systems. The utilities further contend that  large-scale wind farms are breaking up their projects into smaller 10-MW increments to qualify for the published avoided-cost rate, which may be more attractive than  rates for projects larger than 10 MW.

 

In 1978, Congress passed the Public Utility Regulatory Policies Act (PURPA) to promote the development of renewable energy technologies as alternatives to fossil fuels. PURPA requires electric utilities to buy power generated by qualifying small-power producers at a rate that is set and posted by state commissions. The rate is called the avoided-cost rate because it is to be based on the cost the utility avoids by not having to generate the power itself or buy it from other sources. In Idaho, the avoided-cost rate is based on the estimated cost a utility would incur in building a combined-cycle natural gas power plant. Currently, only qualifying projects 10 MW or smaller qualify for the posted rate. The commission must ensure the avoided-cost rate is reasonable for utility customers because 100 percent of the price utilities pay to qualifying producers is included in customer rates.

 

In its petition, the three utilities are claiming that the small-power projects PURPA was originally intended to encourage are now developed by sophisticated large-scale wind farms that aggregate several projects within a mile apart from each other to qualify for the avoided-cost rate. When combined, these projects can total up to 100 or 150 MW interconnecting at one delivery point, the utilities claim. For example, Idaho Power claims it now has 208 MW of wind generation and another 264 MW of approved wind contracts scheduled to be online by the end of this year. The utility claims it could have 1,100 MW of wind generation on its system in the near term, which exceeds the amount of power used in Idaho Power’s total system on the lightest energy-use days. The rapid expansion of these projects is causing a strain on utility transmission systems, the utilities claim.

 

The commission denied a request of the utilities to lower the size limits of projects than can qualify for the post rate within 14 days of its Nov. 5 application. However, the commission did say that any decision it makes next year in regard to lowering the limit will become effective Dec. 14, 2010.

 

Parties intervening in the case claim the utilities’ petition is not backed up by evidence and will have an adverse impact on PURPA development in Idaho. “Once in place, such a drop in the eligibility cap is likely to remain in place for many months, likely years,” said the Northwest and Intermountain Power Producers Coalition. “The implications on the renewable energy industry will be widespread and have impacts on the entire economy of Idaho.”

 

The J.R. Simplot Company said it “fears the investment climate in Idaho will be, and may have already been, tainted from the perspective of sophisticated investors who undoubtedly have many other more favorable jurisdictions in which they may invest their renewable energy dollars.” The J.R. Simplot Company and the Milk Producers of Idaho, among others, asked that a lowered eligibility cap apply only to wind projects and not other renewable projects, such as anaerobic digester, small-hydro and solar projects.

 

The commissions is seeking comment on three matters: 1) the advisability of reducing the published avoided cost eligibility cap; 2) if the eligibility cap  is reduced, the appropriateness of exempting non-wind projects from the reduced eligibility cap and 3) the consequences of dividing larger wind projects into 10 average megawatt projects in order to qualify for the published rate.

 

Written comments are due Dec. 22 and reply comments by Jan. 19. Oral argument will begin at 9:30 a.m. on Jan. 27 in the commission hearing room at 472 W. Washington St. in Boise. 

 

Public comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions About a Case." Fill in the case number (GNR-E-10-04) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

 

A full text of the commission’s order, along with other documents related to this case, is 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 the above case number.