Case No. IPC-E-06-21, Notice of Oral Argument

November 21, 2006

Contact: Gene Fadness (208) 334-0339




Oral arguments set for Nov. 28 in wind case


The Idaho Public Utilities Commission will hear oral arguments Tuesday from Magic Valley wind developers and regulated electric utilities over who should have to pay for transmission upgrades to accommodate new generation from primarily wind sources in south-central Idaho.


A complaint filed by Cassia Gulch Wind Park and Cassia Wind Farm alleges that an Idaho Power plan to require small-power producers to pay for nearly $60 million in transmission upgrades to accommodate nearly 200 megawatts of new generation threatens the economic viability of a number of wind projects and will stifle further development of renewable energy in Idaho.


The developer of the Cassia wind projects, Jared Grover, is asking the Idaho Public Utilities Commission to determine that costs to upgrade the 138-kV transmission system in the Twin Falls area should be borne by all Idaho Power ratepayers, not just small-power producers.


Cassia Wind Farm is a 10.5-MW facility with five, 2.1 MW turbines. Cassia Gulch Wind Park is an 18.9-MW project that will include nine, 2.1-MW turbines. Both projects, in the Bell Rapids area near Hagerman, are slated to be online by Dec. 31. Grover is not disputing developers paying for new feeder lines and substations to interconnect with Idaho Power’s grid, but says the developers should not have to finance upgrades to the “backbone” of Idaho Power’s transmission system. Grover is asking for expedited treatment because turbine costs are increasing rapidly and further delay could impact anticipated delivery of the turbines.


Grover’s projects, as well as others that have signed contracts with Idaho Power, were all approved as Qualifying Facilities (QFs) under the provisions of the Public Utilities Regulatory Policies Act of 1978, or PURPA.


PURPA, passed by Congress during the energy crisis of the late 1970s, requires electric utilities to buy power produced by small power producers or cogenerators who obtain QF status from the Federal Energy Regulatory Commission (FERC). The published rate to be paid project developers is set by state commissions and 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 the Idaho case, wind developers maintain that FERC does not require that QF projects pay all interconnection costs. It is up to state commission to determine interconnection costs, the developers argue. The wind developers argue that Idaho Power’s tariff for interconnection, Schedule 72, says QFs are responsible to pay for the interconnection between the generation facility and the point of interconnection with the existing transmission grid. The tariff does not address responsibility for upgrades beyond that point, the developers say, adding that requiring new generators to bear the cost of grid upgrades discriminates in favor of older, existing generators.




Idaho Power argues that requiring ratepayers to pay for interconnections costs would amount to a ratepayer subsidy, violating the basic PURPA principle of “ratepayer neutrality” that says the cost to ratepayers should be no greater for PURPA projects than if the power was generated by the utility itself or purchased from another source. A decision favorable to the wind developers would result in more favorable treatment than that given Idaho Power’s own generating units as well as independent, merchant generation sources and could adversely affect the utility’s ability to require other developers to fund system improvements, according to Idaho Power. The utility claims a decision for the wind developers could result in economically inefficient siting decisions made by QFs because transmission costs are ignored.


Idaho Power maintains the upgrade is needed to ensure system reliability when a loss of transmission in some segments of the grid during a peak use period could create thermal overload on the lines remaining in service. The wind generators argue that there are less costly means of preventing overloads than major transmission upgrades such as curtailing predetermined amounts of generation during an outage.


Oral argument is scheduled for 9:30 a.m. on Nov. 28 in the commission hearing room, 472 W. Washington St. Comments have been filed by Idaho Power, Rocky Mountain Power, Avista Utilities, Cassia, Exergy Development Group of Idaho LLC and commission staff. The comments are available on the commission’s Web site at Select the “Electric” icon, then “Open Electric Cases,” and scroll down to Case No. IPC-E-06-21.


This case is not related to a 2005 case, IPC-E-05-22, which will determine how integration costs from wind generation should be treated in calculating the rates to be paid wind developers. That case is still open.