Commission approves Telocaset Wind agreement
The Idaho Public Utilities Commission today approved a major wind agreement between Idaho Power Company and Houston-based Telocaset Wind Power Producers LLC. The agreement for 100 megawatts of wind energy is needed to meet Idaho Power’s growing demand, the commission said.
“Moreover, the addition of wind generation to the western side of the company’s service territory adds some geographic diversity to its growing portfolio of wind resources,” the commission said. Most of Idaho Power’s wind projects are on the company’s eastern side, in south-central Idaho. Telocaset’s wind farm is in eastern Oregon’s Union County near North Powder. Energy will be delivered to a point on the La Grande-Brownlee 230 kV transmission line.
The 20-year sales agreement with Telocaset starts at a base rate of $48 per megawatt-hour with an annual escalation rate of 3 percent. The levelized cost of the contract over the entire 20 years is estimated at $62.38 per MWh.
The agreement has provisions similar to those included in the company’s agreements with small wind projects that penalize Telocaset if output does not meet projections. The agreement provides that Telocaset will deliver detailed forecasting data, including forecasts of energy to be delivered during the next hour, day and week. The data will assist Idaho Power to integrate the wind power into the utility’s resource supply mix. The project, scheduled to be operating by March 21, 2008, is expected to generate its most output during those times of winter and summer when there is peak demand on Idaho Power’s overall generating system.
The estimated cost of transmission upgrades and interconnection to Idaho Power’s transmission system is $3.6 million. Of that, an estimated $2.3 million is the expense required to allow Telocaset to interconnect with Idaho Power’s transmission system. Telocaset will pay all the costs related to interconnection. The remaining $1.3 million is the estimated expense for upgrades to the company’s general transmission system. Because those upgrades benefit all customers, Telocaset will be eligible to have that amount refunded by Idaho Power after it makes the initial investment for those upgrades.
Idaho Power’s 2004 growth plan, called an Integrated Resource Plan, said the company would solicit bids for 200 MW of wind energy. In September 2005, the request-for-proposals was revised downward to ask for 100 MW because of the quantity of wind the company was getting from small-wind projects in the state. Telocaset was selected as the preferred bidder from among seven bids representing 19 projects between 45 MW and 200 MW. In its findings, the commission said the RFP process was “conducted in a fair and reasonable manner” that resulted in the selection of the best proposal.
Three organizations, the Northwest Energy Coalition, the Renewable Northwest Project and the Idaho Farm Energy Association submitted comments for the case record.
The Northwest Energy Coalition and the Renewable Northwest Project said the agreement would be beneficial to both Idaho Power and ratepayers and furthers renewable energy in Idaho Power’s mix of energy resources. The rate is one of the most cost-effective of all generation sources identified in Idaho Power’s long-range plan, the groups said.
The Idaho Farm Energy Association said the contract is a wise investment for ratepayers, but noted that the project is a $160 million investment in a rural Oregon county while Idaho customers pay for the energy. The organization said projects similar to this, which typically generate more than $1 million per year in local economic benefits, are desperately needed in rural Idaho.
A full text of the commission’s order, along with other 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 No. IPC-E-06-31.