February 23, 2008
Contact: Gene Fadness 208.334.0339
Utility proposes end to reduced wind project size cap
Larger wind projects could once again qualify for a published rate that is typically higher than market rates when they sell their output to Idaho Power Company if state regulators approve a petition recently filed by the utility.
Idaho Power is proposing that the current 100-kilowatt limit on wind projects that can qualify for the higher rate be moved back up to 10,000 kilowatts or 10 megawatts.
Under the federal Public Utility Regulatory Policies Act of 1978 (PURPA), regulated utilities such as Idaho Power Co. must buy power from generators of renewable energy at a rate that is published by state utility commissions. That rate, currently about $64 per megawatt-hour, is called the avoided-cost rate. The rate is intended to be based on the cost the utility avoids when it buys from a PURPA project and thus does not have to generate the power itself or buy it from another source. However, Idaho Power Co. and other utilities have questioned whether the current PURPA rate is truly based on avoided-cost since it does not take into account the costs the company incurs when it has to use its hydroelectric facilities as the backup for wind generation. Wind can cost more for utilities when projected wind output is not met and the utility is forced to generate its own back-up power or buy from another more expensive resource.
In June 2005, Idaho Power Co. asked the commission to suspend further PURPA wind projects until the costs of integrating wind into the company's transmission could be determined. The commission denied the company's request to suspend PURPA projects, but did agree to lower the size of wind projects that can qualify for the PURPA rate from 10 MW to 100 KW until an appropriate wind integration cost could be determined.
Idaho Power recently completed a wind integration study and is now asking the commission for a return to the 10 MW size cap if wind developers: 1) agree to share in the cost of state-of-the-art wind forecasting services; 2) include a guarantee in future wind contracts that demonstrates projects are mechanically capable to generate at full output during 85 percent of the hours during a month and 3) agree to accept a discount off the PURPA rate to account for wind integration costs. Idaho Power is contending that discount should be $10.72 per MW off the $64 per MW PURPA rate.
Further, Idaho Power would also agree to remove the "90/110 performance band" now required in wind contracts. That requirement stipulated that when output was less than 90 percent of projections or more than 110 percent of projections, that Idaho Power could pay developers a lesser market-based rate rather than the PURPA rate.
Idaho Power has scheduled a workshop with wind developers, the commission staff and other interested parties to discuss the company's petition. Following that workshop, commisson staff will file a status report with a recommendation for further procedure. Idaho Power has notified interested wind developers regarding the workshop. Those interested in knowing more about the workshop may e-mail the company at email@example.com or call 388-2688.
To see a complete copy of Idaho Power’s application, go to www.puc.idaho.gov. Click on the electric icon, then on “Open Electric Cases,” and scroll down to IPC-E-07-03.