Workshop set to determine how to handle revenue from SO2 sales
The Idaho Public Utilities Commission is granting an Idaho Power Company motion to conduct a workshop in Boise on Jan. 15 to consider how the revenue from the company’s sale of sulfur dioxide emission allowances might better benefit customers.
Idaho Power sold 35,000 sulfur dioxide (SO2) emission allowances during 2007 for $19.6 million less brokerage fees. The share allocated to Idaho is about $10.1 million, after discounting income taxes and the share that goes to Idaho Power’s Oregon customers.
Last year, about $69 million in SO2 sales proceeds was used to offset the company’s power purchase costs, with 90 percent of the proceeds going to customers and 10 percent to company shareholders. Idaho Power states it is willing to again apply 90 percent of this year’s sale proceeds to the annual Power Cost Adjustment (PCA), which offsets power purchase costs. However, the company suggests there may be other ways to use the SO2 proceeds to provide greater long-term value to customers.
For example, Idaho Power said the 90 percent customer share of proceeds could go to buy green tags from owners of small-wind projects or other renewable projects that have entered into PURPA contracts with the utility. If state or federal renewable portfolio standards (RPS) were enacted, which would require Idaho Power to acquire a certain percentage of its generation from renewable sources, the utility would likely have to buy green tags at prices expected to be higher than today’s prices. If Idaho Power were to buy green tags before an RPS mandate, the company could sell the green tags on a short-term basis and flow the proceeds to customers through the PCA.
Another option suggested by Idaho Power is that it enters negotiations or solicits bids to buy a wind project. The company maintains that by owning a wind project rather than buying energy from elsewhere, customers would have added access to renewable energy at competitive prices. Further, customers would retain the value of the green tags associated with the wind project or project.
The commission is inviting persons or groups interested in determining how the revenue from the sale of the SO2 allowances for 2007 should be treated to participate in the workshop. The workshop will begin at 9:30 a.m. on Jan. 15 in the commission hearing room at 472 W. Washington St. in Boise.