Idaho Public Utilities Commission

Case No. IPC-E-08-09, Order No. 30608

August 8, 2008

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



PUC accepts sale agreement between Idaho Power, anaerobic digester


The Idaho Public Utilities Commission has approved an Idaho Power Co. application to buy power from an anaerobic digester to be built alongside the Big Sky Dairy near Gooding.


The proposed 20-year contract with DF-AP#1 LLC is for 1.5 megawatts of generation. DF-AP, based in Ferndale, Wa., has a scheduled operation date of Feb. 14, 2009.


The generator qualifies as a small-power production facility under the provision of the Public Utility Regulatory Policies Act of 1978, or PURPA. Passed by Congress during the energy crisis of the late 1970s, PURPA requires electric utilities to offer to buy power produced by small-power producers who obtain Qualifying Facility (QF) status. The rate to be paid project developers, called an “avoided cost rate,” is determined and published by state commissions. The avoided cost rate 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. The avoided cost rate for a non-fuel generator that signs a non-levelized contract during 2008 is $66.82 per megawatt-hour or 6.68 cents per kilowatt-hour.


Unique to this contract is a clause that requires DF-AP to pay a stipulated amount if the project does not come online by its contracted date. Commission staff said the provision is reasonable because at least six separate PURPA facilities have failed to meet their contractual online dates with Idaho Power.


The commission agreed that a delay security provision is reasonable to protect the utility against potential default or failure. However, the commission is concerned that such provisions could have a “potentially deleterious effect” on future PURPA projects. “Quite often, operators of (PURPA) qualified small-power production facilities do not have ready access to the necessary amount of security or capital delineated in this agreement.”


The commission said delay security provisions should come close to reflecting Idaho Power’s increase in power supply costs if the project fails to meet its scheduled online date and not be significantly greater than that amount so as to be “punitive in nature.”


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 Click on “File Room” and then on “Electric Cases” and scroll down to Case No. IPC-E-08-09.


Interested parties may petition the commission for reconsideration by no later than Aug. 20. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.


Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.