Idaho Public Utilities Commission

Case Nos. IPC-E-09-18, Order No. 30924; IPC-E-09-19, Order No. 30925;

IPC-E-09-20, Order No. 30926

October 15, 2009

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

Website: www.puc.idaho.gov

 

Idaho Power will buy energy from three Hagerman area wind farms

 

The Idaho Public Utilities Commission has approved three energy sales agreements between Idaho Power Company and a Boise-based wind developer who will build three wind farms in the Hagerman area.

 

The sales agreements are with Exergy Development Group of Idaho, which plans to build all three projects under the provisions of PURPA, the Public Utility Regulatory Policies Act of 1978. PURPA requires electric utilities to offer to buy power produced by qualifying small-power producers or co-generators. The rate to be paid project developers, called an “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 three projects – Camp Reed (22.5 MW), Payne’s Ferry (21 MW) and Yahoo Creek (21 MW) – are scheduled to begin operating Sept. 30, 2010. Under the agreements, each of the plants will deliver up to 10 average megawatts on a monthly basis, which is the upper limit of the size of projects that can qualify for PURPA posted rates.

 

The projects are among the first PURPA wind agreements signed since the resolution of a major case involving all of Idaho’s regulated electric utilities and wind developers. Because of the intermittency of wind generation and its impact on the utility transmission grid, the posted rate paid to wind developers is reduced to reflect the utility’s cost of integrating the generation into its system. Wind developers must also provide mechanical guarantees and share in the expense of wind forecasting.   In exchange, the utilities agreed to drop a provision that penalized wind developers if their actual generation output was less than 90 percent or more than 110 percent of their projected output.

 

These wind agreements are also unusual in that the contracts are for levelized rates rather than non-levelized rates. Levelization means that the developer is paid an energy price at the front-end of the 20-year agreement that is in excess of the actual energy value. The overpayment is recouped in later years when the payments are projected to be less than the value of the power. Levelized rates can be an incentive to cogeneration and small-power development because it helps project developers recoup up-front expenses more quickly. But few developers choose this option because of the accompanying security requirements put in place to discourage contract default. In the event of a default, some project owners may not be unable to refund the utility the overpayment that comes in the early years of a levelized contract.

 

The developer of these three wind projects has agreed to meet various security requirements in addition to a maintenance reserve account of at least $2 million.

 

Under the 20-year contracts, Idaho Power will pay the posted rate of $84.40 per megawatt-hour during months of normal demand, which include January, February, June, September and October. During the months of heavy demand (July, August, November and December), Idaho Power will pay $102.58 per megawatt-hour. During months of less-than-normal demand (March through May), Idaho Power will pay $61.47 per megawatt-hour. Those rates include the wind integration charge and are adjusted slightly during heavy-load hours and light-load hours of the day.

 

Documents related to these cases, including the commission’s orders, can be accessed on the commission’s Web site at www.puc.idaho.gov. Click on the electric icon, select “Open Electric Cases” and scroll down to case numbers IPC-E-09-18, -19 and -20. Interested parties may petition the commission for reconsideration by no later than Oct. 29. 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.