Idaho Public Utilities Commission
Case No. IPC-E-09-34, Order No. 31087
May 20, 2010
Contact: Gene Fadness (208) 334-0339, 890-2712
Contract with geothermal project is approved
The Idaho Public Utilities Commission is approving an Idaho Power Company sales agreement with the developer of geothermal generation project 12 miles northwest of Vail, Oregon. The project is within Idaho Power’s service territory.
The Neal Hot Springs Unit No. 1 is expected to produce about 22 megawatts of power by late 2012. The project is owned by USG Oregon LLC, a subsidiary of U.S. Geothermal based in Boise. The agreement provides that Idaho Power will receive the rights to the renewable energy credits now available or created during the 25-year term of the agreement.
Beginning in 2012, the flat energy price, under the agreement, is $96 per megawatt hour. The price escalates annually by 6 percent in the initial years and by 1.33 percent during the latter years of the agreement. The approximate 25-year levelized price is $117.65 per MWh.
Idaho Power asserts that while the price of energy under this agreement is higher than most sales agreements, there are benefits that bring value to Idaho customers. Those include Idaho Power’s right to the renewable energy credits, the utility’s ability to curtail energy output from the project when needed, Idaho Power’s first right to ownership of possible future site development and the right to extend the terms of the contract.
Initially, Idaho Power sought bids for a geothermal source, but received only three. Two of those bids were later withdrawn and the third was too speculative, the company said. The company then decided to actively pursue negotiations with developers of five potential geothermal sites, including the Neal Hot Springs site.
The commission noted that a bid process is the preferred method for getting competitive proposals for energy purchases. But when the bid process is not successful, Idaho Power is not precluded from directly negotiating contract terms with a single provider. However, Idaho Power “always bears the burden” in demonstrating that a purchase agreement’s terms “are fair, just and reasonable,” the commission said.
All payments Idaho Power makes for the purchase of energy from the site will be included in the company’s annual Power Cost Adjustment process until the next rate case, at which time costs are included in base rates.
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 www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to case number IPC-E-09-34.
Interested parties may petition the commission for reconsideration by no later than June 10. 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.