Idaho Public Utilities Commission

Case No. IPC-E-10-02, Order No. 31034

April 5, 2010

Contact: Gene Fadness (208) 334-0339, 473-8791

Website: www.puc.idaho.gov

 

Commission accepts agreement with anaerobic digester

 

The Idaho Public Utilities Commission has approved a contract between Idaho Power Company and Cargill, Inc., the developer of an anaerobic digester near Hansen.

 

The agreement is for 2.25 megawatts of output from Cargill’s Bettencourt Dry Creek Biofactory.

 

The anaerobic digester has been producing electricity on a non-firm basis since August of 2008. This 10-year agreement is for firm delivery.

 

The project is a Qualified Facility (QF) under the provisions of the federal Public Utility Regulatory Policies Act (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 or co-generators who obtain 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.

 

Commission staff noted this agreement contains significantly higher delay penalties than past PURPA contracts. The delay security is $45 per kW or about $101,250, compared to about $25 per kW in previous contracts.

 

Idaho Power maintains the higher penalty is needed because several PURPA projects have failed to meet their scheduled operation date.

 

Although this project is already operating, commission staff believes Idaho Power included the $45 per kW penalty partly because the company is seeking an endorsement of the higher security requirement with the intent of including it in future contracts.

 

The commission said delay provisions should not be too much so as to be punitive, but should be high enough to be an incentive for project owners to complete their projects on time. Further, the commission said, the delay provisions mitigate any additional costs to the company and its customers when the utility is forced to buy substitute power on the market due to a project not coming on line.