Idaho Public Utilities Commission

Case No. IPC-E-10-24

November 26, 2010

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

Website: www.puc.idaho.gov

 

Idaho Power’s first large PURPA project approved

 

The Idaho Public Utilities Commission has approved an Idaho Power Company sales agreement with a 44-turbine wind project near American Falls in eastern Idaho.

 

The 80-megawatt Rockland Wind Project is a PURPA project with a scheduled operation date of Dec. 31, 2011. PURPA is the federal Public Utility Regulatory Policies Act passed by Congress during the energy crisis of the late 1970s. The act requires electric utilities to offer to buy power produced by small power producers or cogenerators who obtain Qualifying Facility (QF) status.

 

The proposed agreement has many unique characteristics because of its size. All Idaho Power PURPA wind projects to date are 10 megawatts or smaller, which is as large as a project can be for developers to be paid an “avoided cost” rate that is determined and published by the commission. 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. However, projects larger than 10 MW can still qualify as PURPA projects if the developer and the utility are able to negotiate a cost that closely matches the utility’s avoided cost. Because customers ultimately pay for the power generated by PURPA projects, it is not in the public interest for the commission to approve sales agreements that result in customers paying more for electricity that could have been generated or purchased elsewhere at lower cost.

 

The negotiated levelized energy price in the 25-year agreement is $71.29 per megawatt-hour, lower than the published avoided cost rate of $75.88 for projects 10 MW or smaller. Blue Ribbon Energy LLC, which develops PURPA projects smaller than 10 MW, did not oppose the agreement, but noted that Rockland was able to accept a lower payment because of tax credits and benefits it received. Blue Ribbon Energy said Idaho Power or any other utility should not be allowed to treat this agreement “as establishing a precedent for rates.”

 

The commission praised Idaho Power and Rockland for negotiating an agreement “that we find sets forth a creative solution to resource issues that have heretofore often resulted only in impasse and the filing of complaints.”

 

Some of those issues resolved include not only price, but items such as delay and security provisions, mechanical guarantees and the treatment of renewable energy credits or “green tags,” created by the project.

 

The agreement contains financial damage and security provisions for the benefit of customers in the event of the project’s default or failure to meet its completion date as well as mechanical availability guarantees. The developer would retain the renewable energy credits (green tags) for the first 10 years which will help offset the development cost. Idaho Power would retain the renewable energy credits for the final 15 years when the utility may have to comply with federal or state renewable portfolio standards.

 

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 No. IPC-E-10-24.

 

Interested parties may petition the commission for reconsideration by no later than Dec. 15. 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.