Idaho Public Utilities Commission
Case No. IPC-E-11-25, Order No. 32470
February 24, 2012
Contact: Gene Fadness (208) 334-0339, 890-2712
PUC approves Idaho Power contract with landfill waste to energy project
Idaho Power Company’s 20-year sales agreement with Dynamis Energy LLC’s landfill waste to energy project at the Ada County landfill near Boise has been approved by the Idaho Public Utilities Commission.
At maximum capacity, the project will generate 22 megawatts, according to Eagle-based Dynamis. The agreement states the developer will be paid a 20-year levelized price of $92.53 per megawatt-hour, though the pricing stream varies based on the time of year and the time of day that energy is delivered to Idaho Power. The scheduled operation date is Feb. 14, 2014.
Rates in the agreement may appear high, commission staff noted, but the rates are not unreasonable given that all of the plant’s energy will be delivered during peak hours when energy is substantially more valuable. Further, unlike many renewable projects such as wind and solar which are intermittent, all of this project’s energy will be available during peak-load hours in the summer.
The project is a qualifying facility under the provisions of the Public Utility Regulatory Policies Act. PURPA requires that electric utilities offer to buy power produced from qualifying small power producers or cogenerators. The rate to be paid small-power producers, called an avoided-cost rate, is to be equal to the cost the utility avoids if it would have had to generate the power itself or purchase it from another source. The commission must ensure the avoided-cost rate is reasonable for utility customers because 100 percent of the cost is included in customer rates.
Commission staff said the rates contained in the agreement are not a precise reflection of Idaho Power’s avoided costs and may even be too low. Dynamis maintained that staff’s recommended adjustments are either not immediately quantifiable or would have a minor impact on the contract’s rates. Dynamis agreed to waive any later determination that the contract rate may be too low. The commission concluded that the agreement “contains acceptable contract provisions,” and is in the best interest of the parties and ratepayers.
The commission received about 27 written comments, 16 of those opposed, alleging the project’s technology is untested and the rate is too high.
Regarding whether the technology will work, the commission noted that all power purchase agreements it approves contain provisions to protect ratepayers if the project fails to perform. “Significantly, no payments are made by Idaho Power to Dynamis unless energy is delivered,” the commission said. The agreement also includes liquidated damage provisions if the facility is not brought on line by Feb. 14, 2014.
Some of those commenting objected to Ada County’s approval of the project. The commission said its review is focused on whether the agreement meets PURPA and other state and federal regulations. “Consideration of Ada County’s role in this project is outside our authority. We take no position on the commenters’ expressed frustration with Ada County’s processes and decision-making regarding this project,” the commission said.
The agreement also states that the value of the Renewable Energy Certificates that would be generated over the 20-year contract will be shared equally by Dynamis and Idaho Power.
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 Case No. IPC-E-11-25.
Interested parties may petition the commission for reconsideration by no later than March 9. 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.