September 11, 2007

IPC-E-07-04, PAC-E-07-07, PAC-E-07-13, AVU-E-07-02

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



PUC allows daily adjustment to prices paid generators


State regulators have granted a request by utilities to adjust rates paid small-power producers so they more closely match the actual value of energy at the point of time it is delivered.


The value of energy increases during peak demand times and decreases during light-load hours, yet utilities maintain they must pay the same price to the small-power generator during light load hours as it pays when the energy is delivered during heavy load hours.


In a related matter, the Idaho Public Utilities Commission denied a request by utilities to place further restrictions on the distance allowed between wind projects, or other small-power generation projects, which are owned by the same entity.


Under the federal Public Utility Regulatory Policies Act of 1978 (PURPA), regulated utilities must buy power from generators of renewable energy a rate that is published by state utility commissions. That rate, currently about $62.40 per megawatt-hour, is called the avoided-cost rate and is typically more attractive than market rates. The rate is to be based on the cost the utility avoids when it buys from a PURPA project and thus does not have to generate the power itself or buy it from another source.


Utilities are already allowed a seasonable adjustment to account for the changing value of energy between the various seasons of the year. But because the value of energy fluctuates hourly, Idaho Power Company and Rocky Mountain Power (formerly Utah Power) petitioned the commission for a daily load shape adjustment, similar to one recently granted Avista Utilities in northern Idaho. The revision does not change the computation of the avoided-cost rate but could change the revenues received by small-power producers depending on the times during the day they deliver their energy.


Idaho Power proposed a daily load shape adjustment of $11.63, as the weighted difference between light-load hours and heavy-load hours. However, commission staff proposed and the commission adopted an adjustment of $7.28. For Rocky Mountain Power, the difference, on average, is $7.18.


Idaho Power and Avista also asked commission to adopt a rule, similar to one approved in Oregon, which prevents utilities from having to pay the published avoided-cost rate when the same owner/developer has small-power projects located within five miles of each other. Current federal regulations state that projects must be at least one mile apart.


The utilities allege some wind developers build their projects at or near the size limit to qualify for the published PURPA rate and then locate another similar-sized project close by and still qualify for the published rate simply by creating a separate legal entity, although ownership does not change.


But the commission said the public interest would not be served by the more restrictive rule. “It is a change that we find would encourage and might actually promote gamesmanship,” the commission said.


A full text of the commission’s orders in these cases, along with other documents, are available on the commission’s Web site at Click on “File Room” and then on “Electric Cases” and scroll down to any of the above case numbers.


Interested parties may petition the commission for reconsideration by no later than Sept. 28. 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.