Idaho Public Utilities Commission

March 16, 2011

Case No. IPC-E-11-01, Order No. 32203

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

Idaho Power seeks PUC decision regarding Oreana wind project

Comments are being accepted through April 7 on an Idaho Power Company application for state regulators to accept or reject a sales agreement with a 5-megawatt wind project near Oreana.

The developer of the project, Boise-based Western Desert Energy LLC, seeks a 20-year agreement with a scheduled operation date of Dec. 1, 2012. The agreement states that the project developer would be paid by Idaho Power at a rate that is published by the Idaho Public Utilities Commission.

However, the application for the projects was submitted to the commission after the Dec. 14, 2010, effective date of a commission order that reduced the eligibility cap on the size of wind and solar projects that can qualify for the commission’s published rate from 10-megawatts to 100 kilowatts.

Idaho’s three major investor-owned electric utilities asked the commission to temporarily reduce the eligibility cap on projects that can qualify for the commission’s published rate while the commission examines issues surrounding the rapid development of large wind projects that are broken up into smaller 10-MW projects in order to qualify for the published rate. The utilities claim the disaggregation of the wind projects is circumventing their planning processes and creating system reliability and operational issues. Idaho Power claims that the “continuing and unchecked requirement” for the utility to acquire additional intermittent generation regardless of its need for additional energy “increases the price its customers must pay for their energy needs.”

Despite those concerns, Idaho Power states it is complying with its federal mandate under the Public Utility Regulatory Policies Act (PURPA) to accept power generated from qualifying renewable facilities. (The reduction in the eligibility cap does not waive regulated utilities’ PURPA requirement to buy energy from wind and solar projects, but the rate paid to projects larger than 100 kW will now be negotiated between the utility and the developer using the published rate as a starting point for negotiation.)

PURPA was passed by Congress in 1978 to encourage development of renewable energy technologies as alternatives to burning fossil fuels or building new power plants. The act requires that electric utilities offer to buy power produced from qualifying small-power producers at rates determined by the states. The rate to be paid small-power developers, 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 price utilities pay to qualifying producers is included in customer rates.

Western Desert Energy seeks to be paid a non-levelized rate that increases through the life of the contract. In 2013, the published rate for normal load hours during normal seasons of the year is $61.93 per megawatt-hour, escalating to $125.89 per MWh in 2033. The rate varies to account for heavy and light load hours of the day and heavy and light load seasons of the year.

The agreement states that it is up to the wind developer to work with Idaho Power’s business delivery unit to ensure that interconnection facilities and transmission upgrades are completed in time to meet the projects’ scheduled operation date. If the projects fail to meet their delivery dates, delay damages will be assessed.

Comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions About a Case." Fill in the case numbers (IPC-E-11-01) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

A full text of the commission’s order, along with other documents, is available on the commission’s Web site. Click on “File Room” and then on “Electric Cases” and scroll down to the above case number.