Idaho Public Utilities Commission

Case No. IPC-E-11-23, Order No. 32410

December 27, 2011

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

PUC asked to assert jurisdiction over PURPA project

Idaho Power Company is asking the Idaho Public Utilities Commission to assert jurisdiction over a proposed power sales agreement between the utility and a landfill gas generating facility in Kootenai County.

The Fighting Creek Landfill Gas to Energy Station near Bellgrove is owned by Kootenai Electric Cooperative and can generate up to 3.2 megawatts. Kootenai Electric seeks to sell the output of its landfill gas plant to Idaho Power customers in Oregon. The project is a qualifying facility under the provisions of PURPA, the Public Utility Regulatory Policies Act.

PURPA requires investor-owned electric utilities to buy energy from small-power producers at rates published by state commissions or negotiated between the utility and the small-power producer. The rates the utility pays the producer for project output is based on avoided-cost, or the cost the utility avoids by not generating the power itself or buying it elsewhere.

Kootenai Electric wants to sell its output to customers in Idaho Power’s eastern Oregon territory, but seeks to be paid Oregon’s PURPA avoided-cost rate, which is higher than Idaho’s rate.

Idaho Power states the project and its interconnection to Idaho Power’s transmission grid are both in Idaho, and thus subject to Idaho’s published rates. Because 95 percent of the costs of PURPA power are paid by Idaho Power customers in rates, Idaho Power maintains Kootenai Electric’s proposed transaction is a “blatant manipulation of PURPA’s rules and regulations ... in order to financially profit to the direct and substantial detriment of Idaho Power’s customers.” Idaho Power is asking the Idaho commission to assert jurisdiction over the transaction and apply Idaho rates to the project’s output.

Kootenai Electric claims it tried to negotiate a contract with Avista Utilities, which serves customers in northern Idaho, but Avista would not agree to pay Kootenai for the environmental attributes (renewable energy credits or RECs), nor would Avista disclaim ownership of the RECs. Kootenai then decided to attempt to sell to the nearest investor-owned utility in Oregon because Oregon requires that the value of RECs remain with the small-power producer. Idaho Power is the nearest utility with customers in Oregon to which Kootenai can most easily wheel its output without operating at a substantial loss. Kootenai Electric proposes to wheel the generation across Avista’s system for delivery to Idaho Power, although Avista has yet to approve an interconnection agreement to do so.

Kootenai Electric maintains that the Idaho commission is prohibited by federal law from regulating PURPA projects and does not have authority to restrict its access to markets. Granting Idaho Power’s petition for Idaho to assert jurisdiction would violate the Commerce Clause of the U.S. Constitution, Kootenai Electric claims.

The commission plans to handle this request in a modified procedure that uses written comments rather than conducting a hearing, unless customer comments can demonstrate a need for a public hearing. Comments are accepted through January 4 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 number (IPC-E-11-23) 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 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 the above case number.