March 22, 2012

Case No. GNR-E-11-03, Interlocutory Order No. 32498

Contact: Gene Fadness 334-0339; 890-2712


PUC denies Idaho Power motion, but allows more flexibility in sales agreements


The Idaho Public Utilities Commission has denied an Idaho Power Company motion to temporarily suspend the utility’s federal PURPA obligation to enter into sales agreements with qualifying small-power producers.  But, at the same time, the commission is giving the utility more latitude in determining a fair price for the energy it buys from the projects. 


Idaho Power said a suspension of PURPA development was needed while the commission processes a case (GNR-E-11-03) that addresses how energy from the small projects, called Qualifying Facilities (QFs), should be priced.  That case is ongoing with technical hearings scheduled for Aug. 7-9.  In the meantime, Idaho Power argued, it may be required under PURPA regulations to enter into contracts for energy it claims it does not need at prices it claims are too high, unduly inflating customer rates. 


The federal Public Utility Regulatory Policies Act (PURPA) requires regulated utilities to buy energy from qualifying small-power generators, such as hydro and wind projects.  The rate utilities must pay QFs is called an “avoided cost rate,” and is based on the costs the utility avoids by not having to generate or buy the power itself.   


Today’s commission order says the commission cannot suspend the utility’s federal obligation to buy from qualifying facilities.  But the commission said methods previously approved by the commission and used by Idaho Power to determine the rate paid developers “do not currently produce rates that reflect Idaho Power’s avoided costs and are not just and reasonable, nor in the public interest.”  Effective immediately and until the current case concludes, contracts for all projects over 100 kW can be individually evaluated and the utility is not bound by some of the parameters that were used to calculate avoided-cost in previous contracts, the commission said. 


 “As contracts are negotiated and presented to the commission for approval, parties should keep in mind that FERC (Federal Energy Regulatory Commission) regulations require that the avoided-cost rates for all QF purchases be just and reasonable to utility customers and in the public interest, and not discriminate against qualifying cogeneration and small-power production facilities,” the commission said.  “Further, utilities are required to purchase QF generation at a rate equal to the utility’s avoided cost. The commission’s case-by-case review will ensure QF purchase agreements satisfy these and other FERC requirements.”


In late 2010, the commission lowered the size of wind and solar projects that can qualify for the commission’s published avoided cost rate from 10 megawatts to 100 kilowatts.  Today’s order extends that 100 kW eligibility cap to all other generation types such as biofuel, anaerobic digestion and geothermal projects.  


PacifiCorp, which does business as Rocky Mountain Power in eastern Idaho, sought to join Idaho Power’s motion, but the commission’s order applies only to Idaho Power. 


Several groups, including Exergy Development Group of Idaho, JR Simplot Company, the Idaho Conservation League and the Snake River Alliance opposed Idaho Power’s motion.   Exergy, a Boise-based wind developer, urged the commission to leave the current procedure in place until the overall case is resolved.  


Idaho Power claimed that 27 QFs representing 595 megawatts of capacity are “seriously exploring” sales agreements with the utility.  Those projects would be in addition to the existing 119 PURPA projects, representing 989 MW of nameplate capacity, already in place. 


A copy of the commission’s order and other documents related to this case will soon be posted on the commission’s Website at Click on the electric icon, then on “Open Electric Cases,” and scroll down to Case No. GNR-E-11-03.  Interested parties may file petitions for review by no later than April 19.