July 2, 2007
AVU-E-07-02, IPC-E-07-03, PAC-E-07-07
Contact: Gene Fadness (208) 334-0339, 890-2712
Website: www.puc.idaho.gov
Utilities propose steps to resolve wind development issues
Idaho’s three large regulated electric utilities are
proposing a possible settlement with wind developers that could resolve cost
issues that have slowed development of small-wind projects in the state for
nearly two years.
In the summer of 2005, Idaho Power Co., asked the Idaho
Public Utilities Commission to place a moratorium on rapidly increasing wind
development within its territory. The moratorium was requested to allow Idaho
Power time to study how much it costs the utility to accept wind and to provide
for back-up generation when wind output is less than projected. The commission
denied the company's request to suspend wind development entirely, but did
agree to lower the size of wind projects that can qualify for the commission
posted rates that utilities must pay generators of small renewable power
projects. The commission lowered the
size of wind projects that could qualify for the posted rates from 10 megawatts
to 100 kilowatts.
Since then, Idaho Power Co., Avista Corporation and PacifiCorp
have completed studies to determine wind integration costs and are now
proposing that the published rate for wind be discounted to allow for wind’s
intermittency and that the size limit of projects that can qualify for the rate
be brought back up to 10 MW.
Under the federal Public Utility Regulatory Policies Act
of 1978 (PURPA), regulated utilities must buy power from generators of
renewable energy at a rate that is set by state utility commissions. That rate,
currently about $64 per megawatt-hour, is called the avoided-cost rate. The
rate is 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. However, Idaho’s utilities have questioned whether the current PURPA
rate is truly based on avoided-cost since it does not take into account the
costs the utilities incur when they have to use more expensive back-up
generation when wind output is less than projected.
The three utilities differ on exactly how much the
discount for wind integration should be, but the proposals are in the $5 to
$7.50 per MW range.
The utilities are also proposing that wind developers
reimburse them for the cost of state-of-the-art wind forecasting services and
that they be allowed to require guarantees from developers that their wind
generation projects are mechanically capable to generate at full output during
85 percent of the hours during a month.
If the developers agree to these provisions, the utilities
would agree to support removal of the
"90/110 performance band" now required in wind contracts. That
requirement stipulated that when output was less than 90 percent of projections
or more than 110 percent of projections, that Idaho Power could pay developers
a lesser market-based rate rather than the PURPA rate.
The commission is inviting wind developers and other interested parties to intervene in the case for the purpose of presenting evidence, cross-examining witnesses and participating in settlement or negotiation conferences. The deadline to intervene is July 18.
Commission staff will sponsor a joint settlement workshop
to explore whether parties can agree to a common generic wind integration
adjustment to published rates. Participants must have been a party or record in
one or more of the previous dockets related to this case. The workshop is
scheduled for July 31 at 9 a.m. in the East Conference Room of the J.R.
Williams Building, 700 W. State St. in Boise.
July 2, 2007
Case Numbers AVU-E-07-02, PAC-E-07-07
In a related docket, the commission is taking public
comment on a petition by Avista and PacifiCorp to prohibit wind projects under
common ownership from reconfiguring themselves into multiple projects of a
smaller size to qualify for the PURPA rate. Some developers disaggregate their
projects to make them smaller, give them different names and build them within
a few miles of each other so that they can qualify for the PURPA rate.
Idaho Power Co. filed a similar petition earlier this
year. All three utilities contend the disaggregating should not be allowed.
The commission is taking comments on the Avista and
PacifiCorp petitions through July 27. Comments are accepted via e-mail by
accessing the commission’s homepage at www.puc.idaho.gov
and clicking on "Comments & Questions." Fill in the case number
(AVU-E-07-02 for Avista and PAC-E-07-07 for PacifiCorp) and enter your
comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074
or faxed to (208) 334-3762.