FOR IMMEDIATE RELEASE

Idaho Public Utilities Commission

March 2, 2011

Case Nos. IPC-E-10-56, -57, -58, Order No. 32189

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

Sales agreements with three Murphy area wind projects submitted

Comments are being accepted through March 17 on an Idaho Power Company application for state regulators to accept or reject sales agreements with three wind projects in the Murphy area.

The developer of the projects, Brian Jackson of American Wind Group, LLC, seeks a 20-year agreement for each project with a targeted operation date of Dec. 31, 2012. The agreements state that each project would deliver up to 10 average megawatts monthly to Idaho Power and that the developers would be paid by Idaho Power at a rate that is published by the Idaho Public Utilities Commission.

However, the applications for the projects were 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.

The temporary reduction in the eligibility cap came after Idaho’s three major investor-owned electric utilities said the rapid development of large wind projects that are broken up into smaller 10-MW projects in order to qualify for the published rate is circumventing utility planning process and creating system reliability and operational issues. Idaho Power further 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 commission’s reduction in the eligibility cap does not waive regulated utilities’ PURPA requirement to buy energy from wind and solar projects up to 80 MW, but the rate paid to the projects between 100 kW and 80 MW is negotiated between the utility and the developer using the published rate as a starting point for negotiation. For now, projects under 100 kW qualify for the posted rate.)

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.

The rate proposed for the projects is a non-levelized rate that increases through the life of the contract. In 2013, the agreement’s proposed 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.

To address some of Idaho Power’s concerns, the agreements state that Idaho Power can curtail generation from the projects without compensation to the developer under certain conditions. Those conditions include times when generation on Idaho Power’s total system approaches minimum levels needed to serve customers and further acceptance of the wind would have a detrimental effect on the utility’s ability to simultaneously manage the generation also coming from thermal, hydro and other resources.

The agreement also 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-10-56, -57 or -58) 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 orders, along with other documents related to these cases, is available on the commission’s Web site. Click on “File Room” and then on “Electric Cases” and scroll down to any of the above case numbers.