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PUC Deals Big Blow To Wind Generators

Idaho’s Public utilities commission has dealt a blow to companies seeking to sell massive amounts of electricity to Idaho Power and two other utilities in the Gem State.

Monday the PUC issued an order putting a temporary limit on the size of so-called PURPA projects which require the big utilities to purchase power from alternative renewal resource generators–like wind farms.

The old rule put a cap of 10 megawatts on PURPA projects. The new rule cuts it back to a mere 100 kilowatts. The 100 kilowatt figure equals .1 megawatts or put another way, 10 megawatts equals 10,000 kilowatts.

This is a major news story and will have a huge financial impact on future wind projects in Idaho. The GUARDIAN reported last month that Idaho Power now has either contracts, projects about to be built, or existing wind capacity that will provide enough power to meet MINIMUM daily demand.

TUESDAY P.M.Here is a statement from Idaho Power that mentions everything except the fact THEY sought to get the cap lowered to avoid forced purchase of power they claim not to need.

Idaho Power has a long and robust commitment to sustainable resources that started nearly 100 years ago with the first dam in our hydroelectric fleet. The commission’s order will not eliminate our obligation to purchase power from wind, solar, or other PURPA QFs. It simply modifies the way the price is calculated. This ensures the cost we all pay most closely aligns with the value we all receive.

Idaho Power continues to negotiate, process, execute and file for IPUC approval PURPA firm energy sales agreement contracts as we did prior to this order. We continue to adhere to commission orders regarding the purchase of power from PURPA projects, and maintain our commitment to a balanced resource portfolio that includes a significant amount of sustainable generation resources.

Details from the PUC follow.

Commission adjusts size cap for wind, solar projects

Wind and solar project developers that want to be paid a rate published by the Idaho Public Utilities Commission can be no larger than 100 kilowatts, according to an order issued by the commission today. Previously, projects up to 10 megawatts in size could qualify for the published rate. The 10 MW upper limit remains for non-wind and non-solar renewable projects.

The smaller size limit for wind and solar projects that can qualify for the published rate is temporary until a number of issues that led to a petition filed by the state’s largest three electric utilities can be resolved. Wind and solar projects that have signed agreements with utilities dated before Dec. 14 are still under the former 10 MW eligibility cap.

The three regulated utilities – Idaho Power Company, Avista Utilities and PacifiCorp – contend that a rapidly expanding number of wind projects is having a profound impact on customer’s rates and reliability. The utilities contend that large-scale wind farms are breaking up their projects into smaller 10-MW increments in order to qualify for the published rate, which is typically more attractive than rates for projects larger than 10 MW.

The published rate is called an “avoided-cost rate” because it is to be based on the cost the utility avoids by buying power from the small-power producer and, thus, not having to build the generation itself or buy power from another source.

Small-power producers can have their projects declared Qualifying Facilities (QFs) under the provisions of the federal Public Utility Regulatory Policies Act (PURPA) passed by Congress in 1978 to promote the development of renewable energy technologies. PURPA requires electric utilities to buy power generated by QFs at the avoided-cost rate determined by state commissions. The commission must ensure the avoided-cost rate is reasonable for utility customers because 100 percent of the price utilities pay to QFs is included in customer rates.

The three utilities claim the small-power projects PURPA was originally intended to encourage are now often developed by sophisticated large-scale wind farms that disaggregate large wind projects into several smaller projects in order to qualify for the published avoided-cost rate. When combined, these projects can total up to 100 or 150 MW interconnecting at one delivery point. Idaho Power claims it could have 1,100 MW of wind generation on its system in the near term, which exceeds the amount of power used in Idaho Power’s total system on the lightest energy-use days. The rapid expansion of these projects is causing a strain on utility transmission systems which can affect electric reliability, the utilities claim.

In today’s order, the commission states the utilities have made a “convincing case,” to temporarily reduce the eligibility cap for wind and solar projects only until these issues can be resolved. The 100-kW cap does not include all types of renewable projects, such as biomass, hydro, geothermal and anaerobic digestion, because these types of projects do not pose the same type of issues as those posed by wind and solar. The latter two are intermittent and must be backed-up by other generation when the wind does not blow or when the sun does not shine. Further, large-scale wind and solar projects can be broken up into smaller projects to qualify for the published rate.

“The commission is supportive of all small-power producers contemplated by PURPA, including wind and solar, and it is not the commission’s intent to push small wind and solar QF projects out of the market,” the commission said. The commission is directing the parties in the case, which include utilities, power producers and environmental organizations, to schedule an informal meeting within 10 days of the commission order to establish a schedule to gather evidence in advance of a technical hearing that will be scheduled during the week of May 9.

Specifically, the commission is soliciting information and investigation of an avoided-cost rate cap structure that allows wind and solar QFs that are 10 MW or smaller to again qualify for published rates while also preventing large QFs from disaggregating their projects to qualify for a rate exceeding true avoided cost.

Parties representing wind developers claim the utilities have not provided sufficient evidence that reducing the published cap will have an adverse impact on PURPA development. The commission said federal rules regulating PURPA development insist that rates for purchases from QFs be “just and reasonable to ratepayers and in the public interest – not in the interest of the QFs.”

The Northwest and Intermountain Power Producers Coalition said the reduction in the eligibility cap is not necessary because if avoided cost rates are accurately set, the rates for small and larger projects would be the same.

Further, they claimed that the commission’s establishment of a December 14 effective date is “retroactive ratemaking,” which is prohibited.

The commission said it provided notice on Dec. 3 that whatever decision it made in the case would be effective Dec. 14. “One need look no further than the abundance of firm energy sales agreements filed with the commission within that time frame to realize that the parties took the commission’s notice of its effective date seriously,” the commission said.

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 Case No. GNR-E-10-04.

Comments & Discussion

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  1. Good for ratepayers. Bad for rent seekers. Good for Idaho Power. Bad for the Obama green revolution.

  2. Not really good for anybody, Idaho Power keeps building plants and buying power from others, and will need even more if we get a dry year or five, or if all the houses now vacant and businesses now closed come back into use as the recession winds down and the mortgage writers start playing fair. By downsizing the allowable wind projects to the point that they’re not financially viable, Idaho Power limits itself to buying excess power from the Wyoming coal-fired plants and whatever else is available. It’s not just a matter of “green,” it also is a matter of availability. Unless the doom-sayers are right and the world ends, we can be pretty certain that wind and sunshine will continue to be available much of the time, pretty much forever. Coal takes a long time to dig up, prepare and haul, and useable supplies of it and natural gas are limited, no matter how big they are. Granted, both are renewable resources, but since it takes millions of years to make them, that’s not a very practical consideration.
    If we use water, wind and solar as they’re available, and leave coal and natural gas for backup supplies in case of a dark, windless stretch, that should be a sustainable combination.

  3. It wasn’t actually good for Idaho Power. Solar and Wind aren’t firm, meaning you can’t rely on always having sun and wind to supply the power. So Idaho Power and the other companies had to provide backup generators for the power they were buying. Add into this that corporations were using this as an income generators and were taking advantage of the Purpa, and you’ve got a whole lot of lost revenue. Factor in the cost of the backup generators and it’s worse.

  4. Rod in SE Boise
    Feb 9, 2011, 12:13 am

    It would be hard to convince me that wind and solar are NOT cheaper power sources than hydro, coal, or natural gas.

    This also proves, once again, that the PUC exists to enhance the profits of the utilities it should be regulating. It’s hard to be anything but an anarchist when the deck is stacked so unfairly against the consumer.

  5. Hey, what was the name of that big name company that stepped away from wind here in Idaho a short while back?

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