Interconnect Solar contends delay ordered by Idaho utility regulator on its 25-year PPA with Idaho Power could kill its 20-MW solar project, but regulators say contract, electricity rates may set precedent, need more review

Rachel Carter

BOISE, Idaho , August 11, 2011 (Associated Press) – Idaho spent the last nine months fighting over wind power. It now looks set to spend a few more in the discussion over solar developments, too.

Interconnect Solar, one of the state's first utility-scale solar power developments, contends a delay ordered by the Idaho Public Utilities Commission could be fatal for its 20-megawatt project in the desert between the Snake River and the rugged Owyhee Mountains.

The utilities regulator counters that Interconnect — and the price Idaho Power Co. has agreed to pay for the developer's electricity — could set a precedent for future solar projects. They want to get the pricing right, so Idaho residents and businesses who foot the bill don't end up paying too much.

The fight over wind power that dominated the 2011 Idaho Legislature when lawmakers turned down extending a sales tax credit has morphed into a phase that underscores the complexity of balancing new, environmentally friendly resources with the coal, natural gas and hydroelectric dams — and keeping it all affordable. Lawmakers had been concerned the industry was expanding uncontrollably and driving up power prices.

"If we approve a contract that's very favorable to the developer, with rates that are high, there will be a rush of proposals from other developers expecting the exact same treatment," Gene Fadness, a spokesman for the Public Utilities Commission in Boise, said Wednesday. "We just can't quickly approve a contract because it will improve our public image as a state. That's not the PUC's job. The PUC's job is to review contracts to make sure they are fair and reasonable."

The three-member committee is leery of getting caught flat-footed like it did with the conflict between the wind industry and utilities.

That climaxed this past year, when turbine builders were accused by Idaho Power of using federal law to force their more expensive electricity onto the grid. The regulator intervened with measures meant to slow the construction of wind farms until the commission gets a better handle on their impact on power rates.

Interconnect Solar's manager, Bill Piske, feels caught in the crossfire.

The former TV advertising executive, who got the solar bug while living off the grid in the mountains northeast of Boise, has been working with engineering companies including Germany's Siemens AG to turn the sun into enough power to run up to 14,000 homes. He has a 25-year power contract with Idaho Power and is awaiting final regulatory approval so he can begin construction.

But last week, the PUC told Piske it needed more time — until Sept. 29 — to review pricing because Interconnect and Idaho Power based their rates on a methodology never before used for this type of deal, creating uncertainty that ratepayers won't be treated fairly.

"Staff's first set of production requests has triggered additional questions and the need for additional review," wrote Public Utilities Commission attorney Kristine Sasser.

In his response, Piske told the Public Utilities Commission that delaying approval that long would doom his project.

"Such a schedule is fatal," his lawyers wrote.

Here's why: Piske's company must still complete construction financing for the project, something that's contingent upon regulatory approval.

He's also counting on a U.S. Department of Treasury cash grant program that's pumped more than $5 billion into the nation's renewable energy projects since 2009. To qualify, he has to have 5 percent of construction done by year's end.

Piske said the money also is in jeopardy if Interconnect can't install more than 1,000 steel poles needed to support 73,800 solar panels before the southwestern Idaho's ground freezes.

He insists the deal he's struck with Idaho Power is fair, especially given he'll deliver its green, carbon-free energy to the power grid on summer late afternoons. That's when farmers run their irrigation pumps and residential customers crank up their air conditioners. The utility is scrambling to find enough electricity to keep everything running.

"I'm delivering most of my energy at a time when Idaho Power is currently asking farmers not to farm," Piske said. "We're giving the ratepayers a baseline energy source with a good, set energy price for 25 years. It pretty much guarantees we won't have California or New Jersey energy prices" for years to come.

He's now hoping to convince Idaho's regulators to expedite their review.

Fadness, the PUC spokesman, conceded the delay's timing with the federal tax break deadline is awkward.

The regulator is "willing to consider anything Interconnect might propose," Fadness said, but he warned it won't rush a decision that could hurt ratepayers by setting a precedent for other Idaho solar developers who already have another 100 megawatts waiting in the wings.

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