Idaho Power to buy energy from Boise-based Exergy's four 10-MW wind projects near Rogerson, Idaho; applications were submitted just days before state reduced size of projects that qualify for set rate from 10 MW to 100 kW

Idaho , February 18, 2011 (press release) – Four wind projects developed by Boise-based Exergy Development will be able to sell their output to Idaho Power Company, but only after the Idaho Public Utilities Commission approved the sales agreements with some provisions to address concerns expressed by Idaho Power.

Applications for the four 10-megawatt projects in the Rogerson area were submitted just four days before the effective date of a commission order that reduced the size of wind and solar projects that can qualify for a commission posted rate from 10-megawatts to 100 kilowatts. Idaho Power and two other major electric utilities operating in Idaho asked for a reduction in the size of projects that can qualify for published rates due to the rapid development of large wind projects that are broken up into smaller 10-MW projects in order to qualify for the commission posted rate.

Idaho Power said it would accept these four projects to comply with its federal PURPA mandate to accept power generated from qualifying renewable facilities but, at the same time, stated that the “continuing and unchecked requirement” for Idaho Power to acquire additional intermittent generation regardless of the utility’s need for additional energy “increases the price its customers must pay for their energy needs.”

Idaho Power also stated that the growing number of small wind projects is circumventing its planning process and creating system reliability and operational issues.

To address some of Idaho Power’s concerns, the agreements state that Idaho Power can curtail generation from the four 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.

Commission staff did not have objections to the curtailment provision, but stated that if non-compensated curtailment became frequent, the economic viability of the projects could be adversely affected.

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 of June 30, 2012. If the projects fail to meet their delivery dates, delay damages will be assessed.

Idaho Power maintains it now has about 470 MW of wind generation and could have 1,100 MW of wind on its system in the near term, which exceeds the amount of power used in its total system on the lightest energy-use days.

PURPA, the Public Utility Regulatory Policies Act, 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 rate proposed for the four projects is a non-levelized rate that increases through the 20-year life of the contract. In 2012, the agreement’s proposed rate for normal load hours during normal seasons of the year is $58.68 per megawatt-hour, escalating to $117.77 per MWh in 2031. The rate varies to account for heavy and light load hours of the day and heavy and light load seasons of the year.

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.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.