Idaho's three major investor-owned utilities are petitioning the Idaho Public Utilities Commission (PUC) to investigate a number of issues related to small-power projects that qualify for a rate published by the commission. The utilities are also asking that the eligibility cap on the size of projects that qualify for the posted rate be reduced from 10 MW to 100 kW during its investigation.
The three utilities- Idaho Power Co., Avista Utilities and PacifiCorp – contend that a number of wind projects are having a profound impact on customers and on utility transmission systems. The utilities further contend that large-scale wind farms are breaking up their projects into smaller 10 MW increments to qualify for the published avoided-cost rate, which may be more attractive than rates for projects larger than 10 MW.
In 1978, Congress passed the Public Utility Regulatory Policies Act (PURPA) to promote the development of renewable energy technologies as alternatives to fossil fuels. PURPA requires electric utilities to buy power generated by qualifying small-power producers at a rate that is set and posted by state commissions. The rate is called the avoided-cost rate because it is to be based on the cost the utility avoids by not having to generate the power itself or buy it from other sources.
In Idaho, the avoided-cost rate is based on the estimated cost a utility would incur in building a combined-cycle natural-gas power plant. Currently, only qualifying projects 10 MW or smaller are paid the posted rate. The commission must ensure the avoided-cost rate is reasonable for utility customers because 100% of the price utilities pay to qualifying producers is included in customer rates.
In its petition, the three utilities are claiming that the small-power projects PURPA originally intended to encourage are now developed by a large-scale wind developers that aggregate several projects within a mile apart from each other to qualify for the avoided-cost rate. When combined, these projects can total up to 100 MW or 150 MW interconnecting at one delivery point, the utilities claim.
For example, Idaho Power claims it now has 208 MW of wind generation and another 264 MW of approved wind contracts scheduled to be online by the end of this year. The utility 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, the utilities claim.
The commission denied a request of the utilities to lower the size limits of projects than can qualify for the post rate within 14 days of its Nov. 5 application. However, the PUC did say that any decision it makes next year in regard to lowering the limit will become effective Dec. 14.
The commission is seeking comment on three matters: the advisability of reducing the published avoided-cost eligibility cap; if the eligibility cap is reduced, the appropriateness of exempting non-wind projects from the reduced eligibility cap; and the consequences of dividing larger wind projects into 10 average MW projects in order to qualify for the published rate.
The commission set Dec. 17 as the deadline for parties who want to intervene in the case, is taking public comments through Dec. 22 and is hearing oral arguments on Jan. 27. Several parties, representing primarily wind developers, have already filed petitions to intervene.