The Idaho Public Utilities Commission (PUC) has approved a 20-year sales agreement with High Mesa Energy LLC, a 40 MW wind project near the town of Bliss.
According to the developer of the project, West Des Moines, Iowa-based High Energy, the wind farm will be operating by Dec. 28 of this year.
High Energy will be paid a 20-year levelized price of $56.43/MWh, though the pricing stream varies based on the time of year and the time of day that the energy is delivered to Idaho Power. The agreement also states that the value of the renewable energy certificates generated over the 20-year contract will be shared equally by the developer and Idaho Power.
The project is a qualifying facility under the provisions of the Public Utility Regulatory Policies Act (PURPA), which requires that electric utilities offer to buy power produced from qualifying small power producers or co-generators.
The rate was negotiated between Idaho Power and the developer using the company's long-range growth plan as a basis. The rate to be paid small-power producers 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 PUC must ensure the avoided-cost rate is reasonable for utility customers, because 100% of the cost is included in customer rates, the commission explains.
Commission staff calculated a lower avoided-cost – about $3/MWh lower, or 5% – than that agreed upon by Idaho Power and High Mesa and, thus, recommended denial of the project. However, the commission said the agreement contains "acceptable contract provisions" and should be approved.
Both commission staff and the commission acknowledged that the negotiated IRP methodology is relatively new and that many of the issues related to computing an accurate avoided cost for PURPA projects are being considered in another case now before the commission (GNR-E-11-03).
"We expect to see the IRP methodology issues addressed by staff argued more fully, and to conclusion, in the generic PURPCA docket currently before the commission," the PUC said.