Utility Seeking Permission To Shift Wind Project Risk To Developers, Curtail Wind Energy Generation

Posted by NAW Staff on August 21, 2012 No Comments
Categories : New & Noteworthy

The Idaho Public Utilities Commission (IPUC) is currently reviewing a case filed by utility Idaho Power that seeks to change the way prices and contracts are established for renewable energy projects, such as wind farms and solar installations.

Utilities are required to buy energy from qualifying renewable energy facilities under the Public Utility Regulatory Policies Act (PURPA). Although this is a federal law, states have the authority to determine how key parts of the act are implemented.

Idaho Power and other parties involved in the case say customers are paying higher electric rates for the cost of power from renewable energy projects and claim that as more generation from wind farms and other renewable energy projects comes online, rates will continue to climb.

Idaho Power's proposed pricing model would take into account factors such as the reliability of the resource, whether its production can be raised or lowered in response to customer demand, and whether the electricity is even needed at all.

The utility has asked the IPUC to do the following:

  • Shorten the contract length from 20 years to five years, shifting the financial risk from its customers to developers.
  • Establish a process for negotiating contracts.
  • Approve a procedure to allow Idaho Power to limit purchases or to curtail deliveries from these projects under certain conditions This would ensure that Idaho Power would not have to shut down a less-expensive generation resource in favor of a more expensive alternative, such as wind, during periods of oversupply.
  • Make it clear that the utility and its customers own the renewable energy certificates (RECs) produced in conjunction with the purchased energy. These RECs could be sold and the proceeds could be used to help keep customer costs low, or they could be used to satisfy future renewable energy requirements.

Idaho Power stresses that it is not against wind energy. Rather, the utility says the aforementioned changes are necessary in order to comply with PURPA law, which requires that customers be held indifferent with regard to the cost and reliability of energy.

As of this March, 27 projects were seriously exploring energy sales agreements with Idaho Power. These projects represent 595 MW of nameplate capacity of generation in addition to the 989 MW nameplate capacity of the 119 projects with existing power purchase agreements with Idaho Power.

According to the utility, these additional projects would require customers to pay an additional $2.7 billion over the company's existing 20-year contractual obligation of more than $3.6 billion.

In addition, the company has contracts with several renewable energy projects that have been successfully negotiated outside of PURPA, including the Elkhorn Valley Wind Farm in northeastern Oregon.

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