Rates Paid To Small-Power Producers Decline

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The rates that regulated utilities pay small-power producers have decreased significantly due to declining natural-gas prices, according to a new price forecast by the Northwest Power and Conservation Council (NPCC), the Idaho Public Utilities Commission reports.

Under the provisions of the federal Public Utility Regulatory Policies Act (PURPA), regulated electric utilities are required to buy power from qualifying small-power producers or co-generators, such as wind or anaerobic digester projects. The rate to be paid to the developers of projects 10 MW or smaller is determined by the commission, and is called the avoided-cost rate, because it is to be equal to the cost the electric utility avoids if it would have had to generate the power itself or purchase it from another source. Â Â Â Â Â Â Â Â Â Â Â One of the key factors the commission uses in determining the published avoided-cost rate is a long-term natural-gas forecast by the NPCC. A change in the forecast automatically triggers a recalculation of the published avoided-cost rates.

Under new rates effective immediately, a qualifying PURPA project developer that signs a 20-year levelized contract this year would be paid $79.19.MWh. Under the previous rate, a developer would have been paid $90.90/MWh.

According to NPCC data, the price for natural gas at the Sumas trading hub in Washington state including delivery averaged $7.68/MMBtu, but had dropped to $3.91/ MMBtu in 2009 and is projected to be about $4.56/MMBtu this year.

SOURCE: Idaho Public Utilities Commission  Â

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