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ID Energy Update Oct 2: Idaho Power Wants Efficiency ‘Decoupling’ Program To Be Permanent

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Idaho Energy Update
October 2, 2009

Idaho Power wants the Public Utilities Commission to make permanent its pilot “decoupling” project to remove disincentives for energy efficiency programs. The utility also has a wind purchase agreement before the PUC Monday, while Avista is seeking its third gas rate cut of the year. Avista’s electricity integrated resource plan is also up before the PUC Monday. For more on these developments and others, please read on.

Thanks as always, and if you have any calendar items, please send them along!

Ken

Ken Miller
Clean Energy Program Director
Snake River Alliance
(208) 344-9161
kmiller@snakeriveralliance.org
www.snakeriveralliance.org

I: Idaho Power Asks PUC to Make Decoupling Mechanism Permanent

Idaho Power Co. this week asked the Public Utilities Commission to change its first-in-Idaho “decoupling” project from a pilot to a permanent schedule, reflecting what the company believes is a successful program that allows it to aggressively promote energy-saving programs while still earning a reliable return despite lower sales due to reduced electricity consumption. Idaho Power was the first electric utility in the West outside California to enact a decoupling mechanism.

Also known as a “fixed cost adjustment” (FCA) this mechanism is designed to separate, or “decouple” the relationship between company sales as they’re impacted by conservation and reduced power sales and the company’s recovery of its fixed costs. Historically, utilities had little incentive to promote conservation and efficiency programs because those programs would presumably lead to reduced power sales. Idaho Power notes that utilities recover a large portion of their fixed costs (as opposed to fuel costs, which are addressed separately) through the sale of electricity. This three-year pilot project was launched to determine whether the mechanism would work, and so far it has resulted in only small adjustments to residential and small commercial power bills.

Idaho Power and the PUC began exploring this kind of decoupling mechanism about five years ago. The company ran models to determine the impacts of energy consumption that is below or above normal, and the pilot project began two years ago.

“During the three-year period in which (decoupling) has been in effect as a pilot schedule, Idaho Power has made strong progress in improving and enhancing its efforts to promote energy efficiency and demand-side management activities,” Idaho Power said in its filing this week. “In general due in no small part to removal of the disincentive provided by the FCA mechanism during the term of the FCA pilot, the Company has increased the number of DSM programs it offers and substantially increased both its investment in DSM activities and the megawatt-hour savings obtained via DSM.”

DSM programs are those designed to reduce electricity consumption on the customer’s side of the power meter – usually through energy efficiency and conservation programs. Idaho Power said the first two years of the decoupling program resulted in a small refund to customers in the first year and a small surcharge in the next year. “The mechanism has also proven to be reasonable as the individual customer bill impacts, both as surcharges and refunds, have been relatively small.”

To review Idaho Power’s filing, visit www.puc.idaho.gov and go to “File Room” and then “Electric Cases” and scroll to IPC-E-09-28.

II: PUC to Review Idaho Power Wind Agreement

Idaho Power’s request to the Public Utilities Commission for approval of another wind power agreement will be up before the PUC at its regular decision meeting Monday.

The utility has signed a 20-year agreement with Idaho Winds LLC, which plans to build and operate a 21-megawatt wind farm six miles northwest of Glenns Ferry in Elmore County. The Sawtooth Wind Project is the second project (following the Alkali Wind Project) to sign a contract with Idaho Power under the Public Utility Regulatory Policies Act of 1978 (PURPA), which among other things requires utilities to purchase power from small generators at rates that are set by regulatory commissions. While the Sawtooth Wind Project is rated at 21 megawatts, that is its maximum capacity and it will typically not deliver more than 10 average megawatts to Idaho Power due to the variability of the wind. If it generates more, the company can take it at no cost. Idaho Winds expects to energize the new wind farm by Oct. 31, 2012, with a formal operation date of Dec. 31, 2012.

III: Avista Requests Another Gas Rate Cut

Spokane-based Avista Utilities has asked the Idaho Public Utilities Commission to approve yet another decrease in its gas rates, this time seeking a reduction of almost 18 percent for its Idaho Panhandle residential customers.

According to a PUC news release, Avista’s request is part of its annual “purchase gas cost adjustment (PGA) in which utilities ask the PUC to adjust rates to reflect higher-than-expected or lower-than-expected fuel costs. The PUC said this latest request would cut an average residential customer’s $62.21 bill by $12.74. This is the third rate decrease sought by Avista so far this year, and if approved the three rate cuts would amount to a 25 percent reduction in 2009. The requests for the rate reduction are a result of steadily falling natural gas prices.

The PUC will take comments on Avista’s request through Oct. 16. To comment and to review Avista’s filing, visit www.puc.idaho.gov and then “File Room” and then “Gas Cases” and then scroll to AVU-G-09-05.

IV: Avista Integrated Resource Plan Before Idaho PUC

The Idaho Public Utilities Commission is expected to set a timetable for public comment on Avista Utilities’ recently submitted Integrated Resource Plan (IRP) when it holds its regular decision meeting in Boise Monday. The only question before the PUC is whether to set a 60-day comment period, which is the usual procedure when a utility’s IRP is filed.

Avista, whose Idaho service territory includes much of the Idaho Panhandle, has submitted its “preferred resource strategy” (PRS), which projects adding 250 megawatts of new gas-fired generation in three stages through 2027; 200MW of wind in three stages through 2022; 339MW in new conservation; and smaller amounts of hydropower upgrades. Like many utilities, Avista also projects a sharp increase in carbon costs over the next 20 years and is adjusting its generation mix with an aim to reduce the amount of carbon dioxide-emitting emissions from its power plants.

To review the full IRP, visit www.puc.idaho.gov and go to “File Room” then “Electric Cases” and then scroll down to AVU-E-09-09.

On The Agenda:

► The Public Utilities Commission holds its next decision meetings on Oct 5, 19, and 26. Agendas are normally posted the day before on the Commission’s website at www.puc.state.id.us. The meetings typically start at 1:30 p.m.

► The Northwest Power and Conservation Council continues to firm up its public hearing schedule for its recently released draft 6th Power Plan, which is intended to serve as a roadmap for the Pacific Northwest’s electric energy needs over the next two decades. The Council will hold a public hearing in Boise on Oct. 13 at the JR Williams Building (the Hall of Mirrors) at 700 W. State Street from 4 p.m. to 6 p.m. It will also hold a meeting in Idaho Falls on Oct. 14, but the time and location had not been announced. For more information about the Power Council and to review the draft 6th Power Plan, visit www.nwppc.org

► Speaking of the Northwest Power and Conservation Council, the Council’s next monthly meeting will be Oct. 7-8 at the Sun Valley Resort. On Oct. 7, the Council’s Fish and Wildlife Committee and the Power Committee will meet at 9 a.m. The Power Committee’s agenda includes a discussion of California’s wind policy’s impacts on the Northwest and other issues. The full Council will then meet in the afternoon, with an agenda that includes a panel presentation by the Idaho Consumer-Owned Utilities Association and a presentation by Bonneville Power Administration Administrator Steve Wright and representatives from the Bureau of Reclamation and NOAA Fisheries. On Oct. 8, the Council’s agenda includes an update on the 6th Power Plan and an update on the Idaho sockeye recovery program. For more information and details on the Council’s Idaho meeting, visit www.nwppc.org
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