Idaho Energy Update
November 22, 2011
Clean energy advocates are starting to wonder whether the Legislature is cooking up a turkey in the form of a revised Idaho Energy Plan. Lawmakers voted repeatedly Monday to weaken provisions in the 2007 Idaho Energy Plan as part of their five-year rewrite of the plan. Idaho wind developers are considering their next move in the wake of a surprising ruling by the Federal Energy Regulatory Commission that the PUC erred in refusing to accept more than a dozen wind contracts with Idaho utilities. Meanwhile, the PUC is accepting comments on Avista utilities Integrated Resource Plan, and there’s a Dec. 5 hearing on Idaho Power’s big general rate case. In other news, Hoku Materials has finally plugged its huge Pocatello polysilicon plant into Idaho Power’s system, and Gov. Butch Otter signed an order to extend the life of the Office of Energy Resources. For more information on these developments and coming events, read on. Thanks as always, and if you have any calendar items, please send them along!
Clean Energy Program Director
Snake River Alliance
I: Big Disappointments as State Energy Plan Rewrite Effort Creeps to Finish Line
The Idaho Legislature’s long-anticipated update of the 2007 Idaho Energy Plan wound down Monday as members of the Interim Energy Committee accepted most of the proposed recommendations from the Idaho Strategic Energy Alliance (ISEA) Board of Directors – a group composed primarily of Idaho utility representatives.
As part of their final day of decision-making on the Energy Plan rewrite, Committee Republicans rejected calls for a new Idaho consumer advocate to represent residential utility customers before regulators and stripped the 2007 Plan of all of its proposals for tax and other incentives to promote energy efficiency and renewable energy. As a result, the 2012 Energy Plan will be far less specific than the 2007 version, and will contain far fewer recommendations and action items to steer the state’s energy future in years to come. One of the ironies on Monday was that many of the 2007 Energy Plan’s clean energy provisions that were stripped from the new plan or that were watered down by legislators Monday were approved in 2007 by the very same legislators.
The Energy Plan rewrite got off to a troubled start that frustrated efforts by Idahoans who wanted to participate in the process. Unlike in 2006, when the Legislature appropriated $300,000 and spent much of the year developing the plan with a consultant and multiple subcommittees that included members of the public and other interests, this effort began with lawmakers asking the state Office of Energy Resources and its ISEA to freshen the 2007 Energy Plan. The first ISEA draft of the plan contained many progressive recommendations that came out of the ISEA’s various task forces, which feature dozens of interested energy experts and interests. However, that plan was suddenly and inexplicably withdrawn and replaced by a second draft that was prepared by the ISEA Board, not the task forces that worked on the issues for more than a year. Of the eight non-government ISEA Board members, five represent Idaho utilities. JR Simplot and the Idaho Farm Bureau are also represented on the Board, but there is no representation from residential and other small utility customers, the renewable energy and energy efficiency sectors, low-income advocates, or the environmental community.
Despite more than 80 public comments and despite lawmakers’ assurances that the utility-dominated ISEA Energy Plan draft would be treated no differently than other public input, it became clear Monday as the Energy Committee plowed through the ISEA Board’s recommendations that the final product will largely reflect the views and positions of the ISEA Board of Directors.
For instance, while the 2007 Energy Plan and the original ISEA draft revision contained many recommendations for tax and other incentives to promote clean energy, this plan was diluted to simply “encourage” clean energy investments. Many commenters on the plan urged the state to consider creating a “consumer advocate” of some form to represent the general public in matters before the Public Utilities Commission, as Idaho is alone among 18 Western states without such representation before the PUC. Lawmakers rejected the idea. Unlike in 2007, nuclear power was singled out in this plan for special attention from the state and is the only specific energy generation resource to receive such treatment. The ISEA Board rejected its ISEA task force recommendations for transportation policies such as endorsing vehicle mileage standards and permitting local approval of transit option taxes and encouraging regional land use planning to reduce vehicle miles traveled, and the Committee agreed with the ISEA Board. An action item directing the PUC to encourage utilities “to pursue all cost effective conservation” was watered down by removing the word “all.”
In a nod to the scores of comments submitted, lawmakers briefly discussed some of the issues raised by the public, but not in detail and the only action taken on issues raised by the public was to kill the consumer advocate idea.
Not all of the news was bad, however. Responding to overwhelming public sentiment, the 2012 Idaho Energy Plan will rank energy efficiency as the highest priority energy resource for the state into the future, followed by renewable energy. Much of the work left to be done will be to review the ISEA’s proposed narrative language that fills much of the Energy Plan. It remains to be seen how much of the ISEA task force version of the report will survive. That version contained some very direct and important language on such issues as climate change and greenhouse gas emissions.
The next step in the process will be for Interim Energy Committee Co-Chairs Sen. Curt McKenzie and Rep. George Eskridge to meet with legislative staff to finalize the Energy Plan policies and action items and also the important narrative language in the plan. Once that’s done, the Committee will meet a final time, perhaps by phone, to approve the plan and then send it to relevant legislative committees for review and likely approval in the 2012 Legislative Session, which begins in January.
To review the ISEA draft plan, public comments, and other documents regarding the Energy Plan rewrite, go to the Legislature’s homepage at http://www.legislature.idaho.gov/ or http://legislature.idaho.gov/sessioninfo/2011/interim/energy.htm
II: Wind Developers Ponder Next Steps After FERC Criticizes PUC’s Wind Actions
Idaho wind developers are considering their next moves in the wake of a surprising U.S. Federal Energy Regulatory Commission (FERC) ruling that the Idaho Public Utilities Commission improperly rejected several contracts between utilities and the developers.
FERC’s Oct. 4 order in the case of a developer of five wind projects shocked the utility and wind industries. The wind developer, Cedar Creek, took its case to FERC after the PUC ruled its contracts with Rocky Mountain Power were submitted past the PUC’s Dec. 14, 2010, a deadline set by the Commission as part of an ongoing case regarding the prices utilities should pay to small energy producers such as wind farms under the 1978 Public Utility Regulatory Policies Act (PURPA). That case is pending before the PUC.
But in the FERC case, the government said the PUC’s rejection of the contracts that were filed after Dec. 14 was improper. While the PUC said the contracts were filed too late to be considered, FERC said the contracts were valid at the time they were signed by the utility and the developer – well before the Dec. 14 deadline. The Dec. 14 deadline was the date after which wind developers seeking more favorable PURPA rates would be capped at 100 kilowatts for their projects rather than the old 10MW that most of Idaho wind projects operate under. In some cases, wind developers complained utilities intentionally delayed filing their signed contracts until after Dec. 14 so that the PUC would then reject the contracts.
Idaho’s electric utilities took their case to the PUC in 2010, complaining that developers of large wind projects were carving their projects into smaller PURPA-sized projects of 10MW or less in order to qualify for PURPA’s more attractive set rates, which are based on what a utility would have to pay if it bought needed energy on the market or built its own generation.
Cedar Creek asked FERC to initiate an enforcement action against the PUC. FERC declined to do that, but it did conclude that the PUC’s interpretation of what constitutes a legally enforceable PURPA contract “is inconsistent with our regulations implementing PURPA.”
FERC also said its ruling only applied to Cedar Creek, which initiated the FERC case. It does not directly apply to the rest of the 14 wind projects that had contracts rejected by the PUC for similar reasons. So the question now is, in the wake of FERC’s order, will the dozen or so wind projects that were stopped by the Idaho PUC move ahead? And will the PUC, having been reprimanded by FERC in the case of one wind developer, relent and allow the other projects that have contracts with Rocky Mountain Power and Idaho Power to move forward.
FERC’s order also means wind developers can pursue legal remedies against the PUC on their own, which means direct appeals to the state Supreme Court. Cedar Creek had already taken its case to the Supreme Court, but in the wake of the FERC ruling in its favor, the company asked to suspend the case while it joins Rocky Mountain Power and the PUC in negotiating a resolution.
Boise attorney Peter Richardson, who practices energy law before the PUC and whose clients include wind developers, told the Times-News newspaper in Twin Falls the FERC ruling was “a landmark case” in how PURPA is implemented in Idaho.
To review documents in the most recent PURPA case, go to www.puc.idaho.gov and then “File Room” and then “Electric Cases” and scroll to GNR-E-11-03.Various wind contract cases can also be found in the “Electric Cases” section.
III: PUC Takes Comments on Avista Utilities IRP
The Public Utilities Commission is taking comments through Dec. 5 on Avista Utilities’ 2011 Integrated Resource Plan (IRP), which serves as the utility’s roadmap for how it will meet future electricity needs.
The Spokane-based electric and gas utility, which serves parts of northern Idaho, plans to rely on a mix of wind power, energy efficiency, upgrades at existing generation facilities, and new gas-fired power plants.
The IRP projects that Avista will begin facing energy deficits in 2020, with peak capacity deficits in 2019. To deal with those deficits, the company’s preferred resource plan envisions adding 120 megawatts of Northwest wind by the end of 2012 and 2019-2020; 83MW of additional natural gas generation by the end of 2018 and another 46MW by 2029; 4MW from existing thermal plant upgrades; and additional gas. It projects 419MW of energy efficiency through 2031.
To review Avista’s proposed IRP and other documents in the case, go to www.puc.idaho.gov and then “File Room” and then “Electric Cases” and then scroll to AVU-E-11-04. Public comments can also be submitted via the PUC website.
IV: Hoku Materials Energizes Pocatello Solar Facility
Hoku Materials has finally plugged its polysilicon factory in Pocatello into Idaho Power’s electric grid, a big step in getting the plant up and running.
In a news release on Monday, the subsidiary of Hoku Corp. that manufactures polysilicon for photovoltaic (PV) modules said, “Connecting to the 82-megawatt Idaho Power grid-connected substation is a critical milestone. The power infrastructure for the plant is complete, and we now have continuous electricity.” The company said it has been relying on temporary power and portable generators as it gets the factory ready for production.
The Pocatello plant will not produce actual solar panels, but rather the polysilicon that is the key component of the panels. With its connection to Idaho Power’s system, Hoku is one of the utility’s largest industrial customers.
V: Public Hearing Dec. 5 in Idaho Power Rate Case
The Public Utilities Commission will hold a public hearing on Idaho Power’s pending general rate case at 7 p.m. Dec. 5 in the PUC’s hearing room at 472 West Washington St. in Boise.
Idaho Power filed the rate case in June, seeking $83 million in additional revenues, or an overall average rate increase of 9.9 percent. A number of intervening parties, including the Snake River Alliance, Idaho Conservation League, and NW Energy Coalition, participated in settlement negotiations that resulted in a proposed $34 million in additional revenues, which would reduce the average rate increase to 4 percent.
Some issues were not resolved in the rate case settlement negotiations, and they will be argued in a technical hearing – also on Dec. 5. That hearing will begin at 9:30 a.m. in the Commission’s hearing room. Those issues include the level of the energy efficiency tariff rider, which is currently at 4.75 percent of customer bills but which some parties want to reduce. The three conservation parties identified above oppose reductions in the rider, which funds the bulk of Idaho Power’s energy efficiency and conservation programs. Another unresolved issue is the level of Idaho Power’s spending for low-income weatherization programs.
The PUC has yet to rule on whether to accept the partial settlement agreement. It will rule on that as well as the efficiency rider level and weatherization funding later.
For information on Idaho Power’s rate case, go to www.puc.idaho.gov and then “File Room” and then “Electric Cases” and scroll to IPC-E-11-08.
VI: Governor Extends Office of Energy Resources
Gov. Butch Otter has signed an executive order renewing the state’s Office of Energy Resources, which serves as the governor’s energy office.
OER has no statutory authority, so it exists by gubernatorial order. The last order was about to expire when the governor issued Order No. 2007-15, extending OER for four more years. OER’s status has recently been the subject of much speculation. Its staff has decreased significantly, and while it was flush with cash during the federal energy “stimulus” program spending spree, that money is no longer coming to the state.
OER does not receive state general funds to operate, but has relied on grants, particularly from the federal government, to stay in business. OER is currently administered by Interim Administrator John Chatburn.
On The Agenda:
► The Public Utilities Commission holds a public hearing on Idaho Power’s general rate case at 7 p.m. Dec. 5 in the PUC’s Boise hearing room. See above for details.
► The Public Utilities Commission is taking comments through Dec. 5 on Avista Utilities’ 2011 Integrated Resource Plan (IRP), which serves as the utility’s roadmap for how it will meet future electricity needs. See above for details.
► The Public Utilities Commission holds its next decision meetings on Nov. 28 and Dec. 14 and 21. Agendas are normally posted the day before on the Commission’s website at www.puc.idaho.gov The meetings typically start at 1:30 p.m.