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Oct. 4 Idaho Energy Update: New Utility Coal Report, Rate Cases & Idaho Energy Plan Revisions

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Idaho Energy Update
October 4, 2011

The Snake River Alliance has released the first of two reports on the use of coal-fired generation by Idaho’s three electric utilities, and in a related development Idaho Power has notified the Idaho Public Utilities Commission of the planned early decommissioning of the Boardman coal plant in Oregon, of which Idaho Power is a 10 percent owner. On the regulatory front, parties in Idaho Power’s big 2011 rate case have reached a settlement agreement, but the public will have a chance to weigh in before the PUC decides whether to accept the deal. Meanwhile, Avista’s electric rates and the rates charged by Intermountain Gas will both decline following PUC review of their cases. And the Legislature’s Interim Energy Committee will soon receive draft revisions to the 2007 Idaho Energy Plan, and when it does it will post the plan for public review and comment. 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!

Ken

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

I: Alliance Reports on Idaho Utilities’ Use of Coal-Fired Generation

The Snake River Alliance has released the first of two reports on the use of coal-fired generation by Idaho’s three electric utilities.

The report, “Idaho’s Dangerous Dalliance with King Coal,” notes that the utilities own or have a stake in no fewer than 29 out-of-state coal plants, the bulk of which are owned or partly owned by PacifiCorp, which does business in eastern Idaho as Rocky Mountain Power. Idaho’s reliance on coal for about 45 percent of its electricity generation is roughly the same as the national average, despite the abundance of hydropower generation in the state. The report clears up a common misconception that most of Idaho’s electricity comes from hydropower plants, and also the oft-repeated claim that Idaho’s per capita carbon footprint is the lowest in the nation.

“While it is technically accurate because it is based on “state-by-state emissions” of climate-changing greenhouse gases, claims of Idaho’s remarkable low carbon footprint collapse completely when it becomes evident that a huge chunk of Idaho’s electricity comes from out-of-state coal-fired power plants,” the Alliance report says. “So the emissions associated with Idaho’s electricity consumption are not credited to Idaho, where they belong. Instead, the coal plant emissions from power imported to Idaho get credited to the unfortunate states where the plants are located.”

Of the 5.2 million metric tons of carbon dioxide or equivalent emissions for electricity production in Idaho in 2010, 4.6 million metric tons were attributed to net imported electricity. “Only .6 million metric tons out of 5.2 million metric tons of CO2 emissions attributable to electricity production came from Idaho. The remainder amounts to Idaho’s toxic gifts to its neighboring states where the coal plants that help keep our lights on are located.”

Oregon’s lone coal plant at Boardman and Washington’s lone plant at Centralia are now scheduled for early decommissioning in 2020 rather than 2040, as utilities plan to shed the remnants of their dirty coal power. In contrast, Idaho Power, PacifiCorp, and Avista are planning for business as usual, injecting billions of customer dollars into their aging coal fleets to keep them in compliance with state and federal environmental laws. Those are dollars that could be used on expanded energy efficiency and renewable energy investments, the Alliance report says.

The report is available for free download from the Alliance’s website at www.snakeriveralliance.org

II: Idaho Power Notifies PUC of PGE’s Plans for Early Coal Plant Retirement

Idaho Power has filed an application with the Public Utilities Commission to set up the accounting and cost recovery mechanisms in preparation for the early retirement of the 31-year-old Boardman coal plant in Oregon.

Idaho Power buys about 10 percent of Boardman’s energy output, or about 60 megawatts. Most of Boardman’s power is used by majority owner Portland General Electric, which has filed plans with the Oregon Public Utilities Commission to retire the Boardman plant by around 2020, rather than 2040 as originally planned. PGE agreed to close Oregon’s only coal plant early and reduce the amount of investments it would have had to make in order to keep the plant in compliance with state and federal anti-pollution regulations. The utility is working with stakeholders and others to determine how to replace the power that will be lost when Boardman closes, and also how to minimize the economic impacts to the Boardman community and plant workers.

Idaho Power still relies on coal-fired power plants in Wyoming and Nevada for about 40 percent of its overall electricity generation. In its filing with the PUC, the company said it needs to track the cost and benefits associated with the Boardman retirement so they can be dealt with in a future proceeding before the PUC.

Idaho Power said Boardman’s expected plant life would have extended at least through 2030, but plant owners, including Idaho Power, were facing up to $600 million in anti-pollution retrofits and other improvements over the next decade. Some investments will still be required to keep the plant in compliance anti-pollution rules, but the early closure means the costs will be significantly less.

There will be added costs associated of about $80 million after salvage with the plant’s early retirement, and that’s what Idaho Power wants to bring to the PUC’s attention because it will be asking the PUC to allow it to recover its share of the decommissioning costs from ratepayers at a later date.

III: Legislators Prepare to Take Comments on State Energy Plan Revisions

The Idaho Legislature’s Interim Energy, Environment, and Technology Committee will begin taking public comments on possible revisions to the 2007 Idaho Energy Plan as soon as the Office of Energy Resources and its Idaho Strategic Energy Alliance complete their first stab at a plan rewrite.

Committee Co-Chair Rep. George Eskridge, R-Dover, said during a two-day meeting of the panel last week that he wants the public to be able to review any proposed revisions as early as possible in advance of the committee’s next meeting later this month.

“Our intent will be to have a final product in a couple weeks,” Eskridge said on Sept. 28. “At the same time, our intent is to open up this process to the public; open it up to the public from now until our next meeting.”

The Idaho Legislature will consider updating the 2007 Idaho Energy Plan upon the plan’s five-year anniversary in the 2012 session. While the Legislature spent $300,000 and more than a year to draft the current plan, it has few resources to undertake a major overhaul this year. Instead, the Interim Committee asked the Idaho Strategic Energy Alliance (ISEA) to review the plan, freshen its data, and consider possible new recommendations. Once ISEA finishes that task in the next several days, it will be sent to the Committee and posted on the Legislature’s website for public review and comments.

The ISEA will meet this Friday, Oct. 7, from 8 a.m. to noon at Idaho Power Headquarters in Boise to consider plan revisions. That meeting is open to the public. Meanwhile, the Snake River Alliance has posted its review of the 2007 Idaho Energy Plan and the status of many of the plan’s recommendations on the Alliance website at www.snakeriveralliance.org

IV: Settlement Reached Among Parties in Idaho Power Rate Case

Idaho Power, Public Utilities Commission staff, and several intervening parties have reached a settlement agreement that might shorten what could be a prolonged rate case for Idaho Power.

The settlement stipulation wouldn’t resolve all of the contentious issues in the utility’s 2011 general rate case. But if approved by the Commission, it would resolve some of the larger issues such as the utility’s revenue requirement and the rate of return it is allowed to earn. The Commission is not bound by the settlement agreement, and the public will still have an opportunity to comment on the case when the commission schedules a public hearing in the next several weeks. Three conservation parties, including the Snake River Alliance, Idaho Conservation League, and NW Energy Coalition, agreed to the settlement.

In its original application, Idaho Power sought an increase in base rates of an average of 9.9 percent and a revenue increase of about $83 million. Under the settlement agreement, the additional revenue would be $34 million, down from the requested $83 million. The monthly service charge for residential customers would rise from $4 to $5.

Among the unresolved issues are funding levels for low-income weatherization program and the percentage amount of the energy efficiency “rider tariff,” the 4.75 percent of bills that customers pay each month to fund the company’s overall energy efficiency and conservation programs. The parties also agreed to open a separate case for the company’s request to make permanent its pilot project that “decouples” the company’s revenues from power sales and its energy savings from efficiency program. The mechanism is designed to remove disincentives for energy efficiency programs, which if successful would lead to reduced energy sales. This pilot mechanism provides for very small upward or downward rate adjustments depending on how much energy savings the company realizes, so the company is made whole even if it sells less power.

To review the settlement stipulation and other documents in this case, go to www.puc.idaho.gov and then click “File Room” and “Electric Cases” and scroll down to IPC-E-11-08.

V: PUC Grants Avista Request to Reduce Electric Rates, Increase Gas Rates

Spokane-based Avista Utilities, which provides both electric and natural gas service in parts of northern Idaho, was granted a request to reduce its electric rates and increase its base gas rates.

According to the PUC, the average overall rate decrease for residential customers will be 2.1 percent, or $1.79 per month. The average natural gas customer would see an increase of about 20 cents a month. The PUC also ruled that Avista can realize a $2.8 million increase in annual revenue, down from the $9 million sought by the utility.

The PUC’s action was its approval of a settlement agreement reached between Avista, PUC staff, and several intervening parties. As part of the agreement, Avista will not seek another electric or gas rate hike before April 2013. Rates could change, however, because the company can still file for adjustments due to changes in fuel costs or the amount it collects from customers to finance its energy efficiency programs.

VI: Intermountain Gas Rates Decline Due to Abundant Supplies, Lower Demand

The Public Utilities Commission has agreed with a request by Intermountain Gas Co. to reduce rates to its natural gas customers in light of lower-than-expected demand due to the recession and also due to increases in natural gas supplies. Rates were reduced by an average 5.3 percent effective Oct. 1.

The reduction is part of Intermountain Gas Co.’s annual Purchased Gas Cost Adjustment (PGA), which is adjusted to reflect changes in natural gas supply and transportation costs. According to the PUC, the reduction from 49.2 cents per them to 45.3 cents equates to an average reduction of $2.17 per month for residential customers.

To review the PUC’s order and other documents in the case, go to www.puc.idaho.gov and then “File Room” and “Open Gas Cases” and then INT-G-11-01.

VII: Idaho Power Solar Contract May be Salvaged After Modifications

A contract between Idaho Power and Interconnect Solar Development for the utility to buy 20MW of power from Interconnect’s Owyhee County solar project may be back on after the PUC gave the two parties additional time to rework some numbers that set the price for the power.

PUC staff said it was concerned about the accuracy of the power prices set in the 25-year contract.

As reported earlier, Interconnect says it’s on a tight timeline, needing to break ground and begin installing components for the project before the ground freezes, or risk losing a U.S. Treasury grant that must be issued before the end of the year. PUC staff asked for an extension in this case as staff explores the contract’s pricing structure – something unfamiliar to the PUC given this is one of the first solar utility contracts in Idaho. Too much of a delay, Interconnect Solar manager Bill Piske said through his attorney in a PUC filing, would be fatal to the project because it would delay construction financing and the beginning of construction, which must be 5 percent complete by year’s end in order to qualify for the federal grant.

The PUC gave the two companies an extra week to resubmit their numbers, and companies have subsequently asked for additional time, planning to turn in the revised contract in mid-October.

Documents in this case can be found at the PUC’s website at www.puc.idaho.gov and then clicking “File Room” and then “Electric Cases” and then scrolling to IPC-E-11-10.

On The Agenda:

► The Idaho Strategic Energy Alliance meets from 8 a.m. to noon on Friday at Idaho Power’s Boise headquarters to consider possible revisions to the 2007 Idaho Energy Plan. The meeting is open to the public.

► Boise’s monthly First Thursday celebration will feature a National Energy Awareness Month Energy Fair with Idaho Power from 5 p.m. to 7:30 p.m. at the Basque Block. Idaho Power will showcase winners of a K-8 Student Art Contest, and utility representatives will provide information and materials on energy technologies, energy research, and energy efficiency in homes and businesses.

► The Snake River Alliance will hold its Autumn Membership Dinner from 6 p.m. to 8 p.m. Oct. 22 at the First Congregational Church at 2201 Woodlawn in Boise. Alliance nuclear program director Beatrice Brailsford will give a presentation on radioactive waste and cleanup at the Idaho National Laboratory. To RSVP or for more information, call 344-9161 or email lwoodruff@snakeriveralliance.org

► The Idaho Public Utilities Commission set a Nov. 14 deadline for comments on Idaho Power’s 2011 Integrated Resource Plan (IRP), which is the utility’s proposed roadmap on how it plans to meet future growth in electricity demand. All regulated electric utilities in Idaho are required to submit their IRPs every two years.
For Idaho Power’s first 10-year planning period, which is most important because it covers the times it expects to add resources in the near term, the company plans to rely heavily on its proposed Boardman to Hemingway transmission line from Canyon County to the Boardman area on the Columbia River. That transmission line is designed to augment existing lines that are often at capacity at times when Idaho Power can ship excess power to the Pacific Northwest when it has excess power, and vice-versa when it is short on electricity. Idaho Power will also rely on its new Langley Gulch gas-fired power plant, expected to be operating near New Plymouth next year, to meet additional demands.

The company’s second 10-year planning period might include solar, geothermal, small hydro resources, as well as new gas generators. But given that the plan is updated every two years, resources included in the second 10-year period tend to be somewhat speculative.

To review the IRP and related documents, go to www.puc.idaho.gov and click “File Room” and “Electric Cases” and then scroll to IPC-E-11-11. Those wanting to comment can do so online from a form on the PUC’s home page or by mail or fax to the address and number in the “Comments and Questions About a Case” section on the home page.

► The Idaho Public Utilities Commission holds its next decision meetings on Oct. 11, 17, 24, and 31. 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.

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