Idaho Energy Update
August 23, 2011
This hasn’t been the best of months for wind and solar projects in Idaho, what with the PUC hitting the brakes on no fewer than 14 wind projects while utilities and renewables developers accused each other of dealing in bad faith over wind and solar contract negotiations. In an Oregon case with ramifications for two of Idaho’s electric utilities, the Oregon PUC has questions about the huge amount of coal-fired generation in PacifiCorp’s energy portfolio. PacifiCorp is known in southeastern Idaho as Rocky Mountain Power, while Idaho Power gets most of its coal generation from the Bridger coal plants in Wyoming, which are mostly owned by PacifiCorp. Intermountain Gas customers are in store for a rate cut due to abundant gas supplies nationwide, and the BLM has finally released its draft EIS for the big proposed Gateway West transmission line targeted for southern Idaho. Finally, the Snake River Alliance is planning a series of three workshops to explore its new energy guide, Idaho’s Clean Energy Future, and to discuss current energy issues in Idaho. 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: Tension Grows Between Renewable Developers, Utilities, PUC
It’s been a tough few weeks for Idaho wind and solar energy developers, what with the PUC slamming the brakes on 14 wind projects and with developers locking horns with Idaho Power over the terms of their contracts.
A 2010 decision by the PUC to sharply reduce the size of wind and solar projects able to qualify for more favorable contract rates while the Commission reviews the renewables situation in Idaho didn’t end these projects, but it unquestionably slowed them down while developers consider their next move. Add to that a roiling dispute between a solar developer and Idaho Power over who gets to keep the “renewable energy credits” from the projects, and another fight over whether a wind project can win a more favorable contract by selling its power exclusively to Idaho Power’s Oregon customers, and the result is new acrimony and confusion over the future of new renewable projects in Idaho. Here’s a glance at some of the recent blow-ups:
The PUC on July 27 issued four orders opting not to reconsider earlier orders that disqualified contracts for 14 wind projects on grounds the contracts weren’t submitted before a PUC-ordered cutoff date before the PUC began its review of small renewables contract and costs issues. Nine of those contracts were between developers and Idaho Power; the other five were with PacifiCorp, or Rocky Mountain Power. Central to this issue is the PUC’s granting of a request by all three Idaho regulated electric utilities to reduce the size of wind and solar projects qualifying for special rates from the old standard 10MW to 100kw, which is far smaller than almost any utility-scale wind or solar energy project. The affected wind projects would be located near Burley, near Declo, south of the City of Rocks, and near Shelley. Developers in the past secured “published rates” under the federal Public Utility Regulatory Policies Act, which was passed in 1978 to foster more renewable energy projects nationwide. That rate is similar to what the utilities would have to pay if they generated their own power or purchased it from the markets. Now, if developers want to sell to Idaho utilities, they must work out a project-specific price mechanism, which they say is less favorable than the PURPA rates and which they say depends largely on a utility’s willingness to negotiate.
With those wind projects sidelined for now, two more wind projects, one in Owyhee County of 5MW and one in Elmore County of 10MW, are the subject of charges by Idaho Power that they are trying to game the system by skirting the Idaho PURPA roadblock by selling their power to Oregon customers at Oregon’s rates instead. Oregon still has a 10MW cap on the projects, so these could qualify for the more favorable rates. But Idaho Power claims it shouldn’t be forced to buy power from these projects at the higher rates because they’re higher than Idaho’s new 100kw cap for wind projects. The developers argue it would be a violation of the federal Commerce Clause of the U.S. Constitution for the Idaho PUC to restrict to whom who they sell their power.
On the solar side, Grand View PV Solar Two, which is proposing a 20MW solar farm in Elmore County, has filed a complaint against Idaho Power, charging the utility is improperly demanding 50 percent of Grand View’s valuable “renewable energy credits” as a condition of its contract. Renewable energy developers in Idaho have traditionally kept those “RECs”, which can be key to their financing packages. Idaho Power’s argument in this case is that it must have access to some of these renewable credits in order to qualify for a possible federal requirement that they obtain a certain percentage of their power from non-hydro renewables. There is currently no requirement, but officials in Washington have been discussing it as part of a larger energy package. Idaho Power currently sells the RECs it receives from a wind and geothermal project on the open market, returning the proceeds to customers as ordered by the PUC.
And then there’s the case of Interconnect Solar’s proposed 25-year contract with Idaho Power, which has agreed to purchase the output from Interconnect’s 20MW project in Owyhee County. 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. However, PUC staff asked for an extension in this case as they further explore the Idaho Power contract’s pricing structure – something the PUC hasn’t seen before given this is one of the first solar utility contracts in Idaho. Such 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 said it needs the extra time to learn more about the solar contract because it doesn’t want to find itself in the same chaotic spot as it is with wind contracts.
Documents in the above cases can be found at the PUC’s website at www.puc.idaho.gov and then clicking “File Room” and then “Electric Cases.”
II: PacifiCorp’s Heavy Coal Use Draws Attention of Oregon Regulators
PacifiCorp, which does business in Idaho as Rocky Mountain Power, has been told by Oregon regulators it needs to supply a detailed cost-benefit analysis of its plans to continue its reliance on a sizeable fleet of coal plants for the bulk of its power generation.
According to the Oregonian newspaper, the Oregon Public Utilities Commission wants more information about the utility’s decision to pour millions of dollars more into its existing coal fleet to comply with existing and expected air quality regulations. As it did in its new rate case filed in Idaho, the company said it concluded it’s more cost-effective to upgrade the coal plants with pollution control equipment than to begin planning to replace them with cleaner energy resources. The issue in Oregon arose as the PUC began its review of PacifiCorp’s every-other-year integrated resource plan, which is designed to show how utilities will meet future energy needs.
The issue of PacifiCorp’s coal use is particularly timely in light of the decision by Portland General Electric to plan for an early decommissioning of its Boardman coal plant, the only coal-fired generator in Oregon. Washington state’s sole coal generator, at Centralia, is also targeted for early decommissioning. Idaho Power is a 10 percent partner in the Boardman coal plant and a one-third partner in PacifiCorp’s Jim Bridger coal complex in Wyoming, so Idaho Power customers have an interest in plans for the Bridger coal plants and the cost of keeping them in compliance with environmental regulations.
PacifiCorp relies on 26 coal-fired generators at 11 sites in Utah, Wyoming, Montana, Colorado and Arizona. Those plants account for more than 60 percent of PacifiCorp’s generation resources, and according to the Oregonian the utility is planning more than $4.2 billion on improvements and higher operating costs by 2023. Idaho Power and its customers would be on the hook for their share of the improvements to the Bridger coal plants. In the cases of Boardman and Bridger, however, those massive anti-pollution investments would not reduce the plants’ emissions of carbon dioxide, the prevailing greenhouse gas.
PacifiCorp’s integrated resource plan filing and related documents can be found at the Oregon PUC’s website at www.oregon.gov/PUC in the “Current Topics” section on the PUC’s home page.
III: Deep Natural Gas Supplies Prompt Intermountain Gas to Seek Rate Decrease
Intermountain Gas, Idaho’s largest natural gas utility, has asked the Idaho Public Utilities Commission to sign off on its proposed rate decrease, due largely to abundant gas supplies and lower gas costs nationwide.
According to the PUC, approval of the Intermountain Gas “Purchased Gas Cost Adjustment,” or PGA, would slice an average $2.17 from the monthly residential gas bill.
The PUC is taking public comments on Intermountain Gas’ filing through Sept. 21. To review the application and related documents, go to www.puc.idaho.gov and then “File Room” and then “Gas Cases” and scroll to INT-G-11-01. Comments can also be made online from the “Comments & Questions About a Case” section on the PUC’s home page or mailed to P.O. Box 83720, Boise, ID 83720-0074.
IV: BLM Releases Gateway West Transmission Line Environmental Study
The U.S. Bureau of Land Management has released its long-delayed draft Environmental Impact Statement for the proposed Idaho Power-PacifiCorp Gateway West transmission project, a, 1,100-mile long high-voltage line that would span southern Wyoming and southern Idaho. Public comments will be taken through Oct. 29.
The joint project consists of 10 segments from Glenrock, Wyo., to Idaho Power’s Hemingway substation near Melba in southwest Idaho. According to the utilities, the line would supplement existing east-west transmission that is often congested, increase capacity of the current transmission lines, and improve grid reliability. Among the possible effects of the project, as identified in earlier scoping meetings, are impacts to visual and cultural resources, wildlife and plants, wetlands and water resources, air quality, noise, and environmental justice. The plan also examines the need for the project, which some dispute.
The heart of the draft EIS is an analysis of the various routes that were studied. The study describes the purpose and need of the project, alternatives studied, and environmental protection plans and measures. Residents and many Idaho communities have raised concerns about the various proposed routes and the impacts they might have on everything from agriculture operations to environmental damage and reduced property values. Questions have also been raised about how much of the line should cross federal lands, as opposed to private property or state and local government-owned lands.
To review the draft EIS and related documents, go to www.wy.blm.gov/nepa/cfodocs/gateway_west/index.html
V: Alliance Plans Workshops to Explore New Energy Guide
The Snake River Alliance will be holding a series of three workshops in September and October to discuss its new energy guide, Idaho’s Clean Energy Future, and to explore current energy issues in Idaho. The early evening workshops will be held Sept. 26 and Oct. 3 and 10 at a Boise location to be announced shortly. They’ll give participants and Alliance staff an opportunity to break the guide into three sections for purposes of discussion, and to delve into some of the challenging and exciting energy options facing Idaho today and into the future. Central to the workshops is to discuss how we can become advocates for progressive energy planning and policies at the utility and state levels. We’ll be looking at everything from where Idaho gets its electricity today to what its renewable energy potential is, how utilities work and how they’re regulated, transmission issues, the role energy efficiency can play in reducing our dirty energy resources such as coal, and a look at the coming update of the 2007 Idaho Energy Plan.
Registration information will be announced soon. In the meantime, the guide can be downloaded for free at www.snakeriveralliance.org
On The Agenda:
► The 2011 Western Energy Policy Research Conference, sponsored by the Center for Advanced Energy Studies and the Energy Policy Institute, is scheduled for Aug. 25-26 at the Grove Hotel in Boise. For more information and registration, go to http://epi.boisestate.edu/conference/welcome.aspx
► The Bureau of Land Management will hold a series of open houses to provide information about the proposed Gateway West transmission line (see above). The Idaho open houses will be Sept. 12 in Boise and Kuna, Sept. 13 in Mountain Home, Sept. 14 in Melba, Sept. 15 in Murphy, Sept. 19 in Twin Falls, Sept. 21 in Burley, Sept 22 in Almo, Sept. 26 in American Falls, Sept. 27 in Pocatello, Sept. 28 in Fort Hall, and Sept. 29 in Montpelier. For times and locations of the open houses, visit the website listed in the Gateway West item above.
► The Snake River Alliance will be holding a series of three workshops in September and October to discuss its new energy guide, Idaho’s Clean Energy Future, and to explore current energy issues in Idaho. The early evening workshops will be held Sept. 26 and Oct. 3 and 10 at a location to be announced shortly. Alliance staff and workshop participants will break the energy guide down into three sets of chapters for the 90-minute discussions. Registration information will be announced soon as well. To download the guide, visit www.snakeriveralliance.org
► The Idaho Public Utilities Commission holds its next decision meetings on Aug. 29 and Sept. 6 and 12. 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.