Idaho Energy Update
Feb. 11, 2011
Energy Efficiency advocates wowed a House energy committee this week with presentations on how utilities, businesses, and the government can save energy in homes, business, and government buildings across Idaho. On the geothermal front, a package of four bills that would remove some hurdles to processing and issuing geothermal development leases on state lands is moving quickly through the Legislature. Meanwhile, the Idaho PUC sided with utilities seeking temporary shelter from an increasing number of wind energy projects seeking contracts, and Blaine County continues efforts to settle on a new energy efficiency code for new residential construction.
For more on these and other developments, read on. Thanks as always, and if you have any calendar items, please send them along!
Clean Energy Program Director
Snake River Alliance
I: Energy Efficiency Advocates Impress House Committee
Energy efficiency advocates, businesses, and policy makers joined Idaho electric utilities Thursday in touting the virtues of energy efficiency, drawing the interest of the House Energy, Environment and Technology Committee and rave reviews from its chairman.
“This is one of the better ones we’ve had,” Committee Chair Rep. Del Raybould, R-Rexburg, said of the presentation by eight panelists. Thursday’s two-hour session was coordinated by long-time House clean energy advocate Rep. Wendy Jaquet, D-Ketchum.
Boise attorney and U.S. Green Building Council Advocacy Chair Kelsey Nunez briefed lawmakers on existing barriers to adding energy efficiency and renewable energy technologies to homes in Idaho.
Nunez, representing the Idaho Energy Collaborative, said homeowners and renters often lack the time, knowledge, and financial resources to make many of the improvements. “It takes a lot of time to understand you have a problem and what to do about it, how to pay for it, and how to do it,” she said. Nunez also said it’s important in today’s real estate market to recognize the benefits of energy efficiency and renewable energy improvements to homes – and that those improvements are recognized in a home’s value. “Consumers are hesitant to pay for something you can’t see,” she said. Nunez also touted the possible benefits of “on-bill financing” mechanisms in which utilities can front the cost of some improvements and have customers pay for them over time on their bills. She also called for prompt adoption of new energy codes and increased funding for the low-income loan program run by the state’s Office of Energy Resources.
OER Director Paul Kjellander told lawmakers the loan program is successful, with about 83 loans currently open worth about $900,000, but he said the state has a hard time promoting the program because it lacks enough funding to accommodate all who might be interested.
Paul Zasada, who oversees the Idaho energy operations for McKinstry, the large Seattle-based building design, construction and management firm, said energy efficiency can mean jobs and new economic activity in Idaho: “Our projects are out there providing good-paying jobs,” Zasada said, adding that last year alone, McKinstry did $20 million in energy efficiency work in Idaho energy conservation retrofits, mostly with about 300 local subcontractors. McKinstry’s work on Idaho government buildings such as schools and universities save taxpayers through reduced energy costs, such as the $325,000 annual cost-avoidance from $4.8 million worth of retrofits in nine Caldwell schools, he said. Still, he said, Idaho is unique in the region in requiring up-front financing to pursue such projects, even if they are self-funded.
David Kirkland, representing the energy efficiency software firm OPower, said his firm is working with 50 utilities in 22 states (so far none in Idaho) to promote energy efficiency by generating reports for utility customers that compare their energy consumption with that of their neighbors – and providing customer-specific tips on to reduce that consumption.
Also presenting to the committee were representatives of Bonneville Power Administration, Idaho Power, Avista Utilities, and Rocky Mountain Power.
II: Department of Lands Backs Package to Ease Geothermal Development on State Lands
The Idaho Department of Lands is sponsoring a package of four bills designed to make it easier and more efficient to arrange for leases on state lands by developers of various forms of geothermal energy – from electricity production to sources of heat.
As with wind developers in past legislative sessions, state officials recognized that existing state code provisions can hinder some geothermal development through such things as restricting leases to just 10 years or requiring individual leases for each “section” of state land, even though projects may sprawl over thousands of square miles.
Specifics of the bills are listed below in the Legislative section of this Energy Update. The geothermal initiative captured the attention of the national energy publishing house Environment & Energy Publishing and its “Greenwire” update of energy news across the country. Following is the Greenwire piece as distributed by the New York Times:
February 3, 2011
Geothermal-Rich Idaho Aims to Remove Development Obstacles
By SCOTT STREATER of Greenwire
Idaho, sitting atop the nation’s third-largest geothermal resource, is working to ease development restrictions on prime state-owned lands with hopes of attracting new interest and investment in what is arguably the nation’s least-known renewable energy fuel.
Four bills being floated in the state Legislature would remove a 10-year expiration clause on geothermal leases to allow companies more time to develop projects, as well as remove restrictions on geothermal lease sizes and reduce royalty fees for power producers that have scared other developers away from the state.
The legislative package, written and sponsored by the Idaho Department of Lands with the support of Gov. C.L. “Butch” Otter (R) and other top-ranking lawmakers, comes as the Gem State tries to stake its claim in the renewable energy boom that is sweeping across the Interior West.
“In order to get a company to come in, it’s just nearly impossible the way our law is now,” Rep. Bert Stevenson (R) told members of the House Resources and Conservation Committee last week, according to the Times-News in Twin Falls. “We’ve got to make these changes to encourage that geothermal development.”
The changes would apply only to Idaho’s 2 million acres of state endowment lands — parcels given to the state by the federal government when Idaho joined the Union in 1890. Those tracts are intended to produce revenue to support public schools and several public university and charity funds.
Eric Wilson, minerals program manager for the Department of Lands, said much of the state endowment lands are in the southeast part of the state, which is believed to have tremendous geothermal energy potential.
The Bureau of Land Management — which handles federal leasing on the 12.7 million acres it manages in Idaho, as well as 17 million acres of U.S. Forest Service land in the state — has estimated that by 2025 geothermal plants in the state could be producing as much as 1,670 megawatts — enough to power more than 650,000 homes.
Those estimates place Idaho behind only California and Nevada in total geothermal power producing potential, according to BLM.
But Idaho currently has only one operating geothermal power plant, U.S. Geothermal’s 13-megawatt capacity Raft River 1 project about 200 miles southeast of Boise in the Raft River Valley. By comparison, BLM’s Nevada state office lists 12 active geothermal operations on federal land that produce about 350 megawatts of electricity, according to federal statistics.
And BLM last week issued draft approval for up to five new geothermal power plants in western Nevada that could power nearly 50,000 homes (Greenwire, Jan. 31).
“There’s a lot of potential in Idaho. It’s just that when you look at projects that have already gone through [exploratory] drilling and are under construction, Nevada, California, Utah and Oregon are leading the pack,” said Karl Gawell, executive director of the Geothermal Energy Association, an industry trade group. “But of all those states, Idaho has potentially the largest untapped capacity.”
The slow pace of geothermal development in Idaho in some ways mirrors the technology’s development nationwide.
Currently, geothermal, which relies on heat and steam from the earth’s core to drive electric power generators, accounts for less than 1 percent of total domestic energy production.
The Interior Department has estimated that by 2025 geothermal plants on federal land could produce enough electricity to power more than 10 million homes, placing it on par with wind and solar.
And geothermal, unlike wind and solar, can provide baseload power, moving electricity to the grid 24 hours a day regardless of whether the sun is shining or the wind is blowing.
Idaho’s decades-old state statutes, however, were written “before anyone was sure what geothermal energy was and how it could be used,” Wilson said.
Among the current law’s shortcomings is a cap limiting geothermal leases on state land to 640 acres. While the footprint of a geothermal plant is relatively small, wells are typically spread across 1,000 or more acres, requiring developers on state endowment lands to purchase multiple leases.
Another pitfall for developers is the state’s 10-year retirement clause for geothermal leases on state endowment lands. That’s probably too short a time for a company to determine whether the resource is sufficient to invest millions of dollars in a new plant, said Steve Lubinski, a BLM geologist in Burley, Idaho.
“In an oil and gas field, you can drill a well and know in a matter of days if it’s going to be profitable,” Lubinski said. “With geothermal, it can be a decade or more. It’s a much more drawn out process.”
In addition, Idaho collects a 10 percent royalty rate from geothermal producers operating on state lands, nearly three times what BLM collects from geothermal operators on federal lands. The high royalty rate has made it uneconomical for most companies seeking to do business in Idaho.
“The developers can’t make a project pencil out at 10 percent. They can’t make it work,” Wilson said. “So we realize our rates are too high. If we can get it down to 3.5 percent, we’ll be bringing in good steady income. Right now we’ve got a 10 percent rate but no production, and 10 percent of nothing is still nothing.”
While the state proceeds with its lease and royalty reforms, geothermal development is not standing still in Idaho, where federal leases are moving forward at a healthy pace.
A prime example is a proposal to develop geothermal resources on 640 acres of BLM land in the Raft River Valley. The area was proposed for lease two years ago, but the nominating company’s name is to be withheld until a formal bid is entered for the lease this summer. The lease proposal is open for public comment through Feb. 25.
Geothermal development on federal land requires a multistep process that begins with the purchase of leasing rights at a competitive auction. After that, further analysis and permits are required to drill wells, build power generators, and site roads and other infrastructure needed to produce electricity, Lubinski said.
The nominated parcel in the Raft River Valley is in an area with high geothermal potential, according to BLM and the Forest Service, which issued a programmatic environmental impact statement (PEIS) in 2008 identifying the best sites for geothermal development across the West.
BLM is currently reviewing nine other agency-managed parcels for possible lease in Idaho, as well as three others nominated on Forest Service land, Lubinski said. “One of our state director’s priorities is doing a better job of processing these,” he said.
Since June 2007, BLM has held three geothermal lease sales, resulting in leases on 18 parcels covering 28,168 acres, according to federal records.
The BLM parcel proposed for lease this summer sits near U.S. Geothermal’s Raft River project, which occupies 8.2 square miles of private land. That plant, which first began producing electricity in late 2007, has five deep wells producing about 11 megawatts of electricity a day, enough to power about 4,000 homes.
Daniel Kunz, U.S. Geothermal’s president and CEO, said the company plans to start construction on a second production unit at the site this year that would have the capacity to produce 26 megawatts, or enough to power about 10,000 additional homes.
Kunz praised state lawmakers’ latest effort to promote geothermal energy development on state endowment lands.
“They’re trying,” Kunz said. “The government needs to provide incentives so that people can lease or develop or seek to develop this resource.”
Streater writes from Colorado Springs, Colo.
Copyright 2011 E&E Publishing. All Rights Reserved.
For more news on energy and the environment, visit www.greenwire.com.
Greenwire is published by Environment & Energy Publishing. Read More »
III: PUC Grants Utility Request to Clamp Down on Wind Contracts Pending Dispute
The Public Utilities Commission on Monday granted a request by Idaho’s big three regulated electric utilities to lower the cap on wind and solar energy projects that can qualify for special published rates from the usual 10 megawatts to 100 kilowatts – essentially bringing the small wind business in Idaho to a halt pending resolution of a case before the PUC.
Idaho Power, Avista Utilities, and Rocky Mountain Power asked the PUC for the action, claiming they are getting so much wind on their respective systems that they’re worried about how the wind might affect system reliability and the need for other, more constant, energy resources than intermittent wind. The utilities also complained to the PUC that, while they have added smaller wind projects to their systems as required under the 1978 Public Utility Regulatory Policies Act (PURPA), the more recent trend is for developers of very large wind farms to break their projects up into 10MW pieces to qualify for more favorable rates. PURPA, which was enacted to help stimulate renewable energy development, requires utilities to pay the “avoided cost” rate for qualifying renewable energy projects that is the equivalent of what the utility would have to pay if they produced the energy on their own or bought it on the open market. Utilities originally asked for several kinds of renewable energy to be covered in this case, but the PUC ruled only wind and solar projects would be covered.
Since that rate is typically higher than the price renewable energy developers might otherwise receive, the utilities allege, wind companies are scrambling to grab more favorable rates by submitting multiple contracts that meet the 10MW threshold.
Wind companies and others urged the PUC to keep the 10MW limit for PURPA wind projects. Among other things, they claimed the utilities failed to show how they are being threatened by the recent wave of wind contracts. There are now more than 20 such contracts pending before the PUC, but they will likely be on hold since the PUC ruled that its order Monday was retroactive to Dec. 14 – before most of the contracts were submitted by the utilities. Developers also challenged the Dec. 14 effective date as tantamount to “retroactive ratemaking.”
In its order, the PUC gave the utilities and others 10 days to schedule an informal meeting to set a schedule to collect evidence and other information on these issues in advance of a hearing that will likely be set for early May.
To review the PUC order and other documents in this case. Go to www.puc.idaho.gov and then click “File Room” and then “Electric Cases” and scroll down to GNR-E-10-04.
IV: Blaine County Still Looking at Efficiency Code for Homes
The following news story appeared in the Idaho Mountain Express:
County still considering efficiency requirements
By: KATHERINE WUTZ
The Blaine County Commissioners will continue consideration of a new, more efficient energy code on Tuesday.
Under the proposed code, new homes of more than 11,000 square feet would be required to have a Home Energy Ratings System (HERS) score of zero, effectively meaning all the home’s energy must be produced by solar power or other renewable energy systems.
Smaller new homes would need to comply with a sliding scale of HERS scores on the amount of their energy consumption. The smaller a home, the more energy it’s permitted to use per square foot. County Planner Shana Sweitzer said smaller homes could also comply by installing certain approved energy-efficient components.
The county held a meeting last month for the sole purpose of allowing public comment on the issue. More public comment will be accepted at the hearing’s continuation at 2 p.m. on Tuesday, Feb. 15, at the Old County Courthouse in Hailey.
On The Agenda:
► The Idaho Public Utilities Commission holds its next decision meetings on Feb. 22 and 28. 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 Idaho Energy Collaborative holds its 3rd annual Legislative Lobby Day from 9 a.m. to noon on Valentine’s Day, Feb. 14. IEC members will be meeting with legislators throughout the day to brief them on energy-related issues, and will have displays on the 4th Floor Rotunda at the Statehouse. To learn more about the Collaborative, go to http://idahoenergycollaborative.weebly.com/
► Idaho Power’s Integrated Resource Plan Advisory Committee, which advises the state’s largest electric utility on how to meet its future energy needs, holds its next scheduled meeting on Feb. 17. The meeting is open to the public and will be held at Idaho Power in the first floor auditorium The meeting begins at 10 a.m. and will include analyses of various resource “portfolios” that the company is looking at to meet its power needs from 2011-2020 and also from 2021-2030. For information about Idaho Power’s IRPAC, go to http://www.idahopower.com/AboutUs/PlanningForFuture/irp/2011/default.cfm
►The Northwest Power and Conservation Council’s March meeting will be in Boise on March 8-9. The agenda will be announced before the meeting, as will the time and place. The Power Council is made up of eight members appointed by the governors of the four Pacific Northwest states and is the region’s leading authority on planning for the Northwest’s electricity needs, as well as the protection of fish and other wildlife. For information about the Council, go to http://www.nwcouncil.org/
IN THE LEGISLATURE: Geothermal Bills Expected to Breeze Through Both Chambers
Little action this week on energy bills in the Legislature. Listed below are four new geothermal bills that are designed to clean up existing Idaho code sections and make it easier to process geothermal lease applications and projects on state lands. Some similar provisions have been approved in prior legislative sessions for wind developments on state lands.
Each week, we’ll post thumbnail summaries on where the bills stand. Text of bills can be found by going to the Legislature’s main site at www.legislature.idaho.gov and clicking the “Bill Center” link and then “Legislation By Subject” and scrolling to the categories in which you’re interested in. Such as “Energy,” “Environment” or “Utilities.” You then click the link to the bill for more information. The Energy section will look something like this:
Energy/environment/technology, interim study comm HCR004
Renewable energy projects, expedite permits S1035
Here’s a look at the status of pending bills:
Grow Green Idaho Jobs Act (S1035):
Calls on state and local government jurisdictions to “expedite” permit applications for renewable energy projects and to hold public meeting on the applications. Says the “permitting and approval of such projects shall be a priority of each state agency or political subdivision.” Requires local governments and the state to expedite permits for renewable energy projects and to provide for public meetings on such applications in an accelerated fashion.
Status: Awaiting hearing in Senate State Affairs.
Sponsor(s): Sens. Edgar Malapeai, Les Bock, Michelle Stennett, Elliot Werk, and Dianne Bilyeu. (332-1351).
Interim Energy Committee Renewal (HCR4):
Joint House-Senate resolution to renew the interim Energy, Environment and Technology Committee, which will convene after the 2011 session to study energy and related matters. This interim committee has been authorized to meet for the past 14 years, and this year it will be tasked with the Legislature’s first five-year review of the 2007 Idaho Energy Plan. Much of the 2007 plan has been implemented only in part or not at all, so the committee will review which of the dozens of plan recommendations should be updated or dropped from the plan – as well as whether new recommendations should be added.
Status: Approved by House; awaiting Senate State Affairs hearing.
Sponsor(s): Interim Committee Co-Chairs Rep. George Eskridge and Sen. Curt McKenzie.
Geothermal Development on State Lands (H52, 52, 54, & 56):
Mostly technical but nonetheless important bills by the Department of Lands designed to remove certain barriers to geothermal energy development on state lands. H52 amends Idaho code to lengthen the maximum lease period for geothermal leases from the current 10 years to 49 years, similar to the change already made for wind. The extension is needed to provide time for geothermal energy developers of projects to recover their investments H53 would amend Idaho code to allow the state to negotiate royalty rates for geothermal projects on state lands, rather than be forced to use the current minimum annual rates of 25 cents per acre and royalties of not less than 10 percent of the geothermal resource produced. The change is needed to allow latitude in negotiating rates depending on the kinds of geothermal uses proposed. H54 amends Idaho code that restricts the size of geothermal leases on state lands. Currently, code restricts leases to a single “section”, or 640 acres, when in practice geothermal projects can cover thousands of acres. This change allows the state to negotiate one lease rather than several leases for each section of land. H56 modifies state bonding procedures to allow for lease performance in bonding and also to reflect bonding for actual surface disturbance without duplicating existing bonding requirements by the Department of Water Resources.
Status: All four bills are pending in House Resources and Conservation.
Sponsor(s): Bob Brammer, Idaho Department of Lands; 334-0239.