Idaho Energy Update
March 11, 2011
Idaho’s gathering storm over utility wind projects burst open this week as rival bills were introduced in the Legislature first to extend the lifeblood renewable energy sales tax rebates beyond their expiration this summer, and then to ban new wind farms altogether pending a legislative study of how wind power works in Idaho. And in something of a surprise, Gov Otter moved former Idaho PUC Commissioner Paul Kjellander back to the PUC from the Office of Energy Resources, which Kjellander led for the past two years. And the Payette County Commission rejected appeals of a P&Z green light of a property rezone for a nuclear reactor, meaning the County Commission is now free to hold hearings of its own on the proposal that remains mired in a federal securities fraud suit. For more information on these developments, along with your legislative update, read on. Thanks as always, and if you have any calendar items, please send them along!
Clean Energy Program Director
Snake River Alliance
I: Wind Battles Heat Up in Legislature
Idaho’s wind wars heated up this week in the Legislature as Interim Energy Committee Co-Chair Rep. George Eskridge introduced a bill Thursday to retain a key sales tax rebate for renewable energy developers – and today Rep. Erik Simpson introduced a bill to slap a two-year moratorium on new wind farms.
The rival bills set up a showdown of sorts on whether the Legislature intends to continue supporting the state’s young wind industry through the revenue-neutral tax rebate, or to shut it down along with more than a dozen wind projects that are awaiting approval at the Public Utilities Commission. The PUC, meanwhile, is embroiled in a renewable energy battle of its own, as Idaho’s three electric utilities are seeking cover from having to take additional wind onto their systems until regulators have a chance to study assorted renewable energy issues.
Eskridge’s H250 extends the five-year-old renewable energy sales tax rebate – broadly viewed as the catalyst of Idaho’s suddenly robust wind industry – beyond its scheduled June 30 expiration and instead until the end of 2014. Renewable energy developers seeking the rebate would have to have certification that their project is running and delivering energy in order to qualify for the rebate. Some Idaho utilities have lobbied heavily against extending the incentive for new renewable energy projects, especially wind.
Utilities, which this session more than others are more vocal about their disdain for new wind projects, are more supportive of Simpson’s bill, which would shut down new wind construction in Idaho for two years – a period wind developers say would effectively kill the industry’s growth in Idaho. Simpson’s bill (no number had been assigned as of Friday afternoon) also charges the Legislature’s Interim Energy Committee, which met only once last interim due largely to a tight budget, to address several wind-related issues and report back to the Legislature in two years on how those recommendations should be incorporated into the 2007 Idaho Energy Plan.
With both bills now in the House and awaiting committee assignments and hearings, attention in the mounting conflict over the future of Idaho’s wind industry will turn for now from the Public Utilities Commission to the Idaho Legislature for at least the next month or so. Since both bills will not pass, the House will get the first crack at setting the direction of the wind energy business in Idaho. Eskridge reminded his colleagues Thursday that all states around Idaho either don’t have a sales tax or offer a sales tax rebate or similar incentive to attract not only wind but solar, geothermal, and other renewable energy businesses, many of which will take their business elsewhere if the rebate disappears.
Two presentations in the House Environment, Energy, and Technology on Monday will help shed some light on the economic impacts of renewable energy businesses in Idaho. The panel will hear a presentation on “Fiscal and Economic Impacts of Idaho’s Alternative Energy Sales and Use Tax Rebates” and another on “The Economic and Fiscal Impacts on the State of Idaho from Exergy Development’s Construction and Operation of 300MW of Wind Energy In Idaho.” The first presentation will be by Geoffrey Black and Don Holley of the Center for Business and Economic Research at Boise State University. The second will be by John Church of Idaho Economics. The meeting will be at 1:30 p.m. in Room EW41.
Back at the PUC, an unusually high 18 different parties have filed to intervene in a regulatory case that will also determine what Idaho wind farms look like in the future. And as reported here last week, the PUC is taking public comments on multiple applications on 17 different utility wind contracts, which utilities are generally opposing because they have a case pending before the PUC on how the state should regulate the prices and configurations of the relatively small wind projects that are popping up around southern Idaho.
Idaho’s three regulated electric utilities – Idaho Power, Avista Utilities and Rocky Mountain Power – have asked the PUC to intervene in whether the utilities must accept power from all wind projects at certain prices, including power from large wind farms that have been broken into smaller ones that qualify for more favorable prices. Utilities are required under the 1978 federal Public Utility Regulatory Policies Act (PURPA) to buy power from “qualifying facilities” at an “avoided cost” rate that is supposed to be about what the utilities would have to pay if they generated their own power or bought it from outside markets. Traditionally, those more attractive rates were granted to projects generating 10 megawatts (MW) or less. But increasingly, utilities claim, far larger projects have been carved into 10MW mini-projects to qualify for the higher prices. Wind developers deny they’re trying to “game” the system, arguing instead the multiple projects bring advantages such as combined connections to utility systems and economies of scale.
At the utilities’ request, the PUC has already slashed the size of projects that qualify for those rates from the former threshold of 10MW (a typical Idaho wind farm) to 100 kilowatts, which precludes wind farm developments.
The applications and wind farms that are up for public comment include five wind projects in Bingham County in eastern Idaho that were submitted by Rocky Mountain Power; five wind projects in the Burley area submitted by Idaho Power (the former Cotterel Ridge wind project); two wind projects Utah that were submitted by Idaho Power; two wind projects in the Declo area submitted by Idaho Power; and three wind projects near Murphy that were submitted by Idaho Power. All projects were for up to 10MW, meaning they wouldn’t qualify for the PURPA rates under the PUC’s current orders.
For more information about the pending PURPA case, go to www.puc.idaho.gov and then “File Room” and then “Electric Cases” and scroll to GNR-E-11-01. Those interested in reviewing the cases for the multiple wind projects described above, including how to submit comments on whether the projects should be allowed to move forward, can also find them in the “Electric Cases” section. The Bingham County projects are at PAC-E-11-01, 02, 03, 04, and 05. The Burley projects are at IPC-E-10-51, 52, 53, 54, and 55. The Utah projects are at IPC-E-10-61- and 62. The Declo projects are at IPC-E-10-59 and 60. The Murphy projects are at IPC-E-10-56, 57, and 58.
II: Gov. Otter Sends Kjellander Back to PUC
Gov. C.L. “Butch” Otter today reappointed Paul Kjellander to the Idaho Public Utilities Commission, replacing retiring Commissioner Jim Kempton.
Kjellander will be returning to a post he held for nine years before Otter moved him from the PUC to the newly created Office of Energy Resources in 2007. OER Program Services Manager John Chatburn has been named interim administrator of the state’s energy office.
“It has been an honor to articulate Governor Otter’s vision for energy during my service at OER,” Kjellander said in a news release. “I welcome the opportunity to rejoin my colleagues at the IPUC as we work through the difficult regulatory issues that will impact every Idahoan’s pocketbook.”
Kjellander’s term will run six years. The next commissioner’s term to be up is Mack Redford in 2013, followed by Marsha Smith in 2015.
III: Payette County Commissioners Reject Appeals of P&Z’s AEHI Recommendations
The Payette County Commission this week rejected two appeals of the county Planning and Zoning Commission’s recommended approval of a rezoning request by would-be nuclear reactor developer Alternate Energy Holdings, Inc.
The County Commission heard the appeals of the P&Z in January but deferred a decision. The Commission has yet to schedule its hearing on AEHI’s rezoning request, which is opposed by several surrounding property owners in Payette County as well as a number of county residents concerned about the impacts an industrial energy factory would have on the county’s rural lifestyle and its quality of life, drain county resources, and pose new environmental threats. Other reactor critics objected to the AEHI proposal during the P&Z hearing on grounds a nuclear reactor would consume huge amounts of water and on grounds that no transmission exists for such a power plant, nor have any potential purchasers of the power been identified.
The County Commission suspended consideration of AEHI’s rezoning request in December when the U.S. Securities and Exchange Commission froze trading of AEHI stock and then secured a temporary court order freezing the company’s assets in the wake of a far-reaching SEC fraud complaint against AEHI and its executives and related companies. The government’s securities fraud case, as well as a massive class-action suit by AEHI investors, are a long way from being set for trial. Both are before federal judges in Boise.
To review the SEC’s complaint against AEHI, go to: http://www.sec.gov/news/press/2010/2010-249.htm
On The Agenda:
► The House Environment, Energy and Technology Committee will hear a presentation on “Fiscal and Economic Impacts of Idaho’s Alternative Energy Sales and Use Tax Rebates” and another on “The Economic and Fiscal Impacts on the State of Idaho from Exergy Development’s Construction and Operation of 300MW of Wind Energy In Idaho.” The first presentation will be by Geoffrey Black and Don Holley of the Center for Business and Economic Research at Boise State University. The second will be by John Church of Idaho Economics. The meeting will be at 1:30 p.m. in Room EW41.
► The Senate Agricultural Affairs Committee will hear a presentation on “Changing Climate Conditions” by Jen Pierce of the Department of Geosciences at BSU when it meets at 8 a.m. on Tuesday in Room WW53.
► The Idaho Public Utilities Commission holds its next decision meetings on March 14, 21 and 29. 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 Western Governors’ Association’s Industrial Energy Efficiency Summit will be held March 16 and 17 in Boise. The meeting, to be held at the Boise Centre and hosted by current WGA Chairman Gov. C.L. “Butch” Otter, includes sessions on industrial energy efficiency success stories, utility efficiency programs, regulatory policies that promote efficiency programs, and regional program resources. For more information, including the full agenda and registration information, go to: http://www.westgov.org/
IN THE LEGISLATURE: Wind Bills to Set Direction of Renewables in Idaho
As mentioned above, two competing wind bills were introduced this week in the Legislature – one supporting Idaho’s wind industry by extending a sales tax rebate for renewable energy project purchases and another that would put a two-year moratorium on the construction of new wind farms.
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:
Alternative electricity generation, tax rebate, when H0250
County-based renewable energy commerce authority H0208
Energy/environment/technology, interim study comm HCR004
Idaho National Laboratory, 60th anniversary HCR019
Office of Energy Resources, approp H0244
Renewable energy projects, expedite permits S1035
School district, electric energy, receive credits S1112
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 both chambers.
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 sent to governor.
Sponsor(s): Bob Brammer, Idaho Department of Lands; 334-0239.
School Districts and Renewable Energy (S1112):
Allows local school districts to exchange or receive credits on their bill for excess thermal or chilled water or electric energy not needed by the school district. As more school districts look to clean and renewable energy resources such as wind, solar, biomass and heat pumps, they want to be able to receive credit for excess amounts of energy they produce during times they don’t need as much. This bill would allow them to receive credits on their energy bills for unneeded energy.
Status: Awaiting hearing in Senate State Affairs.
Sponsor(s): Sen. Chuck Winder
Transmission Lines and Eminent Domain (H189)
Adds new language to existing state eminent domain language dealing with electric distribution and transmission lines. Says any entity besides a regulated public utility or a cooperative or municipal utility (meaning any private or merchant transmission developer) must show a new transmission line “directly serves the interests of the residents of Idaho.” While the state’s big regulated utilities have the power to use eminent domain if needed to acquire land for transmission rights of way, private companies would have to show a benefit to Idaho residents. There are questions about how to define those benefits. One private transmission developer, LS Energy, which plans a line in southern Idaho, opposes the measure on grounds it sets a higher standard for eminent domain proceedings than that for Idaho’s regulated utilities.
Status: Held in House State Affairs pending additional questions posed to attorney general’s office on certain legal issues.
Sponsor: Rep. Scott Bedke
County Renewable Energy Authorities (H208)
Authorizes counties to create their own “renewable energy commerce authorities” to help facilitate the development of renewable energy projects within their borders. The authorities could receive federal, state, or local funds and enter into contracts to acquire, hold or lease property to promote projects.
Status: Awaiting hearing in House State Affairs
Sponsor(s): Rep. Bert Stevenson
Renewable Energy Sales Tax Rebate (H250)
Extends the five-year-old renewable energy sales tax rebate, which is scheduled to expire June 30, for another three and a half years. Says projects must produce commercial-scale electricity by Dec. 2014, or developers must return their rebate.
Status: Awaiting House committee assignment
Sponsor(s): Rep. George Eskridge, Sen. Curt McKenzie
Wind Turbine Moratorium (awaiting bill number)
Places a two-year moratorium against counties, cities or state agencies from granting approval or issuing licenses or permits for construction of wind turbines higher than 100 feet or producing more than 100 kilowatts of power. That would ban new wind farms during the pendency of the moratorium.
Status: Awaiting House committee assignment
Sponsor(s): Rep. Erik Simpson