Idaho Energy Update
March 25, 2011
Idaho’s Wind Wars continued to rage this week, with a House committee killing a bill that would have slapped a two-year moratorium on new wind farms and another House panel struggling with whether to extend the state’s renewable energy development sales tax rebate, which expires this year. Meanwhile, Office of Energy Resources Administrator Paul Kjellander had his Senate confirmation hearing and is bound back for another stint at the Public Utilities Commission; and the PUC will hold oral arguments in a case that could change the way Idaho Power funds its energy conservation programs. 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 Moratorium Goes Down; Renewables Tax Rebate Up Monday
The near-term future of renewable energy developments in Idaho became only slightly clearer this week, with legislators killing a utility-backed bill to slap a two-year moratorium on wind farm developments but then holding up a renewables incentives bill to give all sides a chance to try work out a compromise.
The House State Affairs on Tuesday voted 11-8 to kill H265 by Rep. Erik Simpson, R-Idaho Falls, that would have imposed a two-year moratorium on the ability of the state, counties, or cities to issue permits to wind developers. Rep. Simpson said the bill was needed to combat what he described as a wave of wind projects confronting Idaho’s electric utilities, who also supported the wind moratorium. But bill opponents denied charges new wind energy developments would drive utility prices up, saying utilities can more than manage the addition of more wind on their systems. Wind supporters also warned that wind and other renewable energy developments are bringing millions of dollars in investments, creating hundreds of jobs, and injecting millions more into state and local economies and cash-strapped budgets.
Meanwhile, the House Revenue and Taxation Committee held up another wind bill, H250, by Rep. George Eskridge, R-Dover, and Sen. Curt McKenzie, R-Nampa, the co-chairs of the Legislature’s Interim Energy Committee, that would extend the state’s five-year-old sales tax rebate incentives for renewable energy developers. The utilities opposed that bill as well, also arguing they can’t cope with the additional wind power. Bill supporters, including renewable energy developers, held several meetings with opponents, including the utilities, to try to work out a compromise in the bill. The Revenue and Taxation Committee is now scheduled to consider introducing two separate pieces of renewable energy legislation, including extending the rebate that is due to expire this July, when it meets at 9 a.m. Monday in Room EW42. Energy developers say the rebate is needed for their developments to pencil out, adding they’ll likely need to move their projects to other states if the rebate is allowed to lapse.
The Legislature’s Interim Energy, Environment, and Technology Committee, which was extended through this year earlier in the session, will take up the wind and other energy issues when it meets after the 2012 session adjourns. Meanwhile, the Idaho Public Utilities Commission is in the midst of a complex renewable energy case of its own, as Idaho’s three regulated electric utilities are seeking refuge from having to take additional wind onto their systems until regulators have a chance to study assorted renewable energy issues.
The PUC has already issued an order that effectively put the brakes on new wind projects while it considers the renewables case before it. Nearly 20 wind contracts with utilities and wind developers are before the PUC awaiting action, but a decision on those contracts may be delayed while the PUC considers the larger wind case. The PUC’s next big wind issue to decide is whether developers of large wind projects should be allowed to break those projects into smaller wind farms in order to qualify for more favorable guaranteed prices.
The 1978 federal Public Utility Regulatory Policies Act (PURPA) requires utilities to buy power from smaller “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. In Idaho, 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 more attractive 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.
A number of contract applications between developers and utilities are pending at the PUC. They 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: Kjellander to Return to PUC
The Senate State Affairs Committee was to vote Friday on the confirmation of Office of Energy Resources Administrator Paul Kjellander to return to the PUC after being nominated by Gov. C.L. “Butch” Otter to replace retiring Commissioner Jim Kempton. Such a vote is generally a pro forma exercise, and Kjellander’s new term at the PUC is set to run from Monday through January 2017.
Kjellander was at the PUC for nine years before Otter moved him from 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. The next PUC commissioner’s term to be up is Mack Redford in 2013, followed by Marsha Smith in 2015.
III: PUC to Hear Oral Arguments in Idaho Power Energy Efficiency Incentives Case
The PUC is set to hear oral arguments on Wednesday, March 30, in a settlement agreement for a case involving Idaho Power’s request to change the way it pays incentives for some of its energy conservation programs.
Idaho Power wants to fund its three energy “peak” reduction programs, including the one that allows residential customers to have their air-conditioners cycled on and off during times of unusually heavy demand, through its annual “power cost adjustment” rather than the surcharge customers pay on their bills each month. The reason for the request to change how the programs are funded is because, if they succeed in reducing heavy demand at peak load times in the summer, they may help defer the need for the company to build expensive new gas plants to provide that power during the few times its needed. Another part of the case, Idaho Power wants to be able to “capitalize” and include in customer rates the incentive payments made to large commercial and industrial customers who participate in the company’s largest efficiency program. By doing so, Idaho Power would for the first time earn a rate of return on some of its energy efficiency programs; similar to the way it earns a return on its traditional “supply side” or generation resources such as gas or coal plants. Other energy efficiency programs would continue to be funded as they are now through 4.75 percent surcharge paid by customers.
The Snake River Alliance, along with the Idaho Conservation League and the NW Energy Coalition, are the three conservation parties participating in the case and generally supporting Idaho Power’s request. Also participating is the Community Action Partnerships of Idaho, which helps low-income utility customers with their bills. The settlement agreement that will be discussed Wednesday is opposed by the Industrial Customers of Idaho Power.
According to the PUC, a settlement in this case would not immediately affect rates. Idaho Power said its growing energy conservation programs, which cost more than $40 million in 2010, are expanding faster than the ability of the 4.75 percent “efficiency rider” to fund them. The company said it will have a negative balance of about $17 million by the end of this year, which is one reason why it’s looking for other ways to fund the energy-saving programs.
The oral arguments in the case are set to begin at 10 a.m. Wednesday in the Commission Hearing Room at 472 W. Washington St. in Boise. To review Idaho Power’s filing and other documents in the case, go to www.puc.state.id.us and then “File Room” and then “Electric Cases” and scroll to IPC-E-10-27.t
On The Agenda:
► The House Revenue and Taxation Committee will take up two bills dealing with renewable energy, including the expiring sales tax rebate for energy developers, when it meets at 9 a.m. Monday in Room EW42.
► The NW Energy Coalition’s Spring Conference and Board meeting will be held in Boise this year and runs May 13-14. For more information, including registration information and the agenda, go to http://www.nwenergy.org/get-involved/2011-spring-conference/
►The Idaho Green Expo, a celebration of all things green – including energy! – runs May 14 and 15 in Boise. For more information, go to www.idahogreenexpo.org
► The Idaho Public Utilities Commission holds its next decision meetings on March 29 and April 4, 18, and 25. 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.
IN THE LEGISLATURE: Wind Bills the Only Energy Game in Town
As mentioned above, the Idaho Legislature will try to untangle what’s become a tough fight over whether to extend the renewable energy development sales tax rebate, which will expire this summer unless the Legislature acts. A House panel solved one wind issue when it killed a bill to place a two-year moratorium on new wind developments.
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 signed by 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: Held in House Revenue and Taxation Committee (see above) and will be replaced with legislation to be introduced March 28.
Sponsor(s): Rep. George Eskridge, Sen. Curt McKenzie
Wind Turbine Moratorium (H265)
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: Killed by House State Affairs
Sponsor(s): Rep. Erik Simpson