To say these are uncertain times for Idaho’s renewable energy businesses is an understatement, what with the Public Utilities Commission clamping down on the kinds of projects that can receive favorable rates from utilities, some in the Legislature wanting to go a step further and pull the plug on new wind farms for a year or two, and a critical tax incentive for renewables on the brink of disappearing.
However you feel about the love-it-or-hate-it wind industry in Idaho, you now have a chance to sound off – at least to the Idaho PUC, which wants to hear from the public about the fate of no fewer than 17 wind projects that are now snarled in a case that may determine the near-term fate of Idaho’s nascent renewable energy industry.
Idaho’s wind industry is already bracing for a Category 4 showdown in the Idaho Legislature, where it’s under heavy fire, particularly from eastern Idaho interests, in a fight mostly over aesthetics. Now Idaho’s big three electric utilities – Idaho Power, Avista Utilities in the north and Rocky Mountain Power in the east – want the PUC to shield them from what they charge is an onslaught of new wind projects that threaten to destabilize their grid systems and jack up customer rates. Those allegations are roundly dismissed by wind, solar and other renewable energy developers who say precautions can be taken to avoid the calamity feared by the utilities, and also that new wind power won’t be any more expensive than the power to be generated from the pricey new gas plants the utilities favor.
The green energy entrepreneurs say they’re not doing anything in Idaho that’s not being done elsewhere, where utilities manage to absorb large amounts of renewable energy just fine. No less a super-utility than the Bonneville Power Administration is tripling its wind portfolio from 2,000 megawatts to 6,000MW by 2013 thanks to ever-improving understanding of how to do it with minimal system impacts.
There’s no question Idaho is headed for a big showdown over the future of its clean energy industry. A drawn-out fight at the PUC may well render many of these proposed new wind farms uneconomic and either kill them or send them to more renewables-friendly neighboring states. But before that happens, the three-member Public Utilities Commission is sounding out public opinion on the issues.
Combined, the looming expiration of the sales tax rebate and the utilities-versus-energy developers imbroglio at the PUC have thrown future development of wind, solar, geothermal, biomass, small hydro and other renewable projects into uncertainty. Many energy developers say their projects have such thin profit margins they may not pencil out without the sales tax rebate and the more attractive prices they have been able to obtain from utilities under a federal law designed to encourage development of small energy projects.
Idaho Statesman reporter Rocky Barker wrote a story in Monday’s edition(http://www.idahostatesman.com/2011/03/07/1555146/companies-examine-the-alternatives.html#ixzz1Fw8bPQiJ) in which he summarized what might happen if the five-year-old renewable energy investment sales tax rebate is allowed to expire this summer, and it will if the Legislature decides not to renew it. Rocky summed it up like this:
So far, the debate over the alternative energy tax rebate has focused on wind energy developers who have invested $1 billion since the rebate was first approved in 2005. A bounty of wind has Idaho utilities and the Idaho Public Utilities Commission calling for a pause so they can figure out how best to integrate this intermittent energy source into the power grid.
It also has created opposition in Bonneville and Bingham counties from people who live near the giant towers and turbines built in the hills overlooking the Snake River Valley. Despite studies that have shown the state will get millions in investment, tax dollars and royalties for rural families, the concern over the impact on electric rates is giving many lawmakers pause as well. That’s why some energy companies are looking at ways to sweeten the deal.
As we reported in last month’s Snakebite article “Debunking the Renewable Energy Tax Myth,” some legislators initially opposed extending the sales tax rebate incentive for renewables because, they incorrectly thought, the rebate was blowing a hole in the state’s general fund budget as developers came in to claim their rebates. In fact, the State Tax Commission later acknowledged – after all the front-page stories about the fiscal dangers of wind power – the impact is either non-existent or so small as to not matter. A pair of Boise State University economic studies went a step further, pointing out that the tax revenues from which the rebates are paid would probably not exist if the projects weren’t built to begin with, and in any case the projects are having huge, favorable budget impacts for the state and the counties in which they’re built.
But let’s return from the Legislature to the Public Utilities Commission, which wants your two cents’ worth on the renewables issue.
In five separate March 2 news releases that are nearly identical save for the names of the wind farms, the PUC solicited comments through March 17 (three cases) and March 24 (two cases) on how it should treat these multiple-farm wind projects that are seeking to sell power to Idaho Power or Rocky Mountain Power.
Under the 1978 federal Public Utility Regulatory Policies Act (PURPA), utilities are required to buy power from “qualifying facilities” at an “avoided cost” rate that is 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. They also point out that they are willing to have their power deliveries to the utilities curtailed or turned off altogether in certain cases if the utilities are taking on way too much wind power.
While the overall issue of who qualifies for more favorable PURPA rates and things like the sizes of their wind farms and other issues are pending before the PUC, the Commission has reduced the size of projects that qualify for those rates from the former threshold of 10MW to 100 kilowatts, a size so small that it does not include wind farms. As a result, applications such as those at issue here that were technically submitted to the PUC after the retroactive date of Dec. 14 are in an effective moratorium. Wind developers charged they reached agreements or were very close to having signed contracts with the utilities, but that the utilities delayed filing the contracts with the PUC so the contracts would miss the Dec. 14 cutoff date. In a similar case in 2005-2006, the PUC agreed to “grandfather” certain wind contracts if they were far enough along before a moratorium hit. That has not occurred yet in this case.
To be clear: Not all wind projects are created equal, and the Snake River Alliance does not support any and all wind or other renewable energy project simply because it can help replace coal or gas-fired generation. For instance, some projects may not be “sited” in good places, including places where they might have environmental impacts on plant or animal species. That’s why we review each project independently, just as we do for proposals to build transmission lines in Idaho. There are some wind projects proposed for Idaho that may have negative impacts on sage grouse, for example, and they are already drawing strong opposition, including from some in Idaho’s environmental community.
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 in 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.
So the PUC, which is already getting an earful from the utilities, energy developers and others like the Snake River Alliance in this case, want to hear from you. You can learn more about these cases by going to the PUC’s website at www.puc.idaho.gov and then “File Room” and then “Electric Cases” and scroll to GNR-E-11-01.
If you’re interested in reviewing the cases for the multiple wind projects described above, including directions on how to submit comments on whether the projects should be allowed to move forward, you 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. In each separate case file, there is a copy of the news release that explains how to submit electronic or written comments.
The Alliance will be participating in the renewables case at the PUC, but just as important we’re going to be on the lookout for opportunities like this one, in which the public has an opportunity to weigh in on controversial issues such as the future of Idaho wind farms.
And it’s not too late to express your opinions to your legislators. You can call the main legislative line at 332-1000 or toll-free at (800) 626-0471. You can also go online to www.legislature.idaho.gov and click “Contacting Legislators” on the home page to send an e-mail, and if you don’t know who your legislators are, simply click “Who’s My Legislator?” and follow the interactive map to your district.
Finally, and returning to Rocky Barker’s Idaho Statesman story, he finished it like this:
Interconnect Solar Development is seeking to build two 20-megawatt solar generation plants near Murphy in Owyhee County. Utility officials say Idaho’s solar potential to meet their needs is better than wind because its peak period in the summer matches southern Idaho’s peak power time.
But solar power costs more to build than wind plants, so it hasn’t taken off at the same rate despite the federal stimulus package’s incentives. Interconnect’s solar manager Bill Piske said his company could live with a severance tax but said it should be 2 percent for solar instead of 3 percent because of the cost differential.
Piske’s disappointed that Idaho Gov. Butch Otter hasn’t been more active in promoting solar power after running ads touting solar power for the state.
“He needs to step up to the plate and say you are going to kill jobs and kill energy if you don’t pass this,” Piske said.
Dover Republican Rep. George Eskridge said lawmakers need to do something this year.
“If the rebate dies, the industry goes away and we gain nothing,” he said.