Windland..pdf

Corporate Office
10480 Garverdale Ct., Ste. 804A
Boise, Idaho 83704
Telephone: [phone]
FAX: [phone]
Email: wind(1Ywindland.com
I~
df
p...V r""
CC('f:"I\!ED PJ f;,P
;;i!~E~J . - rc :9'
..
II :. t..
'" '~... ' '
Windfarm Office
"'" '.~ '~~'
;r-"
;:;:-;
\n~~~meron Canyon Road
1f\. 'JI , ILl; h:0 CCili i 0~
~~;
hon l:~~j ~~~~~~~~rVlnOlLanO~ '-.Jnc. FAX: [phone]
March 15 2002
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
O, Box 83720
472 West Washington Street
Boise, Idaho 83720-0074
Reference:Submittal of attached comments re: Case No. GNR-O2-
Dear Commission Secretary:
Windland Inc, thanks the Idaho Public Utilities Commission for this opportunity to offer the
attached comments pursuant to Case No. GNR-02-01.
As is detailed in our comments, Windland believes the current Qualifying Facilities size threshold
of 1 Megawatt and restriction of the maximum contract length to five years are no longer
reasonable. We would be happy to offer additional information on these important topics to the
Commission should that be required.
CC:Gregory N Duvall, Pacificorp
Jim Fell, Pacificorp
Robert J Laferty, Avista Corporation
Barton L Kline, Idaho Power Company
John Eriksson, Utah Power & Light
Roald Doskeland
President
Windland, Inc.
10480 Garverdale Court, Suite 804A
Boise, Idaho 83704
[phone]
~ ,", .- ,...
, ,. I ;- '
- ""'- . ~
I 1.. C~f
!'~~-- "~..
r") ,.--, 1- o. rLUl.:LI.",
.:)
l':25
' , ", -, '
JI:U;.;:,.:i C,=i;;'i!SSiO;J
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
OF THE CONTINUED REASONABLENESS
OF CURRENT SIZE LIMITATIONS FOR
PURP A QF PUBLISHED RATE ELIGffiILITY
(i.e. 1 MW) AND RESTRICTIONS ON
CONTRACT LENGTH (i.e, 5 Years)
CASE NO, GNR-02-
COMMENTS OF
WINDLAND, INC.
Windland, Inc, (Windland) is in the business of developing commercial wind farms.
Windland has developed, owned and operated commercial wind farms for approximately 20
years and has operated ITom its headquarters in Boise, Idaho for the past nine years.
Windland thanks the Commission for this opportunity to offer comments and explain its
reasons for believing the current Qualifying Facility size threshold of 1 Megawatt and
restriction of maximum contract length to five years are no longer reasonable. Contrary to
the intent of the Public Utility Regulatory Policies Act (PURPA), the current 1 Megawatt
facility size and five year contract length discriminate against wind based Qualifying
Facilities being developed in the contemporary marketplace.
PURP A was intended to help the United States achieve energy independence, allow
for more efficient use of our resources, and wean the electric utility industry ftom the use of
COMMENTS ofWINDLAND, INC.
Re: CASE NO, GNR-02-
non-renewable resources, As secure, domestically based, renewable resources wind turbine
generating Qualifying Facilities are precisely the type of facility the PURPA legislation
intended to promote. Due to the recent attacks on our country and the heightened
awareness of our potential vulnerability to disrupted access to foreign fossil fuels, the
original intent ofPURPA has even greater significance today,
Of the major forms of renewable energy (i.e. solar, wind, bio-mass, bio-fuels, etc.
wind is the most widely implemented today primarily due to its cost effectiveness. Since
1996 when the Commission promulgated Order No. 25884, wind generated electric power
has been the fastest growing form of electric generation in the United States.
Since PURPA was passed the cost per kilowatt-hour of wind generated electricity
has declined by ninety percent. While improvements in turbine reliability and maintenance
procedures have contributed to this cost improvement, the primary factor influencing the
improved cost effectiveness has been a trend toward the use of larger turbines.
The Stateline Project (the largest wind farm in the world on the Washington-
Oregon border near Hermiston, OR) uses 660 kilowatt turbines, Commercial turbine sales
today are primarily of the 650-900 kilowatt class machines. But this class of turbine is
nearing the end of its market life cycle and is starting to be displaced by turbines in the 1.
8 Megawatt range, For off-shore developments, access to extremely powerful barge
based cranes and other factors lend themselves to use of even larger turbines,
On any particular land based project, the topography of the site can limit the size of
the turbines installed, but the general trend is to ever larger turbines, A single commercial
COMMENTS ofWINDLAND, INC.
Re: CASE NO. GNR-02-
turbine can now exceed the IMegawatt threshold, The commercial trend to larger turbines
plus scale economies in operation and maintenance, siting, permitting, financing, and
construction, make the development of wind based IMegawatt Qualifying Facilities
economically untenable.
For the foregoing reasons, Windland believes the current QF IMegawatt size
threshold is unreasonable, Similarly, Windland believes the five year maximum contract
duration for QF's is unreasonable in the contemporary marketplace.
The experiences of the past 18 months show that a five year PURP A contract length
is not an appropriate resource planning horizon. When the Commission decided to reduce
the PURP A contract length to five years in 1996, it was anticipated that a competitive
market for power was imminent. Today a competitive deregulated market for electric
power in Idaho is not within the foreseeable future.
In 1996 Idaho Power contended that it had no plans to build, own or operate new
generating facilities to meet load growth. Instead, Idaho Power planned to supplement its
existing resources as necessary with short term market purchases of capacity and energy.
As we know now, the transition ITom low gas prices and surplus energy (such as existed in
1996) to high prices can take place very rapidly.
The attempt to exploit the low-cost power that was available temporarily in 1996
and immediately thereafter, has recently exposed Idaho ratepayers to extreme variability in
power costs, The five year maximum QF contract duration limits QF opportunities to assist
in mitigating such variability, Windland believes that the policy IPUC establishes for
COMMENTS ofWINDLAND, INc.
Re: CASE NO. GNR-02-
PURPA QF's should exploit the stable, cost effective prices of "no- fuel-cost" wind
generated electricity.
A failure to plan for load growth, and a low precipitation season in the natural
hydrological cycle, have recently combined to expose Idaho ratepayers to high market
prices for power, As mentioned above, in 1996 Idaho Power stated that they would not
build new generating facilities and would rely instead on short-term purchases at market
rates. This risky strategy eventually resulted in the utility building an inefficient, high
operating cost, non-renewable fueled facility at Mountain Home as a quick response to
unexpectedly high market prices for power, Although Idaho Power has recently proposed a
more conservative Integrated Resource Planning methodology which may serve to reduce
this variability, Windland believes Idaho ratepayers should also be protected ITom such
unfortunate resource planning decisions in the future by extending the current maximum QF
contract duration of five years.
The Commission ruled (in Order 25884) that ratepayers should be indifferent to
whether a generating resource serving them was constructed by a utility or an independent
developer, The Utility s monopoly access to customers ensures that they have reliable
access to a long-term cash flow, Use of a maximum contract length dramatically shorter
than the useful life of capital intensive Qualifying Facilities (such as Wind farms) serves as
an unreasonable barrier to such QF's being developed,
Electric generating facilities built by large utilities and those provided by smaller
Qualifying Facilities tend to be long lived assets. The hydro facility-based model (that the
COMMENTS ofWINDLAND, INc.
Re: CASE NO, GNR-02-
Commission uses to calculate avoided costs for non-fossil-fueled facilities) recognizes that
high capital cost, low fuel cost generation facilities require amortization of the capital costs
over a long period of time, IPUC uses a 20 year amortization period in its non-fossil-fueled
model. Windland believes that, consistent with the Commission s model, the maximum
contract duration for PURP A QF's should also be extended to 20 years.
As was detailed above, Windland believes that retaining 1 Megawatt QF size
threshold denies Idaho ratepayers protection ITom market fluctuations by precluding wind
participation as a QF. Instead of multiple small to medium sized QF's being developed
throughout the state, the current IMegawatt and five year thresholds have resulted in Idaho
Power building the Mountain Home single cycle gas plant at rates much higher than
published avoided cost. Ratepayers have not been held indifferent to QF or utility source of
supply; rather the 1 Megawatt size limit and five year maximum contract duration have
served as a bias favoring utility developed generation. The 1 Megawatt size limit is not
reasonable as it discriminates against wind powered QF's when wind is one of the most cost
effective of all renewable energy sources, Given the industry trend to larger turbines
current maintenance requirements and access to financing, Windland believes a reasonable
maximum facility size is in the 13 to 18 Megawatt range,
A revised QF policy that allows the development of multiple 13-18 Megawatt wind
projects would provide a set of ancillary regional benefits. One of the benefits of having
developed hydro facilities in multiple river basins is a level of protection against a low
snowfall in anyone drainage, Similarly, geographic diversity in wind generation facilities
COMMENTS ofWINDLAND, INC.
Re: CASE NO, GNR-02-
will enhance system wide availability of the output ITom wind facilities, An appropriate QF
size threshold will allow diversification that will support both QF and non-QF wind
development, furthering, in a second order effect, the original PURP A intent to develop
renewable resources.
Wind projects are being developed in many states. Utilizing wind as a renewable
cost effective source of electric power is recognized as an important part of a generation
portfolio. Due to the best wind resources being located in rural areas, expanding the
development of wind powered generating facilities also serves as a significant source of
rural economic development.
The Idaho Legislature allocated several million dollars last year to address issues
related to rural economic development. Implementation ofPURPA standards that do not
unreasonably restrict wind based QF development would, as an ancillary benefit, serve to
enhance rural economies.
Capital intensive wind developments can significantly increase rural property tax
bases, pay royalties to land owners, provide skilled maintenance jobs and generally support
local businesses such as machine shops, equipment rental and others. Multiple small
Qualifying Facilities, distributed throughout the State, provide other benefits not calculated
elsewhere. Distributed generation ITees up transmission capacity, strengthens the grid and
reduces losses by putting the generation source nearer the customer load. Multiple
distributed wind facilities would also provide a "diversification" availability benefit to all
wind based facilities as described above, Windland requests that the Commission hold
COMMENTS ofWINDLAND, INC,
Re: CASE NO. GNR-02-
public hearings to determine the extent of such ancillary benefits.
As the Commission has previously stated, ratepayers should be indifferent to
whether generation facilities are utility owned or QF provided. Some would try to convince
the public that PURP A Qualifying Facilities are effectively subsidized by the ratepayers,
Rate-payers can be assured that the cost of QF supplied power is appropriately priced by a
careful calculation of avoided costs. Windland believes that QF's are cost effective and
provide additional benefits, of the type listed above, that are not reflected in the current cost
analysis system.
Windland respectfully suggests that the Commission establish PURP A QF size limits
at 18 Megawatts and extend the maximum contract duration to 20 years,
COMMENTS ofWINDLAND, INc.
Re: CASE NO. GNR-02-