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Idaho Public Utilities Commission

Case No. GNR-E-09-03, Order No. 30873

August 14, 2009

Contact: Gene Fadness [phone], 890-2712

Website:
http://www.puc.idaho.govwww.puc.idaho.gov

Commission accepting comments about PURPA rates

The Idaho Public Utilities Commission has opened a case to review the mechanism for determining the rates utilities pay to some small-power producers.

The Public Utility Regulatory Policies Act, or PURPA, requires regulated utilities to buy the output from qualifying small-power generators, such as small-hydro and wind projects. Although PURPA is a federal act, state commissions determine and publish the rate utilities pay developers of PURPA projects.

The published rates available to qualifying projects 10 megawatts and smaller are called avoided-cost rates because they are based on costs utilities avoid by not generating the power themselves or buying it from the wholesale market. The costs associated with a hypothetical natural gas generator form the basis for determining the published rates.

In 1993, the commission adopted the natural gas generator as the surrogate for determining the rates in place of a coal-fired generation plant. The commission now questions whether using a gas-fired source as a surrogate accurately represents avoided-cost. “Based on recent filings at the commission by Idaho’s electric utilities, we are concerned that a disparity exists between Idaho’s published avoided-cost rate established using a natural gas-fired surrogate resource and the cost to a utility of developing and operating its own wind generation project,” the commission’s notice says. Although the commission’s concern originated with wind, the same concern exists for other resources.

The commission is seeking comment from interested parties on three questions:

n  Does the present surrogate avoided rate methodology for published avoided-cost rates need to be modified or augmented?

n  If your answer is no, please provide a basis for your answer.

n  If the answer is yes, please provide a basis and describe in broad, general terms how the methodology should be augmented or modified.

PURPA projects can also be larger than 10 megawatts, but rates for those projects are determined by a different mechanism and are not at question in this case.

All of Idaho’s regulated utilities have PURPA projects. Idaho Power Co. has, by far, the largest at about 86. Sixty-two of those are small hydro projects and 20 are wind.

Comments are accepted through Sept. 18 via e-mail by accessing the commission’s homepage at
http://www.puc.idaho.gov/www.puc.idaho.gov and clicking on "Comments & Questions." Fill in the case number (IPC-E-08-24) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to [phone].

A full text of the commission’s order, along with other documents related to this case, is available on the commission’s Web site at
http://www.puc.idaho.gov/www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to Case No. GNR-E-09-03.