20030418Reconsideration US Geothermal.pdf

04/17/2003 15: 28 6046889895 NEW DAWN GROUP PAGE 01 10'-;
2003 APR 17 PM~: 53
u. S. Geothermal Inc.
1609 Tyrell Lane, Suite B. Boise.ID 83706 iDft.hu ?UtjLlC
UTILITIES COMMISSION
RECEiVED
FILED tos.c No, CtJR
-03 -
Tel: [phone] Fax: [phone]
April 17. 2003
Idaho Public Utilities Commission
472 W. Washington
Boise, Idaho 83702
RE: Order No. 29216 - Petition to Increase Size of QuaJifying facilities
Dear Commissioners,
We request that the Commission reconsider their order No. 29216 regarding the IEPI petition to increase the size of
QF facilities from 10 MW to 30 MW. We believe an increase in QF size is very important to the development of
renewable energy sources in Idaho with the current avoided cost rates in effect.
US Geothermal is working on the development of the Raft River geothermal field in Cassia, County. Using our
project as an example, one of the advantages of increased QF size is a significant reduction in on-site O&M costs.
The largest O&M cost for a small geothennal facility is labor. Our studies show a 10 MW facility will have a labor
burden of 73 % of its O&M cost. A 20 MW plant, which utilizes nearly the same labor force as a 10 MW plant and
produces twice the power, could reduce its O&M cost per kilowatt by approximately 50%.
Renewable energy is more capital intensive that the comparative SAR, due primarily to the smaller size of the
allowed QF. Not only are the direct capital costs higher for renewable energy projects when compared to the SAR,
but many of the ancillary capital costs of project development, such as permitting, mfrastructure. interconnection
and transmission facilities all increase the cost per MW for a smaller facility. Agam, these costs may increase 15-
20% if a 20 MW plant is constructed rather than a 10 MW plant, but with twice the power output, debt repayment is
accelerated and a lower cost per kilowatt is achieved.
In short, we believe a larger QF size could increase the development of new energy sources in the state of Idaho.
The Commission s aggressive changes to its PURP A rules made last year were a step in the right direction, but it is
clear that they have not stimulated the desired effect. Short of adjusting the avoided cost rate to reflect the current
natural gas price, an increased QF size can have a very positive effect on PURP A project economics, especially for
development of renewable energy such as geothennal and wind. A 50 MW QF size would not be unreasonable in
my opinion.
Sincerely,
CEO