20081117Application.pdf

LISA D. NORDSTROM
Senior Counsel
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An IDACORP Company
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November 14,2008
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-007 4
Re: Case No. IPC-E-08-24
IN THE MA TTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR AN ORDER AUTHORIZING THE RETIREMENT OF ITS GREEN TAGS
Dear Ms. Jewell:
Enclosed please find for filing an original and seven (7) copies of Idaho Power's
Application in the above matter.
i would appreciate it if you would return a stamped copy of this letter for my file in
the enclosed stamped, self-addressed envelope.
Very truly yours,¿;~£J11~
Lisa D. Nordstrom
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Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, tD 83702
LISA D. NORDSTROM, ISB No. 5733
BARTON L. KLINE, ISB No. 1526
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-338-6936
InordstromæRidahopower.com
bkline~idahopower.com
RECEIVED
iOU8NOV l l; PM ~: ~ l
IDAHO PUE,L G
UTILITIES COf~i!M SS
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR AN ORDER
AUTHORIZING THE RETIREMENT
OF ITS GREEN TAGS
)
) CASE NO. IPC-E-08-24
)
) APPLICATION
)
)
Idaho Power Company ("Idaho Power" or the "Company"), in accordance with
Idaho Code § 61-524 and RP 52, hereby respectfully makes Application to the Idaho
Public Utilities Commission ("IPUC" or the "Commission") for an order authorizing Idaho
Power to retire the Green Tags it has obtained or wil obtain in the future. The
Application is based on the following:
APPLICATION - 1
I. BACKGROUND
1. "Green Tags," also known as Renewable Energy Certificates ("RECs"),
are tradable environmental commodities that monetize the environmental and social
benefits of the non-energy attributes of renewable energy generation. For each
megawatt-hour ("MWh") of power generated from a renewable resource, two separate
commodities are produced: the electricity and the environmental attribute (or "Green
Tag"). Under current market standards and contractual arrangements, the Green Tag
represents the environmental benefit of the power generated from the renewable
resource.
2. Each Green Tag represents proof that one MWh of electricity was
generated from an eligible renewable energy resource. Solar, wind, geothermal, low
impact hydropower, and biomass typically qualify as renewable energy resources. A
certifying agency, such as the non-profit Western Renewable Energy Generation
Information System ("WREGIS"), gives each Green Tag a unique identification number
to prevent double-counting.
3. The Green Tag may be sold with the power (bundled) or separately from
the power (unbundled). A Green Tag separated from the power (unbundled) carries
with it the value imbedded in the environmental attributes of the generation along with
all environmental claims. Under renewable energy purchase/sales agreements, a MWh
of power sold without its Green Tag cannot be described as being delivered to
customers as a renewable or green resource. Customers lose the environmental
benefit, which is transferred to the purchaser of the Green Tag. This transfer of rights is
outlined in the contractual agreement between the buyer and seller of the Green Tag
APPLICATION - 2
and lbacked by guidelines and policies developed by Green-e Energy,1 the Federal
Trade Commission,2 and National Association of Attorneys General.3
4. Green-e Energy is the nation's leading independent certification and
verification program for renewable energy. This voluntary consumer-protection program
is administered by the Center for Resource Solutions, a nonprofit organization based in
San Francisco, California. More than two-thirds of the green power transactions in the
voluntary retail market in 2007 were certified by Green-e.4 A Green Tag without Green-
e certification or the ability to become Green-e certified loses value in the market.5
5. A buyer of a Green Tag, transacting in either a voluntary or compliance
market, can claim to have purchased "renewable" energy. Corporations or households
may choose to voluntarily purchase renewable energy to reduce their carbon-based
impact on the environment. 6 By contrast, electric utilities in at least 25 states must
purchase Green Tags in the compliance market to comply with Renewable Portolio
Standards ("RPS"). In these states, electric companies are required to supply a certain
percentage of electricity from renewable generators by a specified year. For example,
IGreen-e Program Customer Rights information can be found at: http://w.green-
e.orglwhycert rights.shtml. The Green-e Code of Conduct and Customer Disclosure Requirements can be
viewed at: http://w.green-e.org/docs/energy/Appendix B-National Code of Conduct Cust Disclosure.doc.
2The Federal Trade Commission's Guides for the Use of Environmental Marketing Claims are
outlned in 16 CFR Part 260. See http://ww.ftc.gov/bcp/grnrule/guides980427.htm.
3The Environmental Marketing Guidelines for Electricity can be found at:
http://apps3.eere.energy.gov/greenpower/buying/pdfs/naag 01 00. pdf.
4Green Power Marketing in the United States: A Status Report, 11th ed., National Renewable
Energy Lab, October 2008, at 16-17. http://w.nrel.gov/docsIf090sti/44094.pdf.
5Although some RPS programs allow Green Tags to have a longer shelf life, Green-e wil only
certify renewable generated in the calendar year in which the product was sold, the first three months of
the following calendar year or the last six months of the prior calendar year.
61daho Power purchases Green Tags on behalf of customers participating in its Green Power
Program on the voluntary market.
APPLICATION - 3
Oregon utilities must provide 25 percent of their power with renewable resources by
2025; California requires 20 percent renewable power by 2010. Electric utilities in these
states must demonstrate RPS compliance by holding purchased or self-generated
Green Tags equivalent to the required percentage of their electricity sales.
6. The State of Idaho has not established a RPS for electric utilties, nor has
it passed legislation that creates Green Tags or a market in which to sell them. Idaho
Power Company's resource portolio includes both renewable resources and electricity
purchased from renewable energy resources, such as the 1 01-MW Elkhorn Valley Wind
Project located in eastern Oregon. In 2007 and 2008, Idaho Power wil have obtained
approximately 320,000 MWh of Green Tags from this project. Each of these Green
Tags, depending on their ability to become Green-e certified as discussed below, could
have a market value of between $5 to $6.
II. REQUEST FOR AUTHORITY TO RETIRE GREEN TAGS
7. Idaho Power remains committed to developing a diverse generation
portolio to better provide reliable, responsible, and affordable energy for generations to
come. Renewables play an important part in this resource mix. As stated on page 7 of
Idaho Power's 2006 Integrated Resource Plan ("IRP"f:
Idaho Power believes it should purchase and retain green
tags from any renewable resource built or purchased by
Idaho Power for the supply of energy to its customers. In
addition, the acquisition and retention of green tags is
necessary to accurately represent the renewable energy
component of Idaho Power's resource portolio. Acquiring
and retaining green tags assures Idaho Power's customers it
has acquired the energy from renewable resources.
71daho Power's 2006 Integrated Resource plan can be found at:
http://w.idahopower.com/energycenter/irp/200612006IRPFinal.htm.
APPLICATION - 4
By acquiring, retaining, and retiring the Green Tags generated with company-sponsored
renewable projects, Idaho Power can: (a) comply with certification standards regarding
characterization of its resource portolio while clearly communicating the Company's
renewable portolio to customers, (b) meet customer expectations for increased use of
renewable energy, and (c) align with state interests in promoting renewable energy.
Consequently, Idaho Power believes it would be appropriate for the Commission to
authorize the Company to retire the Green Tags associated with its renewable
resources on behalf of its customers.
A. Compliance with Certification Standards.
8. As described above in paragraph 4, Green-e Energy is the nation's
leading independent certification and verification program for renewable energy.
Green-e Energy has issued the Green-e Energy National Standard for Renewable
Electricity Products8 ("Green-e Standard") to be applied to all Green-e Energy Certified
products (e.g., RECs, utility green pricing programs, and competitive market electricity
products). The Green-e Standard states that eligible RECs or renewable energy can be
used once and only once; making a claim (e.g., stating "we buy wind powet') is one
example of a "use" that results in retirement. 9 Therefore, renewable energy that can be
legitimately claimed by another party may NOT be used in Green-e Energy Certified
products. According to the Green-e Standard:
Examples of prohibited double uses include, when the same
REC is claimed by more than one part, including any
expressed or implied environmental claims made pursuant to
electricity coming from a renewable energy resource,
8The Green-e Energy National Standard Version 1.5 can be found online at: http://ww.green-
e.org/getcert re stan.shtml#standard.
91d. at 7.
APPLICATION - 5
environmental labeling or disclosure requirements. This
includes representing the energy from which RECs are
derived as renewable in calculating another entity's product
or portolio resource mix for the purposes of marketing or
disclosure.1o
9. As a practical matter, the sale of its Green Tags would limit Idaho Power's
abilty to communicate on a basic level with customers on subjects related to its
generation portolio. Because Idaho Power is not permitted under the Green-e
Standard to imply that customers are receiving the benefits of the renewable energy in
its system or delivering this energy to their homes when Green Tags are sold, Idaho
Power wil have diffculty clearly stating the resources in Idaho Powets generation mix
and those delivered to customers. Under the Green-e Standard, Idaho Power would be
prohibited from using visuals (including charts, graphs, line art, etc.) depicting green
resources as part of the energy delivered to customers. The sale of all of its Green
Tags that are (or capable of being) Green-e certified would also preclude Idaho Power
from using photographs or other imagery depicting wind turbines, solar, or other green
resources when describing or displaying its resource portolio if all environmental
attributes have been relinquished through the sale of Green Tags.
10. A May 1 '¡ 2008, draft of the "Best Practices in Public Claims Related to
Green Power Purchase and Sales" from the Center for Resource Solutions provides the
following example:
Utility W is sellng the RECs from their wind farm to Marketer
Q. Utility W wants to show their customers their commitment
to the environment, so they launch an ad campaign with
language about how they provide green power and display
pictures of the wind farm on bilboards, on their website, and
in their annual report. Utility W could also say they have
invested in renewable energy.
101d. at 7-8.
APPLICATION - 6
In this example, the customers (or potential customers) of
Utility Ware under the false impression that they are
purchasing renewable energy for their homes or businesses.
In fact, the claims for all of the renewable attributes of that
power were transferred to Marketer Q when Utility W sold
the RECs. To avoid double-counting and false advertising,
Utility W should not advertise that they supply green power.
Based on the foregoing, Idaho Power believes that the ability to certify its 2007
and 2008 Green Tags associated with the generation from Elkhorn and Raft River is in
doubt.
11. Most contracts for the purchase of Green Tags contain attestation clauses
that require the seller to certify that the Green Tags are Green-e certified or capable of
becoming so. Given the above market guidance examples, Idaho Power is concerned
that it wil not be able sign in good faith the attestation clause for the Green Tags it has
obtained thus far. Any claims or inferences that Idaho Power customers enjoy the
environmental benefits of the project would be a violation of the contract signed
between Idaho Power and the purchaser of any associated Green Tags.
B. Customer Expectations Supporting Renewable Energy.
12. Customer expectations support adoption of a balanced energy portolio
that includes alternative sources of energy. For instance, in the Idaho Energy Policy
Survey 200711 conducted by the Energy Policy Institute, Center for Advanced Energy
Studies sponsored by Boise State University's Social Science Research Center, 50
percent of respondents said "green" or renewable sources of electricity should be the
highest priority to meet Idaho's electricity demand. This result is consistent with the
11 http://ppa.boisestate.edu/ssrclarchive/2007 -EPI-pressconf.pdf.
APPLICATION - 7
majority of the feedback Idaho Power received in customer comments filed with the
Commission on the Company's 2006 Integrated Resource Plan.12
13. For customers who want to support incremental renewable energy
development above and beyond Idaho Power's standard business practices, Idaho
Power offers a voluntary Green Power Program which gives customers the opportunity
to purchase Green Tags through the Bonnevile Environmental Foundation. These
Green Tags are sourced from renewable generation located in the northwest but
outside Idaho Power's service area. The program has seen steady participation growth
of 13.85 percent annually since 2001. As of September 2008, the Company had 2,522
residential customers and 119 commercial customers participating in the Green Power
Program. According to the 2008 Electric Utility Residential Customer Survey by J.D.
Power and Associates, Idaho Power customers who participate in the Green Power
Program (and consequently pay more on their monthly bil) have a higher satisfaction
rate (index 630 out of 1000) for the price they pay for electricity than customers that do
not participate (index 564 out of 1000).
14. Green Power Program participants and Idaho Power, through the
administration of such a program, recognize the inherent value of the environmental
benefit contained in the Green Tags as separate from the electricity produced. To be
consistent, Idaho Power should not sell Green Tags generated by its system resources
and stil claim or imply to customers that they receive the environmental benefits of the
renewable energy.
12Staff Decision Memo dated 03/09/2007, Case No. IPC-E-06-24. The Commission Staffs
summary of the 2006 IRP noted of the 20 individuals that submitted comments, "most added their desire
that the Company focus on alternative sources such as wind, solar, biomass and geothermal energy
sources."
APPLICATION - 8
C. Alignment with State Interests in Promoting Renewable Energy.
15. The retirement of Green Tags on behalf of customers aligns with Gov.
C.L. "Butch" Otter's 25 x '25 initiative, which established the Idaho 25 x '25 Renewable
Energy Council (later renamed the Idaho Strategic Energy Allance) to further the goal
of providing 25 percent of Idaho's energy needs through renewable sources by the year
2025.13 The original 25 x '25 effort was focused primarily upon using agricultural and
forestry resources to meet 25 percent of the state's energy needs by 2025 but was later
expanded by the Governor's Offce of Energy Resources ("OER") to include sustainable
resources, energy effciency and conservation, and energy development in accordance
with the 2007 Idaho Energy Plan.14
16. By sellng the Green Tags, that portion of renewable energy represented
by such Green Tags wil be claimed by the purchasing entity to help meet their state's
goals and cannot be considered part of Idaho's mix. However, the Green Tags Idaho
Power retains and retires now on behalf of customers may hold value to be used at a
later date if either the State of Idaho or the federal government adopts a RPS that
allows utilities to bank credits for use in future years.
II. MODIFIED PROCEDURE
17. Idaho Power believes that a hearing is not necessary to consider the
issues presented herein and respectfully requests that this Application be processed
under Modified Procedure, i.e., by written submissions rather than by hearing. RP 201,
et seq. If, however, the Commission determines that a technical hearing is required, the
13Executive Order 2007-20 can be found at: htt:/Igov.idaho.QOv/mediaceter/execrderseo7/eo 2007 20.html.
14The 2007 Idaho Energy Plan can be found at: http://w.energy.idaho.gov/energy plan 0126.pdf
(page 47).
APPLICATION - 9
Company stands ready to present its testimony and support the Application in such
hearing.
iv. COMMUNCIATIONS AND SERVICE OF PLEADINGS
18. Communications and service of pleadings with reference to this
Application should be sent to the following:
Lisa Nordstrom
Barton L. Kline
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
InordstromæRidahopower.com
bklineæRidahopower.com
Mark Stokes
Karl Bokenkamp
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
mstokesæRidahopower.com
kbokenkamp~idahopower.com
V. REQUEST FOR RELIEF
19. Idaho Power respectfully requests that the Commission issue an Order
authorizing Idaho Power to retire the Green Tags it has obtained or wil obtain in the
future.
DATED at Boise, Idaho this 14th day of November 2008.
rƣ)~LISA D. NORDS~
Attorney for Idaho Power Company
APPLICATION - 10