20090520reconsideration_order_no_30818.pdf

Office of the Secretary
Service Date
May 20, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATIONOF IDAHO POWER COMPANY FOR
AUTHORITY TO RETIRE ITS GREENTAGS. CASE NO. IPC-08-
ORDER NO. 30818
On January 26 2009, the Commission issued its final Order No. 30720 approving the
retirement of Idaho Power Company s Green Tags. On February 17, 2009, the Industrial
Customers of Idaho Power (ICIP) filed a timely Petition for Reconsideration. ICIP urged the
Commission to reconsider its decision and order the sale of the Green Tags generated by the
Elkhom Valley Wind Project and the Raft River Geothermal Project.Thereafter, the
Commission granted ICIP reconsideration by written briefs followed by oral argument. After
reconsidering our prior Order and the positions of the parties , the Commission grants ICIP'
Petition and directs Idaho Power Company to sell its 2007 and 2008 Green Tags. The proceeds
from the sale of the Green Tags shall be recorded in the Company s 2010 Power Cost
Adjustment (PCA) filing.
BACKGROUND
A Green Tag is a tradable environmental commodity attributable to renewable energy
generation. The entity possessing a Green Tagl allegedly has a right to make claims about the
environmental benefits associated with renewable energy. For example, a utility that possesses a
Green Tag may claim that it is producing renewable energy and that it satisfies a state renewable
portfolio standard (RPS). Each megawatt-hour (MWh) of electricity generated by an eligible
renewable energy resource is equal to one Green Tag. Order No. 30701 at 1.
Idaho Power purchases energy and receives the accompanying Green Tags from two
qualifying renewable energy facilities, the Elkhom Wind Project and the Raft River Geothermal
Project. Presently, the generator of a Green Tag may sell, retire, or hold (a.k.a. "bank") the tag.
While an active market exists for the sale and purchase of Green Tags, once the tag is sold the
generator purportedly loses the right to claim any environmental attributes gained from these
renewable energy resources. Retiring the Green Tag allows the generator to claim it
I A Green Tag is often referred to as a "renewable energy credit" (REe).
ORDER NO. 30818
generating electricity from renewable resources and to make representations to its customers and
the general public about its renewable resources and further promote renewable energy.
Banking" a Green Tag allows the generator to decide at a later date whether to sell or retire the
tag. The value of a Green Tag declines with time.
FINAL ORDER NO. 30720
Idaho Power s initial Application filed on November 14, 2008, requested permission
to retire its Green Tags from the Elkhom and Raft River facilities. The Company asserted that
the acquisition and retention of Green Tags was necessary not only to accurately represent the
renewable energy component of its resource portfolio but also to satisfy future federal and/or
state laws imposing renewable energy standards.
In Order No. 30720, the Commission acknowledged the likelihood of federal
legislation regarding renewable energy. More specifically, the Commission determined that any
potential savings through rates for customers in the short-term might result in the need for
exponentially greater increases in rates in the future in order to meet mandated renewable energy
standards under consideration by Congress. Order No. 30720 at 3. Consequently, the
Commission approved the Company s request to retire its Green Tags for purposes of promoting
renewable energy and in anticipation of an impending federal renewable energy standard.
THE PETITION FOR RECONSIDERATION
In its Petition for Reconsideration, ICIP argued that the Commission did not fully
consider the consequences that retirement has on Green Tags, its effect on ratepayer assets, and
the implications of image advertising. Specifically, ICIP maintained that the value associated
with Green Tags belongs to the ratepayers and the only appropriate action is to sell the Green
Tags and credit ratepayers with the sales proceeds. In Order No. 30743, the Commission granted
reconsideration and directed the parties to submit briefs. The Commission also scheduled oral
argument for April 22, 2009.
In its Brief on Reconsideration, ICIP addressed the additional issues of shelf life
federal and state guidelines regarding renewable portfolio standards, Green Tag value, and
impacts on ratepayers. ICIP asserted that the longer a Green Tag is "banked" and neither retired
nor sold, its value decreases in the saleable market. Therefore, ICIP argued that the most prudent
action by the Company would be to sell the Green Tags as soon as the tag is generated in order to
maximize the sales price. ICIP claimed that the sale of approximately 320 000 MWh of Green
ORDER NO. 30818
Tags generated in 2007 and 2008 would amount to a rate reduction for customers of about three
tenths of one percent. ICIP Brief at 5.
IDAHO POWER'S RESPONSE
In its Brief on Reconsideration, the Company asked that it be allowed to both retire
and bank its Green Tags. However, at oral argument the Company requested authorization to
bank or "shelve all of its Green Tags. Tr. at 24-25. Idaho Power maintained that banking
Green Tags now will allow the Company to "stockpile" tags in anticipation of federal mandatory
renewable energy requirements. "(B)anking the tags is the most prudent course of action until
such time as Green Tags can be applied to State or Federal RPS standards and be permanently
retired. . . .Id. at 25.
Idaho Power agreed with ICIP's assertion that a Green Tag s value declines over
time. Although each jurisdiction has its own definition of shelf life, the older the Green Tag the
lower the value and the less likely that it may be used to satisfy any given jurisdiction
renewable portfolio standard. IPC Brief at 5. Idaho Power estimated that the present value of its
Green Tags generated between November 2007 and March 2009 is $1 313 797. However, the
Company recognized that its communications with customers in 2007 and 2008 may have
impaired its ability to sell all of the Green Tags. Id. at 14.
COMMENTS ON RECONSIDERATION
The Idaho Conservation League (ICL) and Renewable Northwest Project (RNP)
submitted joint comments on reconsideration. The ICL and RNP asserted that the Commission
correctly prioritized the financial and environmental values derived from the retirement of the
Company s Green Tags. Accordingly, the ICL and RNP urged the Commission to affirm its
decision to retire the Green Tags in Order No. 30720.
DISCUSSION AND FINDINGS
Reconsideration provides an opportunity for a party to bring to the Commission
attention any issue previously determined and provides the Commission with an opportunity to
rectify any mistake or omission. Washington Water Power Company v. Kootenai Environmental
Alliance 99 Idaho 875, 591 P.2d 122 (1979). At the outset, we note that this case presents an
issue not previously addressed and that Idaho Power s position on the Green Tags in this case
changed over the course of the proceeding. The Company initially requested permission to retire
the tags, but on reconsideration asked for authority to bank or shelve all of the tags. Thus, it
ORDER NO. 30818
appears that the applicant no longer supports the Commission s decision in Order No. 30720 to
retire the tags.
Having fully reviewed the Application, the briefs on reconsideration, the comments
of the other parties and the arguments offered at oral argument, the Commission grants ICIP'
Petition for Reconsideration.2 The Commission finds that there is no compelling evidence that
banking these tags generated in 2007 and 2008 will lessen the Company s burden in meeting a
future federal standard. In the absence of federal standards, Idaho Power s request to shelve or
bank the tags rests solely on its speculation that they might be able to be used in the future.
Likewise, retirement of these older tags may have no tangible benefit in the near term. The only
certainty in this matter is that these 2007 and 2008 tags will continue to lose value.
Unless and until the federal government establishes renewable energy standards and
corresponding guidelines, we find the most prudent disposition of these Green Tags at this time
is their sale. We also declare that selling the 2007 and 2008 Green Tags does not foreclose
alternative treatment of future tags and we do not address in any way in this order the appropriate
treatment of future tags. Consequently, ICL's and RNP's argument that the Commission should
retire future tags is not foreclosed. We conclude only that the best use of the Green Tags at issue
in this case is to sell them and use the proceeds to benefit Idaho Power ratepayers.
Based upon the particular facts of this case, we direct Idaho Power Company to sell
its eligible 2007 and 2008 Green Tags generated by the Elkhorn Valley Wind Project and the
Raft River Geothermal Project. The Company shall notify the Commission of the sales price and
the proceeds shall be included in the Company s 2010 PCA calculation. The Company is also
directed to formulate a prudent business plan outlining how it plans to manage Green Tags
generated in 2009 and later. This plan should be submitted to the Commission no later than
December 31 , 2009.
ORDER
IT IS HEREBY ORDERED that Industrial Customers of Idaho Power s Petition for
Reconsideration is granted.
IT IS FURTHER ORDERED that Idaho Power sell its eligible Green Tags generated
in 2007 and 2008 by the Elkhorn Valley Wind Project and the Raft River Geothermal Project and
2 Although ICIP was directed to provide details regarding its image advertising argument, it failed to do so.
Therefore, the image advertising issue is deemed abandoned and we do not address it in this Order.
ORDER NO. 30818
include the proceeds in the Company s 2010 PCA calculation. The Company shall report the
sale price(s) to the Commission.
IT IS FURTHER ORDERED that Idaho Power formulate a business plan that
describes how it will manage Green Tags generated in 2009 and after. This plan shall be
submitted to the Commission no later than December 31 , 2009.
THIS IS A FINAL ORDER ON RECONSIDERATION. Any party aggrieved by
this Order or other final or interlocutory Orders previously issued in this Case No. IPC-08-
may appeal to the Supreme Court of Idaho pursuant to the Public Utilities Law and the Idaho
Appellate Rules. See Idaho Code ~ 61-627.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;(eJ-fA
day of May 2009.
/2/D. MPTON IDENT
ok d~
MARSHA H. SMITH, COMMISSIONER
MACK A. REDFORD, COMMISSIONER
ATTEST:
O:IPC-08-- ks4
ORDER NO. 30818