20100514Comments re REC Management Plan.pdf

KRISTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 6618
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR AUTHORITY )
TO RETIRE ITS GREEN TAGS. )
)
)
)
CASE NO. IPC-E-08-24
COMMENTS OF THE
COMMISSION STAFF
RE: REC MANAGEMENT PLAN
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Kristine A. Sasser, Deputy Attorney General, and in response to the Notice of
REC Management Plan Filng and Notice of Modified Procedure issued in Order No. 31062 on
April 23, 2010, in Case No. IPC-E-08-24, submits the following comments.
BACKGROUND
On May 20, 2009, in response to an Application fied by Idaho Power, the Commission
issued a final Order directing Idaho Power to sell its eligible 2007 and 2008 Green Tags!
generated by the Elkhorn Valley Wind Project and the Raft River Geothermal Project and to
include the proceeds from the sale in the Company's 2010 Power Cost Adjustment (PCA)
calculation. Order No. 30818. The Commission also directed the Company to formulate a
i Green Tags are also commonly referred to as renewable energy credits (RECs).
STAFF COMMENTS 1 MAY 14,2010
business plan regarding the disposition of Green Tags generated in 2009 and later. Idaho Power
fied its REC Management Plan with the Commission on December 30,2009. The Commission
determined that the REC Management Plan should be considered through the use of Modified
Procedure, allowing 21 days for comments. Order No. 31062.
STAFF ANALYSIS
A Green Tag is produced for each megawatt-hour (MWh) of electricity generated by an
eligible renewable energy resource. An active market exists for the purchase and sale of Green
Tags. Unlike states with Renewable Energy Standards (RES), Idaho curently has no requirement
for utilties to acquire, retain or retire Green Tags. Because Idaho Power has no requirement to
possess Green Tags, Staff believes that the appropriate question for the Commission to consider is
whether customers wil be better off if Idaho Power retires, sells, or continues to simply hold the
tags.
Idaho Power's REC Management Plan
The basic philosophy of Idaho Power's REC Management Plan is to sell its RECs in the
near-term and retur the customers' share of the proceeds through the PCA mechanism while
continuing to acquire and hold long-term contractual rights to own RECs for use in meeting a
future federal RES. More specifically, for existing projects, such as Elkhorn Valley Wind Project
and the Raft River Geothermal Project, in which Idaho Power receives RECs as par of a long-
term power purchase agreement, Idaho Power plans to sell the near-term RECs and retur the
customers' share of the proceeds through the PCA while continuing to acquire and hold long-term
contractual rights to own RECs for use in meeting a future federal RES.
For existing PURP A and other REC generating projects that provide output to Idaho
Power under mid- to long-term contracts, if a mutually agreeable price can be reached with the
project owner, Idaho Power may enter into contracts to purchase the project's RECs on a mid- to
long-term basis with the expectation that the REC acquisition costs wil be treated as a PCA
expense. In this situation, Idaho Power's intent is the same - to sell the near-term RECs and
retur the customers' share of proceeds through the PCA while continuing to acquire and hold
long-term contractual rights to own RECs for use in meeting a future federal RES.
STAFF COMMENTS 2 MAY 14,2010
For new long-term power purchase agreements, like the recently fied Neal Hot Springs
Geothermal contract (Case No. IPC-E-09-34), Idaho Power intends to continue to acquire long-
term rights to the RECs under these agreements. As noted above, Idaho Power intends to sell the
near-term RECs and return the customers' share of the proceeds through the PCA while
continuing to acquire and hold long-term contractual rights to RECs for use in meeting a future
federal RES.
No Change in the Situation Supports No Change in Policy
As stated in the Commission's previous final Order in this case, there is no compelling
evidence that banking Green Tags wil lessen the Company's burden in meeting a future federal
Renewable Energy Standard. "Likewise, retirement of ( ) tags may have no tagible benefit in the
near term." Order No. 30818. Retiring Green Tags wil not cause any additional renewable
projects to be developed, nor wil it change Idaho Power's resource portfolio in any way. Retiring
Green Tags means that revenues foregone by not sellng them canot be productively used for any
purpose. The foregone revenues simply become the price paid to permit Idaho Power to tell its
customers that some of their power is renewable. The abilty or inabilty to advertise that power
is generated from a renewable source does not change the fact that the power is, indeed, generated
from a renewable energy project.
Unless and until the federal governent establishes renewable energy standards and
corresponding guidelines, the most prudent disposition of Green Tags is their sale. ¡d. Allowing
the sale of presently generated tags does not foreclose alternative treatment of future tags when
the federal or state government creates an RES that would warrant such alternative treatment.
Staff believes that Idaho Power's REC Management Plan for disposition of Green Tags
generated in 2009 and later generally reflects the same treatment that the Commission ordered for
2007 and 2008 Green Tags. In Idaho Power's 2010 Power Cost Adjustment (PCA) fiing (Case
No. IPC-E-IO-12), the Company reported that the proceeds of2007 and 2008 REC sales to date
amounted to $665,788. In accordance with Order No. 30818, these and future proceeds gained
from the sale of 2007 and 2008 RECs wil be retured to customers through the PCA.
The Commission's Order on treatment of 2007 and 2008 Green Tags was issued in May
2009. Since its issuance, Staff is unaware of any changes in either state or federal RES
requirements. Staff is also unaware of any momentum at the state level presently to implement
RES requirements. At the federal level, discussions regarding various versions of a
STAFF COMMENTS 3 MAY 14,2010
comprehensive energy bil continue, most of which include some provision for RES requirements.
However, Congress and the Administration's recent focus on other issues has delayed furher
consideration of energy issues.
Staff anticipates that federal RES requirements wil emerge in the futue, but believes that
until they do, Idaho Power should continue to sell the near-term RECs and return the customers'
share of the proceeds through the PCA. Staff supports the Company's plan to continue to acquire
and hold long-term contractual rights to RECs for use in meeting a future federal RES.
If RES requirements are eventually implemented, Staff believes it is unlikely that utilties
wil be expected to comply immediately. Instead, it is likely that utilties would be given some
time to comply, making it unnecessary for Idaho Power to have a stockpile of retired and/or
baned Green Tags. Unless or until something significant changes at either the state or federal
level, Staff believes that the Commission's prior Order regarding disposition of 2007 and 2008
RECs sets an appropriate policy for treatment of 2009 RECs and beyond. Idaho Power's REC
Management Plan is consistent with the Commission's previously established policy direction.
STAFF RECOMMENDATION
Staff recommends that the Commission accept for fiing Idaho Power's REC Management
Plan. As laid out in the Plan, Staff believes it is appropriate for the Company to sell its RECs in
the near-term and return the customers' share of the proceeds through the PCA mechanism while
continuing to acquire and hold long-term contractual rights to own RECs for use in meeting a
futue federal RES. Should there be any change in the political landscape concerning an RES,
Staff recommends that Idaho Power be directed to submit a revised plan consistent with state and
federal policy. Staff further recommends that acceptance for filing ofIdaho Power's REC
Management Plan not imply approval of any specific REC transaction, but that review of the
prudency of specific transactions be reserved for annual PCA filings, general rate case filings, or
fiings made specifically to address RECs.
STAFF COMMENTS 4 MAY 14,2010
Respectfully submitted this il-TH day of May 2010.
ff;".l (). ~q~Krite A. Sasser
Deputy Attorney General
Technical Staff: Rick Sterling
i:umisc/commentsipce08.24ksrps.doc
STAFF COMMENTS 5 MAY 14,2010
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14TH DAY OF MAY 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-08-24, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
LISA D NORDSTROM
IDAHO PO~R COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: lnordstromi:idahopower.com
MARK STOKES
KARL BOKENKAMP
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: mstokesi:idahopower.com
kbokenkamp(iidahopower.com
~:n.Y\k
SECRETARY
CERTIFICATE OF SERVICE