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Idaho Public Utilities Commission

Case No. IPC-E-08-24, Order No. 32002

June 16, 2010

Contact: Gene Fadness [phone], 890-2712

Commission accepts Idaho Power green tag plan

The Idaho Public Utilities Commission is accepting a business plan filed by Idaho Power Company spelling out how the utility intends to treat the renewable energy credits (RECs) it earns from its renewable energy sources. Customer groups have differed over whether the RECs, or “green tags,” should be sold to benefit customers or “retired” to meet possible future renewable energy standards.

A Renewable Energy Credit is issued to each utility for every megawatt-hour of electricity generated by an eligible renewable energy resource. The RECs represent a currency that can be traded on an active market to entities wishing to support renewable energy.

RECs are becoming more valuable as a growing number of states require their regulated utilities to buy or generate a certain amount of power from renewable sources. Idaho Power’s 101-megawatt Elkhorn Wind project in Oregon and its 13MW Raft River geothermal project in south-central Idaho generated more than 320,000 MWh of RECs for Idaho Power in 2007 and 2008.

Last year, after reconsideration, the commission directed Idaho Power to sell its 2007 and 2008 RECs and use the approximate $1.7 million in proceeds to benefit ratepayers. Idaho Power originally requested that it be allowed to retire, rather than sell, the RECs in anticipation of federal or state renewable mandates. By retiring the RECs, Idaho Power said it could represent to renewable energy certification programs and to customers that it is meeting customer expectations for increased use of renewable energy.

Standards established by Green-E Energy, the nation’s leading independent certification and verification program for renewable energy, say that green tags sold by utilities from a renewable project cannot be counted twice – by the utility doing the selling and the purchaser. Thus, when Idaho Power sells its green tags, the company maintains it can no longer represent to customers that customers are receiving the benefits of renewable energy projects that carry green tags. According to Idaho Power, the Green-E standards prohibit the utility from using visuals of its wind or geothermal projects in charts, graphs or line art as part of the green resources delivered to customers if the green tags that accompany those projects are sold.

Idaho, unlike many other states, does not require its regulated utilities to generate a certain amount of its power from renewable sources. However, retaining the green tags would allow Idaho Power to satisfy any future state or federal laws imposing renewable portfolio standards, the company claimed in its original filing.

After the commission granted Idaho Power’s request to retire the tags, the Industrial Customers of Idaho Power petitioned for reconsideration, arguing the value associated with the RECs belongs to the ratepayers and should be sold to benefit them. On the other side of the issue, the Idaho Conservation League and the Renewable Northwest Project argued that the commission allow the utility to retire the RECs.

After reconsideration, the commission directed the company to sell the RECs. But the order allowing them to be sold also required the company to submit a business plan on how it intends to treat REC sales in the future.

In April, Idaho Power submitted that plan which proposes that, in the short term, the RECs be sold and the customers’ share of the proceeds be returned to customers in the annual Power Cost Adjustment process. In the longer term, Idaho Power plans to continue acquiring and holding contractual rights to own the RECs to meet any possible future renewable energy standards.

Idaho Power states there is a “reasonable likelihood” that a federal renewable standard will be passed by Congress that will require the company to obtain and retire RECs for compliance. “However, because of current economic conditions and recent increases in costs and customer rates, the basic philosophy of Idaho Power’s REC Management Plan is to sell its RECs in the near-term,” the company stated.

The Idaho Conservation League and the Renewable Northwest Project also opposed the company’s plan for handling future RECs. They said the plan fails to consider the value of REC retirement and that it should explain how Idaho Power intends to sell its RECs and still comply with REC market guidelines.

Idaho Power customer Annie Black said the environmental benefits that should be accorded the company and its customers are stripped away when the REC is sold, contrary to the state’s energy policy requiring a diversified energy portfolio. Black requested a hearing to review the implications of Idaho Power’s proposed plan or, if a hearing is denied, that the commission not accept the plan.

The commission, denying requests for further hearings or that the plan not be accepted, noted that accepting the plan as filed does not mean the commission endorses its specifics.

“As noted by the commenters in this case, the REC system is a complicated market that is still developing and varies from state to state,” the commission said. “We expect Idaho Power to remain fully engaged in REC market developments and to comply with proper procedures regarding representations of renewable energy. We further direct the company to submit a modified REC management plan when a change in state or federal energy policy warrants such actions.”