20080225RNWP Comments.pdf

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Februar 25,2008
Renewiibl Northwest Prt
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPROPRIATE DISPOSITION
OF PROCEEDS FOR THE SALE
OF IDAHO POWER
COMPANY'S S02 EMISSION
ALLOWANCES IN CY 2007
Case No. IPC-E-07-18
RENEWABLE NORTHWEST
PROJECT'S COMMENTS
TO NOTICE OF MODIFIED
PROCEDURE
Than you for the opportty to comment on the Commission's Modified
Procedure for Idaho Power Company's disposition of over $10 milion in S02
proceeds. Renewable Northwest Project (RNP), a non-profit organization, is a
broad coalition of public interest organizations and energy companies that
actively promotes the development of renewable energy generation in the
Nortwest.
RN urges the Commission and Idaho Power to rely on four guiding
principles, outlined in these comments, to decide the best way for Idaho Power
to spend the available S02 allowance proceeds. The principles are very much
in line with the 2007 Idaho Energy Plan, which prioritizes conservation, energy
effciency and demand response and renewable resources. Simply put, the S02
proceeds should be used to invest in new energy effciency/conservation and
renewable energy resources in Idaho that reduce S02 and C02 emissions and
offer long-term benefits to ratepayers. This investment should exceed Idaho
Power's plans in its curent Integrated Resource Plan and the proceeds should
be spent as quickly as possible.
Reaping the Benefits of Idaho's Renewable Energy Potential
Idaho Power has an excellent opportity to fuher encourage new renewable
energy generation in the state. Idaho has strong wind, solar and geothermal
resources thoughout the southern half of the state that can be captued very
effciently with curent technology. Renewable energy generation wil help
achieve the 2007 Idaho Energy Plan's objective of ensuring a secure, reliable,
stable energy system, maintaining a low-cost energy supply, protecting public
health, safety and the environment, promoting sustainable economic growth,
job creation and rual economic development, and providing Idaho with the
abilty to adapt to changing circumstances.
For Idaho ratepayers, the most significant benefit of renewable energy is that
there is no fuel cost. The fuels for renewable energy - sun, wind, heat from the
earh, and water -- are free. All sources of energy are increasing in cost, with
significant spikes in fossil fuel prices. The price of oil has surassed $100 a
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barel, natual gas used to power electrical plants has more than trpled in price since 1999, and
coal prices are up 45 percent over the same period. Ratepayers are at risk as a result of this
dramatic price volatilty. These factors can cause Idaho's electricity prices to rise and fall
dramatically from year to year. Alternatively, renewable energy generators offer a stable price
over the life of the project, with no fuel price volatility. Renewable energy mitigates the risk of
increasing natual gas and coal prices, and flattens the rate swings in Idaho Power's anual
Power Cost Adjustment.
Renewable energy's primar environmental benefit - the fact that it is virtally free of polluting
emissions -- removes additional costs and risks to ratepayers and utilities. Idaho Power has
already benefited from the sale of S02 allowances in the federal cap and trade program because
much of the utilties' power comes from hydropower. An investment in renewable energy wil
fuer reduce emissions and offer Idaho Power the abilty to generate additional proceeds
through S02 allowance sales.
The utilty wil also be ahead of the game in a futue carbon constrained economy. Renewable
resources are now in high demand because prudent utilties see that in the near futue, they wil
have to pay for both the fuel going into a power plant and the carbon dioxide coming out of it.
They also know that the price of carbon dioxide could be very high and very volatile. That's
why Idaho Power and every other investor-owned utilty in the region have compared all
available resources in their twenty year plans and found that renewable resources such as wind
are the long-ter, least-cost, least-risk resources for ratepayers.
Finally, renewable energy generation can greatly benefit Idaho's economy. RN compiled the
economic development benefits of 954 MW of new wind projects in the Northwest built between
October 2005 and October 2006, including the Wolverine Creek project in Idaho. These projects
resulted in $1.38 bilion in new capital investment, $2-3 millon in annual royalty payments to
rual landowners, $5.8-6.8 millon anually in local propert tax revenues, and nearly 1,500
constrction and operation and maintenance jobs. If more renewable energy projects are built in
the state, Idahoans wil be able to reap the benefits of hundreds of milions of dollars in capital
investment, rual economic development and job growth.
For all of these reasons, RNP urges the Commission and Idaho Power to use the following
guiding principles when deciding the best way to spend the available S02 allowance proceeds.
Guiding Principles for Spending S02 Allowance Proceeds
I) Achieve the maximum amount of emissions reduction from Idaho Power's electricity mix,
paricularly S02 and C02 emissions, by investing in renewable energy and/or energy
efficiency/conservation.
2) Maximize S02 proceed monies to provide capital for an investment that wil benefit Idao
Power ratepayers in the long-term and create additional allowance proceeds and/or income.
3) Exceed Idao Power's IRP and fuding capacity for energy effciency/conservation and
renewable energy.
4) Ensure S02 proceed monies are spent as quickly as possible on energy
efficiency/conservation and renewable energy projects within Idaho's borders.
RNP believes the Commission and Idaho Power should consider a suite of options, including
options that were not included in the workshop alternatives presented in Order No. 30495.
Workshop Alternatives
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The first workshop alternative, to include the S02 proceeds in the anual PCA case, is not in the
best long-term interest of the Company or its ratepayers. First, this option does not reduce
emissions. Second, this option would return all of the proceed monies at once to ratepayers,
negating any abilty for Idaho Power to use the proceeds to invest in options that wil benefit
ratepayers over the long term or generate additional allowance proceeds or income.
The second workshop alternative does have a clear benefit - the purchase of multi-year streams
of renewable energy certificates (RECs) wil reduce Idao Power's emissions in the utility's
resource mix. Unfortately, the REC purchases wil only be for renewable energy projects that
have entered into PUR A contracts with Idaho Power. Assuming that these projects include
PURA projects in line for contracts with Idaho Power, this alterative does not maximize the
S02 proceeds to provide capital for a long-term investment, exceed Idaho Power's IRP and
fuding capacity for renewable energy, nor spur new renewable energy generation in Idaho as
quickly as possible.
The third workshop alternative also has clear benefits. The purchase of all or a portion of a wind
project's development rights will reduce emissions and maximize S02 proceeds to provide
capital for a long-term investment. However, as proposed, it is unclear whether or not this
alternative wil be above and beyond Idaho Power's IRP and funding capacity for renewable
energy and if it wil spur new renewable energy generation in Idaho as quickly as possible.
The four workshop alternative may also have benefits. Spending a portion of the S02
proceeds on energy efficiency education has the potential to reduce emissions and is a capital
investment that ratepayers should expect to benefit from over the long-ter. Yet it is unclear
whether or not this tye of spending wil exceed Idao Power's IRP and fuding capacity for
energy efficiency/conservation, if it can be quickly deployable, and if it is cost-effective.
Conclusion
RN recommends that the Commission and Idaho Power spend the S02 proceeds in a manner
that fulfills our guiding principles. Workshop alteratives two, three and four or a combination of
these alternatives have the potential to achieve these goals, but wil require modification to do so.
Idaho Power should also consider other options, such as investing in solar or additional
geothermal energy. RNP recommends that the Commission require Idaho Power to submit a
detailed spending plan for the S02 proceeds within six months of the close ofthis case. The
plan should specify the tye, location, time line and amount of investment.
Again, thank you for the opportity to provide these comments. RNP looks forward to working
with all staeholders in this case to continue the development of Idaho's homegrown renewable
energy.
Sincerely,
Suzanne Leta Liou
Senior Policy Advocate
[phone]
Suzane~rnp.org
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