20141230press release.pdf

Case Nos. IPC-E-14-32, -33, -34;-35; and -36.
Contact: Gene Fadness [phone], 890-2712
www.puc.idaho.gov

Commission approves Idaho Power
agreements with five solar projects

BOISE (Dec. 29, 2014) – The Idaho Public Utilities Commission is approving Idaho Power
Company sales agreements with five solar projects owned by Boston-based First Wind.
The contracts, totaling about $322.5 million over 20 years, are for a total 100
megawatts, 20 MWs for each project.

The commission has yet to rule on another six solar projects totaling about 181 MW.
Last month, the commission approved applications from two other solar projects, Boise
City Solar and Grand View Solar II, totaling 120 MW. Idaho Power also recently signed
six contracts for 60 MW of solar generation in Oregon.

While stating that the projects qualify under federal PURPA provisions, the
commission’s order expresses concern that the federal law may be compelling utilities
to buy energy they do not need. The order states that utilities should inform the
commission as to whether additional review of contract terms and conditions for federal
PURPA projects is necessary.

PURPA requires regulated utilities to buy energy from independent, renewable
generation projects at rates established by state commissions. The rate to be paid small-
power producers is called an “avoided-cost rate,” because it is based on the cost the
utility avoids by not having to generate the energy itself or buy it from another source.
The commission must ensure the avoided-cost rate is reasonable for utility customers
because 100 percent of the price utilities pay to qualifying small-power producers is
included in customer rates.

Congress enacted PURPA in response to a national energy crisis in the late 1970s with a
goal to lessen the nation’s dependence on foreign oil. “Unfortunately, PURPA does not
address and FERC (Federal Energy Regulatory Commission) regulations do not
adequately provide for consideration of whether the utility being forced to purchase QF
power is actually in need of such energy,” the commission said.

Idaho Power’s 20-year Integrated Resource Plan does not indicate the utility is in need
of more energy sources. “And yet, in less than four months time, 13 QFs have
contracted with Idaho Power for nearly 400 MW of solar generation – all expected to be
on-line and producing power by the end of 2016,” the commission said.

The commission reiterated that the combined potential contractual obligation of $1.4
billion for what could be 13 projects is passed on to ratepayers. While the projects will
displace the fuel costs of Idaho Power’s existing resources, “the capital costs of the
displaced resources (such as baseload natural gas, coal and hydroelectric plants) will
continue to be recovered through ratepayers’ bills along with the costs of QF power.”
Because solar and wind generation is intermittent, other resources are sometimes
needed to balance their variability as well as provide back-up generation.

The First Wind projects include American Falls Solar and American Falls Solar II in Power
County, Murphy Flat Power in Owyhee County, Simco Solar in Elmore County and
Orchard Ranch Solar in Ada County.

The developers will be paid a non-levelized avoided-cost rate over the 20-year term of
the agreements, which means payments increase over the course of the agreement and
vary according to light-load and heavy-load hours of the day and seasons of the year.
The average levelized rate for the First Wind projects is about $63 per megawatt-hour
and the value of the five 20-year contracts ranges from $60.2 million to $68 million. (See
attached chart.)

Included in each contract is an integration charge the developer pays Idaho Power to
cover the cost of integrating the energy into Idaho Power’s transmission and
distribution system. The integration cost increases as the amount of solar generation on
Idaho Power’s system increases. For these contracts, the charge ranges from $2.46 per
MWh to $5.05 per MWh.

The agreements allow for a 2 percent deviation in estimated energy output before the
price can be adjusted. A consistent deviation from the hourly energy generation
estimates would be considered a material breach of the agreements. Also included is a
“90/110” firmness requirement. If a project’s generation exceeds 110 percent of
estimated output, the developer is paid 85 percent of a market-based price for the
generation above 110 percent of forecasted output. If the developer does not produce
at least 90 percent of forecasted generation, then all output is paid at 85 percent of the
market price.

Revenue from the sales of Renewable Energy Certificates associated with the projects
will be split 50-50 between the developer and Idaho Power.

The commission’s final order, along with other documents related to these cases, is
available on the commission’s Website at www.puc.idaho.gov. Click on “Open
Cases” under the “Electric” heading and scroll down to Case Nos. IPC-E-14-32 through
IPC-14-36.

Interested parties may petition the commission for reconsideration by no later than Feb.
19, 2015. Petitions for reconsideration must set forth specifically why the petitioner
contends that the order is unreasonable, unlawful or erroneous. Petitions should
include a statement of the nature and quantity of evidence the petitioner will offer if
reconsideration is granted.

Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed
to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.

Project Location 20-year
levelized rate
20-year estimated
contract value
Murphy Flat Power
Case No. IPC-E-14-32
Owyhee County $64.15/MWh $67.3 million
Simco Solar
Case No. IPC-E-14-33
Elmore County $64.31/MWh $68.1 million
American Falls Solar
Case No. IPC-E-14-34
Power County $63.77/MWh $63.3 million
American Falls Solar II
Case No. IPC-E-14-35
Power County $62.66/MWh $60.25 million
Orchard Ranch Solar
Case No. IPC-E-14-36
Ada County $62.21/MWh $63.3 million