20050425Final Order No 29765.pdf

Office of the Secretary
Service Date
April 25 , 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
ACIFICORP FOR APPROV AL OF A NEW,
VOLUNTARY RENEWABLE ENERGY BULK- PURCHASE TARIFF.
CASE NO. P AC-O5-
ORDER NO. 29765
On February 22, 2005 , PacifiCorp dba Utah Power & Light Company filed a request
with the Commission for approval of a new renewable energy tariff, Schedule 73 New Wind
Geothermal and Solar Power Rider - Bulk-Purchase Option ("Bulk-Purchase Option ). On
March 16, 2005, the Commission issued a Notice of Application and solicited comments'
regarding the proposed Agreement. See Order No. 29731. Commission Staff and the Renewable
Northwest Project submitted comments; both were in favor of the new program. After reviewing
the Application and the comments, the Commission approves the Application.
BACKGROUND
Under the proposed program, customers may make bulk renewable energy purchases
at a reduced rate. Although the proposed program will be available to both residential and non-
residential customers, PacifiCorp designed the program to provide businesses with a less
expensive alternative to the standard "Blue Sky" option that is currently available.
The standard Blue Sky option, authorized by the Commission in August 2003 , is a
voluntary renewable energy purchase program offered to residential and non-residential
customers. See Order No. 29329; Electric Service Schedule No. 70. Under the standard Blue
Sky option, customers may purchase newly developed wind, geothermal, and solar power energy
at a premium of $1.95 per 100-kilowatt-hour block. Customers may elect to enter or exit the
program at any time and choose the number of blocks of renewable energy to purchase. These
purchases are made in addition to the customer s energy bill and the renewable energy purchases
resulting from the proposed program are in addition to those PacifiCorp makes under the
Company s Integrated Resource Plan.
PacifiCorp uses the revenues raised from the standard Blue Sky program to operate
and market the program and to purchase either bundled renewable energy or tradable renewable
credits (TRCs). TRCs, also known as green tags, green certificates, tradable renewable
certificates, and renewable energy credits, are created when a renewable energy facility generates
ORDER NO. 29765
electricity. TRCs represent the amount of renewable kilowatt/hours sent to grid, displacing less
environmentally friendly energy.
Although nearly 700 of Idaho residential customers have signed up for the standard
Blue Sky program since April 2004, only 10 non-residential customers are enrolled in the
program. According to PacifiCorp, the biggest obstacle to increasing non-residential
participation is the price of the program. The proposed Bulk-Purchase Option, although offered
to both residential and non-residential customers, is an effort to present large commercial
customers with a less-expensive alternative for large-scale purchases of renewable energy.
THE APPLICATION
The proposed Bulk-Purchase Option is similar to the standard Blue Sky option:
PacifiCorp will charge eligible customers a premium to purchase renewable energy and then use
the revenues generated to both operate and market the program as well as to purchase either
bundled renewable energy or green tags. However, in contrast to the Blue Sky program, which
allows customers to enter or leave the program at any time, the proposed Bulk-Purchase Option
requires a minimum one-year enrollment commitment and annual purchase of 121.2 megawatt-
hours (121 200 kWh or 1 212 blocks/year or 101 blocks per month). Customers with multiple
sites within PacifiCorp s Idaho service territory may aggregate their purchases to meet the
minimum purchase amount.
The Company estimates that the cost of the Bulk-Purchase Option includes a fixed
annual cost of $1 500 per customer ($125 per month), plus $7.00 per MWh ($0.70 per 100 kWh
block) purchased. The fixed cost is designed to cover costs associated with program
management customer contract, enrollment processing, fulfillment costs, materials/tools and
mailings specific to this option. Fixed costs associated with development, advertising and public
relations are not included to be consistent with the standard Blue Sky program. The charge of
$0.70 per block is based on the cost to purchase renewable energy (e., wind power tags can be
purchased for $7/MWh). Thus, the minimum annual proposed charges for the Bulk-Purchase
Option is $2 348.40 ($1 500 fixed cost and $848.40 for the 1 212 MWh) or $195.70 per month.
COMMENTS
Comments were received from the Commission Staff and the Renewable Northwest
Project (RNP). Both support the proposed Bulk-Purchase Option.
ORDER NO. 29765
RNP is a coalition of energy companies, consumer groups and environmental groups
that supports the development of renewable energy in the Pacific Northwest. RNP supports the
proposed Bulk-Purchase Option because it creates an incentive for large energy consumers to
buy more power from renewable resources. RNP identified eight large commercial customers in
Oregon that have increased their renewable energy purchases as a result of the bulk Blue Sky
program in Oregon.
Staff also supports the proposed Schedule 73 Bulk-Purchase Option. Staff noted that
the program offers a lower cost alternative to customers desiring large amounts of renewable
energy. In addition, Staff commented that the program is voluntary and self-funded, and non-
participating customers should be unaffected by it. Therefore, Staff recommended approval of
Pacifi Corp s Application.
COMMISSION FINDINGS
The Commission has reviewed PacifiCorp Application and the comments
submitted in this case. This Application is substantially similar to that filed and approved in
Case No. PAC-03-, the standard Blue Sky renewable energy purchase option. See Order No.
29329. The central difference between the two programs is that the Bulk-Purchase Option
requires a minimum annual enrollment and purchase amount, 121.2 megawatt-hours (121 200
kWh or 1 212 blocks/year or 101 blocks per month). These minimums are necessary in order to
achieve the cost savings underlying the reduced rates for bulk purchases.
CONCLUSIONS OF LAW
The Commission has jurisdiction over PacifiCorp dba Utah Power & Light
Company, an electric utility, pursuant to Title 61 of the Idaho Code. Pursuant to this authority,
the Commission concludes that the rates PacifiCorp proposes in the bulk purchase renewable
energy program are just and reasonable as required under Idaho Code ~~ 61-301 and -307.
ORDER
IT IS HEREBY ORDERED that the Application ofPacifiCorp for a new renewable
energy tariff, Schedule 73 New Wind, Geothermal and Solar Power Rider - Bulk-Purchase
Option is granted.
THIS IS A FINAL ORDER. Any person interested in the Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
ORDER NO. 29765
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~~ 61-
626 and 62-619.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this t2.~
day of April 2005.
illi~ JJ~~
MARSHA H. SMITH, COMMISSIONER
, COMMISSIONER
ATTEST:
Je JewellCo ission Secretary
O:P ACE0503 - kdp2
ORDER NO. 29765