20050415Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:KIRA DALE PFISTERER
DATE:APRIL 14, 2005
RE:PACIFICORP APPLICATION FOR APPRO V AL OF A NEW,
VOLUNTARY RENEWABLE ENERGY BULK-PURCHASE OPTION
TARIFF, CASE NO. PAC-05-
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
Geoihermal and Solar Power Rider - Bulk Purchase Option. Under the proposed program
PacifiCorp would offer customers the ability to make bulk renewable energy purchases at a
reduced rate. The renewable energy purchases resulting from the proposed program would be in
addition to those PacifiCorp will make under the Company s Integrated Resource Plan.
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 and both were in favor of the new program.
BACKGROUND
The proposed bulk renewable energy purchase option was designed 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 lOa-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.
DECISION MEMORANDUM
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
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 1 a non-residential customers are enrolled in the
program. According to PacifiCorp, the biggest obstacle to increasing non-residential
particip.on is the price of the program. The proposed bulk purchase program, 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 APPLI CA TI 0 N
The proposed bulk-purchase option is similar to the standard Blue Sky option:
PacifiCorp would 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 would be able to aggregate their purchases to
meet the minimum purchase amount.
The Company estimates that the cost of the program includes a fixed annual cost of
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
348.40 ($1 500 fixed cost and $848.40 for the 1 212 MWh) or $195.70 per month.
DECISION MEMORANDUM
CO MMENTS
Comments were received from the Commission Staff and the Renewable Northwest
Project (RNP). Both support the proposed bulk Blue Sky purchase option.
RNP is a coalition of energy companies, consumer groups and environmental groups
that support the development of renewable energy in the Pacific Northwest. RNP supports the
proposed bulk Blue Sky program, 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
pro gram in Oregon.
Staff also supports the proposed program. 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.
COMMISSION DECISION
Does the Commission approve PacifiCorp s Application for a new renewable energy
tariff, Schedule 73 - New Wind, Geothermal and Solar Power Rider - Bulk Purchase Option?
~(JJ.
Kira Dal fisterer
M:PACEO503 kdp2
CISION MEMORANDUM