20060215Comment.pdf

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Jean Jewell
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From:
Sent:
To:
Subject:
Ed Howell
Tuesday, February 14 , 2006 5:24 PM
Jean Jewell; Ed Howell; Gene Fadness; Tonya Clark
Comment acknowledgement
WWW Form Submission:
Tuesday, February 14, 2006
5:23:56 PM
Case: PAC-E-05-
Name: Gerald Fleischman
Street Address: 11535 W Hazeldale Ct.
City: Boise
State: 10
ZIP: 83713
Home Telephone: [phone]E-MaIl: gfleisch98 6~hotmail. com
Company: Idaho Power Company
mailing list yes no: yes
Comment descriptIon: Comments on Power
for a 20 MW rated output wind farm east
Sales Agreement between PacifiCorp and Schwendiman
of Idaho Falls.
As a ratepayer in Idaho Power Company service territory, I submit my comments in view of
the potential effects this contract may have in setting a precedent for Idaho Power PURPA
wind contracts. To start out, I do not want to be protected from wind power. I want to get
as much of it as we can creatively fit into the system. The 90% to 110% provision is doing
just that, protecting me from wind.
In as much as I am protected from wind power being integrated into the electric supply, I
am subjected to other generating resources, resources from which you have absolutely no
control of what costs will be transferred directly to me. Not considering the
environmental considerations of any generating resource, the huge risks of price
variability associated with fossil fuel-based generation are not born by the company that
makes the decision on resources. If other generating resources were required to supply
power according to a PURPA type rate, then I would feel that you are not protecting me
from wind.
If the 90% to 110% provision had anything to do with some controllable aspect of wind
generating resources, it could be useful. As it is it costs the developers of windproj ects a great deal more than the value it delivers to me. This inequality of cost
benefit pushes choices toward other generation resources that would cost me far more
would wind.
vs.
than
This regulation smacks of the granting of monopoly rights to
Parente and Edward C. Prescott, the 2004 Nobel Prize winners
their book "Barriers to Riches ff how the granting of monopoly
the heart of the differences in incomes between nations. The
your average income.
industry insiders. Stephen
in economics, describe in
rights by government is at
more you grant, the lower
It makes some sense to grant monopoly rights to natural monopolies and it could be argued
that when the only choices for power generation were hydropower or coal, a natural
monopoly of for generation could exist considering the large scales and concentrated
resources required for these power generation techniques. However, this is far more
difficult to argue with the hundreds of potential PURPA scale wind sites throughout
southern Idaho. Here is a description of monopoly rights from the "Barriers to Riches
These monopoly rights are protected via regulation that makes it costly for a group of
outsiders to enter the industry with a superior technology. The stronger is this
protection, the greater the amount of resources a group of potential adopters of a
superior technology must spend to overcome resistance to the use of that superior
technology
Also they say, "A key element of our abstraction is state protection of monopoly rights.
How widespread these monopoly rights are in a country depends largely on the behavior of
the state. The state must prevent firms in the industry from changing work practices of
production methods that would increase productivity
...
Putting arbitrary and costly restrictions on the independent (outsider) wind industry must
be the granting of monopoly rights.
Lets assume that there is value for me as a ratepayer for my utility to pay less for wind
power when it is not delivered according to a schedule made at least three months in
advance. What if there was an incentive you could apply that would give me that value. If
the incentive was equal to the cost of providing that value, this makes sense. When the
cost is three or more times more than the value it provides, it makes no sense. We learned
in the Idaho Power workshop series ordered by you on finding a good way to determine what
a fair cost of integrating wind would be, that it is impossible to predict wind power
output with any better than historical seasonal wind variation. If there was a way, and it
had a cost and it provided a true benefit to the utility and to me, this would make sense.
If you want to lower the price of wind because it is intermittent, fine. If you want to
grant monopoly rights to entrenched resources by putting arbitrary, non-pertinent,
unattainable requirements on wind while shielding other generation resources from the real
costs of fuel price variability, then, not so fine. The 90% to 110% requirement is a
market distortion that will make my costs of electricity higher by brining in more coal
and gas. If you want to maintain the unrealistic protection of the utility (read here
monopoly) from fuel price variations at least do not put arbitrarily and capriciously
detrimental rules in place for wind. 00 something reasonable. I suggest including any
value of the 90% to 110% rule in integration costs.
If you want to encourage accurate predictions of wind project output, 90% to 110% will not
do it. My calculations show that to maximize profit (for the wind farm owner) the owner
should always predict output at 80% of what it really expects. Even this may be high as I
used a 20% standard deviation for same month, year-to-year variation of generation. LeRoy
Jarolimek, who owns a 20 kW net-metered Jacobs wind turbine near Burley reports that last
year it generated 800 kWh in January and this January it generated 4,800 kWh. I don t know
where the idea that wind generation could be predicted three months in advance came from,
but it certainly did not come from the experts in the field. If 90% to 110% related to
anything controllable or real in wind power generation, it could be viewed as a means to
ensure wind project performance, somewhat like a minimum availability guarantee combined
with an integration cost price reduction. As it is, I can only conclude that it is a means
to retain monopoly rights in generation resource selection by utili ties. If this is the
case, the odds of it raising my costs as a ratepayer are, in my opinion, well above 50%.
Transaction 10: 2141723.
Referred by: http: / /www.puc. state. id. us/ scripts/polyform. dll/ ipuc
User Address: 164.165.96.
User Hostname: 164.165.96.