130802_PACStAhydro.pdf

Idaho Public Utilities Commission
Case No. PAC-E-13-06, Order No. 32864
Case No. PAC-E-13-07, Order No. 32865
August 2, 2013
Contact: Gene Fadness [phone], 890-2712
Website: www.puc.idaho.gov

PUC approves agreements with St. Anthony hydro project

State regulators have approved an application by Rocky Mountain Power to sell a small
hydroelectric project it owns in downtown St. Anthony. Ted Sorenson of Sorenson Engineering
in Idaho Falls, the winning bidder on the project, will repair the 700-kilowatt facility and have it
operating within six months. The plant ceased operations in 2002 when the shaft that connects
the two turbines failed.

The Idaho Public Utilities Commission also approved a 20-year power purchase agreement
between Sorensen and Rocky Mountain Power to sell the output from the restored plant to
Rocky Mountain customers beginning about Nov. 30. The project is a one-unit powerhouse
that contains two submerged turbines originally commissioned in 1915. The plant is powered
by diverting water from the Henry’s Fork of the Snake River. When operating, it delivered
water to Egin Bench Canals, Inc.

The sales agreement falls under the provisions of PURPA, the federal Public Utility Regulatory
Policies Act, which requires utilities to buy energy from qualifying small renewable power
projects at rates to be determined by state commissions. The rate is called an avoided-cost rate
because it is designed to represent the cost the utility avoids by not having to generate the
power itself or buy it from another source.

Under avoided-cost rates adopted in 2011, St. Anthony Hydro LLC will be paid a gradually
increasing amount that starts at about $178,000 in 2014 ($56.13 per MW) and increases to
$352,000 ($110.79 per MW) in 2033. Total payments to the project over the 20-year term of
the project will be about $5.09 million.

The Renewable Energy Credits (RECs) associated with the project will be split with Rocky
Mountain Power getting the first 10 years of proceeds from the sale of RECs and St. Anthony
Hydro the second 10 years. RECs are tradable environmental commodities that represent proof
that 1 megawatt-hour of electricity is generated from an eligible renewable energy resource.

The commission agreed with Rocky Mountain Power that the sale of the plant is the least costly
of four options. A second option was to keep the keep the plant and make the necessary repairs
while increasing generation through added efficiencies.

A third option was to perform minimum repairs and a final option was to decommission the
plant while still incurring operational costs of the dam and water conveyance structures in
order to provide water to the Egin Canal.

Regulated utilities cannot dispose of generating property unless authorized by the commission.
The commission must find 1) that the transaction is in the public interest; 2) that rates for
customers will not increase as a result of the transaction; and 3) that the buyer has the intent
and financial ability to operate and maintain the property in the public service.

A commission staff investigation found the sale of the plant was twice as beneficial as
decommissioning, four times as beneficial as making minimum repairs and eight times as
beneficial as major repairs and increased generation. However, the option to sell still results in
a net cost to the company, but one that is so small that it won’t impact customer rates.

Commission staff said Sorenson, who owns and operates 11 small hydroelectric plants, was the
only bidder “who showed clear ability to assume Rocky Mountain Power’s maintenance and
regulatory responsibilities.”

A full text of the commission’s orders, along with other documents related to these cases, is
available on the commission’s Web site at www.puc.idaho.gov. Click on “Open Cases”” under
the “Electric” heading and scroll down to case numbers PAC-E-13-06 and PAC-E-13-07.

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