150213_IPCsolarintegration.pdf

Case No. IPC-E-14-18, Order No. 33227
Contact: Gene Fadness [phone], 890-2712
www.puc.idaho.gov

Parties agree to temporary solar integration costs
until a second Idaho Power study is completed

BOISE (Feb. 13, 2015) – The Idaho Public Utilities Commission adopted a settlement that sets
the rates solar developers will pay to have their projects integrated into Idaho Power
Company’s distribution and transmission system until a new solar integration study can be
completed.

The integration charge applies only to larger solar developers and does not impact residential
or small-commercial customers who have rooftop solar installations.

The parties agreeing to the settlement include Idaho Power, commission staff, the Sierra Club,
the Idaho Conservation League and the Snake River Alliance.

Solar and wind generation that varies in its energy output depending on sun and wind
conditions requires back-up generation to ensure system reliability. Utilities must provide
operating reserves from baseload (non-intermittent) generation resources – such as a natural
gas or hydro plant – that can be quickly ramped up or down to offset changes in generation
from variable generation. Restricting the use of baseload resources to provide back-up for
intermittent generation results in higher power supply costs that are eventually passed on to
customers, Idaho Power claims.

To prevent customers from paying those costs, Idaho Power proposed a solar integration
charge that would be discounted from the amount the utility pays to solar developers. The
charge gradually increases as solar generation increases. Developers will pay about 40 cents
per megawatt-hour when there is 100 megawatts or fewer of solar generation on Idaho
Power’s system. That cost increases to $1.50 per MWh when solar penetration is between 100
and 300 MW; $2.80 per MWh at a solar penetration of between 300 and 500 MW; and $4.40
per MWh at a solar penetration of between 500 and 700 MW. Those amounts are for contracts
signed this year and would gradually change during the length of the sales agreement.

Because there was disagreement among the parties regarding the methodology Idaho Power
used in its 2014 solar integration study, the parties agreed that Idaho Power will initiate a
second study this year. A Technical Review Committee will be used in that study that consists of
staff from the Idaho and Oregon public utility commissions, Idaho Power personnel and
technical experts from the parties to the settlement. The settlement also outlines the issues a
second study will consider.

In the last three months, the commission has approved power purchase agreements between
Idaho Power and developers of 13 solar projects totaling 400 megawatts. Integration charges
have already been included in those contracts. Idaho Power also buys the output from 60 MW
of solar projects in its Oregon territory.

The commission recently reduced the length of solar contracts from 20 years to five years while
it processes an Idaho Power application to reduce the length of those contracts even further to
two years. Idaho Power claims there are about another 885 MW of solar projects seeking
contracts under federal PURPA provisions with the company.

###