A prominent Idaho wind energy developer has asked to pull out of contracts for projects in Twin Falls and Lincoln counties.
The circumstances of the move by Boise-based Exergy Development Group highlight the ongoing debate over wind and other renewable energy sources in Idaho, and how state regulators should treat them.
Exergy’s projects date back at least two years, according to documents filed online with the Idaho Public Utilities Commission (PUC). The company entered into sales agreements with Idaho Power to develop wind farms scattered in areas of the two Magic Valley counties, as well as Bingham County in eastern Idaho.
But as time went on, those projects became the center of disputes between the developer and the utility over details of the sales agreements and the infrastructure required to connect to Idaho Power’s transmission system, according to the PUC filings. Earlier this year, the utility accused Exergy of failing to meet an initial deadline of June 30, 2012, for the projects to be operational.
In late July, Idaho Power asked state regulators to allow it to terminate the sales agreements due to Exergy’s failure to meet deadline. On Tuesday, Exergy and Idaho Power then jointly requested approval of a settlement dropping the projects.
The settlement submitted to the PUC is largely confidential. But among its terms, Idaho Power would return to Exergy letters of credit — unused so far — the utility holds as financial security in the case of a delay. The power sales agreements would be terminated.
According to the Associated Press, Exergy CEO James Carkulis said he halted the projects after it became clear the company couldn’t finish them by the end of the year. That deadline was necessary in order to receive an upfront payment from a federal tax credit program; a similar incentive from the state of Idaho ended last year and is already unavailable.
The PUC filings indicate that the projects’ fate was also influenced over the years by the ongoing debate over renewable energy in Idaho. For example, the record includes letters between Exergy and Idaho Power regarding a 2011 PUC decision to tighten the limits of what projects qualify for a federal law supporting small-scale power producers.
Outside of this case, Idaho Power has accused wind developers like Exergy of abusing that federal law by breaking up projects until they are small enough to qualify for the law’s perks — a set schedule of payments, and a requirement that the utility accept the energy. The PUC held three days of hearings earlier this month on a proposal by Idaho Power and other state-regulated utilities to dramatically alter how small-scale wind and other renewable projects are treated.
According to the Associated Press, Carkulis told the Idaho Statesman that the decision to back out is a setback but it won’t destroy the business, which has $1.5 billion in wind, solar, biofuel and biomass projects across the country.