Idaho Power Co. says it wants to let more small wind-power developers sell power to the utility – but only if they shoulder some of the costs of integrating wind into the company’s electricity supply.
Idaho Power’s assessment of those costs is already coming under fire from wind developers and wind-power organizations, who say it is more than twice what utilities in other states are charging
Idaho Power is asking the Idaho Public Utilities Commission to reduce the rate of $64 per megawatt hour Idaho Power is required to pay to small wind projects by $10.72 to cover “integration costs” of including wind power in the company’s energy portfolio.
In response, the Renewable Northwest Project, a Portland-based nonprofit that promotes renewable energy, sent a letter to the PUC asking that no action be taken until a peer review of Idaho Power’s study is completed.
“While we’re pleased that Idaho Power conducted a wind integration study, they have rushed an incomplete analysis to the Idaho Public Utilities Commission without completing a peer-review process,” Rachel Shimshak, director of the Renewable Northwest Project, said in a statement.
Idaho Power spokesman Dennis Lopez said the company isn’t avoiding a review of the study and has asked the commission to schedule a public workshop so interested parties can review the study’s methodology and share any concerns.
The company contends that it incurs extra cost because wind power isn’t guaranteed and when the wind isn’t blowing, the utility has to back up the power from other sources – primarily the company’s hydropower dams.
“If our customers are using 2,200 megawatts of electricity, and we’re getting 200 megawatts of that from wind and the wind unexpectedly drops off, we need to quickly replace the lost wind generation or reduce loads,” Jim Miller, Idaho Power’s senior vice president of power supply, said in a statement.
Before Idaho Power’s study, Minnesota was the last state to release a study on integration costs.
That study, completed by one of the same firms that worked on Idaho Power’s study, found that integration costs would be $4.50 per megawatt hour if wind accounted for 25 percent of the state’s total power sources.
Lopez said it’s not fair to compare Idaho’s costs with costs in other states, because Idaho is unique in that most of its power resources come from hydroelectricity.
Miller said Idaho Power’s hydro system is already being used to its fullest extent to serve customer demand, and the company may have to build more generating sources in the future to back up wind power when it can’t deliver the promised electricity.
“We undertook this study to help the Idaho Public Utilities Commission, wind developers, our customers and our company better understand the economic impacts of using our hydroelectric generation system to back up wind power,” Miller said.
Idaho Power initiated the study after its request in August 2005 to put a moratorium on the requirement that the company buy power from small power producers while it studied the impacts of adding new small projects to its electricity portfolio.
The commission didn’t agree to a total moratorium, but agreed to drop the size of the projects that would be considered for the rate from a maximum of 10 megawatts to 100 kilowatts. Ten megawatts is enough power for 13,000 average homes, while 100 kilowatts is enough power for about thirty 1,500-watt hair dryers.
Small providers of electricity fall under the Public Utility Regulatory Policies Act of 1978, a federal law that requires regulated utilities like Idaho Power to buy renewable energy from small operations.
The commission is required to set the amount the company must pay for the electricity based on an “avoided cost rate,” which is equal to what the company would have had to pay for electricity from another source, such as natural-gas fired power plant.
The current rate of $64 per megawatt hour is higher than the current market rate for wind. The company already has contracts with small providers for 227 megawatts of power, and 60 megawatts of power is pending.
Idaho Power is asking state regulators to approve an agreement to buy 100 megawatts of wind power at a rate of $48 per megawatt hour with an annual increase of 3 percent from an eastern Oregon wind farm owned by Houston-based Telocaset Wind Power Producers.
Lopez said the company negotiates the integration costs for large wind-power contracts.
In addition to the request to charge wind developers for the integration costs, Idaho Power is also asking the commission to adopt rules that would prevent larger wind-power companies from restructuring into smaller projects to qualify for the PURPA rate, which is higher than the current market rates.
Gene Fadness, a spokesman for the commission, anticipates that within the next few days the commission will issue a notice of procedure that will outline a public comment period and/or public workshops.
By Ken Dey – Idaho Statesman
Edition Date: 02/13/07