Idaho Power Co. wants state regulators to let the company invest in wind power and sustainable energy instead of using a pollution credit to reduce rates for its customers.
The company says the change may cost ratepayers more initially, but has the potential to save money.
The extra cash comes from the sale of sulfur dioxide emission allowances that Idaho Power doesn’t use.
The Environmental Protection Agency regulates the amount of pollution that can be released from power plants, and it provides utilities with a set number of allowances to emit a fixed amount of pollutants. But because the bulk of Idaho Power’s generation comes from non-polluting hydropower plants, the company typically has allowances left over each year.
The EPA lets companies like Idaho Power sell those allowances to companies that use up their allotment.
In 2006, Idaho Power sold about $69 million in allowances and used 90 percent of the proceeds to help reduce the rates of its Idaho and Oregon customers during its annual rate adjustment.
Last year, the company sold $19.6 million worth of allowances. After fees and a portion to its Oregon customers, Idaho Power customers would receive a credit of $10.1 million when power rates are adjusted in June.
Each year, as part of the annual power cost adjustment, or PCA, Idaho Power adjusts its rates up or down, based on the amount of water available to generate electricity and the cost of buying electricity.
Instead of using the emissions credit in the PCA, Idaho Power is suggesting it could be used to buy a wind power project, which would provide the company with a source of renewable energy and give the company experience in how wind projects operate and how they can be integrated into the company’s existing electricity sources.
Another option would be to use the money to buy renewable energy certificates known as “green tags.”
Companies receive a “green tag” for every megawatt of electricity bought from an approved alternative energy source such as solar, wind or geothermal.
Green tags are sold through private organizations that market green power throughout the United States.
They can also be purchased directly from small renewable energy projects.
The company says buying green tags now would better prepare the company if state or federal renewable energy standards were passed requiring companies to buy a certain percentage of power from renewable sources.
A proposal to require minimum standards was included in the new federal energy bill, but was removed before the bill’s passage. Some states have put standards in place, but Idaho hasn’t.
If standards are ever enacted, Idaho Power says costs for green power would likely increase. The company said it could also sell some of the green tags to other utilities and again give customers a credit on their rates.
By Ken Dey
3 January 2008
|Wind Watch relies entirely
on User Funding