Wind developers and their lobbyists stood shocked in the gallery when the Idaho Senate voted down a bill that would have extended the state’s renewable energy sales tax rebate past June 30.
But Idaho Conservation League energy analyst Ben Otto wasn’t upset.
For when the Senate killed the rebate that would have helped wind developers, it also nixed a provision that would have made it harder for new wind and solar projects to automatically benefit from a federal law that has been a major boon to wind, biomass, geothermal and small hydro project developers since the 1980s.
That provision, demanded by the state’s utilities as part of the compromise that had carried the sales tax rebate through the House, would have ended a discussion before it got started.
Now, the Idaho Public Utilities Commission will address how the state should balance the demand for locally produced renewable energy with the desire for low power costs for Idahoans.
That process – even more than the debate over tax incentives – may decide how Idaho fares in the renewable energy business in the future, experts say.
Idaho’s renewable energy industry rose from almost nothing in 2006 to a generation capacity nearly as large as Idaho Power’s Hells Canyon Complex. That growth brought more than a billion dollars of investment to the state but also has overloaded Idaho Power Co. with intermittent power it must manage to keep its electric rates among the lowest in the nation.
To do it, the company wants the state to change which projects are eligible for a favorable rate under the Public Utility Regulatory Policies Act – PURPA.
Passed by Congress in 1978, PURPA was written to encourage small, sustainable power production and assures these companies a market and a set rate for their electricity.
Big utilities, though, would rather negotiate their own prices. Plus, officials complained that large-scale wind operations like a GE partnership in southern Idaho were bending the rules by forming lots of smaller wind farms that qualified for the set price when they should all be considered one big project.
To combat that, in February the state Public Utilities Commission temporarily lowered a cap on how big these so-called PURPA projects could be.
Now, only wind and solar projects smaller than 100 kilowatts – much smaller than the previous 10- megawatts cap – qualify for the set price.
That’s the cap the utilities wanted the Legislature to make permanent, and it’s what the PUC will now have to debate and decide.
The PUC regulates utilities like Idaho Power that have a monopoly over electricity distribution in the state.
It will hear from developers, utilities, their customers and people like Otto on how the projects can be regulated to prevent them from overwhelming the utilities with unwanted electricity. Wind is especially troublesome, utilities say, because it’s too intermittent and unreliable to make up a major piece of the power picture.
The future of Idaho’s renewable energy industry is at stake, Otto said.
“I think the ability for projects to have access to PURPA rates has a far larger impact than the tax rebate,” Otto said.
WHAT ABOUT THE REST OF THE RENEWABLES?
PURPA’s guaranteed access to the electricity market is precisely what has long driven Idaho’s renewable energy businesses, said Peter Richardson, an attorney who represents developers of renewable energy.
PURPA’s guarantees allowed canal companies to build hydroelectric projects and timber mills to build biomass generation plants, and drove the quick growth in wind power when wind-turbine prices dropped.
Idaho Power officials argue that an alternative process offered by the commission, which allows the utilities and the developers to negotiate a deal that is beneficial to both, is a more effective alternative. Utilities still would be required to buy the power under PURPA.
And even though the fast growth in wind energy has upset some Idahoans – including many in eastern Idaho who called for a moratorium on new wind plants – others don’t want Idaho’s push for renewables to end.
The nation’s growing energy business has brought economic development to Idaho. Hoku, producing polysilicon for solar panels in Pocatello, is expected to create 500 jobs before the end of the year. In the Treasure Valley, Transform Solar, the startup formed by Micron Technology and Origin Energy of Australia, is preparing to go into production of solar panels.
Legislators like Dover Republican Rep. George Eskridge want to see those successes continue and hope to reinvigorate the state’s energy policies this summer in an interim committee.
“I’m hearing that not everybody recognized that the Senate vote not only killed the incentive for wind projects, but all renewable energy,” Eskridge said. “We have to review the Idaho energy plan and decide whether rebates are the way to go, or should we just let the market dictate or should we look at a renewable energy portfolio.”
Surrounding states like Oregon offer incentives – like the temporary tax break Idaho passed in 2006 – while also mandating that utilities generate a certain amount of new renewable energy.
Oregon’s tax credit, which offers up to $40 million for new energy businesses that open in the state, prompted German solar panel manufacturer Solarworld to set up its U.S. headquarters in an old semiconductor plant in Hillsboro and create 1,000 jobs.
And more jobs are coming – to some state.
General Electric, which has invested $500 million in 11 wind farms in the Magic Valley, announced on the same day the Idaho tax rebate died that it plans to build the largest solar panel manufacturing plant in the United States. It is looking at 10 sites nationwide for the $600 million plant that would employ 400 people. General Electric has not disclosed these sites.
The Idaho rebate didn’t do anything for manufacturers, but renewable supporters worry that the Legislature sent a message that Idaho isn’t interested in the industry.
“I’m not sure what the message was,” Eskridge said.
Jill Miles, national business development director for Oregon, wasn’t looking for a chance to kick Idaho while it’s down. An Idaho native, she said the state still has advantages like its skilled work force in the Treasure Valley.
But she’s happy to have the tools the Oregon Legislature has added to the state’s own strong attributes for renewable industry.
“Incentive programs break the tie,” Miles said. “They’re the ones that get the attention.”
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