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Cassia Co. projects affected as PUC won't extend wind energy rate cap increase

Seven proposed Cassia County wind energy projects could lose out on millions of dollars once guaranteed under the Public Utilities Regulatory Policies Act.

The Idaho Public Utilities Commission on Wednesday determined it won’t extend the increased cap on the guaranteed rates that created a favorable climate for the development of wind energy in Idaho. The PUC opted to limit the amount of power wind and solar projects can qualify for PURPA rates to 100 kilowatts – one one-hundredth of the 10 megawatt cap that was in place until Dec. 14, 2010.

The rate is based on the price of natural gas, and pays qualifying wind and solar producers based on the cost a purchasing utility – including Idaho Power and Rocky Mountain Power in the Gem State – avoids by not having to generate or buy power from elsewhere.

Idaho’s regulated electric utilities petitioned the PUC last November to reduce the energy cap, claiming that large Idaho wind projects were breaking themselves into smaller 10 MW projects in order to take advantage of the higher rates and force the utilities into buying power they don’t need at rates that aren’t reasonable for their customers.

In Idaho, 17 projects with contracts executed after the Dec. 14, 2010, deadline will only be eligible for the PURPA rates on 100 kW they produce. Those projects include five near Burley proposed by Cotterel WindEnergy Center LLC, and two near Declo proposed by Jackson of America Wind LLC. Published rates would have netted the Cotterel projects $716.4 million over a 20-year term of three agreements, and Jackson $208.8 million over two decades.

Now, those projects will have to negotiate rates with Idaho Power to determine their feasibility.

The Northwest and Intermountain Power Producers Coalition argued that the 10 MW cap has worked “remarkably well for Idaho,” and called its loss “unfortunate.”

But the Cotterel project represents the type of development the utilities railed against. The Shell-owned company initially responded to a 2009 Idaho Power bid request as one large 150 MW project, according to PUC. But after an agreement wasn’t reached, it was divided into five projects, for which Cotterel submitted five PURPA contracts scheduled to start in 2014.

The PUC will also examine the methodology used to calculate the avoided-cost rates for utilities, stating in a written release, “it is more appropriate to first establish the just and reasonable avoided-cost rates before we implement procedures for obtaining the rate.”

For more of this story, read Thursday’s Times-News.