Idaho Power officials say they are preparing to appeal a federal ruling that challenges company efforts to shut down wind farms during periods of low demand.
But where and how the fight will take place remain to be seen.
Those moves depend on a decision of the Idaho Public Utilities Commission, expected later next month.
The Federal Energy Regulatory Commission ruled in September that Idaho Power’s proposed policy to curtail wind power plants would be inconsistent with the Public Utility Regulatory Policies Act.
That law, passed in 1978 to encourage development of small and alternative sources of energy, requires utilities to buy power from private producers.
The debate over whether a utility can decide on its own to curtail PURPA power purchases is not exclusive to Idaho. Energy developers, banks and utilities across the nation are watching how the Idaho debate plays out.
If utilities can decide not to buy power from existing plants, that could undercut the economics of wind power across the country, said Peter Richardson, an attorney for wind developers.
“The national implications are huge,” Richardson said.
A VICTORY FOR WIND?
Complicating the matter is the uncertainty of the FERC ruling itself.
It was widely reported as a great victory for wind and renewable energy producers nationwide. Even though it was a ruling against the Idaho Public Utilities Commission, FERC did not order the three-member state panel to follow its opinion.
FERC’s ruling came as the Idaho utility regulators were deliberating on petitions from Idaho Power and the state’s other two investor-owned utilities to lower the price and reduce the length of contracts for the power the utilities are required to buy from wind, solar, small hydro, geothermal and other alternative energy producers.
Idaho Power also asked the commission to approve its policy of turning away power from wind plants in times of low demand, so that it can keep using its coal-fired plants that produce electricity more cheaply.
Idaho Power testimony filed in the case earlier this year alarmed Idaho Wind Partners, a company that operates wind farms around Twin Falls that can produce 183 megawatts of electricity and light 39,000 homes.
So Idaho Wind Partners didn’t wait for the PUC’s decision. It didn’t even wait for a hearing in August.
It went directly to FERC, the federal panel that oversees how PURPA is implemented. And FERC sided with the partners, issuing the ruling that did not order anyone to do anything.
BACK IN IDAHO’S COURT
So the matter remains before the Idaho PUC.
If the commission rules against Idaho Power, the utility would have to appeal the case to the Idaho Supreme Court.
If the commission were to rule for Idaho Power, then Idaho Wind Partners could appeal the case either to the state Supreme Court or to federal court.
And the FERC ruling would be its primary evidence.
WHAT FERC SAID
FERC concluded that Idaho Wind Partners and Idaho Power had entered into long-term power-purchase agreements under PURPA that do not permit Idaho Power to unilaterally curtail buying energy from the wind plants.
WHAT IDAHO POWER SAYS
Idaho Power counters that PURPA requires that the effects of the power purchase not adversely affect its customers. It says FERC ignored that aspect in the September ruling.
Idaho Power’s argument in a nutshell: When power demand is low, and the amount of wind energy being produced is high, the contracts force Idaho Power to turn off its coal plants to make room in its system for the incoming wind energy. When the wind dies down or demand increases, it must turn on its coal plants again.
The bottom line, the company argues, is that turning its plants on and off to accommodate unreliable wind energy is unnecessarily expensive.
“That raises rates,” said Lynette Berriochoa, an Idaho Power spokeswoman, “and it’s not a win for customers.”
Idaho Power also argues that it is not getting the power when it needs it. When peak power demand set a record at 4 p.m. on July 12 at 3,245 megawatts, wind turbines generated just 14 megawatts – even though there’s 440 megawatts of wind capacity connected to the system.
“Idaho Power also has the highest percentage of wind generation capacity of any utility in the Northwest,” Berriochoa said.
That makes the utility especially vulnerable to the unreliable power source, the company argues.
WHAT WIND POWER PRODUCERS SAY
If Idaho Power doesn’t buy the wind power it is contracted to buy, that cuts into the revenue the developers earn.
Alternative energy projects require huge expenditures up front – and financing for the projects depends on the certainty that revenues will be there over 20 years.
“It’s a financial disaster for all these projects,” said Richardson, the wind power attorney.
DOES MONEY CHANGE THE CASE?
Last year Idaho Power shut off wind plants when it said the plants’ output threatened the reliability of the system.
But shutting off wind plants for financial reasons is another issue.
Idaho Power Load Serving Operations Director Tess Park, testifying before the PUC in August, said that the utility hearing wouldn’t automatically shut off all wind-plant power, just some of it.
Under cross examination, she said the curtailment might reach 5 percent or more of the plants’ yearly output.
The PUC staff had recommended that the commission accept Idaho Power’s proposal to limit wind-power purchases. But in testimony at the hearings, staff expressed surprise at the size of the curtailment Park and Idaho Power proposed.
“Commission staff said the company provided insufficient evidence the number would be anywhere near that high,” said Gene Fadness, a PUC spokesman. “We don’t know where (the company) got that number.”
The PUC doesn’t have to follow its staff recommendation – and often doesn’t. But it is taking extra time as it makes a decision, expected after the election in November.
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