Idaho irrigation entities are backing a proposal by the state’s electric companies to significantly shorten mandatory contract lengths for solar and wind projects, believing the change would keep power rates in check.
The Idaho Public Utilities Commission recently completed technical hearings on the proposal and scheduled the close of public comment for July 10.
Though Commissioner Mack Redford recently died, PUC spokesman Gene Fadness expects the two other commissioners will come to a consensus, given the urgency of resolving the issue. A decision is expected by late this month or early August.
Under the federal Public Utility Regulatory Policies Act, utilities must purchase any qualifying renewable power. But it’s up to individual states to establish contract lengths and the method for calculating avoided costs – payments for renewable energy based on what utilities would otherwise invest to produce an equivalent amount of power.
On Jan. 30, Idaho Power Co. petitioned to shorten the length of PURPA contracts for solar and wind projects over 100 kilowatts from 20 years to two years. The utility updates its Integrated Resource Plan every two years and reasoned the shorter contract would better capture current pricing. The proposal would also apply to other PURPA projects, such as hydro, biomass or digester power, over 10 megawatts, though there are currently no such projects large enough to qualify.
PacifiCorp and Avista later signed on to Idaho Power’s petition. In the interim, the PUC has set the length of solar and wind contracts at five years.
Utilities have also requested that calculations for avoided costs, now based on construction costs of gas-powered infrastructure, be tied to market rates instead.
Renewable energy developers, however, say utilities don’t have similar flexibility in paying off their own infrastructure and argue renewable projects wouldn’t qualify for financing with such short contacts.
In his public comments, one renewable energy developer described the petition as “an attempt to kill future solar in Idaho.”
Irrigation organizations including Idaho Irrigation Pumpers Association, Twin Falls Canal Co., Northside Canal Co. and American Falls Reservoir District have intervened in the case. Lynn Tominaga, who represents the groundwater users, explained the utilities can produce hydro, gas and coal power more cheaply, and they currently have ample capacity to meet demand. He said wind and solar energy must be backed up by more reliable energy sources, anyway, which detracts from their value.
“We have some concerns about adding more renewable resources that would raise the cost to the ratepayer,” Tominaga said.
Idaho Power spokesman Brad Bowlin said the company made the proposal in response to a glut of solar power applications to beat the Dec. 31, 2016 expiration of a tax credit. Bowlin said Idaho Power is already obligated to buy 320 megawatts of solar and has received inquiries in Oregon and Idaho for another 1,326 megawatts, which would cost $2.7 billion under 20-year contracts.
PacifiCorp officials report having 38.8 million megawatt-hours of renewable power under contract at an average price of $66.32 per megawatt-hour over the next decade, compared with an estimated average cost of power on the open market of $38.11 per megawatt-hour.