Idaho Public Utilities Commission

Case No. PAC-E-10-08, Order No. 32246

May 25, 2011

Contact: Gene Fadness (208) 334-0339, 890-2712

Commission to hear oral arguments in wind dispute

The Idaho Public Utilities Commission has agreed to hear oral arguments between the developer of four proposed Cassia County wind projects and Rocky Mountain Power on June 9.

Boise-based Exergy Development Group is asking for oral arguments in response to a motion by Rocky Mountain Power to dismiss Exergy’s complaint against the utility.

Exergy maintains the yet-to-be-constructed wind projects near Malta should be eligible for a higher rate from Rocky Mountain Power because it submitted a proposed power purchase agreement with the utility in January 2009, well before the commission lowered a published rate wind developers receive in March 2010.

Under the provisions of the federal Public Utilities Regulatory Policies Act (PURPA), regulated utilities must buy from qualifying small-power producers at a rate published by state public utility commissions. The rate, called an avoided-cost rate, is based on the cost the utility avoids by not having to generate the power itself or buying it elsewhere. Idaho’s avoided cost rate is based on the cost to generate power at a combined-cycle natural gas plant. When the Northwest Power and Conservation Council issues a new price forecast for wholesale natural gas prices, the commission adjusts the avoided cost rate accordingly. In March 2010, the commission lowered the rate after a council forecast reflected lower natural gas prices which, in turn, led to a lower avoided-cost rate paid to small-power producers.

Rocky Mountain Power filed a motion to have the complaint dismissed, alleging Exergy did not – and still does not – have the necessary interconnection and wheeling agreements with Raft River Electric Cooperative and the Bonneville Power Administration needed to deliver the wind projects’ output to Rocky Mountain Power territory.

Exergy alleges that securing firm transmission and interconnection rights before creating a legally enforceable power purchase agreement is not a requirement in Idaho. Rocky Mountain Power claims that when power must be delivered from off its system through other entities, some of which are not regulated by the Idaho commission – such as Raft River Electric – advance agreements are necessary.

Exergy claims it does not have the interconnection and wheeling agreements because Rocky Mountain Power, during 2009, informed the project that the available transmission capacity from the proposed delivery point – Brady substation at American Falls – was not enough to accept more than 23 megawatts of net output from Exergy’s four projects, which, at full capacity, totaled 70 megawatts. But Rocky Mountain Power reversed itself in September 2010, Exergy alleges, and said it did have the necessary transmission capacity for all four projects. At that point, settlement negotiations resumed. However, they ceased a few weeks later when Rocky Mountain Power joined with Idaho Power Co. and Avista Utilities in filing a motion to have the eligibility cap for published rates reduced from 10 average megawatts to 100 kilowatts.

Exergy is asking that Rocky Mountain provide detailed explanations for the utility’s alleged failure to earlier realize that transmission would not be a problem “and its reliance on that non-existent problem to stall negotiations.”

Rocky Mountain Power alleges Exergy delayed negotiations by not responding to discovery requests as to how it planned to deliver its output from the wind farms to the Brady substation. Further, Rocky Mountain Power states, Exergy did not file its complaint requesting grandfathered rates to pre-March 2010 rates until July 29, four months after the March 16 rate change.

Oral arguments will begin in the commission hearing room, 472 W. Washington St. in Boise, at 9:30 a.m. on June 9. To read more about this case, go to the commission’s Web site at www.puc.idaho.gov. Click on the electric icon, then on “Open Electric Cases, and scroll down to Case No. PAC-E-10-08.