Idaho approves agreements with six wind energy projects

All six wind farms – Cold Springs, Desert Meadow, Hammett Hill, Mainline, Ryegrass and Two Ponds – qualify for the commission’s posted Avoided Cost Rate under the provisions of PURPA, the Public Utilities Regulatory Policies Act. PURPA requires that electric utilities offer to buy power produced from qualifying small power producers or cogenerators. The rate to be paid developers of cogeneration or small power producers is established by the commission and is to be equal to the cost the electric utility avoids if it would have had to generate the power itself or purchase it from another source.

Each of the wind turbines projects has a capacity of 23 megawatts, but because wind is intermittent, the agreements call for delivery of 10 average megawatts per project per month to Idaho Power. Should the projects exceed 10 average megawatts, Idaho Power may accept the energy but will not pay for it.

While the commission adopted the sales agreements, it expressed concern about the transmission capacity available on Idaho Power’s system at the single point of interconnection, a 230-kilovolt line in Elmore County, which is also near two other projects – Bennett Creek and Hot Springs – owned by the wind farm same developer.

A system impact study was performed that indicated the existing transmission system can accommodate output from the wind farm projects without transmission network upgrades. However, when that study was completed it was for projects with a nameplate capacity of 20 MW.

Since the study was completed, the project evolved with the developer’s wind turbines choice resulting in projects with a nameplate capacity of 23 MW. Consequently, the commission is ordering the developer to request additional transmission capacity and be responsible for all costs associated with the request.

All the agreements include a mechanical availability guarantee, a reduction in the price paid to the developer to allow for integrating the wind power into Idaho Power’s transmission system and a wind forecasting cost assessed the developer. The parties also agreed to damages and security provisions in the event the projects do not meet their scheduled first operation date of Dec. 31, 2012.

The rate for these projects is a non-levelized rate that increases through the 20-year life of the contract. In 2013, the rate for normal load hours during normal seasons of the year is $61.93 per megawatt-hour (6.19 cents per kWh), escalating to $121.76 per MWh in 2032. That rate varies to account for heavy and light load hours of the day and heavy and light load seasons of the year.

Commission staff calculated that the six projects are expected to generate 303,648 megawatt-hours annually. The annual value of the expected generation will be about $18.8 million in 2013 and increasing to about $36.9 million in 2032. Staff calculated the collective net present value of the generation over the life of the agreements to be about $208.9 million.

Approving the agreements does not impact rates now, but all payments made by Idaho Power for purchases of energy from approved PURPA projects are allowed as prudently incurred expenses for inclusion in customer rates once the projects are generating power.

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