Idaho Power seeks changes in wind pricing

Idaho Power is apparently trying to take some of the wind out of renewable energy’s sails.

The utility’s main website sports a banner showing the opening line of a letter that reads, “Dear Wind, We need to talk…” The banner links to a one-page document titled, “Our plan,” which carries a different banner with a similar greeting: “Wind, you’re costing me a fortune!”

Idaho Power said: “The huge influx of industrial wind projects forced onto our system is raising customer rates and threatening the reliability of our electrical grid. Federal law requires us to buy energy from renewable-energy projects, but we don’t think Idahoans should be required to pay inflated rates for electricity that is often not needed at all.”

Those inflated rates, the utility said, come from a requirement in the Public Utility Regulatory Policies Act (PURPA) that it purchase renewable energy generated by certain sources.

“Under PURPA, Idaho Power is required to purchase renewable energy produced by certain qualifying facilities (QFs), such as wind, solar, geothermal and small hydroelectric resources,” the utility said. “The power supply expense passed on to customers through the power cost adjustment (PCA) as a result of PURPA QF projects was about $40 million in 2004.”

The two ads debuted on the utility’s website in May as part of a larger campaign tied to a matter before the Idaho Public Utilities Commission (PUC). The utility is asking the PUC “to analyze the way prices are set for wind projects, how the avoided-cost rate is established, and other issues [but] the central issue is how prices are set,” an Idaho Power spokesperson told TransmissionHub on July 5.

The publicity campaign is intended to get the public involved while simultaneously educating them about renewable energy, the spokesperson added.

“There’s quite a bit of education that has to happen to make people understand that there’s a cost to this,” the spokesperson said. “It’s not just as easy as going out, building a bunch of wind turbines and getting free energy.”

On the education front, for example, a paragraph stating that renewable energy certificates (RECs) associated with renewable energy projects are usually sold by developers to out-of-state buyers includes a link to a webpage that explains how RECs work.

“In most cases, we don’t get the renewable energy certificate from these projects; they go to the developers, so we can’t even tell our customers they’re getting renewable energy unless they’re specifically part of our green power program,” the spokesperson said, adding, “We have a standing order from the PUC that any RECs that we do receive are sold to offset the cost of power.”

While not the first voice of opposition to burgeoning wind development, Idaho Power may be the first utility to air its criticisms so openly.

“I think they’re spot on,” former Illinois Commerce Commissioner Sherman Elliott told TransmissionHub on July 3 of Idaho Power’s campaign. “That’s the problem that’s not being adequately addressed. It’s not just the cost of the turbine and the subsidies; it’s the systemic effects” of wind’s operational characteristics as well as the way wind energy is brought to market.

Those systemic effects are also adding to the costs for Idaho Power and its customers, the spokesperson said.

The utility’s summer peak demand is around 3,000 MW, the spokesperson said. By year-end, the utility will have about 800 MW of wind on its system.

“That high percentage of wind creates various operational challenges for us,” the spokesperson said. “We have to have resources available to compensate” for wind’s variability that are able to ramp up or down quickly to maintain uninterrupted power for its customers. Those resources come at a cost, the spokesperson added.

An American Wind Energy Association spokesperson could not be immediately reached for comment July 5.

As for customer involvement, the ads include a virtual sticky note that said, “NOW is the time to be heard,” which links to the company’s outreach website, GetPluggedIn.com. There, customers can post comments, which the utility said may be shared with other entities, including the PUC.

“We’ve received several hundred responses … and 85% to 95% of the folks who’ve responded have been pretty favorable” toward Idaho Power’s position, the spokesperson said.

In encouraging the public to comment, the utility said: “Something needs to change about the way alternative energy is priced in Idaho. If it doesn’t, Idahoans could end up paying hundreds of millions of dollars more in excess costs for electricity.”

Idaho Power is the chief operating subsidiary of holding company IDACORP, Inc. (NYSE: IDA).