The Idaho Public Utilities Commission approved a settlement between Idaho Power and the Exergy Development Group on Aug. 31 to terminate six wind projects.
The settlement allows the projects to be terminated in exchange for Idaho Power returning letters of credit valued at $3m to the developer. Idaho Power is part of Idacorp (NYSE: IDA).
Exergy Development Group of Idaho was under contract to deliver power from the six projects but none of the projects met their scheduled operation dates.
Idaho Power filed a complaint with the commission in July seeking liquidated damages from the Boise-based developer for failure to complete the projects. Four were approved in 2005 and two approved in 2011.
Exergy claimed that factors beyond its control, primarily disputes with Idaho Power over the interconnection process and transmission service arrangements, caused the projects to be late. The parties entered into settlement negotiations and mutually agreed that Idaho Power would not seek damages if Exergy agreed to terminate the projects.
In a statement, the PUC said both Idaho and its ratepayers benefit from the settlement. “In particular, ratepayers avoid paying nearly $600m in energy payments over the 20-year terms of the Purchase Power Agreements. From Exergy’s perspective, it recovers the four Letters of Credit,” the commission said. Further, termination of the agreements permits Idaho Power to avoid buying a monthly average of 60 MW of electricity that the company claims is not necessary to meet its service obligations.
Under the federal Public Utility Regulatory Policies Act (PURPA), Idaho Power must buy from qualifying renewable energy projects at rates published by the commission. The six projects, each with an average output of 10 MW per month, all qualified for the published rate before the commission lowered the size of wind and solar projects that can qualify for the rate from 10 average MW to 100 kW.
The dispute is part of a larger controversy over PURPA-qualified projects between the utility and developer. The developer said unresolved rules governing alternative energy projects in Idaho had made investors wary, forcing Exergy to put $323m of its 2012 developments on hold. Exergy announced it was giving up contract rights to 116 MW of wind plants in Idaho.
The two 2005 projects were Notch Butte Wind Park, located between Twin Falls and Shoshone, and Lava Beds Wind Park, between Blackfoot and Arco. The original online date for those projects was May 2007, but that was postponed to September 2010.
The four 2011 projects – Cottonwood Wind Park, Deep Creek Wind Park, Rogerson Flats Wind Park and Salmon Creek Wind Park – were all proposed in the Rogerson area and were to have been operating by June 30 of this year.