The Idaho Public Utilities Commission is taking offers of intervention until Jan. 21 on an Idaho Power proposal to limit wind energy on its system, since the utility’s system has about run out of more consistently available, quick-start capacity to balance against wind’s variable output.
The company in this Nov. 29, 2013, application is asking state regulators to update the rates it can assess wind developers to account for the cost of integrating wind into its system. The utility also seeks to change the way wind integration charges are calculated.
“Idaho Power claims its capability to integrate wind generation into its system is nearing its limit,” said the PUC in a Jan. 10 notice. “Wind developers pay a wind integration charge because wind generation is variable and intermittent, which forces the utility to modify its system operations to ensure transmission grid reliability. The utility must provide operating reserves from other resources – such as hydro or natural gas – that can increase or decrease generation on short notice to offset changes in wind generation. The effect of having to use other resources as operating reserve restricts those same resources from being economically dispatched to their fullest capability, resulting in higher power supply costs passed on to customers, Idaho Power claims.”
The rate that wind developers are paid by the utility is discounted by a certain percentage to account for wind integration. The discount varies depending on when each of Idaho Power’s 28 wind projects came online, but it cannot exceed $6.50 per megawatt-hour.
While the wind projects pay varying rates, all of them combined result in a discount of $3.42 per MWh, even though, Idaho Power claims its 2007 wind integration study shows a wind integration cost of $7.92 per MWh. Idaho Power has about 678 MW of wind capacity on its system now, with 505 MW of that having come online since 2010.
“This rapid growth has led to the recognition that Idaho Power’s finite capability of integrating wind generation is nearing its limit,” the utility told the commission. “Even at the current level of wind generation capacity penetration, dispatchable thermal and hydro generators are not always capable of providing the balancing reserves necessary to integrate wind generation. This situation is expected to worsen as wind penetration levels increase, particularly during levels of low customer demand.”
In this application to the Idaho Public Utilities Commission, Idaho Power presents an updated wind integration study that, for all existing and new projects, shows a cost of $6.83 per MWh at 800 MW of penetration; $10.22 per MWh at 1,000 MW; and $14.22 per MWh at 1,200 MW.
Idaho Power proposes one of three options.
- The first is to not change the existing structure for current wind contracts, but charge new projects $8.67 at 800 MW of penetration, $24 at 1,000 MW and $34.70 at 1,200 MW.
- A second option would be to implement a new integration tariff that is separate from the power sales agreement. Idaho Power claims that the current practice of assessing an integration charge based on a percentage of the published rate results in various payments and an inequitable contribution to overall wind integration costs. Further, setting the wind integration charge for the duration of a power sales agreement (typically 20 years) ensures under-collection of integration costs as costs rise. Under this tariff option, the charge to new contracts would be $6.89 per MWh at 700 MW penetration, $8.67 at 800 MW and progressing to $34.70 per MWh at 1,200 MW or greater.
- A third option is to spread integration costs equitably across all wind generators, which would affect existing contracts. That would significantly reduce the size of increase and not penalize new wind generation, Idaho Power said. For example, at 700 MW, the charge would be $6.56 per MWh, $6.83 per MWh at 800 MW and building up to $14.22 at 1,200 MW or greater.
On Jan. 9, Idaho Winds LLC filed or intervention in this case. In September 2009, Idaho Winds and Idaho Power entered into a Firm Energy Sales Agreement, which remains in full force and effect. The Idaho Winds generating project is a 22-MW facility located near Glenns Ferry and has been operational since November 2011. It was the only intervenor in this case as of Jan. 13.