PacifiCorp asks for relief from ‘flood’ of QF contract applications

Like Idaho Power before it, PacifiCorp d/b/a Rocky Mountain Power on March 2 asked the Idaho Public Utility Commission for relief from a “flood” of small power qualifying facility (QF) requests that the utility says will drive up costs for ratepayers.

In this March 2 petition, the company asks the Idaho commission for: immediate relief from certain terms and conditions of its prospective contracts with QFs under the federal Public Utility Regulatory Policies Act of 1978 (PURPA); and long-term modifications to PURPA contract terms and conditions going forward.

“The Company has experienced a significant increase in new QF requests in the immediate wake of the Commission’s Order 33222, issued February 6, 2015 in Case No. IPC-E-15-01, which temporarily reduced Idaho Power Company’s (‘ldaho Power’) PURPA contract length from 20 years to five years,” said Rocky Mountain Power. “These new requests, combined with the large number of existing requests and already executed PURPA contracts, prompts the Company’s current expedited request for similar treatment from the Commission in this proceeding, which would be consistent with previous Commission orders issued under almost these precise circumstances.

“In addition to the immediate, temporary relief, the Company, like Idaho Power, has experienced a significant increase in PURPA contract requests in 2014 and 2015, activity that Rocky Mountain Power believes will harm customers unless the Commission directs permanent modifications to the Company’s current Idaho avoided cost contracting and pricing procedures in the long term.

“Idaho Power’s pending petition in Case No. IPC-EI-15-01 describes the new flood of requests on Idaho Power’s system in recent years related to the rapid development of solar QFs in the state. The Commission has recently expressed concern about passing the costs of these unneeded resources onto Idaho retail customers and ldaho Power’s ability to continue taking such large amounts of intermittent generation on its system. In its Idaho Power Order, the Commission found, upon initial review of Idaho Power’s petition, that its concerns about the influx of QF power continue ‘unabated.’ The Commission concluded, ‘there is sufficient evidence that the predicted influx of high-capacity PURPA contracts could significantly and detrimentally impact customer rates and system reliability.’

“For that reason, the Commission immediately and temporarily reduced the maximum QF contract term for Idaho Power’s QF contracts from 20 years to five years. These same concerns, as well as the new flood of QF requests in the wake of Commission Order 33222, inform the Company’s present petition. Similar to Idaho Power, the Company has experienced a significant increase in QF pricing requests in Idaho and across its six-state system. Similar to Idaho Power, the Company has no need for resources in the next decade. Similar to Idaho Power, the Company’s hedging practices are short-term in nature. Given the magnitude of new QF requests, and considering the inherent uncertainties in projecting avoided cost rates out 20 years or more, current Idaho avoided costs rates are adversely impacting customers and will continue to do so for 20 years.”

Within five days of Commission Order 33222, the company received four pricing requests totaling 130 MW from QF developers who are located in Idaho Power’s service territory but are now planning to obtain a transmission wheel to PacifiCorp in order to secure a more favorable 20-year contract with the company. These requests bring the total amount of proposed Idaho PURPA projects currently seeking contracts with PacifiCorp to 275.5 MW. Add to the 275.5 MW of proposed projects the 189.6 MW of Idaho PURPA contracts already executed by PacifiCorp, and the company has a total of 465.1 MW of existing and proposed PURPA purchase obligations in Idaho. This amount, at full nameplate capacity, would be enough to supply 108% of PacifiCorp’s average Idaho retail load in 2014 and 275% of PacifiCorp’s minimum Idaho retail load in 2014.

Across its six-state system, PacifiCorp currently has 3,641 MW of new PURPA contract requests, in addition to the 1,732 MW of PURPA power already under contract. “Given the large quantity of existing and new QF requests, and considering the inherent uncertainties in projecting avoided cost rates out 20 years or more, current Idaho avoided cost rates are adversely impacting retail customers,” Rocky Mountain Power said. “The Company therefore seeks a permanent reduction in PPA contract length to mitigate price risk to its customers.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.