CWEB.105/September.30.2004
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CORRECTION An Aug. 31 Con.WEB story on the Energy Trust of Oregon had a mistaken identification for Trust program contracting. SAIC runs the New Building Efficiency program, while Aspen Systems operates the Building Efficiency and Production Efficiency ventures. We regret the error. |
Expanded conservation should be the cornerstone of regional energy resource development over the next five years, according to the Northwest Power and Conservation Council's draft regional plan.
The Council thinks the Northwest should aspire to acquire 700 average megawatts of cost-effective energy savings from 2005 through 2009, as a least-cost, least-risk, environmentally friendly resource strategy in a time of apparently sufficient power supplies.
This recommended target of cost-effective conservation would start at 130 aMW annually next year--roughly equal to the 2001-2002 average, and exceeding by about 10 percent, as an annual average, the regional conservation bonanza years from 1993 to 1996, according to the Council. The goal would rise to 150 aMW by 2009.
"We think it's doable," said Council power division director Dick Watson, at a Sept. 8 Council meeting in Seattle. "We don't think it's a slam dunk," he added.
Watson later told Con.WEB he anticipates questions about the magnitude of conservation in the draft plan, and said he has heard expressed the idea the Northwest has already saved plenty of energy. "A lot of this [conservation potential] is new," he said. "It's a function of time and technology marching on, and higher [power] costs."
Estimated utility system cost for these 700 aMW of energy savings would be about $1.2 billion to about $1.35 billion. It would require about a one-third increase from 2002 regional spending, with new and expanded programs and greater regional coordination. Projected overall rate impact, if all this estimated conservation is expensed, would be less than 1 percent, according to Watson.
Council conservation resources manager Tom Eckman told the Council this chunk of conservation would save the region's electricity system an estimated $2 billion to $2.5 billion, compared to a "business as usual" scenario.
It would also reduce risks, according to the draft plan: "The portfolio analysis shows that a sustained and significant investment in conservation to be beneficial in terms of reduced need for more expensive new resources and reduced exposure to periods of high market prices, fuel price volatility, and possible future carbon penalties."
Council chair Judi Danielson harkened to the 2000-2001 energy crisis, from which, she said in a news release, "the region has not yet fully recovered. This plan will put the Northwest back on track to control our energy future."
The draft plan also is bullish on demand response, calling for 500 MW of this resource through 2009.
At the same time the Council envisions no pressing regionwide need for more supply-side resources, owing to a current surplus of Northwest power without firm transmission links outside the region--although Council officials acknowledge some Northwest utilities will add generation in coming years. The draft plan suggests a modest level of generating resource development in the near future, and preparation for building substantial new generating resources as early as 2010, specifically coal and wind, and natural gas-fired generation possibly later.
Council member Tom Karier called this an "innovative and landmark" plan that responds to the energy crisis, meshes with Northwest utility integrated resource plans and provides regional leadership.
The draft plan is out for public comment through Nov. 19, including public hearings.
(Editor's note: Con.WEB will look more closely at the draft plan's conservation and renewables elements in an upcoming issue.)
Regional Planning
This marks the fifth regional power plan prepared by the Council in its 23-year history, and the first since the energy crisis led to soaring electricity rates, lower power demand and an estimated $2.5 billion to $6 billion negative economic impact regionwide from 2000-2002, according to the Council. "These impacts linger today," the draft plan said.
For the draft plan, the Council looked at about 750 different future scenarios, involving such key unknowns as hydroelectric production, regional power demand, fuel prices (especially natural gas), environmental regulations (notably on carbon dioxide emissions), wholesale power market prices and independent power production.
Using analytical models and its own judgment, "The Council has chosen a resource plan that entails somewhat more cost on average but considerably less risk than the absolute least cost plan. This choice reflects: concerns about the adverse effects that very high cost outcomes can have on the power system; the social and ‘non-power' economic costs not included in our risk measures; judgments regarding the value of improved reliability, reductions in price volatility, and the desire for a diverse and orderly development pattern."
The draft plan goes on to acknowledge the Council's preferred resource development model could change, depending on load growth, fuel prices and other variables.
Action Plan: Focus on Conservation
Demand-side activities are the focus of recommended near-term actions.
A draft plan summary declares: " … the Council recommends that the region should increase its efforts to secure cost-effective conservation, beginning immediately. It is the least expensive, and least harmful to the environment, resource available. Development of conservation will reduce the likelihood of another electricity crisis like the one experienced by the West in 2000 and 2001."
In the Council's look at future scenarios, "Significant conservation is a characteristic of all those plans," Watson told the Council. "And failure to develop that significantly increases cost and risk."
The draft plan notes cost-effective conservation is the top priority resource under the 1980 Pacific Northwest Electric Power Planning and Conservation Act. And much is still available--the Council has identified an estimated 2,800 aMW of realistically achievable cost-effective energy savings regionwide by 2025, at an average levelized cost of 2.4 cents per kilowatt-hour.
While both the proposed conservation spending and savings levels represent increases from recent regional practices, Eckman said the actual spending totals could be lower, depending on the effectiveness of energy-saving initiatives.
He also said a number of Northwest utilities are tracking to meet their proportional shares of this planned regional energy-saving goal.
A couple of Council members expressed mild skepticism Sept. 8. "I'm still concerned we're too optimistic on conservation," said Montana member Ed Bartlett. But, he added, "I strongly support pushing the envelope on conservation."
Idaho member Jim Kempton called the regional conservation plan "not easy to achieve," but said advances in energy-saving technologies gave him "reason to be optimistic."
Conservation numbers in previous Council power plans have been greeted with skepticism, Watson later said, but he noted that regional energy-saving achievements over the past two decades have closely matched the potential outlined in the Council's first such blueprint, in 1983.
"We've done a lot [in Northwest conservation] and I think there's a lot more to do and we can do it," he said. "It's a question of do we have the will to do it."
The Council plans to use its "bully pulpit" to move its regional plan toward fruition, Watson said.
In addition to the conservation push, the Council draft plan touts demand response. It defines this resource as "the ability to temporarily reduce demand during power emergencies or periods of very high wholesale prices."
And, said Watson, "We think it can be done relatively inexpensively," said Watson.--Mark Ohrenschall
Tom Eckman of the Northwest Power and Conservation Council has received a top national award for his longtime efforts in energy efficiency.
Eckman--the Council's conservation resources manager--was honored in August with a Champion of Energy Efficiency Award, after peer nomination and selection by a board committee of the American Council for an Energy-Efficient Economy. This award recognizes energy efficiency leadership and accomplishments, according to an ACEEE news release.
One of five 2004 ACEEE Champion honorees, Eckman, who joined the Council in 1982, is the first individual Northwesterner to earn this award since its inception in 1992. The Northwest Energy Efficiency Alliance earned this recognition in 2000, said ACEEE deputy director Bill Prindle.
Prindle praised Eckman's vital role in furthering Northwest energy efficiency, as a planner and an advocate.
Eckman Award
"Over the last 25 years [the Council has] really had a remarkable level of impact on energy efficiency in the region," Prindle told Con.WEB. He described Eckman as "really the analytical engine for a lot of that work" and someone who has "done very detailed analysis on efficiency potential and developed very credible plans," supported by the "direct or implied regulatory role" conferred on the Council by the Pacific Northwest Electric Power Planning and Conservation Act.
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| Tom Eckman (Courtesy of Northwest Power and Conservation Council) |
"We just have been impressed with Tom's energy, his technical skills in doing the analysis and his effectiveness as kind of an advocate within the system," said Prindle. "He not only develops the data, but presents it in a way that's both entertaining and effective."
The Council's latest regional power plan, now out in draft form (see related story), emphasizes conservation. "We're just impressed once again, despite all the other reasons that have been driving efficiency for these many years, there's still a lot of efficiency potential out there. This plan really captures it, and looks like the driver for a whole new round of energy efficiency investments" in the Northwest.
Although the Champion award brings no direct financial benefits, "We hope it bears a professional and peer recognition value that will both give Tom the recognition he deserves and also … lift up the issue of energy efficiency a little bit, show people how important it is and why it's important."
Northwest energy efficiency officials also lauded Eckman.
"The region could not have come as far as it has without Tom Eckman," e-mailed Margie Gardner, Alliance executive director and a former Council colleague of his. "His personal dedication and professional knowledge are unequaled. Besides, he has a good sense of humor! It has been a pleasure to work with him."
"I can't think of a more deserving individual than Tom Eckman," said Mike Weedall, energy efficiency vice president for Bonneville Power Administration. "When I think about what this region has accomplished, nobody has contributed more to this incredible success than Tom Eckman ... He's a regional treasure."
Other 2004 Champion of Energy Efficiency Awards went to Susan Kennedy of the California Public Utilities Commission; Sacramento Municipal Utility District; Steve Cowell of Conservation Services Group; and the Wisconsin Energy Conservation Corp. These awards were presented at ACEEE's Summer Study on Energy Efficiency in Buildings, held in August in Pacific Grove, CA.--Mark Ohrenschall
Bonneville Power Administration is assembling a regional advisory group to help craft BPA's post-2006 conservation initiatives.
This panel, and BPA's final program decisions, will help determine the future shape of Northwest energy conservation, particularly among BPA utility customers.
Among the key issues are how to achieve Bonneville's share of Northwest Power and Conservation Council energy-saving targets (see related story), with cost-effectiveness a top priority, as well as regional conservation strategies, according to BPA energy efficiency vice president Mike Weedall.
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| (Courtesy of BPA) |
These discussions also will cover the fate of BPA's flagship energy-saving initiatives, the Conservation and Renewables Discount Program and Conservation Augmentation.
Bonneville's conservation work group has attracted about 50 participants as of late September, Weedall told Con.WEB. Its initial meeting is Oct. 7 in Spokane.
The advisory group is charged with proposing a general program approach and direction for BPA energy-saving ventures starting in October 2006, along with program design and implementation.
This work group stems from BPA's July proposal for its power supply role for fiscal years 2007-2011.
In that document, the federal power marketing agency pledged its ongoing commitment to energy conservation, calling it "a major portion of the agency's resource portfolio in the future." However, the BPA policy proposal offered only general guidelines for post-2006 conservation.
"BPA envisions some form of collaborative planning process in which experienced individuals can develop a fully defined proposal for conservation that can then be brought to the entire region for consideration," said the proposal.
Conservation Work Group
On Aug. 31, about two months after the policy proposal came out, Weedall distributed a letter soliciting work group participants, and an accompanying notice of interest.
"BPA desires to have the broad range of conservation interests in the region appropriately represented," the notice said. That includes different utility types, direct service customers, tribes, environmentalists, businesses, state and local governments, and the Council.
As of Sept. 24 close to 50 people had joined, Weedall said. "You can generally say it's the usual suspects, with a few exceptions," he said.
They will tackle some broad issues, as well as more nuts-and-bolts conservation details.
"I think it's incredibly impressive that we've been getting over 40 average megawatts a year in our program, and yet we're going to have to bump that up to 53, 55 average megawatts a year under the new [Council] plan," said Weedall. "We've really got things cooking now, but we're going to have to do even more."
Conservation spending is definitely an issue, he said. Many officials of BPA customer utilities are leery of any wholesale rate increases, so Bonneville will seek to acquire energy savings "as cost efficiently as possible."
Weedall said Bonneville also is very interested in collaborative regional strategies for conservation, such as how to pursue the "lost opportunity" energy savings potential identified by the Council. "Lost opportunity is one area that cries for that leveraged, integrated approach," he said.
Also on the docket are the futures of the C/RD and ConAug programs.
Weedall said he has heard widespread regional support for the discount program, but he noted that C/RD energy savings have come at a relatively higher cost--about $2.2 million per average megawatt, compared to $1.3 million/aMW for ConAug and about $1 million/aMW for Northwest Energy Efficiency Alliance savings, according to BPA's policy proposal. Most people recognize a need for some C/RD changes, he said.
BPA's Regional Dialogue process on post-2006 power sales contracts has shown vast backing for Bonneville energy-saving efforts, according to Weedall. "I haven't heard anything other than we need to continue to be very aggressive and consistent on our conservation program," said Weedall. "That's a very strong affirmation … The key thing is how are we going to do it and how are we going to do it cost efficiently."
The work group will operate under a two-stage process. First up is "developing a proposed program and the underlying mechanisms necessary to support the recommended approach," according to Weedall's letter. This phase should run through December, followed by a two-month public review and comment period.
A second phase, tentatively scheduled from March through September 2005, "will focus on the technical aspects of implementation and delivery of the proposed program," said Weedall's letter.
"Our goal is to make sure it's pretty well fleshed out by Oct. 1, 2005," said Weedall, allowing a full year before the start of the post-2006 conservation program(s). --Mark Ohrenschall
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Puget Sound Energy has taken a long step toward acquiring its first large-scale non-hydro renewable energy resource, a proposed Central Washington wind project that would be owned by the state's largest utility.
Puget on Sept. 21 announced a non-binding letter of intent with Zilkha Renewable Energy, developer of the Wild Horse Wind Power Project, under which the investor-owned utility would take full ownership of the wind farm planned roughly 15 miles east of Ellensburg at up to 220 megawatts of capacity. A top Puget official expects a definitive agreement by year's end. Wild Horse could be operating by 2006; it is under permitting review by the Washington Energy Facility Site Evaluation Council.
This would be the largest wind project, by far, owned by a Northwest utility. It also would advance Puget toward its goal of getting at least 5 percent of its power portfolio, or some 400 MW by 2013, from renewables capacity.
"Based on our analysis, the Wild Horse project would help us secure energy for our customers at stable, predictable prices," said Eric Markell, Puget senior vice president for energy resources, in a news release. "It features the economic, operational and environmental characteristics we looked for in a wind project."
In a conference call, Markell elaborated that ownership of Wild Horse, compared to a power purchase deal, is economically beneficial for Puget. "These are capital-intensive projects, obviously," he said, this one in the $200 million to $300 million range. "We have, fortunately, a fairly low cost of capital we bring to bear. By owning it directly and accessing the [federal wind energy] production tax credit, which we believe will ultimately flow to the benefits of ownership, once Congress renews the PTC, it is a least-cost way for our customers to obtain this resource." (Congress on Sept. 23 passed a PTC extension through 2005, as part of tax legislation; President Bush was expected to sign it into law, according to the American Wind Energy Association.)
Wild Horse is Puget's first announced intended purchase from a shortlist of seven resource proposals that emerged from utility solicitations (see Con.WEB, June 30, 2004). Other proposals remain under negotiations, Markell said.
Buying Wild Horse
The letter of intent is not an actual purchase agreement for Wild Horse, but Markell believes a final deal will follow in the near future. He described the letter of intent as a "fairly robust" document containing many technical and commercial details. "I'm pretty optimistic a definitive agreement will be done by the end of the year," he said.
Markell outlined the basic roles of Zilkha and Puget. "Zilkha is to complete the initial phase of development, up through and including acquisition of land rights and all non-appealable permits," he told the Sept. 21 conference call. "At that point, PSE will acquire all development rights and proceed with Zilkha to finance, construct, erect and operate the project for Puget's account. There will not be a power purchase agreement involved in the transaction."
Asked during the conference call about potential turbines for Wild Horse, Markell said plans are afoot for competitive bidding, and an equipment supplier may be known by year's end.
To an inquiry about integrating intermittent wind power into its system, Markell responded that Puget would use mid-Columbia hydropower "to firm up this wind resource." A Puget transmission line runs very near to the Wild Horse site.
Markell projected about a 33 percent average annual capacity factor for Wild Horse, which, at 220 MW capacity, would generate close to 73 average megawatts.
The eventual size of Wild Horse is "a bit of a moving target," Markell said, and could range from 150 MW to 220 MW capacity. Zilkha is seeking EFSEC approval for Wild Horse of up to 312 MW capacity.
The project would occupy ridge tops on Whiskey Dick Mountain, which lies between Kittitas and the Columbia River in eastern Kittitas County. The 8,600-acre proposed site contains mostly private land, and livestock grazing is the primary land use. Surrounding environs are relatively uninhabited by humans--a project map shows four residences within about two miles of the project boundaries, and 17 residences within about four miles.
This sparse population largely explains why Wild Horse has moved through the EFSEC process-- including a draft environmental impact statement and a recent public hearing--with minimal contention compared to other wind farms planned in Kittitas County, closer to Ellensburg (see Con.WEB, Aug. 31, 2004).
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| (Courtesy of Washington Energy Facility Site Evaluation Council) |
Markell said Puget officials believe Wild Horse has community support, although he acknowledged some concerns have been raised. An Aug. 24 hearing on the Wild Horse draft EIS included a few public comments about potential impacts on wildlife, shrub-steppe habitat and views. Nevertheless, Markell said, "Given the range of issues, this project is among the least controversial in Washington state."
For Wild Horse, EFSEC has ruled the project inconsistent with certain local land-use planning and zoning requirements, and Zilkha and Kittitas County are seeking a resolution, EFESC manager Allen Fiksdal said. "They think they can resolve their issues by January or February of next year," he said. "If they come back with that result, then we can proceed almost immediately with our adjudicative hearings." He predicted an EFSEC recommended decision on Wild Horse could be made by early summer 2005, after which the governor would have 60 days to say yes or no, or punt it back to the council for more consideration.
Why Buy?
Most Northwest utilities with wind power in their resource portfolios have power purchase deals with developers or power marketers. One exception is Foote Creek Rim I wind project in Wyoming, co-owned by PacifiCorp (80 percent) and Eugene Water and Electric Board (20 percent), and operational since 1999. Energy Northwest, a joint operating agency of public power utilities, owns the Nine Canyon Wind Project in southeastern Washington.
Both Markell and Zilkha project development manager Chris Taylor said Wild Horse ownership offers Puget some economic advantages.
Utility acquisition of wind projects is "certainly not the norm," Taylor said, but it is "an emerging trend," for compelling financial reasons.
"Publicly traded investment-grade utilities have a lower cost of capital than your typical independent power producer or wind developer," he said. And capital expenses are one of two huge variables in determining wind power costs--the other is wind resource, "which only nature can change." Puget also can take full advantage of the federal PTC for wind, unlike Zilkha, which Taylor said "could never use all the tax credits our projects generate. We don't owe that much in taxes."
Puget's acquisition of Wild Horse also makes sense because the utility serves parts of Kittitas County, has a nearby transmission interconnection and can use mid-Columbia hydro firming, Taylor said. He also said Puget customers are "keenly interested" in green power.
"We think Puget is the logical customer for this project," he said. "We're thrilled they've made this decision."
This might also "cause other utilities to take a look" at wind project ownership, Taylor said.
Puget is considering two other proposed wind projects from its resource shortlist: Desert Claim, also in Kittitas County, and Hopkins Ridge in Columbia County. Puget announced in June potential 150-MW acquisitions from both ventures, along with four other resource proposals.
Markell said Puget is "in active negotiations with the other short-listed projects," although they pose "lots of challenges" and have "a fair number of moving parts." Further announcements may be made by year's end, he said.--Mark Ohrenschall
Puget Sound Energy's intent to own a Central Washington wind farm has led to a postponement in state review of a controversial wind project planned in the same county by the same developer.
The Kittitas Valley Wind Power Project, proposed for up to 246 megawatts of capacity about 12 miles northwest of Ellensburg, was scheduled for formal hearings starting Sept. 27 before the Washington Energy Facility Site Evaluation Council.
But developer Zilkha Renewable Energy and Kittitas County jointly sought a hiatus of up to six months, to focus on EFSEC review of the proposed Wild Horse Wind Power Project that Puget plans to acquire (see related story).
The Kittitas Valley wind farm proposal has been locally contentious since it was first publicly proposed some 2-1/2 years ago, but Zilkha project development manager Chris Taylor emphasized the EFSEC delay is just that--formally, a continuance of adjudicative hearings. "We remain very committed to the Kittitas Valley project," he told Con.WEB. "We have no intention of dropping it."
Zilkha wants to concentrate on "the expeditious permitting of Wild Horse, given that we've got a customer that is eager to see this project come on-line and needs power in the near term," he said. The involved governmental entities and Zilkha all have limited resources, he added, "and every day we spend preparing for the [Kittitas Valley] hearing is a day not spent on whatever needs to happen to move Wild Horse" forward.
A status report on Kittitas Valley is scheduled for March, said EFSEC manager Allen Fiksdal.--Mark Ohrenschall
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Idaho's first utility-scale wind farm may arise on farmland in the Snake River plain of south-central Idaho.
Fossil Gulch Wind Park--a 10.5-megawatt-capacity venture proposed by Montana-based Exergy Development Group for a site between Twin Falls and Boise--is likely to soon receive official conditional-use approval from Twin Falls County. Exergy hopes to build the project by year's end, although the construction schedule depends at least partly on congressional action on the expired federal wind energy production tax credit, according to a county official. (Congress on Sept. 23 passed a PTC extension through 2005, as part of tax legislation; President Bush was expected to sign it into law, according to the American Wind Energy Association.) He said the project has garnered favorable local reactions.
Wind-generated electricity from Fossil Gulch would be sold to Idaho Power, under the federal Public Utility Regulatory Policies Act (PURPA). A proposed power purchase contract was submitted to the Idaho Public Utilities Commission for approval in mid-September, according to IPUC staffer Rick Sterling.
Exergy president James Carkulis could not be reached for comment. He previously told The Times-News of Twin Falls the project would feature seven 1.5-MW-capacity turbines capable of spinning out about 28,000 megawatt-hours annually (about 3.2 average megawatts).
Idaho hosts no large wind farms at the moment. Windland Inc. has proposed a wind project that could exceed 200 MW capacity in the Cotterel Mountains, near Burley; a draft environmental impact statement is anticipated in early 2005. Idaho Power, meanwhile, has agreed to buy output from a planned 9-MW-capacity wind project near Great Falls, MT.
Fossil Gulch Wind Park
Fossil Gulch Wind Park would occupy about 416 acres of farmland just outside Hagerman, which lies about 35 miles northwest of Twin Falls, south of the Snake River, according to Twin Falls County planning and zoning director Bill Crafton.
He described the area as "very open … mesa-type" land, on which are primarily grown potatoes and sugar beets, with some grains and hay.
The property is owned by David Bloxham. "They're renting the ground from me," Bloxham told Con.WEB, adding that the wind farm infrastructure would avoid agriculturally productive land. "We're utilizing ground presently not being farmed. It's a real nice fit." He referred further questions to Carkulis, who did not return several phone calls.
Each of the seven turbines would rise nearly 388 feet, Carkulis told The Times-News. He estimated the venture was valued at more than $10 million, and would generate 16 to 20 construction jobs.
Transmission lines run directly through the proposed site, according to Crafton.
Although specific wind resource information on this property was unavailable, the Renewable Energy Atlas of the West noted, "Powerful winds blows across Southern Idaho's long, broad Snake River plain, offering potential locations for large-scale wind development." An Atlas wind map shows both "marginal" and "good" wind power densities at 50 meters high in the general vicinity of Fossil Gulch.
Power generated by the seven turbines would be sold to Idaho Power under PURPA, which requires utilities to purchase energy from qualifying small-scale producers at utility avoided costs. Sterling said IPUC staff would likely recommend approval of the proposed contract, but commissioners make the final call. He said the commission in April endorsed an "almost identical" contract between Idaho Power and United Materials for the proposed Horseshoe Bend Wind Park in Montana (see Con.WEB, May 28, 2004).
"Normally the commission's policy has been in the past, if the utility and the developer can reach mutual agreement on the terms of the contract, as long as it doesn't adversely affect the utility's ratepayers, the commission has usually not stood in the way," Sterling said.
Local response to Fossil Gulch has been "very positive," Crafton said. "They just think it's something that's needed; we need alternative energy sources … They'd rather see this than a coal plant, by any stretch."
Twin Falls County intends to issue a land-use approval letter for Fossil Gulch, after an appeals period for the county Planning and Zoning Commission's approval ends in early October, Crafton said. As of Sept. 20, he had heard no indications of any appeals. The site is zoned Agricultural Range Preservation.
"We had quite a bit of support for the project," said Crafton. A few concerns were aired about the wind farm's potential impacts on raptors, he said, but because the property has been farmed since the 1960s it lacks extensive bird habitat. Exergy will be required to cooperate with a bird impact study. The county didn't mandate a full environmental impact statement, although a larger wind project likely would have needed "more intensive study," Crafton said.
Exergy wants to construct Fossil Gulch by year's end, he said, but uncertainty over the fate of the expired federal wind energy PTC may delay those plans.
Others are studying wind energy prospects in Twin Falls County, but no other developer has approached county officials about a specific project, Crafton said.
"I think it's great," he concluded about Fossil Gulch. "I hope it works great and that they build a hundred more just like it."--Mark Ohrenschall (Joel Puglisi contributed to this article)
A pitched battle of words between Idaho Power and U.S. Geothermal over contracts for renewable and other small power projects emerged publicly during a recent hearing before the Idaho Public Utilities Commission.
At stake are the terms and pricing of power sales from qualified facilities, generally small renewable power generators, under the federal Public Utility Regulatory Policies Act (PURPA)--and, more broadly, development prospects for small renewables in the Gem State.
PUC staffer Rick Sterling said this case [IPC-E-04-08] could be "extremely significant," particularly for wind power. "Given the potential for wind development and the importance of these issues to wind developers, I think it could have a very major impact on what sort of development" occurs in Idaho.
U.S. Geothermal, which is developing a geothermal venture in southeastern Idaho, maintains it could be unfairly financially harmed under the terms Idaho Power wants to use for its recently developed standard QF contract, including maximum hourly power purchases, penalties for energy production shortfalls and a contract termination provision should Idaho adopt retail electric restructuring.
PacifiCorp, meanwhile, said relatively high QF rates could make Idaho a magnet for out-of-state renewable projects seeking only a higher bottom line.
The early September hearing culminated five months of filings from the parties in the matter, including intervening utilities PacifiCorp and Avista Utilities, which favor Idaho Power's approach. Also involved are Bob Lewandowski and Mark Schroeder, private wind developers whose separate case was combined with U.S. Geothermal's.
The hearing was the final step before the IPUC is expected to render a judgment in the matter; no commission order had been made as of Con.WEB deadline.
PURPA Positions
U.S. Geothermal, the developer of a planned geothermal project in Idaho's Raft River area, has maintained it could be financially harmed under Idaho Power's recently developed standard QF agreement, which it terms a Cogeneration Small Power Producer contract. The rates and penalties it imposes, Runyan said, seem punitive.
PURPA and its amendments require utilities to buy power from QFs at rates and conditions set by state regulators. Idaho limits QF output qualifying for PURPA rates to 80 megawatts or less. QF power below 10 MW can receive "published rates," which the commission establishes separately for fueled and non-fueled QFs, providing both levelized (constant) and non-levelized (seasonal) versions. Levelized rates for non-fueled QFs selling to Idaho Power range from 4.5 cents per kilowatt-hour to 5.9 cents/KWh, depending on contract length and on-line date.
At 10 MW or higher, QF power must be priced with a specific cost model to determine a rate that the utility, developers and customers find reasonable, as described in a 1996 IPUC order. These prices must be tied to the utility's integrated resource plan.
U.S. Geothermal would like to define its 10 MW output on an annualized basis--sometimes exceeding that level for periods, sometimes falling short--as 10 aMW.
This 10 aMW standard would provide "a big advantage" for many renewables, especially intermittent wind power, said Sterling.
Idaho Power, on the other hand, would assess the energy output more stringently as 10,000 KWh in an hour.
The utility also wants to impose a 10-percent performance band around the contractual delivery amount, penalizing the QF if it falls below 90 percent, and employing a different pricing scheme if it exceeds 110 percent. IPUC's Sterling, who in direct testimony said he has worked on all QF filings in the past 10 years, favors expanding the band's lower limit to 80 percent and its upper band to 120 percent.
Sterling saw nothing fundamentally wrong with the concepts behind Idaho Power's CSSP contract, for QF power above 10 MW, but said the IPUC-crafted alternative for large QF projects, one that is based on the utility's IRP, should also be considered.
However, Sterling objected to the "regulatory-out" option of the contract, which would allow Idaho Power to terminate its contractual responsibilities if the state allows retail electric deregulation and the utility isn't able to recover its costs under the U.S. Geothermal agreement. He said PURPA would likely trump Idaho Power's desire, and force it to buy the QF power.
Sterling also supports a 30-day grace period for outages, during which no performance penalty would accrue, as opposed to the 72-hour period in the CSSP contract. "That would enable QF project owners time to diagnose problems, order replacement parts and make repairs," he said.
PacifiCorp analyst Laren Hale endorsed Idaho Power's CSSP contract in direct testimony, though advising an added requirement that QFs receiving published rates at the 10-MW cap be certified as actually having 10 MW capacity (as opposed to shopping out that much excess generation), as a way to prevent abuse of the QF system.
"Increasing the ceiling to 10 aMW might make Idaho a magnet for out-of-state QFs," Hale said. "Idaho has the highest avoided cost prices of any of PacifiCorp's jurisdictions. With a ceiling of 10 MW, let alone 10 aMW, Idaho also has the highest ceiling for standard tariff price application of any state in the Northwest. This provides an incentive for out-of-state QFs to wheel their power to Idaho for sale to an Idaho utility."
"All three utility witnesses conjure up a parade of hypothetical PURPA abuses that might be possible in certain 'scenarios,'" said U.S. Geothermal attorney Kip Runyan in rebuttal testimony filed Aug. 16. "Some of these hypotheticals are ludicrous on their faces . . . In short, the utilities devote much of their testimony to beating up a strawman of their own invention. None of this has anything to do with the real issues in this case."
In addition to QFs beyond Idaho borders possibly selling into the state, another concern raised was that with a 10 aMW definition a QF could supply utility power "when it's least valuable for the utility and generate additional amounts to sell on the market or sell to somebody else," said Sterling.
He said there are "lots of possibilities for game-playing," but acknowledged the utilities and IPUC staff differ with other parties to the case on the severity of these concerns.
U.S. Geothermal's Runyan also insisted that if IPUC determines projects of 10 MW or larger capacity must use the IRP-based approach to setting rates, that the company be "grandfathered" to use published rates, as the commission did in the case of Renewable Power of Idaho, a 17.5-MW biomass QF.
The IPUC reluctantly granted an exception in that case in May because the QF would likely incur massive expenses if the power purchase contract was delayed through the utility's "unacceptable and inexcusable" failure to apply the approved methodology. But Sterling said the commissioners explicitly deemed this an exceptional case not intended to set a precedent.--Rick Adair (Mark Ohrenschall contributed to this article)
More Information:
This month's News Bytes section includes items on a number of renewable energy/green power developments, Washington State Energy Codes, changes to Oregon's Residential Energy Tax Credits program, awards and more.
Renewables/Green Power
Meanwhile, about 374 MW of new renewables capacity in the Northwest--primarily from Stateline Wind Energy Center--serves competitive green markets and renewable energy credits, NREL reported. That's about one-third of the national total of 1,126 MW, 99 percent of which is wind power.
A Union of Concerned Scientists study reports the prospective benefits to Oregon of a 20 percent national renewables portfolio standard. UCS said the Beaver State would host more than 4,800 MW of renewables capacity by 2020 (mainly wind and geothermal), which would provide about 35 percent of the state's electricity sales. Renewables development also would create nearly 6,800 new jobs, and generate an additional $60 million in income and $130 million in gross state product. Oregonians would save nearly $620 million in lower energy prices, according to UCS.
Whitman College has become Washington's first higher education institution to buy green power. The private Walla Walla school has committed to buy 90 blocks, each 100 kilowatt-hours, from Pacific Power's Blue Sky program, according to a July announcement.
The Nature Conservancy, Pacific Power and Portland General Electric have reached an agreement under which the Conservancy will manage Oregon salmon habitat restoration with funds from certain retail green power revenues for the two investor-owned utilities.
Flow testing on five production wells for the proposed Raft River Geothermal Project in south-central Idaho have yielded positive results, project developer U.S. Geothermal reported in late August. " … the wells are in excellent condition," a company news release said. Analysis of the wells' electricity producing capabilities is pending; U.S. Geothermal plans a 10-MW to 15-MW first phase of the venture, which could be the Northwest's first geothermal power plant. Meanwhile, the company in late September announced it had raised $3.4 million in private financing, earmarked for engineering and final design work on Raft River, investigation of potential new projects and possible acquisitions, and working capital. U.S. Geothermal expects Raft River to begin power production in 2006. (See related story.)
Avista Utilities has increased the amount of wind-generated energy in each block of its retail green power program, reflecting the utility's lower cost for power from the Stateline Wind Energy Center. Each block in the "Buck-A-Block" program now is worth 300 KWh, up from 55 KWh.
Portland General Electric has recognized as its "greenest neighborhood" an inner southeast Portland area that boasts the highest percentage of PGE's retail green power customers--about one of every seven utility customers. The investor-owned utility will buy wind power equal to the neighborhood's streetlighting power use for three months. Altogether, PGE reports, some 30,000 of its customers are purchasing green power.
Energy Codes
Washington State Energy Code changes designed to increase energy efficiency, improve consistency with national standards, and offer more clarity and flexibility have been proposed by the Washington State Building Code Council.
The proposed amendments include mechanical system efficiency requirements, wall and window thermal efficiency requirements, revised lighting power allowances, expanded requirements for lighting controls, and efficiency requirements for small fan motors in series fan boxes.
The BCC has scheduled an Oct. 15 hearing in Renton on these proposals; the intended adoption date is Nov. 12.
Tax Credits
Bonneville Power Administration
Utilities
Puget Sound Energy has announced 20 percent bonus grants for retrofit or new construction energy efficiency projects completed by Nov. 30, for its commercial and industrial customers. Grant agreements must be signed by Nov. 1. More information: PSE's Energy Advisor Hotline: 1-800-562-1482.
Awards
Christopher Dymond of the Oregon Department of Energy has received the 2004 True Champion Award from the U.S. Department of Energy's Million Solar Roofs program. Meanwhile, ODOE presented 14 Solar Pioneer awards to various entities at the National Solar Energy Conference in July, according to an ODOE news release.
Nominations are open through Oct. 15 for awards honoring notable energy efficiency and renewable energy projects by Washington state government agencies and schools (including colleges). More information: Governor's Award for Excellence in Energy Management.
Green Building
Federal
Miscellaneous
The Northwest Energy Efficiency Council has formed an Oregon chapter.--Mark Ohrenschall (Rick Adair also contributed to this article)
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