Facebook will buy the renewable energy credits from PacifiCorp's first wind farm in Montana, but the utility may be on the hook for the $406-million price tag because it was acquired outside of Oregon's competitive bidding rules.

The utility acquired the 240  MW Pryor Mountain Wind Farm in Carbon County, Mont., in May, and expects to have the project completed and energized next fall in time to capture the production tax credits (CU No. 1920 [9.2]).

The utility filed a request with the Oregon PUC Sept. 27 in its integrated resource plan docket [LC 70], asking for a waiver of the state's competitive bidding rules because it needed to move quickly to capture the fading wind production tax credit, which sunsets in 2020.

It's the same argument PacifiCorp used unsuccessfully with OPUC for the acquisition of 1,311 MW of new wind projects in Wyoming and an accompanying 140-mile section of transmission line that together form the cornerstone of the utility's $3.5-billion Energy Vision 2020 plan (CU No 1852 [9]). The outcome was that in May 2018, the commission declined to acknowledge the company's short list of projects gathered from a request for proposals that was released before it had acknowledged the company's integrated resource plan.

Facebook is acquiring the unbundled RECs from the Montana wind project under PacifiCorp's Schedule 272 tariff, or "Blue Sky Select" program, which allows the utility's corporate customers to help finance development of new renewable energy projects.

PacifiCorp and Facebook used the tariff in the summer of 2018 to develop 437 MW of new solar projects in Oregon and Utah that will cover the load of Facebook's data center in Prineville, Ore. (CU No. 1860 [9]).

The utility said in a filing that there wasn't enough time to follow the state's competitive bidding rules and release an RFP for the Pryor Mountain project. PacifiCorp said that "initial discussions to negotiation of final terms of the Schedule 272 Agreement occurred in under six months."

"To meet the Dec. 31, 2020, commercial operations date, PacifiCorp determined that issuing an RFP under Oregon's competitive bidding rules would not allow for the prompt contracting required to ensure 100 percent PTC eligibility," the utility added. "A RFP process would have taken many months to complete and would have exceeded the timeline necessary to capture the unique value of this opportunity."

The utility said "to secure contractors and other resources, it was necessary to move quickly."

OPUC staff said that "little information is provided about the project in the company's filing, or about the company's reasoning for defining it as a time-limited opportunity to acquire a resource of unique value to customers."

"Staff finds it difficult to assess the project's economics without an opportunity to evaluate modeling inputs and workpapers, and does not find an exception to the competitive bidding rules to be warranted based on the limited information provided in PacifiCorp's filing," according to staff's filing on Oct. 25.

Procuring this resource outside of both the commission's least-cost, least-risk planning process and competitive bidding process circumvents ratepayer protections designed to ensure fair and reasonable rates for Oregon ratepayers, staff wrote.

Staff said it "does not find this exception to the competitive bidding rules to be warranted based on the limited information provided in PacifiCorp's filing."

The filing continued, "There are concerns about the project economics, especially the large portion of benefits forecasted in 2050 which may be skewing analysis. There is no available process for acknowledgement of this resource, and the company will need to demonstrate application of the exception cited with this filing and prudence of its action in any rate recovery proceeding for Pryor Mountain Wind Project costs."

PacifiCorp plans to file a general rate case in early 2020, where it will need to show the prudency of nearly $4 billion worth of new energy projects and infrastructure that have not been acknowledged by OPUC.