Idaho PUC tightens limits on wind, solar projects

BOISE - State regulators tightened rules governing the price that big utilities must pay for electricity generated by small wind and solar energy projects, a victory for Idaho Power Co. and PacifiCorp that contend the current system was being abused and hiking costs for customers.

Qualifying wind and solar projects can now be no larger than 100 kilowatts, down from 10 megawatts, according to the Idaho Public Utilities Commission decision.

In the late 1970s, Congress required utilities to buy electricity from small power producers at special rates that were based on the cost the utilities could avoid if they had to generate the power themselves. That amount is determined in Idaho by the Public Utilities Commission and is potentially more attractive than prices that wind or solar companies could independently negotiate with the utilities.

Now, Idaho Power Co., Spokane-based Avista Corp. and PacifiCorp's Utah-based Rocky Mountain Power contend sophisticated, well-financed developers such as General Electric Co. and Shell Wind Energy are breaking up their otherwise large wind farms into small, 10 megawatt projects to qualify for the good rates - essentially gaming a system originally designed to help small, independent power producers.

"The commission's order takes the first steps toward addressing large developers who are taking large wind farms and chopping them into bite-sized pieces," said Idaho Power spokeswoman Stephanie McCurdy on Tuesday. "It also is the first step in making sure that our customers don't pay too much for the energy on our system."

The Boise-based utility said it's been overwhelmed by these fragmented projects that are contributing to higher costs for its customers. It estimates it could have 1,100 megawatts of wind power on its system within just a few years - more than it needs during low-usage days.

For instance, GE has built 122 wind turbines producing a maximum of 183 megawatts of power in southern Idaho. They can be operated as a system. But because the project has been broken up into 11 different sites, Idaho Power must buy the power at the mandated rates.

Going forward, the Idaho Public Utilities Commission ruling will affect at least 18 different projects proposed by four different companies, including the wind energy business of Dutch energy giant Shell.

Shell Wind Energy spokesman Tim O'Leary didn't immediately return a phone call seeking comment.

Though solar energy companies have been less active in Idaho, state regulators included their projects under the reduced cap, too. Like wind power, solar energy is also an intermittent electricity producer, regulators wrote, meaning it must be backed-up by other sources of power generation, such as the $427 million natural gas fired power plant that Idaho Power is building in southwestern Idaho.

The new rules will be in effect until the issues raised by the three electric utilities can be resolved, regulators said.

"The commission is supportive of all small-power producers . including wind and solar, and it is not the commission's intent to push small wind and solar QF projects out of the market," according to an IPUC press release.

Utilities, power producers and environmental groups that intervened in the case were told to prepare for a new round of hearings starting in early May at which regulators aim to devise a new rate structure that satisfies utilities' concerns, while once again allowing small wind and solar projects up to 10 megawatts to again qualify.

Ben Otto, a representative of the Idaho Conservation League, said he was disappointed that solar companies were included in the move, since their development in Idaho has been so minimal. However, Otto said the regulators' decision was a "measured response" to big wind developers that have taken advantage of the system.

"Big companies were coming in and using a mechanism that was intended for small independent power producers," he said. "So that gives me heartburn."