Idaho Republican Sen. Jim Risch has introduced a bill that would allow public utilities such as Idaho Power to deny contracts to independent power producers if they can show they don’t need the electricity.
The Public Utility Regulatory Policies Act of 1978 requires utilities, which otherwise have a monopoly over power sales, to purchase the renewable energy at the same price it would pay to build another power plant, called the “avoided cost.” PURPA, as the law is known, is designed to offer a market for energy entrepreneurs with small projects and encourage alternatives within the century-old world of regulated monopolies.
State public utilities commissions set the framework for carrying out PURPA’s obligations, including the formula that sets up the rules and avoided-cost rates. Risch’s bill would allow state commissions to turn down the contracts if the utility shows it doesn’t need to buy the power.
Idaho Power has argued that it has no need for new power sources until 2021, but at one point faced as many as 73 proposed solar projects exceeding 1,325 megawatts. Combined, the utility said, the projects would have cost more than $2.7 billion for electricity that is not needed to serve its customers.
Many of those projects were never seriously proposed, said Ben Otto, an energy attorney for the Idaho Conservation League. And most of the proposed projects have died.
That winnowing shows that the system is working the way it’s intended, he said.
Advocates say such projects would lock Idaho customers in at today’s low rates, because once built, solar plants would produce power without fuel costs, and federal credits make solar projects doable.
But Idaho Power has contended that the federal credits are forcing the burden to customers.
Risch’s bill would offer one more factor to consider.
“This proposal simply adds a state utility regulators’ determination of need to the mandatory purchase obligation,” said Suzanne Wrasse, Risch’s press secretary. “By allowing state utility regulators to consider the need for new energy before forcing a utility customer to pay for it, customers will be better served.”
On Thursday, the Senate Energy and Natural Resources Committee will look at more than 20 separate bills, including Risch’s, as part of a larger energy package, said Ken Miller, energy analyst for the Snake River Alliance.
Idaho’s Public Utilities Commission has a history of aggressively opening the energy market, first to canal companies to build small hydroelectric plants and then to industrial manufacturers such as J.R. Simplot Co. to produce power with surplus heat from production plants.
The PUC does have power to impose short moratoriums or, as it did earlier this year, change the length of power contracts. In the case of the new solar contracts, the PUC reduced the length from 20 to five years, until hearings next month.
Idaho Power said that new 20-year contracts place undue cost and risk on its customers at a time of surplus power, and asked the PUC to limit those contracts to just two years.
The commission has approved PURPA contracts for 461 megawatts of solar energy with 2016 startup dates.