Here Comes the Sun: Idaho Power's PURPA Problem 

But clean energy advocates argue for a solar solution

It seems simple on the surface: Southern Idaho has an abundance of sunshine-filled days. It also has a growing need for electricity during those same days and, in the next 18 months, at least a dozen new major solar power projects will begin running electricity onto the Idaho Power grid, where currently there are none. Problem solved. If only it was that simple.

In the coming weeks, regulators will be parsing Idaho Public Utilities Case IPC-E-15-01—also known as Idaho Power's petition to modify the terms and conditions of prospective Public Utility Regulatory Policy Act contracts. Put simply, PURPA requires utilities to purchase renewable energy from sources such as solar, wind and hydroelectric power generators. Since the 1980s, the act has prompted Idaho utilities to enter contracts to buy energy from 64 hydro producers, 27 wind power producers, 10 biomass generators and three thermal projects.

"But then there's this," Idaho Power attorney Donovan Walker said, pointing to an odd-shaped graph. "I call it the 'hockey stick' chart."

The chart has a long, steady line stretching for decades before rising rapidly as it reaches 2014 and 2015. With the exception of the numbers and data, the chart looks exactly like a hockey stick. Hydro projects have supplied nearly 200 megawatts of power since 1982, enough electricity for nearly 130,000 homes—the template used by the Idaho Public Utilities Commission is 1 MW hour can serve approximately 650 average residential homes for one hour. Wind projects have added another 627 MWs but only in the past few years. Contracted and proposed solar projects would add nearly 2,000 MW hours beginning in 2016 or enough power for about 1.3 million homes. Hence, the steep incline.

"Now keep in mind that we usually talk about megawatts around here," said Donovan. "Idaho Power's entire system operates somewhere between a minimum of 1,000 MWs and maximum peaks of 3,200 MWs. That's the entire load across our territory: about 24,000 square miles.

"Now look at these PURPA contracts," he said, pointing to the graph. "We already have, under contract, 400 MWs that will be coming in from new solar projects next year. Then on top of that there's another 900 MWs from proposed contracts. To put that in perspective, that's larger than our entire Hells Canyon three-dam complex. It exceeds the total load on our system."

Therein lies Idaho Power's argument: The company is required to buy the power, but it insists that its customers don't need it, which is why the utility filed IPC-E-15-01 with the commission. Idaho Power wants to knock down its required purchases by reducing the currently mandated 20-year contracts with PURPA providers to two years.

Idaho Power's Fancy Ad

Ben Otto thinks it's ludicrous for a prospective renewable energy provider to strike a two-year deal; it would be insufficient to commit to a massive operation, and it would scare away investors.

"It's like asking someone to buy a house but only with a two-year mortgage," said Otto. "This would squash any future development."

Otto, energy associate with the Idaho Conservation League, said he spends his days, "fighting for clean energy for Idaho. So yes, sometimes I pick fights with Idaho Power."

He acknowledges the fight coming up, in front of the Idaho Public Utilities Commission, should be heated in more ways than one. He already knows he's up against a massive corporation with a considerable marketing arm.

"Have you seen this?" Otto asked, holding out a full-page color advertisement from Idaho Power, which appeared in the Feb. 8 edition of the Idaho Statesman as well as the Feb. 11 edition of Boise Weekly. "This is the most sophisticated ad I've ever seen Idaho Power put out."

The ad trumpets how attractive Idaho Power's monthly residential rates are ($105.26 per 1,000 kilowatt hours versus the national average of $138.10 per 1,000 kWh); how Idaho Power already uses an abundance of what it calls renewables (nearly all of it hydro); and an open letter to its customers, decrying the 20-year contracts.

"That's not fair to you," Idaho Power President and CEO Darrel Anderson wrote in the ad. "The cost of this unneeded power is passed on to you."

Otto thinks Idaho Power is saying one thing but doing another.

"We actually had an ICL member event, and I had somebody come up to me and say, 'Hey, I saw that Idaho Power ad. It's great. It appears they really support solar.' The guy took a quick glance at the ad, said it was great and didn't really know the backstory," Otto said. "That's actually a very crafty thing. Idaho Power is saying stuff that makes them look great. But their actions are actually against clean energy. They're saying, 'We acknowledge solar power. It's here to stay. That said, we don't think it's a good investment.'"

Back at Idaho Power, Donovan again balked at the 20-year agreements.

"Those 20-year contracts—they're a risk-free investment for the solar developers that are unfortunately shouldered by our customers. We think it's no longer reasonable to have that burden entirely on our company and our customers," he said. "That's why we want two years. We would have the ability to refresh and update, as needed, the prices and inputs on a two-year basis."

Some Solar is Already a Done Deal

Regardless of Idaho Power and its contract fight, solar energy is coming to an electrical outlet near you. It has to. The utility is already locked into 20-year contracts with 13 soon-to-come developers in Idaho and six more in Oregon. Boise City Solar, a subsidiary of Sunergy World, is soon to break ground on its 360-acre, 40-MW solar plant on South Cloverdale Road. The parcel, which the company is leasing from the city of Boise, is part of the Twenty Mile South Farm, a biosolids application facility. As part of the deal, the city receives approximately $54,000 annually in rent. To sweeten the deal, the city will receive around 2.75 percent of the solar farm's gross operating revenue, which could amount to an additional $143,000 per year.

Another major project will be Grandview PV Solar Two, 20 miles southeast of Mountain Home. Grandview developers are planning to lease a huge tract of land from the J.R. Simplot Co. to construct an 80-MWh facility, enough to supply 52,000 Idaho homes. All of the already-under-contract solar projects are expected to be up and running by 2016, including Boise City Solar—due to be on-line in January 2016—and Grandview, slated to begin producing energy in September 2016.

"That probably has a lot to do with the fact that a federal tax credit is set to expire in 2016," said Idaho Power spokesman Brad Bowlin. "That credit reimburses a significant portion of capital costs."

Over the past several years, the Solar Investment Tax Credit has been critical for solar energy growth. It's a generous 30 percent tax credit, which amounts to about a dollar-for-dollar reduction in income taxes. However, it is set to expire on Dec. 31, 2016—all the more reason for prospective developers to want to lock up 20-year contracts.

"Essentially, what we're dealing with right now is a wave of large-scale solar development that came to us in a very short amount of time," said Bowlin.

Boise Weekly found records indicating 36 companies in Idaho, and another 12 in Oregon, have all submitted contracts—hopefully for 20 years—to Idaho Power. If they were all approved, they would generate another 885 MWs.

"We're facing a very big problem in the near future of having too much power," said Donovan. "It has to be used somewhere, or it has to be shut off. And we don't have the ability to turn of PURPA, so that means we're required to turn off our own generation even if that's the lower cost to our customers. That's a problem."

Otto pushed back at that logic.

"That's not really what the facts are. Solar is becoming increasingly cheap," he said. "No matter what they say, there's a reason that they're shutting down their Boardman [Ore.] coal plant in 2020. The economics are terrible. We think that's true of their other plant in North Valmy [Nevada]. Idaho Power owns half of that. It's the most expensive coal plant they have. Solar can totally replace that power plant. It's way cheaper to get clean energy."

That appears to be where the battle line has been drawn in what could be the most contentious debate of 2016: How much is clean energy worth to Idaho?

Even though much of the public doesn't yet know about the upcoming hearings, public comments have already started to fill the Idaho Public Utilities inbox, many of them from consumers:

"Our goal as responsible Idahoans has to be to encourage the shift away from carbon-based fuel electric generation," wrote Chris Harding.

"Idaho Power is using circular reasoning," wrote Jack Sutz. "This is just another trick to keep the status quo."

"Please allow clean solar energy to be part of what Idaho Power sells me," wrote Bruce Smith.

Some Uncomfortably Familiar Comments

Letters have also been submitted to the PUC from some significant public and private entities. An analysis of several of those letters—signed by high-profile individuals—reveals some striking similarities:

"Moving toward a clean energy future cannot come at the expense of reliability and affordability," wrote Jim Kissler, CEO of Norco Inc.

"Moving toward a clean energy future cannot come at the expense of reliability and affordability," wrote Nathan Mitchell, mayor of Star.

"Moving toward a clean energy future cannot come at the expense of reliability and affordability," wrote Mary Vagner, superintendent of the Pocatello/Chubbuck School District.

As BW was going to press, the PUC was set to announce that the official public comment period on the contentious issue would soon begin.

"We're giving the public about four months to send their comments in," said Gene Fadness, public information officer for the PUC. "Considering that those comments are already coming in, we should have a pretty healthy amount of input."

Fadness said the comment period will lead to three hearings—a technical hearing where attorneys representing all of the parties will cross-examine each other; the public hearing, which could easily stretch in multiple days; and a telephonic hearing, allowing Idahoans who are not able to come to Boise to phone in their remarks to PUC commissioners. The in-person hearings will take place at PUC headquarters at Fifth and Washington streets.

A decision could come from PUC commissioners within 60 days of the hearings.

"We've had some pretty intense, high-profile public hearings in the past on net-metering and on the Jim Bridger coal power plant," said Fadness. "I would expect this issue to be right near the top, on that level."

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