Idaho Reduces Rate for Wind, Sets Rate for Solar

The Idaho Public Utilities Commission has accepted an electric utility’s proposal to modify the rates applicable to renewable energy facilities for integrating such energy into the utility’s system. After looking at the amount of wind energy versus solar energy being offered it, the utility, Rocky Mountain Power, had recommended that the rate charged to integrate wind energy be decreased by a substantial amount.

In agreeing with the company’s analysis, the commission approved a new wind integration rate of 57 cents per megawatt-hour (MWh). That is in stark contrast to the previous rate of $3.06 per MWh. The commission also adopted an integration rate of 60 cents per MWh for solar facilities. The commission emphasized the importance of properly calculating and allocating the costs of assimilating renewable power into the company’s system. If such computations are not done correctly, the commission warned, integration costs would be impermissibly passed on to utility customers in avoided-cost rates. The integration charges apply to facilities that qualify for 20-year contracts under the Public Utility Regulatory Policies Act of 1978 (PURPA). The commission elaborated that the integration rate for solar and wind facilities that qualify for power purchase agreements under PURPA is deducted from the avoidedcost rate paid by the utility for the power produced by the facility.

According to Rocky Mountain Power, its analysis of associated costs of accommodating energy produced by wind power facilities indicated that such costs had fallen significantly since 2008, when the previous integration rate was set. The company averred that wind power has played a much greater role in its portfolio than solar power, describing as “insignificant” the amount of solar generation on its system. However, the utility said, it anticipates that the amount of solar power entering its system will exceed 1,000 MW by the end of 2017, thus requiring the implementation of a solar integration charge.

The utility told the commission that its request had relied on a 2017 Integrated Resource Plan as well as a Flexible Reserve Study analysis of wind and solar integration costs. According to Rocky Mountain Power, the 2017 study estimated the reserve required to maintain system reliability and comply with North American Electric Reliability Corporation (NERC) service standards. In concurring with a rate reduction for wind, the commission stated that several factors drove the decrease in the wind integration charge. First, it found that a change in NERC’s reliability standard regarding regulation reserves led to a greater supply of regulation reserves and concomitantly a reduced cost of those reserves. The commission also pointed out that the 2017 study “used a portfoliowide approach to determine the overall regulation reserve requirements” and considered solar, non-variable energy resources, and wind. The previous study, conducted in 2014, had calculated reserve requirements for a smaller amount of wind only. The commission explained that when looking at the entire portfolio, the needed level of reserves is lower because the “largest deviations in load, wind, and solar tend not to occur simultaneously” and sometimes occur in offsetting directions.

The commission observed as well that unlike the prior analysis, the 2017 study accounted for the company’s participation in the Energy Imbalance Market, which reduced reserve requirements because participating balancing authority areas can pool variability amongst themselves and therefore carry less reserves individually than they would be required to otherwise.  In addition, the commission underscored the fact that market prices have declined since the previous study, leading to a reduction in the cost of reserves. Finally, the commission pointed out that according to the utility, transmission congestion has increased, due primarily to additional solar generation.

Consequently, the commission said, if resources capable of providing regulation reserves are backed down, leaving the company unable to export electricity out of its system due to transmission congestion, then those resources can be used to balance wind and solar inside the company’s system at no additional cost. Re Rocky Mountain Power Co., Case No. PAC-E-17-11, Order No. 33937, Nov. 27, 2017 (Idaho P.U.C.).