New Idaho Power Solar Contracts

Idaho Power Company (Idaho Power) has entered into contracts to purchase over 450 megawatts (MW) of solar capacity in Oregon and Idaho.  The solar projects, if developed, would significantly increase Idaho Power’s supply of green power and make Idaho Power a regional leader in the acquisition of solar energy.  

Idaho Power entered into the solar contracts as mandatory purchases under the Public Utility Regulatory Policies Act (PURPA).  PURPA obligates utilities to purchase power from certain renewable generators, which are called qualifying facilities (QFs).  The prices for PURPA contracts are based on the utilities’ costs of acquiring the resources they would have built or purchased but for the acquisition from the renewable generators.  Determining the actual avoided cost prices that a utility must pay to QFs can be very controversial, and individual states have broad authority to set these prices, which can vary significantly across utilities and jurisdictions. 

Prior to these recent contracts, Idaho Power had a more acrimonious relationship with solar developers.  In Idaho and Oregon, QFs under 10 MWs in size are generally eligible to be paid prices based on commission approved tariffs, and QFs over this size threshold have their prices determined by a combination of complex computer modeling, and negotiation between the utility and QF.  In 2012, Idaho Power sought and obtained an order from the Idaho Public Utilities Commission (Idaho Commission) that lowered the size threshold for commission-approved prices for solar and wind QFs to only facilities with a maximum output of 100 kw and smaller.  This means that all but the smallest Idaho wind and solar projects must negotiate their final avoided cost price with their utility.  Idaho Power sought a similar reduction in Oregon, but the Oregon Public Utility Commission rejected the proposal in 2014.  In 2014, Idaho Power also sought to temporarily suspend its obligation to enter into any new contracts with solar QFs until after it completed a solar integration study in Idaho.  Idaho Power’s study would have estimated the additional costs to integrate a solar QF, and reduced the prices paid to the solar QF based on the alleged integration costs.  The Idaho Commission rejected Idaho Power’s proposal to suspend its PURPA power purchase obligation, but stated that the costs of solar integration should be accounted for in any new contracts with solar QFs.

At the end of the day, Idaho Power negotiated and ultimately entered into an unprecedented 16 new solar contracts for 461 MWs in Oregon and Idaho.  Given Idaho Power’s small system, this would make the utility the national leader in solar capacity per customer.  While it is not likely that all the projects will eventually be built at their full size, the contracts represent a significant increase in solar development in the Northwest and are part of a nationwide trend in lower solar costs. 


A copy of an Idaho Statesman News Article is HERE



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