Washington Commission Rejects PacifiCorp PURPA Change

On November 12, 2015, the Washington Utilities and Transportation Commission (the Washington Commission) issued its final order in PacifiCorp’s Washington avoided cost case. The Washington Commission rejected the company’s proposal to eliminate capacity payments. The Washington Commission concluded that some sort of capacity payment was warranted because PacifiCorp’s projected market prices did not reasonably account for the company’s full avoided costs.  

Avoided cost rates are the prices paid to qualifying facilities (QFs) under the Public Utility Regulatory Policies Act. Electric utilities are required to purchase the net output of QFs, which are generally small renewable energy projects. Capacity payments are based on the utility’s costs of electric generation used to meet its peak power needs (typically times when the utility has its highest summer and/or winter loads).

PacifiCorp’s Washington service territory has an abnormally low level of existing and planned QFs. After over thirty-five years since PURPA was passed, PacifiCorp is currently purchasing power from only three projects in Washington with a total size of about 4 megawatts, which represents less than one percent of all PacifiCorp’s power purchased from QFs. PacifiCorp currently has no new Washington QF contracts, or even interconnection or contract requests, which is in significant contrast to the over 1000 megawatts of new QF contracts in its other states.

The Washington Commission rejected PacifiCorp’s proposal to eliminate capacity payments, and retained the Company’s current methodology for setting avoided cost rates. PacifiCorp failed to justify a change because the company is in fact capacity deficit, and QFs should be paid for capacity. The Washington Commission instead stated that it wanted a more thorough and broader public process to investigate the issue of capacity payments in 2016. The Washington Commission warned that it expected to see a more rigorous analysis of the company’s load and resource balance, including data and analysis on seasonal peaking. The Commission’s direction left open the possibility of eliminating capacity payments in the future, as well as making changes to increase them.

 

 

Disclaimer

These materials are intended to as informational and are not to be considered legal advice or legal opinion, nor do they create a lawyer-client relationship. Information included about previous case results does not assure a similar future result.