Utah PSC Modifies Rocky Mountain Power’s Avoided Cost Methodology

On January 23, 2018, the Utah Public Service Commission (Utah Commission) adopted updates and revisions to Rocky Mountain Power’s avoided cost pricing methodologies for qualifying facility (QF) resources. Rocky Mountain Power will now offer renewable resources of the same kind or type a renewable avoided cost rate based on the costs of a similar or a “like” renewable resource.  

Rocky Mountain Power is obligated to purchase power from QFs by the federal Public Utility Regulatory Policies Act (PURPA), but state commissions like the Utah Commission have broad discretion in approving the methodology that utilities can use to calculate prices paid to these non-utility owned renewable and cogeneration power producers. Rocky Mountain Power made a number of proposed modifications to its avoided cost price methodology, including:

  • Limiting avoided cost rates to the same resource type that the company planned to acquire in its most recent integrated resource plan, and specifically not allow renewable resources to defer other types of renewable resource. This means that when Rocky Mountain Power is building wind generation, then a wind QF could defer its new wind facility (and be paid a higher rate based on the new wind) whereas different types of renewable resources (solar, hydro, waste, etc.) would not be able to defer that new wind project and would defer the next planned thermal generating facility at a much later date (and would therefore be paid a lower price).
  • Keeping the renewable energy certificates generated by QFs, but only when the QF was paid a renewable rate.
  • Lowering Schedule 37 rates by using a complex computer methodology and assuming all QFs that have asked for contracts (hundreds of megawatts have been proposed) will be built, which lower prices.

The Renewable Energy Coalition and Utah Clean Energy proposed significant modifications to Rocky Mountain Power’s proposals. The Renewable Energy Coalition represents the interests of renewable QFs in Utah, Idaho, Oregon, Washington and Wyoming. The renewable energy advocates proposed:

  • All Utah QFs be allowed the option of being paid either a renewable rate (based on the costs of PacifiCorp’s next deferrable renewable resource regardless of resource type) or a non-renewable rate.
  • Rates include PacifiCorp’s transmission costs.
  • Rates properly account for the value of the Production Tax Credit (PTC).
  • Schedule 37 rates not be calculated by the Schedule 38 computer model.
  • Only a reasonable estimate of contracted QFs be assumed to reach commercial operation.

The Utah Commission issued a mixed decision approving in part but rejecting in part some Rocky Mountain Power’s proposals. On certain key issues in which the Utah Commission agreed with Rocky Mountain Power, it concluded that it did not reject the Renewable Energy Coalition’s proposals on their merits, but instead stated that it found the proposal “to be conceptual in nature” and was therefore not able to evaluate them for implementation. Ultimately, the Utah Commission:

  • Approved Rocky Mountain Power’s proposal to limit the renewable rate option to only resources of the same type. For practical purposes, this means that the renewable rate is only available to wind generation at this time, and that for non-wind QFs the resource deficiency date would remain based upon a distant future thermal facility.
    • Approved Rocky Mountain Power’s proposal to use its complex computer model to set prices for both large and small QFs.
  • Approved the Renewable Energy Coalition’s recommendation that avoided costs prices include PacifiCorp’s proposed 2021 Wyoming wind and transmission.
  • Approved the Renewable Energy Coalitions recommendation to reject Rocky Mountain Power’s proposal to discount the value of tax credits like the PTCs.
  • Rejected Rocky Mountain Power’s proposal to lower small QF prices based on the unrealistic assumption that every QF that has requested a contract will eventually be constructed.

Sanger Law represented the Renewable Energy Coalition, which advocates for reasonable PURPA policies on behalf of renewable QFs located in in Oregon, Idaho, Montana, Washington, Utah, and Wyoming.



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