How PURPA Impacts The PCA
The Public Utility Regulatory Policies Act (PURPA) is a federal law that has a significant impact on the rates Idaho Power customers pay for their electricity. Under PURPA, Idaho Power is required to purchase renewable energy produced by certain qualifying facilities (QFs), such as wind, solar, geothermal and small hydroelectric resources.
The power supply expense passed on to customers through the Power Cost Adjustment (PCA) as a result of PURPA QF projects was about $40 million in 2004.
The large increase in QF projects on-line and under contract since then is expected to increase that expense to nearly $130 million during the 2012/2013 PCA period, which represents an increase of nearly $30 million this year.
As of May 2012, there were 27 projects currently exploring energy sales agreements with Idaho Power. These projects represent 595 megawatts (MW) nameplate capacity of generation in addition to the 989 MW nameplate capacity of the 119 projects with existing power purchase agreements with Idaho Power.
These additional projects would require customers to pay an additional $2.7 billion over the company’s existing contractual obligation of more than $3.6 billion.
Idaho Power is aware of the impact these cost increases have on customers and the region’s economy and has asked the Idaho Public Utilities Commission (IPUC) to change the way prices are set for energy from these projects.
The proposed pricing model would take into account important factors like whether:
- The resource is reliable
- Its production can be raised or lowered in response to customer demand
- The electricity is even needed at all.
The IPUC is currently accepting comments on this case (GNR-E-11-03) from the public and other interested parties. A decision is expected in late summer or early fall of 2012. More information is available at the IPUC website.