The Idaho Public Utilities Commission's 69-page decision establishes new ground rules for renewable power projects and regulated utilities under the Public Utility Regulatory Policy Act, or PURPA, a 34-year-old federal law meant to promote alternative resources.
Under the decision, solar and wind projects must generate less than 100 kilowatts, on average, to qualify for federally mandated contracts. That limit makes it more difficult for new projects to get off the ground but is a victory for utilities like Idaho Power Co. that complained they've been overloaded with unwanted wind power.
By contrast, the three-member panel stuck with 20-year power contracts utilities wanted just five-year pacts and awarded valuable environmental credits to small developers, over utilities' insistence they were the rightful owners. This will help developers including those seeking to produce power from dairy manure by making it easier for them to win financing.
"If I'm wind or solar, I don't like it," said Peter Richardson, a Boise-based lawyer for renewable energy developers, of Tuesday's ruling. "If I'm any other kind of resource, I'm in heaven."
PUC Chairman Paul Kjellander and commissioners Marsha Smith and Mack Redford said their ruling's rationale was two-fold: to continue Idaho's support of renewable energy, while shielding utility ratepayers from undue price hikes.
For instance, they said the reason they preserved the 100-kilowatt limit for PURPA-eligible wind and solar projects was to prevent developers for breaking large projects up into smaller ones. That's something Idaho Power has said was done prior to 2010, to qualify for attractive, federally mandated prices while driving up ratepayers' bills.
"With the changes ... we believe that PURPA development can continue to thrive in a way that holds ratepayers harmless," the PUC said in a statement.
Idaho Power spokesman Brad Bowlin said the Boise-based utility was pleased with the limits for wind and solar, in particular.
"The commission worked hard to balance the need to protect customers with the obligation to promote qualifying renewable energy projects," he said.
Tuesday's decision follows tense hearings this summer in Boise where utilities, developers and environmental groups tussled. Boise-based Exergy Development Group suspended hundreds of millions in Idaho wind and biogas projects, blaming uncertainty over what the rules would eventually look like for scaring off its financiers.
Exergy officials didn't immediately respond to requests for comment Tuesday.
In a key ruling, commissioners decided PURPA-eligible projects are entitled to ownership of their renewable energy credits, or "RECs," that can be sold for millions of dollars to utilities in states with renewable portfolio standards. For renewable projects that don't qualify under PURPA, utilities and developers will share RECs equally.
"Revenues from the sale of RECs continue to provide a revenue stream to ... developers to encourage the development of renewable generation," the PUC concluded.
Rocky Mountain Power, a utility serving southeastern Idaho, was among those arguing that RECs should belong to the utilities.
Rocky Mountain spokesman Jeff Hymas in Salt Lake City said his company was reviewing the decision.
"We will implement the policy set by the commission and will continue to provide high-level customer service to independent power producers," he said.
For existing wind farms, Tuesday's ruling didn't contain just gloomy news.
It rejected Idaho Power's demands for more freedom to halt contractually required electricity purchases during periods of light load, such as at night when the wind is blowing but few people are using power.
"Idaho Power did not provide sufficient evidence to support its proposal," the commission wrote. "If the company believes that over-supply ... presents operational problems during light-load periods then it should this address issue when it negotiates new power purchase agreements."
This follows a separate, federal decision earlier this year that also blocked the utility's curtailment demands.