Sitting in the Idaho Public Utilities Commission hearing last week, I couldn’t help but think how the players change in Idaho power and water politics.
Former allies become adversaries and then join hands later based on their interests. Following these changes may help guide us as we watch what happens to the two critical elements of our economy.
I’m working on a story on the Bonneville Power Administration’s 75th anniversary from an Idaho view and that also has given me historical perspective. Susan Stacy, the Boise author of Legacy of Light, the official history of the Idaho Power Co. reminded me that the utility, for most of its history, aligned itself with its largest and previously most important customers, irrigation farmers and the canal companies that served them.
That political partnership began to unravel when the Swan Falls court decision in the 1980s said all water rights after 1901 were junior to Idaho Power’s Swan Falls dam. A settlement was reached in 1984 that resolved the lawsuit but the decision began the splitting of the central and eastern Idaho water interests that culminated in the groundwater dispute of the last decade.
Only after the Idaho Supreme Court ruled 2007 that the state of Idaho owned all the water and that the senior users only owned the right to use it did that dispute begin to be resolved.
Tom Arkoosh, is Gooding attorney who represents the Northside and Twin Falls Canal companies, two of the state’s largest. For most of the groundwater fight they were on Idaho Power’s side, their critics said, because both companies have hydroelectric projects of their own and are have rights senior to Swan Falls dam.
Yet Arkoosh was in the hearing opposing Idaho Power as he was in the 1980s when he the canal companies were seeking to get a favorable price for the hydroelectric power their dams would produce. He won then because he and other small hydroelectric developers and Idaho companies who wanted to build co-generation plants, convinced the PUC it was in the state’s interest to force the monopoly investor-owned utilities to grant them relatively easy access to the power market.
Idaho Power’s irrigation customers, especially those who pump water from hundreds of feet underground, need cheap power to remain economically viable. Since no new power source is going to be cheap, canal companies like Twin Falls have added small hydro projects to stabilize rates and offset costs with power revenue.
They are in the same boat as JR Simplot and Clearwater Paper. Those companies are both customers and small power suppliers. The same can be said of the dairy industry that wants to build digesters that turn manure into methane to generate electricity.
These industries long have aligned themselves with Idaho Power and other utilities except on the issue of the Public Utility Regulatory Policies Act. The last legislative session They joined the wind, solar, geothermal and biofuel developers in the renewable fight because their interests again conflict with that of Idaho Power, which makes money when it builds things, not when others do.
All of these people oppose Idaho Power’s proposal to shift renewable energy credits these producers can sell for million of dollars to the utility’s customers. They view the credits as private property and will go to court to keep them from being taken without compensation.
Arkoosh also questioned why the new pricing proposal requires nearly all contracts to be negotiated individually instead of developers getting approval if they meet the requirements as has been the policy previously. The new policy would be based on the utility’s integrated resource plan, which is developed in a public process but needs no approval by the commission.
The utilities, not the commission, would have the final say in the pricing, Stokes acknowledged. That led Arkoosh to ask: “Doesn’t that let the fox watch the henhouse?”
I wrote Sunday that the PUC all but shut down the renewable market with its 1997 decision. And that it opened it up again in 2002 after the 2001 energy crisis where Idaho Power was forced to buy power on the open market at thousands of dollars a megawatt hour to prevent a blackout.
It was Simplot that pushed for the easing in 2002 because it was fighting rising costs. Commissioners Marsha Smith and Paul Kjellander were both on the commission then.
Since both sides agree the renewable price is too high, it is a given that the commission will lower the avoided cost rate somehow. But if they pass the RECs to the utilities and allow them to unilaterally change their contracts with the independent generators, they know the issue will go to court.
Whatever they do they know they have seen it all before. Here is what the commission said in 2002 when it reopened the Public Utility Regulatory Policies Act market:
What has not changed, we find, is the utilities’ opposition to PURPA and the (renewable) industry,” the commission wrote. “Despite a… history of industry reliability and an opportunity presented to utilities to diversify their resource base by adding renewables, utilities continue to regard PURPA (developers) as interlopers.”