Kootenai Electric Cooperative

Living in North Idaho has many virtues. One that is often taken for granted is the abundance of inexpensive hydro power. Through the careful harnessing of this natural resource, the Pacific Northwest has long benefited from the lowest cost and cleanest power in the nation. Unfortunately, this power is not unlimited. In fact, more power is now used in the Pacific Northwest than these facilities can produce.

These hydro facilities were paid for with federal funding and the Bonneville Power Administration was created to ensure the energy they produced was used to serve the public good. To safeguard this, BPA has adopted a new rate that guarantees member-owned utilities, like Kootenai Electric, the right to buy their fair share of power from these inexpensive resources. Any additional power required above this fair share must come from other, more expensive, resources. And, those resources must be specified in a contract BPA requires for several years in advance. These resources are currently specified through 2019.

With this future need in mind, KEC began developing its first generation resource in late 2009. The resource, known as the Fighting Creek Landfill Gas to Energy project, will produce enough electricity to power 1,800 homes from the methane gas that is produced by the decomposition of trash at the Kootenai County Solid Waste Facility located near Bell Grove. This project is being developed through an informal partnership with the County whereby KEC will pay for the gas that is used by the generators. The revenue generated from this will help lower the County’s tax base, will put the methane gas (which is currently emitted into the air after being burned) to a more environmentally friendly use and will provide KEC’s members with a low cost and stable source of power for the next 20 years. The facility, which cost just under $7 million to build, was financed by the issuance of low interest Clean Renewable Energy Bonds that KEC was able to qualify for. The construction is set to be complete in March.

While this is something we are very excited about, there are some who are not. The contract we have with BPA makes it impractical for us to use the output from the Fighting Creek resource to meet our own needs for the first several years of its operation. So, instead of using it ourselves for the initial years of operations, we plan on selling it to another utility. The revenue we receive from selling the power will be used to offset the cost of KEC’s operations.

This right to sell power to another utility is granted to us through a law the federal government enacted in 1978 called Public Utility Regulatory Policies Act, or more commonly known as PURPA. This law requires those utilities that own and control the nation’s transmission system to purchase power from qualified renewable energy projects developed by others at rates that are deemed to be fair and nondiscriminatory. These rates are known as Avoided Cost Rates. They are set and regulated by the Public Utilities Commission (PUC) and represent the cost that the purchasing utility would pay for power if it had to supply the power purchased from its own fleet of generation resources. In other words, when set appropriately, the purchasing utility should be indifferent to buying the power or supplying it from its own generators.

KEC and Avista have negotiated a PURPA contract that is agreeable save the ownership of what is known as Renewable Energy Credits (RECs). RECs are created from the production of renewable power and have a marketable value to their owner. Since Avoided Cost Rates are based upon lower-cost carbon-emitting resources, RECs should remain the property of KEC. While this is the position that most public utility commissions have taken, Avista disagrees. And, curing this disagreement would require a protracted legal fight before the Idaho PUC. If the power was instead delivered and sold to a utility in Montana or Oregon, this issue is avoided. So KEC asked a simple question. What utility operating in Montana or Oregon could this power be most readily delivered to and used by? The answer to that question was Idaho Power and the load they serve within Oregon. We have forwarded an executed contract to them and anticipate their response soon.

You may have read in the media that Avista and Idaho Power have been opposed to purchasing this power from KEC under a PURPA contract. We want to ensure our members understand the reasons why this issue is of importance to you. Avista and Idaho Power claim that the Avoided Cost Rates they are expected to pay are too high. We respect their interest in ensuring their customers do not subsidize the rates of our members. At the same time, KEC adamantly disagrees that our members should give power to Avista or Idaho Power at rates below what the power is worth. The PUCs that regulate them, and the Avoided Cost Rates that they set, ensure that these rates are fair. If those rates are too high, Avista and Idaho Power have a forum before the PUC to address that issue going forward. It is for this reason that KEC is fighting for your rights.

2451 W Dakota Ave | Hayden, ID 83835
Phone: 208.765.1200 | Fax: 208.772.5858 | Toll Free: 800.240.0459 | Report an outage: 1.877.744.1055