'Green tag' sale: Idaho Power ahead of federal rules 

Idaho Power sees the handwriting on the wall regarding renewable energy. With President Barack Obama’s pledge to make 10 percent of the country’s power come from green sources by 2012, the Gem State’s largest utility is banking its renewable energy certificates, or “green tags,” to prove to regulators that it buys clean power.

Awarded for each megawatt hour of energy produced from a renewable source like wind, solar or geothermal, green tags are not only proof that a utility, homeowner or company purchases clean energy, but can be used as commodities for sale on a special market.
By opting to hold rather than sell its green tags, Idaho Power hopes to count that energy toward any potential federal renewable mandate. But some, including the group Industrial Customers of Idaho Power, think that because Idaho Power isn’t currently held to any state or federal renewable standards the tags should be sold and the revenues passed on to customers in the form of rate relief.
“The green tags have value on the open market, and they have no value to Idaho Power because they’re under no obligation to meet a renewable portfolio standard,” said attorney Peter Richardson, of Richardson & O’Leary, who represents ICIP.
Idaho Power’s green tags, which it gets from buying power from the Elkhorn wind farm in Oregon and the Raft River geothermal project in western Idaho, are estimated to be worth about $2 million on the renewable energy market, which currently values each tag at about $5. But if they’re sold, Idaho Power can’t count them toward any standards. Further, it can’t even advertise to customers that some of their energy comes from clean sources.
“A number of our customers want us to acquire green resources and be able to say we’re acquiring green resources,” said Karl Bokenkamp, general manager of Power Supply Operations and Planning at Idaho Power. “To be able to do that and actually confer, or advertise, or represent to the customers that we’re conferring the environmental attributes associated with that renewable generation to them, we need to retire the green tags associated with that generation.”
Richardson dismisses that argument, calling it “an image thing.”
“Frankly we’re not so concerned about Idaho Power’s advertising as we are about Idaho Power’s rates,” he said.
The Idaho Public Utilities Commission approved Idaho Power’s application to hold its green tags late last month, but not without reservations from ICIP and the commission’s staff itself. In documents filed in the case, staff was critical of the importance Idaho Power placed on the ability to tell customers that the power they use comes from wind and geothermal sources.
“Many customers, staff believes, simply cannot accept the idea that the environmental benefits of renewable energy projects are lost or transferred merely by the exchange of a piece of paper saying that they have been purchased by someone else,” staff wrote in its comments.
“Staff believes that many customers would find such a concept to be irrational,” it continued.
Rather, staff suggested, the tags should be sold with the proceeds returning to customers through Idaho Power’s Power Cost Adjustment as it has done in the past with surplus sulfur emissions credits, which operate on a similar market to green tags. In a release from the commission, it said that Idaho Power applied $16 million in proceeds from sulfur credits to it PCA in 2008 and $70 million in 2007, reducing the surcharge paid by customers.   
Another alternative would be for Idaho Power to sell its green tags until they are needed, placing revenues in a dedicated account for future renewable power purchases.
“That way, the purchase of renewable energy could actually cause more renewables to be acquired than otherwise might be,” commission staff wrote.
Bokenkamp said it comes down to differing views on what customers see as a benefit.
“I think in some respects there are always going to be customer concerns about rates [but] there are also customers concerned about us having green resources in our portfolio,” he said. “Some may say, ‘The benefit I want is to have those [resources] delivered to me,’ and some others say, ‘The benefit I want is to have those sold and applied to my rates.’”
 Essentially, Bokenkamp said, some customers “would support the premium that goes along with developing and owning those resources.”
The Idaho Conservation League and the Renewable Northwest Project supported Idaho Power’s application to retire its green tags, submitting comments to the commission that made note of the utility’s need to prepare for future renewable power regulations. The Snake River Alliance nuclear watchdog group also threw its support behind retirement of the green tags, writing that benefits from the sale of the tags would be “transitory.”
“Without the tags, the company cannot claim the green attributes for what we expect will be an increasing amount of renewable energy in Idaho Power’s portfolio,” SRA said in its comments to the IPUC.  “We believe – and Idaho Power’s customers expect – that the company should receive credit for the renewable energy it generates or purchases and provides to its customers.”
Jeff Swerenton, communications director at the Center for Resource Solutions, which administers the Green-e program that certifies two-thirds of all green tags, agreed that there’s a value to customers knowing their energy comes from clean sources.
“If you’re a consumer, you don’t know if you’re getting renewable energy,” he said. “If you turn on your light-switch your lights are going to come on [regardless]. … What they need is a ‘good housekeeping seal.’”
ICIP is still unconvinced and has filed a petition with the utilities commission to reconsider its decision allowing Idaho Power to hold onto the tags.
“Holding onto these in anticipation of a federal standard isn’t an option,” Richardson said. “[I]t’s not a very good insurance policy and it’s an expensive one. They’re just talking about $2 million this year, and the market is actually heating up. …
“Our position’s not a wild position; it’s not radical in any sense. It’s simply saying this is a ratepayer-funded asset… and as a result the ratepayers should get the benefit of it.”

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