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Rates paid to small-power producers decline

The rates that regulated utilities pay small-power producers have decreased significantly due to declining natural gas prices, a new price forecast by the Northwest Power and Conservation Council says.

Under the provisions of the federal Public Utility Regulatory Policies Act (PURPA), regulated electric utilities are required to buy power from qualifying small-power producers or co-generators, such as wind or anaerobic digester projects. The rate to be paid the developers of projects 10 megawatts or smaller is determined by the commission and is called the “avoided cost rate” because it is to be equal to the cost the electric utility avoids if it would have had to generate the power itself or purchase it from another source.

One of the key factors the commission uses in determining the published avoided-cost rate is a long-term natural gas forecast by the Northwest Power and Conservation Council, the commission said in a release. A change in the forecast automatically triggers a recalculation of the published avoided cost rates.

Under new rates effective immediately, a qualifying PURPA project developer who signs a 20-year “levelized” contract this year would be paid $79.19. Under the previous rate, a developer would have been paid $90.90 per megawatt hour.

According to Northwest Power and Conservation Council data, the price for natural gas at the Sumas trading hub in Washington state including delivery averaged $7.68 per/MMBtu (million British thermal units) but had dropped to $3.91 in 2009 and is projected to be about $4.56 this year.

A full text of the commission’s order, along with the avoided cost rates for Avista Utilities, Idaho Power Co. and PacifiCorp (doing business in eastern Idaho as Rocky Mountain Power) is available here.

Interested parties may petition the commission for reconsideration by April 6. Petitions can be delivered to the commission at 472 W. Washington St., Boise, mailed to P.O. Box 83720, Boise, ID 83720-0074, or faxed to 208-334-3762.

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