At just the time of year when work output slows to a crawl in many organizations, the Idaho Public Utilities Commission is being asked to render a tough decision quickly in a case that has far-reaching implications for wind project development in the state.

In September, Jared Grover, developer of the proposed Cassia Gulch Wind Park and Cassia Wind Farm near Hagerman, Idaho, filed a complaint with the commission challenging Idaho Power's intent to charge wind developers the estimated $60 million costs of transmission system upgrades needed to accommodate nearly 200 MW of capacity expected from such projects.

Grover's portion of this upgrade would be about $7 million, an amount he says would force him to scrap his projects and would sound the death knell for many other wind projects pending in Idaho.

At the Nov. 28 hearing, Grover's attorney, and former IPUC commissioner, Dean Miller, said the case is "about removing a barrier" faced by 'Qualifying Facility' (QF) wind farms in Idaho, which are subject to federal Public Utilities Regulatory Policies Act (PURPA) rules.

Grover agrees that QF projects should be directly responsible for interconnection costs to get onto the transmission system, Miller said, but not for upgrades to the utility's overall transmission system.

"[They should be] responsible for the driveway, not the highway," Miller said

The Cassia projects do not want special treatment or subsidies, Miller said. Rather, they are seeking a ruling that these costs should be borne by Idaho Power, and handled the same way other utility upgrade investments are financed: by shareholders and ratepayers.

"There is no compelling reason to saddle wind developers, or any other developer, with the job of being the utility's bank or financer," Miller stated.

Idaho Power attorney Bart Kline cited system safety and reliability as the reasons upgrades are needed. As a group, the area's new wind proposals would generate up to 200 MW, which Kline claims will overburden the existing lines. Opponents countered that planned improvements to Idaho Power's own hydroelectric facilities in the area would necessitate the same transmission upgrades.

However, much of the testimony focused on conflicting definitions of terms: Which expenses are considered 'interconnection costs,' and which are 'network upgrades?' Which involve integration, and which generation?

Kline asserted that no matter what they are called, not charging the QFs for these expenses violates PURPA's customer neutrality standard and sets an expensive precedent for utility companies.

"Our concern is that FERC would look at the fact that QFs had received this preferential treatment, and could make a determination that Idaho Power was required to fund system upgrades for all merchant users," said Kline.

"Do you see any difference at all between a QF project selling all of its energy to the utility and a merchant who's building to sell somewhere else and be in the market?" Commissioner Marsha Smith asked Kline.

"In my mind, I think they're the same," he answered. "I hope FERC sees it the same way."

Attorneys for other utilities that serve Idaho customers lined up in support of Idaho Power. PacifiCorp's Dean Brockbank called Cassia's proposal "a subsidy that benefits QF developers at the expense of ratepayers and non-QF developers," and suggested that the State Legislature is the appropriate forum for the discussion. Avista attorney Blair Strong suggested the parties should negotiate case-by-case, as it has done with its own suppliers.

"One size does not necessarily fit all," said Strong. "We're recommending a process that allows the utility to deal with the generator in determining how those transmission costs should be allocated."

Miller prompted the first hearty laugh of the morning when he quipped, "And everybody knows that negotiating with a utility is like negotiating with the KGB."

Peter Richardson, the attorney for Exergy Development Group, testified that a longer-term issue is whether FERC-mandated avoided-cost rates for QF power purchases are inaccurately set by not including integration costs, when perhaps they should.

In the meantime, he said, wind developers, who have not been charged until now for system upgrades, have a right to be concerned. Among these, he included Montana-based Exergy, which is spearheading at least a dozen wind projects in Idaho.

"We feel sandbagged," Richardson said. "The contracts that have been signed by Idaho Power and approved by you [IPUC] should be grandfathered. You shouldn't change the rules after the fact."

Kline explained that QFs are eager to get signed power purchase agreements with utilities allowing them to obtain financing, and do not learn what the interconnection fees will be until later in the application process.

IPUC staff attorney Scott Woodbury's dry summary of facts seemed to favor Idaho Power's position. "Cassia's proposal could establish an affirmative obligation to upgrade transmission facilities at the request of QFs situated in areas geographically remote from load centers," Woodbury stated, "shifting large costs to consumers with little offsetting benefit. This commission does not direct the company when and where to make transmission investment. Yet, if we adopt Cassia's recommendation, [we] would provide that power to a QF."

With an estimated 246 MW of wind projects on the books and the holidays fast approaching, IPUC can't help but deliver lumps of coal to some Christmas stockings when it rules in this case.