|
|
Estimated Renewable Options Claims
During the BPA fiscal year (FY) 2007 - 2009 rate period, Renewable rate credit requests made under the Renewable Option of the Conservation Rate Credit are capped at $6 million per year. To ensure that the $6 million cap is not exceeded, customer requests will be reduced on a pro rata basis.
Customers must provide Deb Malin with an estimate of their forecasted (total) renewable requests for the forthcoming FY by July 15 of each year. BPA will notify customers by July 30 of the amount, if any, of the pro rata reduction and provide customers with a revised cap for their next year's renewable credit claim. Pursuant to the pro rata reduction, customers will have until close of business on September 30 to adjust their renewable claim (downward only).
BPA will assume that customers that have not submitted requests by July 15 will not make renewable rate credit claims in the upcoming fiscal years.
Customers with projects that require pre-approval must submit project information to either Deb Malin prior to the October 31 reporting deadline. Click on the timeline below.
|
|
Final Proposed Rates Incorporated into the Rate Credit Calculator.
In July, BPA released the Administrators Final Rate Record of Decision for the 2007 Wholesale Power Rate Adjustment Proceedings (WP-07) (ROD). Studies associated with this Final ROD include the Wholesale Power Rate Development Study (WPRDS, WP-07-FS-05 and associated documentation WP-07-FS-BPA-05A and WP-07-FS-BPA-05B). The final FY 2007-2009 flat Priority Firm (PF) rate shown in the WPRDS is $25.87/MWh (Volume 1, Table 2.12).
Customers submitting claims for renewable resources can use the Renewable Rate Credit Calculator to estimate their claims during FY 2007-2009.
Background
The amount Customers can claim for renewable projects during FY 2007-2009 under the Renewable Option to the Conservation Rate Credit is dependent on BPA's flat FY 2007 PF rate. The amount of the Renewable credit for renewable generation projects was defined in the November 2005, Post 2006 Conservation Programs Implementation Guidelines as the difference between the Proxy for Avoided Costs and Proxy for Project Costs, capped at $27/MWh.
The Proxy for Avoided Cost is equal to the simple average of BPA's FY 2007 flat PF rate and the 2007 Forward Flat-Block Mid-C market price used in the investor-owned utility residential exchange settlement. The 2007 residential exchange settlement value for the Forward FY 2007 Flat Block Mid-C market price is equal to $58.46/MWh and the FY 2007-2009 flat PF rate is equal to $25.87/MWh. The average of these two is $42.17/MWh.
The Proxy for Project Cost values were defined in the November 2005, Post 2006 Conservation Programs Implementation Guidelines. The manual provides each type of renewable resource with a specific Proxy for Project Cost. For the most part, these Proxies were generated by The Northwest Power and Conservation Council (Council).
The $27/MWh cap on renewable rate credit claims was derived by the Council and used in the 5th Power Plan. It is equal to the value of CO2 offset credits for the life of the project (20 years). The value of CO2 offsets increases with time with the increasing probability of regulation. $27/MWh represents CO2 offset value in 2007 dollars.
New Utility-Scale Wind projects
BPA updated the Proxy for Project Cost value for New Utility-Scale Wind and included the new value in the Renewable Rate Credit Calculator.
On July 13, 2006, the Council released a new estimate of the cost of shaped and delivered energy from New Utility-Scale Wind projects. The Council found that increasing capital costs and the weakening dollar increased the cost of New Utility-Scale Wind and recommended changing near-term cost assumptions to account for these changes. The Council's near-term levelized cost of shaped and delivered utility-scale wind energy is assumed to be between $72 and $98/MWh. The Council indicated that a reasonable assumption for commercially viable projects would be at the lower end of this range, or $80/MWh.
BPA adopted the Council's new cost assumptions for Utility-Scale Wind projects for use in calculating Renewable rate credit claims. The $80/MWh assumed cost is included in the Rate Credit Calculator as the new Proxy for Project Cost value for Utility-Scale Wind projects. The Rate Credit Calculator can be found here. Please note that this change increases the New Utility-Scale Wind project cap to $27/MWh and the Existing Utility-Scale Wind project cap to $9.00/MWh.
As a result of this large increase in the Proxy for Project Cost value for New Utility-Scale Wind projects and its affect on Renewable rate credit claims for both Existing and New projects, BPA changed the way customers calculate claims for New Utility-Scale Wind projects:
| 1) |
BPA limits Renewable rate credit claims for New Utility-Scale Wind projects to one year of actual production occurring prior to September 30, 2009, not estimated production as previously proposed in the November Post 2006 Conservation Programs Implementation Guidelines. This change was effective October 1, 2006. |
| 2) |
BPA requires that the credit for New Utility-Scale Wind projects be based on the difference between the Proxy for Avoided Costs ($42.17/MWh) and actual Project Costs, capped at $27/MWh. This change gives those customers with expensive New Utility-Scale Wind projects the assistance they may need and prevents those who have less expensive projects from collecting an unexpected wind-fall. |
| 3) |
BPA defines Project Costs for New Utility-Scale Wind projects as independently CPA-certified contracted energy charges at the busbar and independently CPA-certified contracted integration charges. The same Project Cost limitations applied to Existing resources. |
These changes described above were made for the following reasons:
| 1) |
$80/MWh increases claim eligibility for New Utility-Scale Wind by more than 170 percent. New Utility-Scale Wind energy is commercially viable and currently undergoing a boom. Continuing with the existing methodology rather than actual production and actual costs, would swamp the available $6 million Renewable rate credit cap. |
| 2) |
Not all New Utility-Scale Wind projects cost $80/MWh. Customers with less expensive projects should not receive a rate credit windfall due to this change. |
| 3) |
By adopting the Council's new cost assumptions for New Utility-Scale Wind, BPA increased the cap for Existing Utility-Scale Wind energy to $9/MWh, further stressing the $6 million dollar cap. (Claims for existing resources are capped at one-third of that allowed for new projects.) |
| 4) |
New Utility-Scale Wind projects are treated equitably with Existing Utility-Scale Wind projects. This equitable approach is justified because New Utility-Scale Wind is commercially viable. |
|
|
|
Finance & Rates
EE Home
