Letters From the West

As regulated utility, Idaho Power’s role is to follow, not lead

Idaho Power President and CFO Darrel Anderson in his 9th floor office in downtown Boise (KYLE GREEN — kgreen@idahostatesman.com)

Idaho Power President and CFO Darrel Anderson in his 9th floor office in downtown Boise (KYLE GREEN — kgreen@idahostatesman.com)

Idaho Power has not pioneered new ideas and taken big risks since former President Thomas Roach led its effort to build three dams in Hells Canyon.

But as a regulated utility such leadership is not its place in the market. This regulated utility and arguably no utility is going to be the point of the sword of a new energy revolution.

With smart meters and sophisticated new information technology, utilities have at their fingertips the tools to reduce and manage electricity demand so they have more flexibility that saves customers money. But if history is the guide, it will be customers and the wider public that will push Idaho Power to innovate.

Roach had to take on the federal government and its efforts to build a really big dam in Hells Canyon. Then it had to find a market for the huge electric power surplus it would generate at a time when southern Idaho’s economy was largely agrarian.

He found that market in Utah where farmers and the Salt Lake regional economy was growing faster than Utah Power could afford to invest. Idaho Power also promoted deep well and high-lift pumping to open up a million acres of new croplands in Idaho.

That allowed Idaho Power to make the big investment in hydropower, which was cheaper in part because its fuel was free. Today the wind power on the Idaho Power grid at 675 megawatts is less than the 1,100-megawatts the Hells Canyon Complex can generate.

But the hydro power can be stored in reservoirs so it can be called upon at any moment. The wind comes and its goes, for instance only 70 megawatts were generated during this week’s peak demand milestone of 3,402 megawatts

Solar power’s intermittency also challenges utility managers. It would be producing large amount of power these hot sunny days if installed correctly to maximize summer conditions. But a dark cloud could sharply reduce power production, forcing utilizes to have backup power ready immediately.

Idaho Power President Darrel Anderson said he and his peers in the western utility industry talk regularly about solar and wind and their role in the future. He sees technologies that could lead to breakthroughs.

“The biggest thing there is storage,” Anderson said. “That will be a game-changer.

“If we could store this wind energy what a great place we’d be today,” Anderson said.

John Gardner, director of the Boise State University-based Energy Efficiency Research Institute, says that day is already here. The smart meters Idaho Power installed thanks in part to the federal stimulus funding of 2009 allows Idaho Power to both turn off equipment that uses electricity but also to turn it on.

“Every single building is a thermal battery,” Gardner said.

By adjusting the thermostats in buildings throughout its grid by a half a degree up or down, Idaho Power “could account for the variability the renewable generators have,” Gardner said.

Anderson shows the openness to consider new ways of doing things. But the incentives of a regulated utility are such that Idaho Power benefits when it is ordered to take such action, not by jumping ahead of the commission.

History also supports this.

In the 1970s when it begin to reach the limits of its dams, Idaho Power proposed building the 1,000 megawatt Pioneer Coal Plant between Mountain Home and Boise. But the Idaho Public Utilities Commission said the plant would increase rates too much and cause air quality issues in Boise

That decision kept Idaho Power from overbuilding like most utilities in the Pacific Northwest did and saved its customers millions of dollars in stranded costs for a power plant they didn’t need. At the same time farmers like John Peavey sued the company to protect its water right at the Swan Falls Dam from over development of water.

They recognized that if Idaho Power was going to build new generation plants that would add on the cost of those plants to their bills for irrigation. After they won, Idaho Power was forced to turn on its long-time irrigation partners and sue, resulting in a court victory that reshaped Idaho water law and management.

The Idaho Public Utilities Commission also developed the regulatory structure for meeting the Public Utility Regulatory Policy Act or PURPA so that small hydroelectric and eventually wind, solar, biomass and other renewable energy developers had access to its grid.

When federal tax policy favored wind development and large corporations and investors saw a way to use PURPA to add hundreds of megawatts of wind to Idaho Power’s grid against its will, they forceably made Idaho Power the utility with one of the largest portfolios of new renewable energy in the region. The utility fought to close the hole and the PUC went along, prompting a fight of Idaho regulators with the Federal Energy Regulatory Commission that could push Idaho Power more.
Ultimately, it may be a combination of its shareholders and the public that push change on Idaho Power and other utilities. In 2009, a majority of stockholders voted for a resolution urging the company to reduce its carbon-dioxide emissions.
As a result, the company set a goal for cutting emissions. This year Idaho Power made the target more ambitious, in part because of all of the wind power now on its grid. Target Rock Advisors, an investment-advisory firm that emphasizes environmental sustainability and socially responsible investing, named Idaho Power a 2013 Sustainable Utility Leader.
At its Annual Stockholders’ meeting IdaCorp CEO LaMont Keen highlighted the sustainability award and the company’s progress on emissions. Critics continue to challenge its plan to hold on to its coal plants and lack of a solar vision.
But IdaCorp’s business success has come from working the regulatory process along with protecting its hydro assets. How regulators embrace the demand response vision Gardner espouses may drive its future more than its management’s reaction.

Rocky Barker is the energy and environment reporter for the Idaho Statesman and has been writing about the West since 1985. He is the author of Scorched Earth How the Fires of Yellowstone Changed America and co-producer of the movie Firestorm: Last Stand at Yellowstone, which was inspired by the book and broadcast on A&E Network. He also co-authored the Flyfisher's Guide to Idaho and the Wingshooter's Guide to Idaho with Ken Retallic. He also was on the Statesman’s team that covered the Sen. Larry Craig sex scandal, which was one of three Pulitzer Prize finalists in breaking news in 2007. The National Wildlife Federation awarded him its Conservation Achievement Award.

Posted in Letters from the West