Today, Avista announced an agreement to purchase power generated by the proposed Palouse Wind project in Whitman County, Wash., beginning in the second half of 2012. What does this mean for you as an Avista customer? Well, it’s really about Avista’s responsibility to balance the costs of new resources with securing enough energy to meet your energy needs, while at the same time satisfying renewable portfolio standards, both in the near and long term.
Avista must comply with renewable portfolio standards (RPS) detailed in Washington’s Energy Independence Act, which was approved by Washington State voters with the passage of Initiative 937 in 2006. The Act requires us to use eligible renewable resources, renewable energy credits, or a combination of both, to meet the following targets: 3% of energy used to meet customer demand by January 1, 2012, 9% by January 1, 2016 and 15% by January 1, 2020.
We’re already meeting the 2012 targets, mostly with upgrades we’ve made at our hydroelectric dams
. Those upgrades allow us to generate more energy using the same amount of water, with the additional energy qualifying in Washington as an eligible renewable resource.
The next big deadline will be 2016, and, while it’s still a few years away, we’ve been thinking about it for some time. Over the past few years, we’ve been following the market and looking for potential opportunities to incorporate cost-effective, renewable power. Recent market changes, including lower costs of developing wind power facilities and tax incentives, have made this an excellent time to do that, so in February we put out a request for proposals. Through a competitive bid process, Palouse Wind
, which has the added benefit of being located in Avista’s service territory, was selected.
Avista expects to recover the cost of the power purchased from Palouse Wind through retail rates as we would have to recover the cost of any power used to meet demand, but not before that power is generated and delivered to customers. Remember, we’re a regulated utility, which means we can’t recover costs we haven’t incurred, and we must justify any rate increase.
The wind farm is expected be the largest renewable energy facility in Whitman County with the capacity to generate enough clean, renewable energy to power about 30,000 of Avista’s customers’ homes. Developers say its location between the town of Oakesdale and State Route 195 is ideal for capturing the prevailing southwest wind.
Along with the other things Avista’s doing, like upgrading our dams, the renewable power purchased from Palouse Wind is expected to help us meet Washington State RPS goals for 2016, and will also provide a new energy resource for our customers. We think it’s the right thing to do and the right time to do it.