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Idaho Power Looks to Big Sky Country for Electricity by Ken Dey Idaho Statesman, May 29, 2003

PUC asked to OK purchases from Montana utility

Idaho Power Co. is turning to a Montana power company to buy the electricity it had hoped to produce at the now-stalled Garnet power plant project.

The company is asking the Idaho Public Utilities Commission for permission to purchase more than 100 megawatts of power during the months of June, July and August starting in 2004 from PPL Montana.

Company spokesman Dennis Lopez said the company has negotiated a contract to pay PPL Montana $44.50 per megawatt hour, or 4.45 cents per kilowatt hour for the power. The contract would start in 2004 and end in 2009.

Company officials say the rate is competitive with other power options.

The rate is also much lower than the estimated $77 per megawatt hour Idaho Power had negotiated to pay for power from the Garnet plant. Lopez said the estimated price of power from Garnet was higher because it needed to reflect the costs of building the new plant and because — with dozens of other companies rushing to build gas-fired power plants — turbines were selling at premium prices, Lopez added.

Idaho Power had hoped that the Garnet plant, a 250-megawatt natural gas plant, could be built at a site near Middleton and be ready to provide power by 2004 — the year that the company says it would no longer have enough electricity available to meet the increased summer demand of its southern Idaho customers.

Idaho Power awarded the contract to build Garnet in June 2000 to Garnet Energy LLC, a division of Idaho Power's parent company, IdaCorp Inc.

But in July 2002, Garnet notified Idaho Power that it couldn't borrow the money at reasonable rates to build the project. Backers of the plant tried to find alternative financing, but they weren't successful, and in the fall of 2002 the project was put on hold indefinitely.

Following that announcement, the commission asked Idaho Power to come up with other options to provide power.

Lopez said the contract with PPL Montana will provide a portion of the company's additional power needs. The remaining amount will be met through a new 85- to 200-megawatt power plant to be built somewhere in the company's service area.

Idaho Power started accepting bids for that project in late February. Lopez said the company plans to award the contract later this summer.

Contracting with PPL Montana is advantageous, Idaho Power officials said, because existing limits on the west side of Idaho Power's system made power purchases on the east side of the company's system more preferable.

After the Montana Legislature deregulated its retail electric industry, the state's major utility, Montana Power, sold its generating plants to Pennsylvania Power & Light. PPL Montana operates 11 hydroelectric plants in Montana with a generating capacity of 474 megawatts, as well as 500 megawatts of coal-fired generating capacity.

The commission will accept comments on Idaho Power's request until June 27.