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Changes to Renewable Energy Pricing Cause for Concern 

Changes to Renewable Energy Pricing Cause for Concern 
30 January 2020

A recent update to renewable energy pricing in Utah has Utah Clean Energy’s experts on high alert!  A utility rate called “Schedule 38 Avoided Cost” determines what large-scale renewable energy projects in Utah are paid for the clean energy they supply. It's this pricing that makes the wind farm in Spanish Fork, the Red Hills Solar Park in Parowan, and essentially all of our large-scale renewable energy projects possible.  Rocky Mountain Power is proposing to significantly reduce the Avoided Cost rate, threatening future renewable energy development in Utah. 

The proposed changes in rates reflect a significant departure from previous pricing:  

  • RMP’s value for utility-scale solar has dropped from $24/MWh to just $13/MWh - a 45% decline.  
  • Wind prices dropped slightly, from $28/MWh to $27/MWh. However, if RMP had not proposed “non-routine” changes to their methodology, the price for wind energy in Utah would have risen to $58/MWh starting in 2021, because wind in Utah can defer investments in costly new transmission.

These low values for clean energy will effectively halt any future utility-scale wind and solar development in Utah that is not directly owned and operated by Rocky Mountain Power.

Rocky Mountain Power claims that the new 2019 Integrated Resource Plan has had a profound impact on avoided cost pricing because of its interaction with the “Proxy/PDDRR avoided cost method” - the model Rocky Mountain Power uses to determine avoided cost pricing. Rocky Mountain Power’s 2019 long-term resource plan calls for the addition of significant new wind, solar, and battery storage resources because new renewable resources will save customers money in the long-term. Yet Rocky Mountain Power’s modeling has lowered the avoided cost value awarded to third-party developers who choose to build wind and solar resources– the very same resources the utility is calling for in their 2019 preferred portfolio. 

Challenging Proposed Changes

We are concerned that Rocky Mountain Power continues to narrow the scope of Utah’s avoided cost methodology to disadvantage any resources that don’t share the exact characteristics of the resources identified in the utility’s Integrated Resource Plan.  This puts third party renewable energy developers at a disadvantage by squashing competition and deprives Utahns of the benefits of low-cost renewable energy resources built in Utah.

Utah Clean Energy’s utility experts submitted a notice of challenge regarding these changes, and Rocky Mountain Power provided more details in a 70 page filing on April 10.

Specifically, Rocky Mountain Power has proposed that:

  • New wind resources in Utah cannot be credited with deferring planned wind projects in Wyoming, despite the fact that deferral of these wind projects and associated transmission build out could save Utah ratepayers money and provide needed economic development in rural Utah.
  • None of the resources identified in the first five years of RMP’s Integrated Resource Plan should be considered deferrable, even though these resources have not yet been constructed or even put to bid. This discriminates against third-party developers who may be able to build equivalent renewable energy resources at lower costs than the utility.
  • For the first time, Rocky Mountain Power’s preferred portfolio also includes storage, so RMP is proposing to compare tracking solar resources built by third-party developers to solar + storage resources from their own portfolio. We know that solar + storage will be an important part of our future grid, and it’s important that we appropriately model the value of solar and storage resources, both combined and in isolation. 

We plan to submit additional questions about Rocky Mountain Power’s proposal this week in advance of a technical conference, which will be held on April 24. In order to effectively challenge these changes, we will likely need resources to complete modeling or hire grid experts. If you’re interested in supporting this effort, or if your company is interested in working with us to gather more information about RMP’s proposal, contact  for more info.