Idaho Power buys geothermal energy

The utility wants to incorporate money it spends buying geothermal energy as part of a formula called a "power cost adjustment." The company uses the PCA formula to either grant discounts or levy surcharges to customers each spring.

Depending on how much water flows through the company's hydroelectric facilities each year, Idaho Power either discounts customers or charges extra. If the commission approves the request, customers could pay more on their bills to also cover in part what it costs the utility to buy electricity from a geothermal plant near Malta owned by Boise-based U.S. Geothermal.

The commission and Idaho Power say the costs aren't likely to break anyone's bank.

"The costs will be insignificant," said Dennis Lopez, an Idaho Power spokesman.

Under a contract with the company, Idaho Power will pay about $52.50 for each megawatt-hour produced at the plant. The market rate was $68.02 for peak electricity on December 10 and $54.75 for non-peak power. Idaho Power will buy about 13 megawatts from the company under a 25-year agreement in which costs escalate over time.

In 2032, for example, the utility will pay $73.92 for each megawatt-hour. U.S. Geothermal is offering to sell 45.5 megawatts to the utility, and a deal to buy that power could develop later.

Idaho Power plans to buy 200 megawatts of geothermal electricity by 2022. Ten megawatts can meet the electricity needs of about 7,500 people. Geothermal power is more reliable than wind and solar energy, it has virtually no emissions and it has promising potential in Idaho, according to a 2006 report by the Geothermal Energy Association.

That report cited a January 2006 study by the Geothermal Task Force of the Western Governors' Association that estimated Idaho could produce 850 megawatts of geothermal electricity by 2015 and 1,670 megawatts by 2025. Just 850 megawatts is enough to meet 30 percent of Idaho's energy needs.

The U.S. Geothermal plant, which is already selling about 10 megawatts of electricity to Idaho Power, is expected to be selling its contracted amount by June. It is Idaho's first commercial geothermal electricity plant. Eventually, the plant, built on an abandoned Department of Energy test site, could produce 100 megawatts of power at its full capacity.

For comparison, Idaho Power Co.'s Milner Dam - just one of 17 hydro facilities run by the utility company - has a 58-megawatt capacity.