Idaho Power wants the PUC to change a formula used to decide what it has to pay small developers.  PURPA requires power firms to buy supply from small and renewable producers at rates set by regulators.

      To meet the requirement, the PUC sets an Avoided Cost Rate that's supposed to be equal to the cost a utility would avoid if it had to generate the power itself.

      Idaho Power feels it's now paying too much due to the formula and wants to see it changed.

      The fuel component of the ACR is determined by using a 20-year forecast of natural gas prices issued by the Northwest Power and Conservation Council.

      The PUC averages the first three years of that forecast and also includes a fixed 20-year escalation rate when determining the fuel-cost component of the ACR.

      For example, under the current formula, small-power producers are paid $36.21/mwh for the fuel component of the total $62.40/mw-hour of

power generated. 

      The annual fuel escalation

rate is 2.3%.

      Idaho Power contends the method doesn't consider a downward trend in natural gas prices forecast for future years thus the rate's higher than the

avoided cost.

      Idaho Power proposes using an average of the entire 20-year forecast and eliminating the escalation rate.

      Under Idaho Power's proposal, a small-power producer who signs a contract for 2008 would be paid $67.77/mwh instead of the $72.22 under the formula as is.