The Associated Press reports that a spat between Avista Corp. and Kootenai Electric Coooperative is threatening to scuttle a deal between wind industry lobbyists, Idaho Power Co. officials and the governor's office over extension of a renewable energy tax rebate; click below for the full story from AP reporter John Miller.

For now, Idaho energy politics scuttle rebate deal
By JOHN MILLER, Associated Press

BOISE, Idaho (AP) — Just when it looked like wind industry lobbyists, Idaho Power Co. officials and the governor's office had struck a deal over extending Idaho's sales tax rebates for alternative energy, a little northern Idaho landfill power project intervened to put the package in jeopardy.

Kootenai Electric Cooperative, a tiny cooperative in Hayden, is working with Kootenai County to turn gas produced by garbage at the local Fighting Creek landfill into about 3.2 megawatts of electricity, enough to power about 2,000 homes.

The problem is, Avista Corp., the Spokane, Wash.-based utility, doesn't want to pay the price Kootenai Electric can demand under a 1978 federal law that requires regulated utilities to buy alternative developers' power at state-mandated rates. So Avista inserted a provision into the agreement struck late Tuesday aimed at throwing a monkey wrench in Kootenai Electric's plans.

Rep. George Eskridge, R-Dover and sponsor of the rebate extension, called Avista's changes a deal breaker Wednesday morning as he strode down the Capitol basement hallway just before the House Revenue and Taxation Committee hearing.

"I can't support that," Eskridge told The Associated Press.

According to Tuesday's purported deal, wind power developers would have to have utility contracts in place by Oct. 31 to claim the sales tax rebate, something that's been worth tens of millions to the wind industry so far. The rebates would expire in 2014.

As a concession to Idaho Power, which opposed extending the tax break on grounds intermittent wind power drives up their customers' rates, there would be new size limits on future wind projects that could take advantage of the same 1978 law that Kootenai Electric aims to utilize.

Of course, Avista and Kootenai Electric have their views on what may scuttle that deal.

Neil Colwell, Avista's lobbyist, says Kootenai Electric is gaming the 32-year-old federal law to demand it be paid exorbitant prices for electricity that Avista doesn't want, doesn't need and that will drive up its own ratepayers' monthly bills.

"Apparently, Rep. Eskridge thinks it's a good idea to have Avista customers subsidize the customers of Kootenai Electric," Colwell said.

Meanwhile, Will Hart, lobbyist for the Idaho Consumer-Owned Utilities Association that represents Kootenai Electric, said the cooperative plans to eventually supply landfill-generated electricity to its own customers, but is currently locked into a contract with the Bonneville Power Administration.

So Kootenai Electric wants a three-year contract with Avista — something it has a legal right to, at a price the Idaho Public Utilities Commission has set.

If Avista is unhappy with the price, Hart said, its beef is with the state, not Kootenai Electric.

"This is not an attempt by a small cooperative to burden the multibillion-dollar investor-owned utility with our three-year contract," Hart said. "We are utilizing a federal law in an attempt to enter into good faith negotiations."

Exactly where Avista's and Kootenai Electric's regional dustup leaves the broader negotiations for extending the tax rebate is unclear as renewed meetings stretched into Wednesday afternoon.

It's by no means the only hurdle, and lawmakers' appetites for digesting complicated bills like this may diminish as the race accelerates to leave Boise and the 2011 Legislature behind.

For instance, Rep. Ken Roberts, R-Donnelly and a member of the Revenue and Taxation Committee, said he has yet to get a decent explanation of whether the influx of additional wind power on Idaho's electricity system — Idaho Power estimates it could have 1,100 megawatts of wind power on its system within a few years — is affecting power rates.

Just as vociferously, wind developers like Exergy Development Group complain the utilities are blowing smoke to preserve their monopolies.

"Until somebody can show me that the balancing of base-load power and this intermittent renewable is not costing the ratepayer additional money ... I'm not going to support any of this," Roberts said.

Copyright 2011 The Associated Press.