Future of Garnet Energy Plant in Idaho Remains Unclear

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Declining wholesale power market prices and financial turmoil in the power industry have led to an uncertain future for the 273 megawatt (MW) Garnet Energy Facility, proposed by Garnet Energy LLC. Garnet Energy LLC was formed in 2000 by Ida-West Energy Company (Boise, Idaho), a subsidiary of IDACORP Incorporated (NYSE:IDA), the parent company of Idaho Power Company.

Ida-West announced in June 2000 their plans to construct the natural gas fired combined cycle Garnet Energy Facility to be constructed near Idaho Power's load center in the Treasure Valley area in response to the utility's "request for proposal" (RFP) for new sources of generation. In early 2001, the Garnet Energy proposal was selected by Idaho Power as the least-cost alternative for new generation and a 30-acre site south of Middleton was picked for the new plant.

The original design called for a construction of a 250 MW plant to supply electricity to Idaho Power by June 2004. Schedules were later revised calling for commercial operation by June 2005. A tentative plan was in place to expand the plant to 500 MW to meet long-term energy needs. All the necessary permits have been secured to construct the plant, and the proposal has the endorsement of local business organizations and local government officials. Project financing is the only hurdle standing in the way of construction.

Over the past 18 months or more, turmoil in the financial markets and the energy sector has had an adverse impact on merchant power plant construction across the nation.

Consideration of the power purchase agreement between Garnet and Idaho Power Company was suspended in July 2002. In October Idaho Power reported to the Idaho Public Utilities Commission that Ida-West had informed the utility that dramatic changes in the electricity industry had made the successful financing of the Facility on acceptable terms under the existing PPA (Power Purchase Agreement) impracticable. At that time Ida-West presented Idaho Power with alternate proposals that the utility is currently evaluating.

Although delayed, the Garnet Energy Facility still isn't a dead issue. Ida-West Energy Company President & CEO Randy Hill stated "the project is currently on hold and it could be two years or more before construction begins but we believe that the plant will be built when the economy turns around." In the near term Idaho Power plans to meet demands through energy exchange, purchases from the wholesale market, capacity increases from existing generation sources and conservation programs.

Yesterday, Idaho Power issued an RFP for 100 MW of peaking power to be added to their system by 2005.

Ida-West Energy Company was formed in 1989 to develop, finance, construct, acquire, own and operate electric power generation facilities. The company is an unregulated affiliate of Idaho Power Company, an investor-owned utility with $2.9 billion in assets supplying electricity to over 400,000 general business customers in Idaho and Oregon.