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Siemens, Idaho Power Strike Deal on Gas Power Plants

Idaho regulators on Friday approved a 20-year deal allowing Idaho Power Co. to turn over maintenance of its natural gas-fired generation plants to Siemens Energy Inc. As part of the agreement, the electric utility will sell its spare parts inventory to Siemens for $21.9 million.

The value of the long-term service arrangement was not disclosed by the Idaho Public Utilities Commission (PUC). Currently, Idaho Power self-manages two peaking plants, Danskin and Bennett Mountain, near Mountain Home, ID, and the combined-cycle baseload Langley Gulch gas-fired plant near Payette, ID. Siemens provides service on a case-by-case basis.

The PUC agreed with Idaho Power that the long-term maintenance arrangement should produce lower costs for the utility customers when compared to continued self-maintenance. However, the PUC staff and representatives from the state's large industrial customers disagreed with some proposed rate-setting details of the deal.

Idaho Power recognized the limitations of its own staff to have "all of the necessary technical skills to maintain all three gas-fired plants," the PUC said. It looked at various third-party service providers, eventually selecting Siemens, which is the original equipment manufacturer for all three plants.

"The contract will decrease overall costs to the company and its customers by leveraging Siemens' pool of inventory, outage resources and technical expertise," a PUC spokesperson said.

PUC staff and the Industrial Customers of Idaho Power supported the agreement while disagreeing on some of the utility's approaches to recovering costs of the transaction. The regulators made changes in some of these provisions in their final unanimous approval.

In an integrated resource plan (IRP) submitted to the PUC this summer, Idaho Power that concluded that current resources will meet growth in the near term.

A key component of Idaho Power’s IRP is maintaining low-cost baseload power supplies, which are anchored by 17 hydroelectric projects that provide roughly half of the electricity delivered to customers in an average year.

"Those hydro projects, in addition to the company’s natural gas-fired plants, are increasingly needed to offset the variable nature of wind, solar and other renewable resources," a utility spokesperson said when the plan was filed in July.

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