FERC orders BPA to halt wind power curtailment in favor of excess hydro

WASHINGTON 12/9/11 (PennWell) — The Federal Energy Regulatory Commission has ruled that transmission operator Bonneville Power Administration must stop curtailing wind generators in the Pacific Northwest to make room on the grid for delivery of free excess federal hydropower resulting from high river flows in the region.

The wind generators filed a complaint with FERC in June urging it to stop BPA from using its transmission monopoly power to curtail competing generators in an “unduly discriminatory manner.”

BPA began limiting the output of non-hydroelectric energy, including thermal generation and wind energy, in May due to high river flows creating a temporary oversupply of hydropower. It stopped the practice in July. The agency said the action was required to protect salmon and steelhead, maintain the reliability of the power grid, and avoid shifting costs to BPA customers.

Under its interim Environmental Redispatch Protocol, BPA said it would not reimburse wind energy producers for lost production tax credits, renewable energy credits, or other revenues, saying that would shift costs to Northwest ratepayers who do not receive the wind power. The wind generators’ complaint protested these potential losses.

Bonneville estimated that the financial impact of the curtailment, with regard to lost production tax credits and renewable energy credits, could be as high as $50 million in 2011. However, FERC recalculated the estimate, finding the prospective losses to be closer to $2.15 million.

FERC: BPA action “unduly discriminatory, preferential”

The wind generators asked FERC to order BPA immediately to revise its curtailment practices to comply with non-discrimination standards of the Federal Power Act and to abide by terms of interconnection agreements with the wind generators. FERC agreed in a Dec. 7 order.

“In sum, the commission finds that Bonneville’s Environmental Redispatch Policy results in non-comparable transmission service that is unduly discriminatory and preferential,” the order, No. EL11-44, said. “Accordingly, Bonneville may not extend its current environmental redispatch policies or implement new environmental redispatch policies that result in non-comparable transmission service.”

In addition, FERC ordered BPA to file an open access transmission tariff within 90 days that satisfies FERC’s directive to provide transmission service that is not unduly discriminatory or preferential.

FERC rejected arguments that the commission has no jurisdiction over BPA, which provides electricity transmission service, but is owned by the federal government and is not a private utility. BPA argued its actions are only subject to the review by the 9th U.S. Circuit Court of Appeals, and not by FERC.

“The commission has exclusive authority to order an unregulated transmission provider to comply with the provisions of (Federal Power Act) Section 211A,” FERC said. “That is, any obligations flowing from the provisions of Section 211A require findings and directives by the commission.”

The commission noted a case has been filed in the 9th Circuit dealing with the same issues as the FERC proceeding. It rejected arguments that FERC should withholding ruling until the court acts.

“The commission is making no determinations as to whether actions taken by Bonneville in the past, whether pursuant to the Environmental Redispatch Policy or otherwise, were prohibited under Bonneville’s statutory authorities,” FERC said. “To the extent Bonneville’s past actions are subject to judicial review by the 9th Circuit Court of Appeals, such review does not limit the commission’s prospective exercise of authority in this proceeding under Section 211A of the FPA.”

Nevertheless, FERC acknowledged the difficulties facing BPA and other parties and encouraged them to work together to resolve their issues.

Iberdrola: Order levels playing field

Iberdrola Renewables, the lead petitioner for the wind generators, hailed the FERC ruling.

“BPA’s policy, as we saw in the past spring, was keeping prices higher for the power it was selling into the wholesale market — not protecting fish or maintaining reliability,” Iberdrola Senior Vice President Don Furman said. “FERC’s ruling will stop this and other discriminatory practices, and allow all energy producers to compete on a level playing field.”

BPA’s curtailment action came as the U.S. Army Corps of Engineers increased river flows to maintain space in upstream reservoirs for further runoff from the largest Northwest snowpack since 1997. The Northwest River Forecast Center projected Columbia Basin runoff would exceed runoff in all but two of the last 40 years.

BPA said rising runoff had pushed dissolved gas levels above 120 percent at most of the eight federal dams on the Lower Snake and Columbia rivers, exceeding Washington and Oregon water quality standards and threatening protected salmon and steelhead. BPA said reducing hydro generation would send more water through spillways and could push gas levels higher for longer periods, further endangering fish. BPA noted it, the Corps, and the Bureau of Reclamation are required by court order to manage spill levels to protect fish.

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