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The BPA Punches Back in Wind Versus Water Fight by Ted Sickinger Renewables Biz, July 23, 2011

The Bonneville Power Administration told federal energy regulators this week that it has the right to pull the plug on wind farms during times when too much hydropower is already being generated in the region.

The federal power marketing agency is asking the Federal Energy Regulatory Commission to throw out a complaint filed by wind farm owners last month that would force BPA to honor its transmission contracts.

Wind farm owners say FERC is only the first stop, regardless. A lawsuit to recover economic damages is a likely next step.

BPA controls three-quarters of the region's electric grid and sells power from 31 hydroelectric dams to utilities around the west. It adopted a policy this spring that effectively turns off the switch for wind farms connected to its grid when hydroelectric generation already exceeds demand.

BPA has been canceling wind farms' scheduled transmission and substituting free hydropower to meet energy deliveries. And it is unwilling to undertake so-called "negative pricing" by paying utilities outside the region to shut down their own generation and take all the Northwest's excess power.

Wind farm owners, led by Portland-based Iberdrola Renewables, are seeking an expedited decision to end the policy, which was brought on by an unusually high spring runoff that created a surge in hydroelectric generation. The agency maintains that it has bent over backward to accommodate the wind boom on the Columbia Plateau, which has outstripped any forecast or demand growth.

During high runoff, it says surplus generation threatens grid reliability, and after reducing generation at thermal plants in the region, it needs to curtail wind. It says it can't dial back hydrogeneration or spill more water to accommodate wind energy because the resulting dissolved gases in the river are harmful to endangered salmon.

Wind farm developers and renewable energy advocates say those excuses are a red herring, and what BPA is doing is seizing the wind farms' transmission rights to get rid of its own electricity without paying negative prices.

"BPA is a federal agency that is choosing not to play by the rules of the federal power act," said Jan Johnson, a spokeswoman for Iberdrola.

Paying negative prices would reduce BPA's surplus power sales, which would ultimately increase its own customers' rates. BPA contends its customers shouldn't have to subsidize California ratepayers, since most wind power is sold out of state.

BPA has curtailed some 100,000 megawatt hours of electricity from wind farms so far this year. Actual damages are likely in the millions of dollars, but depend on purchase prices and delivery requirements in varying customer contracts. A chief complaint of wind farms is that BPA's curtailment stops the flow of tax and renewable energy credits that are only generated when they are sending power to the grid.

The agency says its overgeneration crisis has largely passed for this year, and hopes all parties can get back to solving the problem, which could get worse with added wind farms. BPA maintains the appropriate venue for any dispute over its transmission policies is the U.S. Ninth Circuit Court, not FERC.

Johnson of Iberdrola said the 9th Circuit could be the next stop after FERC renders a decision. She said regional discussion to come up with solutions is satisfactory as far as it goes. "All these things are helpful, but none of them address the oversupply issue we had this spring."

Press Release: BPA replies to FERC complaint on environmental redispatch

July 19, 2011

BPA's reply explains that it supports wind energy and adopted the policy as a last resort to meet its environmental and statutory mandates. It notes that the Ninth Circuit Court of Appeals, not FERC, is the appropriate forum for the complaint. It explains that, where the complaint strays far beyond the issues of environmental redispatch, its requested remedies would exceed FERC's congressionally directed authority. Due to the intense interest in these issues, many national and regional entities as well as BPA customers and customer groups also filed replies with FERC.

Background

BPA adopted its interim environmental redispatch policy May 13 as a last resort to help manage the highest runoff since 1997. High flows through federal dams necessitated high levels of federal generation, creating a temporary oversupply of electricity during low load hours such as the middle of the night. The high levels of generation were required to avoid high amounts of spill that can produce levels of dissolved gas in the water that are harmful to fish, including fish listed under the Endangered Species Act.

Environmental redispatch gave BPA a final tool to temporarily curtail wind and other generation and replace it with free federal hydropower when necessary to protect fish and maintain reliable power delivery. BPA was unwilling to pay others to take federal hydropower, because doing so would inappropriately shift costs to BPA's customers. BPA took many steps to avoid environmental redispatch. For instance, BPA offered free hydropower to encourage thermal power plants to shut down and serve their load with hydropower instead.

BPA is participating in ongoing "settlement" discussions with a number of parties including complainants. We cannot discuss the substance of those now. However, we are continuing to discuss wind integration issues in many forums, such as at the June 6 meeting of the Wind Integration Forum Steering Committee, attended by many parties on both sides of the FERC filing.

BPA believes most, if not all, use of environmental redispatch is behind us for the season. Some wind generation has been curtailed on a few nights over the last few weeks but flows are receding, making the likelihood of further curtailments minimal. We will be initiating a public "lessons-learned" process to help the region develop solutions for next season. As we have noted, the Record of Decision that is under challenge here is an interim policy that may be revised by next spring.

About 6 percent of scheduled wind generation has been curtailed since BPA began environmental redispatch May 18; roughly 100,000 MW-hours total. 94 percent of scheduled wind energy continued unaffected. Since this all took place over two months, the percentage of wind energy affected over the course of the whole year will be far smaller, probably less than 1 % of total wind generation.

Environmental redispatch applies to all generators in BPA's balancing authority area. BPA curtails thermal generation first to the minimum required for safety and reliability. Only if further redispatch is needed does BPA then redispatch wind generators with free federal hydropower. BPA also requested that the nuclear plant that produces about 10 percent of BPA's firm power shut down ahead of schedule to help reduce the likelihood of environmental redispatch.

BPA gets no direct financial benefit from environmental redispatch. Any curtailed generation is replaced by hydropower free of charge at a time when BPA has already marketed its hydropower at low or no cost to find other customers for it. The complainants argue that BPA should pay some compensation or negative prices to wind generators that are curtailed. However, if BPA paid wind generators to shut down, the region's thermal projects, which have accepted low-cost or free federal hydropower and shut down their for decades during high-water periods, would naturally want to be paid for their displaced power. Since weather and streamflow forecasts suggest when environmental redispatch will be necessary, generators could continue generation to force higher payment to shut down.

The complaint filed with FERC challenges a BPA final action over which the Ninth Circuit Court of Appeals has exclusive jurisdiction. More importantly, the Northwest must address the challenges of integrating rising amounts of wind and other variable energy resources in ways that work for the region and address the unique circumstances that exist in the Northwest. Direct discussions are more likely to produce constructive solutions. The complaint requests FERC to take actions beyond its statutory jurisdiction. BPA has a public process underway to address issues involving its Open Access Transmission Tariff, and complainants should be participating in those discussions.

The complainants have an opportunity to file a response to BPA's reply. There is no set deadline for FERC to rule.