BPA preparing to file oversupply plan with FERC

The Bonneville Power Administration (BPA) is putting the finishing touches on the FERC filing that will detail its plan to deal with future oversupplies of wind energy (Docket EL-11-44-000).

A BPA spokesperson told TransmissionHub March 5 the agency will be making the filing by close of business March 6 as required, if not slightly sooner.

The issue has been at the forefront of discussion among wind generation interests since the spring of 2011 when an abundance of both hydro and wind energy threatened to overwhelm BPA’s system. BPA responded by replacing thermal and wind generation with federal hydropower under interim environmental redispatch and negative pricing policies.

In June 2011, a group of BPA transmission customers that own generation filed a complaint with FERC, alleging that BPA’s policies failed to provide comparable transmission service.

On Dec. 7, 2011, FERC rejected BPA’s interim environmental redispatch policy, ruling that it “impinges on the transmission service obtained by non-Federal generation, such as generation facilities owned by petitioners, in order to deliver Federal hydropower from [BPA’s] system,” according to the ruling. FERC ordered BPA to provide wind generators comparable transmission service that is not unduly discriminatory or preferential, and to file its proposal by Mar. 6.

BPA released a draft proposal to add Attachment P to its existing tariff and comply with FERC’s directive on Feb. 7. 

The proposed Attachment P defines an oversupply management protocol “intended to allow BPA to displace non-federal generation in BPA’s balancing authority area in order to mitigate [total dissolved gas] levels at the lowest cost to the region, while compensating the displaced generators,” according to BPA’s outline of its plan released in February.

BPA has simultaneously been engaged in settlement discussions with a number of key stakeholders to find an equitable solution to oversupply. Discussions have included both a method of compensation and a proper allocation of associated costs. BPA’s plan outline says it will establish a cost allocation methodology but, if the commission does not approve the cost allocation methodology BPA establishes, “Attachment P will no longer have any force or effect.” In such a case, BPA will facilitate a discussion of how to handle oversupply events.

Under the draft Attachment P, all non-federal transmission customers with generation in BPA’s balancing authority area and non-federal generators in BPA’s balancing authority area would be required to will provide BPA with their costs of displacement each year, according to the document.

From that data, BPA will annually construct a least-cost displacement cost curve, which it will then use to determine in what order to shut off generation. Further, BPA’s draft plan it to displace generation only when the total dissolved gas levels exceed Oregon and Washington water quality standards at projects that are spilling past unloaded turbines, according to the plan.

Generators to be compensated for curtailing

Wind generators with a commercial operation date before March 6, 2012, which have contracts for the bundled sale and purchase of both renewable energy credits (RECs) and metered generation, will be paid the sales revenues the purchaser did not pay because of the displacement. In addition, BPA will pay any penalty that was incurred under the contract due to the generator’s failure to generate.

Generators with a commercial operation date after March 6 will have two options under the draft plan. They may choose to be redispatched without compensation, in which case they will not share in the costs under BPA’s proposed cost allocation to wind generators. Alternatively, they may choose partial compensation, in which case they will share in the costs under BPA’s proposed cost allocation. BPA is currently considering some level of compensation under the second option ranging from 0% to 50% of the economic loss incurred for PTCs (production tax credits) and RECs.

BPA’s plan outline says the agency remains committed to taking all reasonable actions to reduce excess spill and mitigate TDG levels before invoking Attachment P.