BPA’s oversupply plan will still fall short of Northwest wind generators’ demands – source

Bonneville Power Authority’s (BPA) oversupply plan to be filed imminently will contain two substantial changes to its proposal released last month, but will largely fall short of a satisfactory settlement, a wind generator familiar with the situation told TransmissionHub March 6.

BPA will shorten the window for its 50/50 cost allocation proposal to one year, ending in March 2013, from a three or four-year period, and employ an independent evaluator to collect data needed from wind generators to establish a cost curve for curtailment, or least-cost displacement curve.

“The things they’ve proposed today that are different from a month ago are good changes at the margin, but BPA continues to ignore the fundamental problem, which is that the interference of their commercial interests has and will continue to create discriminatory behavior,” said the wind generator familiar with the situation.

BPA says the oversupply management protocol “treats system users comparably by covering legitimate displacement costs while allowing Bonneville to fulfill its environmental obligations at the lowest cost and risk to the region.”

BPA is a federal agency that markets hydroelectric generation from the Columbia River. A coalition of Northwest wind generators in May 2011 filed a complaint with FERC, arguing that BPA’s curtailment of wind during periods of high river flows was discriminatory and noncompetitive. FERC on Dec. 7, 2011, ordered BPA to file an open access transmission tariff (OATT) that does not discriminate against wind generators. On Feb. 7, BPA released a proposal offering to compensate wind generators for reducing their output during these periods. According to that proposal, BPA would later recover those compensatory costs through a rate case, which would be structured so that “roughly half” of the costs would be covered by wind interests, while the other half would be covered by BPA’s preference customers.

Over the past six months, the wind generators have repeatedly expressed that there should be two components to a settlement, the wind generator said. One would be a method to curtailing and allocating the costs of curtailment, and the other would be filing an OATT, as ordered by FERC.

“Resolving the first without resolving the second is not a settlement,” he said. “We do not believe this is an adequate response to the FERC order and we will make that clear through whatever means we need to.”

An industry lawyer echoed this argument, noting that a clarification or rehearing of the order does not enjoin BPA from complying with FERC’s Dec. 7 order. BPA on Jan. 6 requested clarification of FERC’s order, which FERC later granted.

Shortening the window for cost allocation does alleviate some concerns, the wind generator acknowledged. Instead of three rate cases in three years, there would only be one. However, he reiterated that the lack of an OATT is not a satisfactory solution.

All eyes will be on the rehearing proceedings, and on FERC’s response to BPA’s revised proposal, the wind generator and industry lawyer said.

The lawyer noted that BPA has already put on its calendar workshops for its cost allocation methodology “at the same time they’re supposed to give due consideration on file with customers,” he said. “To me that shows they’re not giving full consideration to the comments.”

BPA did not return a call for comment as of press time.

This article was amended at 12:25 p.m. on March 7, 2012, to include BPA’s claim that its plan treats system users comparably. 

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.