News Flash: BPA releases oversupply plan

The Bonneville Power Authority on March 6 released its oversupply plan, with revisions to its original proposal to address concerns over the competitiveness of its transmission policies. 

In an interview with TransmissionHub prior to the release of the plan, a wind generator familiar with the settlement talks said the proposal would not be sufficient to meet the wind generators’ requests, not to mention FERC’s. FERC on Dec. 7, 2011, ordered BPA to file an open access transmission tariff. 

For its part, Bonneville said in its filing it believes the Dec. 7 order directed it to file tariff revisions addressing only the oversupply issue. However, BPA is also preparing to seek reciprocity through a tariff filing that will include Bonneville’s entire tariff, which BPA expects to make by the end of this month.

BPA summarized six changes from its original proposal, released Feb. 7: 

1. Validation Process Some comments suggested the validation process was not stringent enough while others indicated that the penalty for submitting inaccurate costs was either too harsh or too mild. Change: Bonneville is requiring that all costs and supporting data and documentation be sent to an independent evaluator.  The evaluator will create the cost curve and will be responsible for flagging any cost submissions that are inaccurate.  Instead of Bonneville assessing a penalty, if the cost data appears inaccurate Bonneville will ask the Commission to investigate the generator and take appropriate action. 

2. Term of Policy Many comments asked BPA to limit the term of this policy to one year to allow the region to continue working on a long-term solution. Change: Bonneville has set an expiration date of March 30, 2013 instead of the previously proposed expiration date of Sept. 30, 2015.  

3. Cost Curve Comments questioned the definition of a generator, the complex methodologies for determining costs, and including costs for thermal generators. Change: Bonneville is clarifying that costs should be submitted for each generating facility, not each company or individual generating unit. In addition, generators will certify their costs, which can include Production Tax Credits (PTC), Renewable Energy Credits (REC) or, for existing contracts, costs based on bundled RECs and energy contracts.  The generators must justify those costs to an independent evaluator.  Bonneville is also allowing all generators to opt out of receiving compensation in return for not being allocated a share of the costs.  Those generators that opt out will be displaced at $0/MWh.  Generators that are not variable energy resources (VER) that have RECs/PTCs can choose to participate in the cost curve. However, Bonneville will not reimburse non-renewable thermals for any operating costs of displacement.  Thermals have an opportunity to submit minimum generation levels for a variety of reasons and do not have costs tied to reduced generation.  

4. Displacement Costs Comments suggested that generators should be allowed to update their costs and that compensation should be based on potential energy rather than scheduled energy.  Change: Bonneville is allowing generators to update their costs of displacement throughout the year. Bonneville will still compensate generators based on the difference between directed generation levels and scheduled generation levels, but can submit independent data to the independent evaluator if Bonneville believes the schedule may be inaccurate. The independent evaluator can request additional data from the generator. If the evaluator concludes that the schedule is inaccurate, the evaluator will inform Bonneville, which can ask the Commission to investigate further. 

5. New Generators Comments differed on Bonneville’s proposal to exclude compensation for new generators. Some suggested that projects that have already entered into contracts be included, with projects cut off by contract end date. Change: Bonneville will compensate all existing and new generators for PTCs and RECs. However, Bonneville will not compensate for foregone revenues or penalties for failure to deliver energy under power sales contracts signed after March 6, 2012. 

6. Non-Disclosure Agreements Many generators voiced concerns with the commercially sensitive nature of the data they would submit to BPA. Change: All information will now be submitted to an independent evaluator.  Bonneville will see information supporting a generator’s costs only if the independent evaluator believes the costs are inaccurate.  In addition, Bonneville will execute non-disclosure agreements (NDAs) with all generators submitting costs and require that the evaluator also execute NDAs with those generators. Scheduling data will also be submitted to the evaluator. Bonneville will see it only if there are questions about its accuracy. The NDA will also cover scheduling data.

 

This article was updated at 12:24 pm on March 7, 2012, to include the paragraph with the information that BPA will make a filing at the end of this month. 

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.