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Energy Companies File FERC Complaint Against BPA On Overgeneration Policy; July 5 Response Deadline
Posted on Friday, June 17, 2011 (PST)

A coalition of leading Pacific Northwest energy companies on Monday filed a complaint against the Bonneville Power Administration that accuses the agency of using its near monopoly control of the region’s electrical grid to break its contracts to transmit scheduled power from wind farms and thermal generation plants.


The complaint filed with the Federal Energy Regulatory Commission claims Bonneville is violating the Federal Power Act and other regulations by implementing its interim Environmental Redispatch and Negative Pricing policies, which were adopted earlier this spring.


The new policy involves, during times when more power is being generated than is needed to meet demand, the curtailment wind and natural gas/coal plant power transmissions so that they can be replaced by hydro power.


According to a FERC notice posted online Wednesday BPA and others now have until July 5 to file comments regarding the complaint. Then the commission would decide if the complaint has merit.


In what is an extremely high water year, BPA says it wants to run as much water as possible through the federal Columbia-Snake river hydro system turbines so that less water has to be flushed through spillgates. And while spill is a preferred means of passage for young salmon and steelhead migrating toward the ocean, the spilled water serves to stir up total dissolved in the rivers. Elevated levels of TDG can be harmful to fish and other aquatic organisms. BPA has obligations under the Endangered Species Act to protect listed salmon and steelhead stocks.


“Under current circumstances, BPA believes it can continue to meet these various objectives by providing no-cost BPA hydropower when necessary to displace non-Federal generation in order to satisfy BPA’s environmental obligations, while at the same time ensuring load service,” the new redispatch policy says. However, BPA believes that its statutory responsibilities and the objectives of the Northwest Power Act would be frustrated if BPA were required to pay negative prices in order to ensure compliance with BPA’s environmental responsibilities.


That overgeneration situation has since May 18 been almost a nightly occurrence and resulted in the curtailment of more than 60,000 megawatt-hours of wind generation. BPA’s transmission capacity was used to deliver replacement hydro generation to customers holding contracts to obtain wind power, the complaint says.


“The policy is the most egregious example of BPA choosing to not play by the rules that apply to other transmission providers,” said Don Furman, senior vice president of Iberdrola Renewables. “The Federal Power Act exists to prevent this kind of discrimination and enforce contracts for energy delivery.


“This is setting a dangerous precedent for the sanctity of contracts in the Pacific Northwest and the nation, and will greatly jeopardize the development of renewable energy in the region,” said Furman.


The coalition initiating the legal filing against BPA is composed of Iberdrola Renewables, PacifiCorp, NextEra Energy Resources, Horizon Wind Energy, and Invenergy. Collectively, the coalition has invested more than $6 billion in new renewable generation in the Pacific Northwest.


BPA is a non-profit federal agency that markets renewable hydropower from federal Columbia River dams, operates three-quarters of high-voltage transmission lines in the Northwest and funds one of the largest wildlife protection and restoration programs in the world.


In announcing the interim policies, which are scheduled to remain in place until March 30, 2012, Bonnville said that in overgeneration situations it will limit generation at coal, natural gas and other thermal power plants and as a last resort temporarily limit wind energy generation connected to its power transmission system.


Under the policy, BPA will replace any reduced thermal and wind generation with free hydropower from federal dams on the Columbia River system. But it will not pay “negative” prices, i.e. pay to have generation taken off the system.


Wind energy producers may lose tax credits and other revenues when their wind turbines do not actively generate power, the federal power marketing agency says. However, BPA under its new policy will not reimburse wind energy producers for lost tax credits or other revenues because that would shift costs to Northwest ratepayers who do not receive the wind power.


The complaint says that the new policy “unilaterally curtails wind generators without compensation, and ‘substitutes’ its own generation for delivery to the wind generators’ customers, in violation of the wind generators’ interconnection contracts with Bonneville and the firm transmission rights associated with the delivery of the output of the wind generators’ facilities.”


“Bonneville’s refusal to pay ‘negative prices,’ and its unilateral action to curtail wind generation instead, improperly place the entire burden of its overgeneration situation on one class of customers -- those subject to the Environmental Redispatch Protocol,” the complaint says.


“Bonneville has estimated that the financial impact of the Final ROD with regard to PTCs and RECs could be approximately $50 million dollars in 2011. In addition, wind energy generators may forgo revenue associated with lost power sales….”


The complaint says that Bonneville has other options for holding TDG to levels”


“Bonneville’s options include:

-- entering into storage arrangements with entities in British Columbia,

-- entering into agreements with regional investor-owned utilities for displacement

of thermal generation outside the Bonneville BAA, and

-- paying negative prices to induce wind generators to back down generation.”

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