FERC to BPA: Change Wind Policy

Co-ops and consumer-owned utilities in the Northwest say a Federal Energy Regulatory Commission ruling could upset a careful balance that the Bonneville Power Administration has struck between hydropower and wind energy.

Federal regulators have ruled on a surplus hydro policy at Northwest dams like Grand Coulee. (Photo By: BPA)

In a Dec. 7 order, FERC said that BPA discriminated against wind interests by cutting back on wind production at times of high hydroelectric generation. It gave the power marketer 90 days to come up with a new program.

“We are disappointed by FERC’s action today,” said John Prescott, president and CEO of PNGC Power, Portland, Ore.

“Our challenge in the region is to operate a reliable, low-cost electric system that remains in compliance with environmental statues such as the Clean Water Act and the Endangered Species Act,” he said. “We are evaluating FERC’s ruling, and we hope to identify a solution that works for all of the region’s consumers of electricity.”

The FERC decision could lead to higher bills, cautioned Scott Corwin, executive director of the Portland-based Public Power Council, which represents consumer-owned utilities.

“While FERC’s position is not a surprise, we believe it is misguided and ignores other federal laws intended to keep the electrical system reliable and protect fish,” Corwin said. “In the midst of a tough economy, it is frustrating to see a FERC ruling that could increase electricity rates and undermine BPA’s ability to operate its electrical system in times of over-generation.”

BPA had announced the policy, called an environmental redispatch in May, to balance supply and demand on the grid.

A key component of the policy included maintaining water flow to protect the region’s $800 million annual investment in salmon recovery and wildlife. Excess water spills could increase levels of dissolved gas and harm endangered species of salmon and steelhead, BPA said.

When high river flows in May and June led BPA to curtail some wind generation, the wind industry filed complaints with FERC and in federal court. The generators said brief shutdowns cost them more than $2 million in tax and renewable energy credits.

Though FERC declared the environmental redispatch “unduly discriminatory and preferential,” it did not address whether BPA should pay generators to curtail production voluntarily to cope with surplus generation.

“The ruling lacks legal reasoning and fails to explain why they see federal generators as identical to other generators not subject to the same array of legal obligations,” Corwin said.

“We will need to evaluate our next legal steps; this ruling is not only harmful, but it also jumped ahead of regional efforts to resolve the issue in a way that continues to protect fish and does not unfairly hit ratepayers.”

In a statement, BPA Administrator Steve Wright said the agency was “disappointed” that FERC issued the ruling at a time when parties are trying to resolve the matter in time for possible high water conditions in 2012.

“The temporary oversupply of energy is a Northwest challenge,,” Wright said. “We believe it is the region’s responsibility to find the most appropriate way to address this challenge.”