(November 2008)Economic uncertainties are raising doubts over utility returns. Will regulators feel the need to consider broader economic effects when engaging in ratemaking? While...
Yet Another Subsidy For Wind?
FERC risks going overboard in easing penalties for generation imbalances.
see the end of the $100 penalty for generator imbalances-even those most skeptical of renewable energy. Yet the proposal still has met with considerable opposition.
Glen Schleede, a former utility executive, and perhaps the most vociferous critic of wind power, calls the proposal "illogical and probably illegal."
On one hand, as he notes, FERC admits that electricity from wind turbines imposes cost requirements on the grid because of its uncontrollable output and thus carries less implicit value. As evidence of that lesser value, some utilities, such as the Western Farmers Electric Co-op., in western Oklahoma, have shown how high local concentrations of wind-turbine capacity may force them to resort to base-load coal-fired plants with slow ramping rates to provide regulation and voltage control. That's far from ideal, as explained in more detail in Figure 1.
Yet, on the other hand, as Schleede adds, FERC concludes that tariffs that recognize this lower intrinsic value for wind turbine output must somehow be unduly discriminatory!
Danger lurks in singling out one particular power plant technology for special treatment. Consider, for example, the comparison between: (a) wind turbine output; and (b) customer load-both which are weather-driven, volatile, and difficult to control or even forecast. Why isn't FERC proposing to kill the $100 penalty for energy imbalances, which occur when consumer load deviates from schedule?
In particular, consider that many electric consumers operate their own distributed generation resources, behind the meter, such as rooftop solar panels or wind turbines for water pumping. Public power lawyers Robert McDiarmid and Cynthia Bogorad add that even FERC's Washington, D.C., headquarters features solar panels that generate power that reduces the building's net retail electric consumption, and that the fluctuations in output are readily visible on a readout in the building's entrance lobby.
This sneaky but apt example shows that, in some cases, volatility in downstream ratepayer load (and hence the energy imbalance) can be attributable to the same variations in weather that drive fluctuations upstream at the generating plant, and yet FERC promises relief for one, but not the other. Imagine this issue up on appeal.
Glenda Lanik, assistant general counsel for Tri-State Generation and Transmission, a "G&T" co-op association serving non-profit member utilities in Colorado, Nebraska, New Mexico, and Wyoming (all prime areas for wind power development, by the way), sums up the problem quite nicely.
"The commission," she notes, "has no legislative mandate to pursue these issues."
This problem, like so many others these days, exists largely for wind-power operators and developers located outside the boundaries of a FERC-sanctioned regional transmission organization (RTO) or independent system operator (ISO). For, as it happens, most RTOs and ISOs seem to have done away with any severe penalties for generator imbalances.
Thus, FERC's proposal appears designed primarily for non-RTO areas, and in fact contains an explicit escape clause (the "independent entity" rule) that allows RTOs to adopt or preserve rules for wind generator imbalances that differ from the FERC scheme.
For example, under a program known as PIRP (Participating Intermittent Resource Program), approved in 2002 (98 FERC ¶61,327) , the