A no-holds-barred interview with the electric industry’s chief architect of wholesale electric market design.
Bonneville's Balancing Act
In the Pacific Northwest, you either spill water or spill wind.
costs should be assigned to hydropower preference customers, by forcing Bonneville to pay a negative price to earn the right to generate the excess hydropower that achieves that goal.
In fact, good cause exists to treat the complaint as an unlawful collateral attack against a Bonneville administrative policy, review of which lies not with FERC, but only in the federal courts.
Nevertheless, the industry response to this case suggests an undercurrent of feeling that Bonneville has become something of a rogue actor by deciding openly not to file a safe harbor OATT, prompting a final ruling from FERC that BPA’s OATT no longer qualified for open-access reciprocity (see Dkt. NJ09-1, April 12, 2011, 135 FERC ¶61,023) .
In a recent white paper, Bonneville itself admitted that “BPA customers disagree on how high a priority the agency should put on seeking reciprocity, compared to other regional priorities” (see, “ Conferring with customers on BPA’s transmission tariff ,” BPA, Feb. 16, 2011) .
As argued by TransAlta Energy Marketing, in commenting on the complaint, Bonneville’s failure to maintain a reciprocal open-access tariff, among other actions, demonstrates that “BPA intends to operate its system in a vacuum without regard to national policies.”
Fishful of Dollars
In written comments filed to help support the wind industry complaint, the Northwest Wind Group—an unincoporated BPA customer group composed of wind turbine manufacturers, trade groups and project developers—argued that Bonneville’s exercise of wind generation curtailments under its environmental redispatch policy appeared to be designed more to save money for BPA and its preference customers, than to protect fish.
To support that allegation, the group presented numerous graphs and charts to show that Bonneville’s redispatch curtailments were correlated more directly with day-ahead market prices at the Mid-Columbia trading hub, rather than TDG levels.
Thus, the group argued Bonneville could well have avoided the wind curtailments, since “if BPA had spilled the amount of water necessary to avoid curtailing the MWh of wind that were in fact redispatched, there would have been no significant or divergent increase in TDG levels.” Rather, for the same degree of wildlife protection, the group suggested that Bonneville could simply increase its hydro generation when needed to avoid spill, sell it into the market at low or even negative power prices, and then offset any losses against the significant net profits expected from hydro sales conducted at other times—projected by BPA to reach $670 million in 2012, and $727 million in 2013 (Comments of Northwest Wind Group, filed July 19, 2011, amended Aug. 10, 2011) .
In fact, Bonneville concedes that its wind curtailments appear more strongly correlated to price than to TDG levels, but stresses that this appearance is pure coincidence.
The wind curtailments, it argues, are best understood as a remedy for insufficient load to support turbine operation to absorb all the excess water behind the dams that otherwise would have to be spilled. As Bonneville explains, it can curtail wind and substitute hydro power only if it has unused turbine capacity available. Thus, Bonneville’s environmental redispatch and wind curtailments tend to take place