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.
to correct the generation source on the e-tag will result in tags showing production of renewable energy credits that in fact may never have been produced.”
Overall, Bonneville argues that its redispatch policy involves generation dispatch, not transmission, and so FERC has no cause to get involved. As Bonneville explains, it was forced to act because of the particular attributes of wind generation—with subsidies from PTC and REC revenue streams. Thus, as Bonneville notes, “wind operators are seeking to export their lost opportunity cost to another party”—namely BPA’s hydropower preference customers.
But on the subject of e-tags and mislabeled RECs, Bonneville counters that in September 2010 at the California Public Utilities Commission, it had proposed that the PUC could allow California utilities to count for RPS compliance the eligible but curtailed renewable power that otherwise would have been generated in the BPA balancing area in the absence of any redispatch ordered by BPA to avoid excessive spill harmful to fish—only to see the idea rejected, as wind developers in California had opposed any rule that might undermine public confidence that all renewable energy earning RECs was actually being generated and delivered to load (See Affidavit of Douglas Marker, Attachment A to Answer of Bonneville Power Administration, FERC Dkt. EL11-44, filed Aug. 15, 2011) .
In fact, Bonneville touts various efforts it has taken to support wind developers in its balancing area.
For example, Bonneville reports that it’s working with the California Independent System Operator on a joint pilot project to better integrate BPA’s intra-hour scheduling with CAISO’s market approach. And back in 2009, Bonneville established a wind integration service charge, now known as VERBS (variable energy resource balancing service), to bill the costs of providing regulation reserves, load-following reserves, and imbalance reserves required to accommodate intermittent wind generation (see, “How BPA Supports Northwest Wind Power,” May 26, 2011, available at www.bpa.gov).
On the whole, it’s difficult to predict how the FERC might deal with Bonneville’s redispatch plan and the wind industry complaint, particularly because of the unique status that BPA enjoys as a New Deal entity.
On one hand, given that FERC Order 890 made it optional for non-jurisdictional entities such as Bonneville to file reciprocity transmission tariffs, and promised only case-by-case, after-the-fact review of their open-access practices, what better test case than this one? As one wind developer suggested, if FERC doesn’t apply FPA sec. 211A to this case, then the provision will become a “nullity.”
Yet, as to whether Bonneville has properly met its statutory obligations, FERC must give way to the Ninth Circuit Court of Appeals—where, by the way, the wind industry complainants also have filed appeals (see, Motion to Lodge of Joint Intervenors, filed Aug. 2, 2011) .
Several industry players have suggested that absent a rate case filing from BPA, FERC lacks any jurisdiction to rule on whether Bonneville’s environmental costs of water system management should be allocated to and recovered from transmission customers—as occurs now under the environmental redispatch policy when Bonneville curtails wind generators to avoid excessive spill and safeguard fish—or whether those