With a flurry of major new environmental regulations, the Environmental Protection Agency (EPA) is altering the power generation landscape. But will the new federal rules survive court challenges—...
It's the Money, Not the Fish
Bonneville Power, wind curtailments and the bigger picture.
with wind producers on a price they would accept to ramp down to enable Bonneville to sell its surplus hydro.
Nuclear and other baseload plants sometimes sell at a loss during off peak hours to maintain minimum loading. In a similar vein, Turlock advises Bonneville to sell forward “to ensure it can operate its hydro facilities within their environmentally imposed limits.”
Bonneville can shoulder these costs, writes Turlock, because both it and its customers realize “tremendous value” from hydro generation at other times of the year:
“What Bonneville loses on the swings, it gains on the roundabouts.”
The M-S-R Public Power Agency agrees that Bonneville loses by insisting on playing in a purely physical world, without taking advantage of financial and virtual techniques for commodity trading.
According to M-S-R (Modesto, Santa Clara, Redding), Bonneville often remains saddled with excess federal hydro to sell “in part because it limits its forward contracts to sell energy to generation levels that it is nearly certain it will be able to meet based on historical water flows.” (Comments, pp. 9-11, filed March 27, 2012.)
While Bonneville defends forced curtailments because wind plants are stubborn and so don’t respond to Bonneville’s entreaties to shut down in exchange for free hydro power, M-S-R argues simply that Bonneville hasn’t made the right offer:
“BPA Power is no longer competing for load only with thermal generators that have fuel costs when they run. Now BPA also has to compete against wind generation that has no fuel cost.”
Can Bonneville and the PMAs be dragged into the 21st century?
On March 16, President Obama’s Energy Secretary Steven Chu announced he would soon be directing new strategic and capital improvement plans for all four federal PMAs to push them deeper into renewables, energy efficiency, cyber security, and electric vehicles, along with intra-hour scheduling and centralized dispatch—all in recognition of what Chu called “the changing nature of the electric sector.”
Notably, Chu also endorsed the PUC EIM project, a campaign driven by utility commissioners in western states to introduce a competitive, bid-based energy imbalance market in areas of the Western Electricity Coordinating Council that fall outside the Cal-ISO’s market area—a regime modeled after the EIM already in force in the Southwest Power Pool, and now under consideration for adoption by the Western Area Power Administration.
Chu’s announcement struck a chord in Congress, but perhaps hit a wrong note.
More than 150 House and Senate Republicans and Democrats joined in a bipartisan letter, sent to Secretary Chu on June 5, describing public power stakeholders and local officials as “troubled” by what they saw as an expansion of the historical role of the PMAs, “beyond their current statutory authority.”