Portland, Oregon: Ontario is not the only jurisdiction facing difficult challenges caused by high levels of baseload generation. Surplus-related curtailment practices became a bone of contention last year, attracting the interest of the federal regulator in a debate that continues to simmer. The Bonneville Power Administration (BPA), the marketing agent for power from all of the federally owned hydroelectric projects in the US Pacific Northwest, got into trouble when it tried to manage the situation in part by curtailing output from wind generators in its region. High water flows during spring runoff last year, combined with other factors, had created a temporary oversupply situation. Affected generators objected and legal proceedings ensued.
As reported recently by Laura DiMugno in Renew Grid, “In December, FERC ruled that BPA had unduly discriminated against wind energy and gave preferential treatment to hydropower, and required BPA to submit a revised open-access transmission tariff (OATT). Last month, BPA released a proposal that would compensate wind energy producers within its section of the grid for periodically reducing their output during periods of oversupply in order to keep supply from exceeding demand during high river flows.”
However a number of generators including some represented by the Renewable Northwest Project argue that the new proposal is still unfair to them. On March 6, they said “The proposal BPA filed today speaks to only half of what was addressed during regional discussions; it focuses on money and cost allocation but sidesteps the fundamental principle of treating others’ generation as it treats its own – the transmission ‘golden rule.’” The Project includes such companies as Iberdrola Renewables, Pacific Power, EDF Renewables North America, Invenergy Wind North America and NextEra Energy Resources.
BPA Administrator Steve Wright noted that, “While the time frame we had to deal with did not provide opportunity for a broad settlement, our filing today is based on extensive conversations with and comments from parties interested in achieving an equitable solution.” DiMugno reports further that, “under the new proposal, BPA would first work with the U.S. Army Corps of Engineers and the U.S. Bureau of Reclamation to manage federal hydroelectric generation and spill water up to dissolved gas limits. Then, BPA would offer what it says would be ‘low-cost or free’ hydropower to replace the output of other power plants. Under this scenario, the expectation would be that generators would voluntarily reduce their generation to save money. After those measures are taken, if electricity supply still exceeds demand, BPA would reduce the output of the remaining generation on the grid – including wind energy – in order of least cost. Notably, BPA would compensate wind generators for lost revenues, including renewable energy credits and production tax credits.” A further ruling from FERC is anticipated.
Market participants in other jurisdictions with surplus generation may see these developments as something of a cautionary tale.