June 14, 2011 / 12:03 AM / 8 years ago

Wind generators to fight Bonneville policy at FERC

HOUSTON (Reuters) - Frustrated owners of wind generation in the U.S. Pacific Northwest have complained to federal regulators about a Bonneville Power Administration policy that curtails their operations in times of low demand and low prices.

Wind turbines spin generating electricity along Highway 10 in Palm Springs, California April 18, 2011. REUTERS/Mike Blake

The largest snowpack since 1997 has boosted Northwest river levels and hydro output, complicating growing competition between hydro and wind interests in the region where Bonneville operates the lion’s share of the high-voltage power network.

Since mid-May, BPA has curtailed wind and other generation most days so it can increase hydropower output to protect salmon and other fish, the agency has said.

But wind generators say the practice of curtailing wind output without compensation is an unfair use of Bonneville’s grid, costing generators lost income and discouraging future development of renewable power resources in the region.

Bonneville “is using its transmission market power to curtail competing generators in an unduly discriminatory manner in order to protect its preferred customer base from prices it considers” too low, a coalition of owners of nearly 2,000 megawatts of wind capacity said in a complaint filed on Monday with the Federal Energy Regulatory Commission.

Transmission contracts allow BPA to cut power output to avoid grid reliability problems, “but they do not permit Bonneville to curtail customers simply because the prevailing market price of power is, in Bonneville’s opinion, too low.”

While Bonneville supplies hydro power to replace the curtailed power, wind generators can lose money in other ways, including the value of federal production tax credits (PTCs) and state renewable energy credits (RECs).

Since May 17, BPA has cut 74,100 megawatt-hours of wind generation and nearly 9,600 Mwh of fossil generation, according to the agency’s website. Most of the curtailment occurs in the overnight hours when power demand is low, pushing market prices into negative territory.

“They have cast this as a fish problem, then as a reliability problem, but the fact is there isn’t anyone who disagrees that economics is at the core of it,” said Don Furman, a senior vice president with Iberdrola Renewables, a Portland, Oregon-based unit of Spain’s largest utility.

Iberdrola is joined in the FERC filing by PacifiCorp, a unit of MidAmerican Energy Holdings Co, the electric unit of Warren Buffett’s Berkshire Hathaway Inc; Horizon Wind Energy, a unit of EDP Renewables, Portugal’s largest utility; NextEra Energy Co, and Invenergy.

BPA spokesman Doug Johnson said the agency will continue to work with generators to find other solutions, noting that the redispatch policy implemented in May will expire next spring.

“We are disappointed this filing has proceeded,” Johnson said Monday. “We are committed to looking for solutions.”

Bonneville has said that compensating wind generators for lost PTC and REC income would shift those costs from taxpayers to its customers who don’t benefit from the wind resources.

High hydro output could continue for months, depending on weather patterns. The U.S. Northwest River Forecast Center has projected above-normal high water runoff at the Dalles Dam, a key dam on the Columbia River, through September.

“We can’t have this system persist or no one will invest in new resources in these states,” said Patrick Reiten, president of PacifiCorp’s Pacific Power utility. “They are cutting transmission for economic reasons when there are other economic options open to them that they are not taking.”

In a summary of its complaint, the companies said: “For the past four years, Bonneville has been moving away from open transmission access and competitive markets and the environmental redispatch protocol is the most egregious example of undue discrimination so far.”

Editing by Dale Hudson and Lisa Shumaker

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