Five companies file claim against Bonneville Power in wind dispute

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Bonneville Power Administration is under fire from the renewable energy community for requiring wind turbines to power down.

A coalition of five companies filed a claim with the Federal Energy Regulatory Commission Monday, charging the Bonneville Power Administration with violating the Federal Power Act by requiring wind farms to shut down operations. The claim cites decades of regulatory policy as grounds to get more than 2,000 wind turbines back on the grid.

Iberdrola Renewables, PacifiCorp, NextEra Energy Resources, Horizon Wind Energy and Invenergy Wind North America are parties to the filing. Collectively, they have invested more than $6 billion in renewable energy generation in the Pacific Northwest. The American Wind Energy Association also filed comments in support.

Their filing charges that Bonneville Power, which owns approximately 75 percent of the transmission system in its balancing authority, used that authority to craft policies that benefit its own hydropower generation while breaking contracts with wind power companies to benefit its own business.

“We have no choice but to pursue legal redress,” Don Furman, senior vice president of external affairs at Iberdrola Renewables, said in an interview last week. “We’ve worked really hard with Bonneville and I think everybody understands that we’re at an impasse and we’re going to have to let someone else resolve it.”

In a statement Monday, Furman charged BPA with discriminating against wind power generators and called its policy an egregious example of BPA’s choosing not to play by rules that apply to other transmission providers.

The filing is the first in what will likely become a three-pronged legal strategy against BPA by wind companies and utilities eager to push back against its recent decision to curtail wind power in the Northwest.

Bonneville Power is facing a high-water spring runoff season. The administration is faced with the dilemma of what to do with too much hydropower in a system that limits the amount of water that can be spilled over dams and can’t find customers for excess power during periods of low demand.

BPA has curtailed wind power during select overnight hours since May 18 through it’s policy, which it calls Environmental Redispatch. The measure is due to a power phenomenon known as overgeneration. As of Sunday, BPA had curtailed 74,114 megawatt hours of wind power at 35 wind farms owned by wind companies and utilities that contract with BPA to transmit power.

The policy has sent shivers through the wind energy community since its approval May 16, prompting observers to speculate it would dampen investment in wind power in the region, with possible long-term consequences for wind development nationally.

“There’s an important principal at stake here and that is that contracts that deliver power have to be upheld in the Northwest, and anywhere, or else you just can’t have electricity commerce. Whether it’s wind companies or anything else, you can’t operate a business if your delivery contracts can be canceled at any time for whatever economic reason the monopoly transmission company chooses,” said Rob Gramlich, senior vice president for public policy of the American Wind Energy Association.

He said AWEA expected non-wind companies around the country “to stand up for the prospect that contracts must be upheld and enforced.”

Bonneville Power was surprised by Monday's complaint filing.

"We are disappointed that this filing has proceeded as we are participating in mediation sponsored by FERC that we believe is worthy of effort," said BPA spokesman Mike Hansen.

BPA maintains it has the authority to limit wind generation, particularly during periods of overgeneration.

“We have the legal authority to implement the Environmental Redispatch policy and, in addition to that, we believe our transmission contracts also give us the legal authority to limit generation,” Hansen said.

That position is unlikely to keep BPA out of the courts or away from a lengthy tangle at FERC. Northwest companies are expected to also challenge BPA’s policy in the Ninth District Circuit Court of Appeals by charging it violates the Northwest Power Act. Individual companies and utilities are also likely to attempt to recover spring losses from BPA in the U.S. Court of Federal Claims.

Total losses from the decision are estimated in the millions so far, both from unrealized power sales and from lucrative state and federal incentives tied to wind power production. With federal production tax credits currently valued at $22 per megawatt hour, losses from federal incentives alone hit at $1.6 million at the time of the FERC filing.

“I think it’s a very real possibility that we will defend our customers interest in court,” said Pacific Power president Pat Reiten, who noted that ratepayers were likely to shoulder some impacts from the BPA policy. Pacific has 1,800 megawatts of power in its portfolio with 200 megawatts in BPA’s balancing authority.

“By not running we are not receiving the production tax credits associated with the projects and we are not able to fulfill REC (renewable energy credit) contract responsibilities because we only generate RECs as we generate the power. So there is a real impact to our customers,” he said.

Reiten and others have repeatedly charged that BPA’s decision to curtail wind is an economic one. Pointing to open capacity on transmission lines running south to California and north to British Columbia, and entities that have offered to use surplus power, he said excess power can be moved from the region to get wind back online, if only BPA would pay.

Some transmission organizations do so. Organizations in the Midwest, New York, New England and Texas regularly pay customers to consume surplus power.

But Hansen said doing so in the Northwest would increase costs at BPA and possibly for ratepayers. That’s not equitable, he said, because most wind on BPA’s system is exported to other utilities, which means some Northwest ratepayers could end up shouldering costs for wind power used by others.

He maintains BPA has worked hard to integrate wind into its transmission system, with more than 3,500 MW of wind in its balancing area and expecting 6,000 by 2013, a volume years ahead of original estimates. But the intermittent nature of power has made balancing supply with demand a tough exercise, he said, and made for difficult decisions this spring while both hydropower and wind power are at a peak.

Sen. Jeff Merkley, D-Ore., joined Rep. Earl Blumenauer, D-Ore., in lobbying BPA to reverse the decision before BPA made it official in May. Blumenauer has since pressed the Obama Administration for support, joined by Rep. Edward Markey, D-Mass. and others.

All say they hope to see an end to the dispute by spring 2012, including BPA and renewable energy advocates.

“It’s certainly a big depressing event for the renewable energy industry in the Northwest. If not an immediate drag, it will most certainly be a drag on investments in clean energy in the region if this policy doesn't get resolved soon,” said Cameron Yourkowski, transmission policy associate at the Renewable Northwest Project, which has promoted renewable energy development in the Northwest since 1994.

Lee van der Voo, lvdvoo*at*gmail.com, is a freelance writer for Sustainable Business Oregon.