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BPA Decision To Curtail Wind Power Sends 'Chilling Signal' To Industry

Wind power generators in the Pacific Northwest this week began seeing the Bonneville Power Administration (BPA) break its contracts with them, thanks to what AWEA and the wind industry called a wrongheaded decision that BPA announced May 13.

BPA signed an “Environmental Redispatch” Record of Decision, a policy which, during times of high hydropower generation, lower electric demand, and high wind generation, can lead wind generation to be curtailed without any compensation to wind project owners. That will potentially cost wind companies tens of millions of dollars and stifle new investment in the Pacific Northwest, members of the wind industry said.

AWEA disagrees with the decision and expressed its disappointment that a federal agency would choose to ignore the president’s commitment to renewable energy and break contractual commitments rather than operate the grid more efficiently — as is done in much of the rest of the country. That could alleviate some of Bonneville’s concerns that led to the decision late Friday.

“BPA really ought to call this the ‘Anti-Environmental Redispatch,’ since it makes no sense environmentally and flies in the face of the agency’s obligation under the Northwest Power Act to promote renewable electricity in the region,” said AWEA CEO Denise Bode. “Yet the agency chose to ignore its statutory duties and Obama administration policies, and instead to illegally promote its own narrow economic interest over meeting its contractual obligations with private renewable energy companies.”

Tom Vinson, senior director of federal regulatory affairs at AWEA, said, “This policy creates significant uncertainty, discriminates against wind energy, and will result in existing projects in the Northwest being seriously harmed economically. It will also make the Northwest significantly less attractive in the future for wind energy development and the associated jobs, economic development and tax and rental payments.”

In a press conference during the AWEA Windpower 2011 show, industry representatives expressed disappointment and anger at what they see as a disconnect between what the Obama administration has stated it wants and what the goverment is actually doing. The Obama administration has said that it wants to encourage clean energy development and yet BPA curtainling wind power is doing the exact opposite.

Congressmen Earl Blumenauer said it really isn't about the money that is being saved in this case, which he estimates could be in the realm of one million dollars, but rather about the message being sent about wind power PPAs. "These agreements, these contracts, if they are not going to be honored, [that] sends a chilling signal to people who would invest, to people who would loan money, to people who are making a long-term decision," he said.

Blumenauer held up the Northwest Wind Intergration Action Plan that was passed in March 2007 and wondered why many of the proposed items in the plan had not been implemented.  He also stated that BPA received around $3 billion from the Recovery Act to address integration issues.  

"It's clear they are making the call in favor of their preferred customers," he said.

BPA claimed it would curtail wind generation instead of spilling water over its hydroelectric dams for environmental reasons. According to BPA, spilling even a bit more water over the dams will create dissolved nitrogen levels that harm the region’s salmon population. However, Pat Ford from Save Our Wild Salmon, the leading conservation group focused on protecting fish in the Northwest, asserted at the press conference that this is false, saying that BPA can spill more water and still meet its salmon obligations. The state of Oregon takes the same position with respect to additional spilled water. In fact, spilling water to Oregon’s standard would be more beneficial for salmon than BPA’s current strategy, the organizations say.

“Rather than being an environmental issue, the policy is a classic case of anti-competitive and discriminatory behavior by a utility with a conflict of interest,” said Rob Gramlich, senior vice president of public policy at AWEA. “BPA as the ‘air traffic controller’ for the Northwestern grid is allowing some generators to operate while blocking others. Such anti-competitive behavior violates contract sanctity and the Federal Power Act’s anti-discrimination provisions. BPA has not sufficiently pursued other measures before curtailing wind, despite its claim that curtailment is a last resort.”

 

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