New Hampshire, USA — In May 2011, after record snowmelt caused a surge in cheap hydropower for Bonneville Power Association (BPA), the utility made a bold move and decided that it would not accept wind power from wind farms with which it had signed power purchase agreements.
The decision, which came down through an Environmental Redispatch Record of Decision, allowed BPA to curtail wind generation during times of high hydropower generation, lower electric demand, and high wind generation without any compensation to wind project owners. The curtailments took place thoughout the spring.
The American Wind Energy Association (AWEA) and other members of the wind industry at the time said that the action could cost wind companies tens of millions of dollars and stifle new investment in the Pacific Northwest. When wind farms are curtailed, not only do owners not receive payments for power but they also cannot collect production tax credits, an essential element in wind power financing.
Iberdrola Renewables, PacifiCorp, NextEra Energy Resources, Invenergy Wind North America and Horizon Wind Energy filed a petition against BPA with the federal energy regulatory commission (FERC) on June 13.
Wind farm owners contended that BPA could have sold the excess power to neighboring utilities under a “negative pricing” situation in which BPA would pay California utilities to shut down their own generating assets. BPA had opted not to do that.
On December 7th, FERC ruled in favor of the wind power developers, stating that BPA’s policy “diminishes open access to transmission and results in Bonneville providing transmission service to others on terms and conditions that are not comparable to those it provides itself.”
BPA is now tasked with revising its policy and its tariff structure.
In the ruling, FERC acknowledged the difficulties facing both sides of the dispute. BPA had contended that it was forced to curtail the wind power in order to meet environmental regulations for the protection of salmon. FERC also noted that had more transmission been in place for BPA, it could have pushed out some of the excess electricity to neighboring utilities.
Renewable Northwest, an advocacy group that supports wind energy among other renewables said that it is “confident that today’s FERC ruling will precipitate new levels of collaboration and clean energy advancement as BPA and diverse concerned businesses, environmental and non-profit organizations work together to replace the controversial policy with more appropriate measures.”
The ball is now in Bonneville’s court. According to wind energy experts, it could choose to file an appeal or it could take several other actions to comply with the FERC ruling.
The wind farm owners also reportedly filed another suit in the Ninth Circuit Court in June that could result in BPA having to pay damages for lost revenue.