Too Much Power in the Northwest?

By Erin Mills
East Oregonian

BPA declines to allow wind farms ‘negative pricing,’ for times of overgeneration between water, wind

The proliferation of wind turbines in the Pacific Northwest has exacerbated the old problem of overgeneration for the Bonneville Power Administration.

Overgeneration typically happens every year during surging spring runoffs. In the past, BPA simply asked other power plants on its grid to shut down and allow more room for hydropower.

Although dams spill water at certain times to aid the downstream salmon migration, excessive spill produces high concentrations of gas in the water, which is bad for fish. It can cause gas bubble trauma, similar to the bends in divers.

BPA hit a snag in its usual overgeneration process during a two-week high-water event last June, however: the wind projects within its authority area did not shut down. They receive federal and state tax credits per megawatt hour as an incentive to operate as much as possible. These incentives are considerable: both run at about $20.

“Wind is a new element of the (overgeneration) picture,” said BPA spokesman Michael Milstein. “They don’t operate the same way as traditional power plants.”

Power plants that buy fuel, such as coal and natural gas, are happy to temporarily shut down and accept low or zero-cost hydropower. Traditionally, they scheduled maintenance outtages in the spring to take advantage of the down time.

Wind projects, on the other hand, say they must keep running to be economically viable. And, with the amount of wind power in BPA’s area at 3,000 megawatts and growing, they could add to the overgeneration problem.

One solution, adopted elsewhere in the United States, would be for BPA to compensate wind projects for foregone incentives during a high water event. This is called “negative pricing”; many of BPA’s customers are opposed to it.

John Saven, CEO of Northwest Requirements Utilities, of which Hermiston Energy Services is a member — it buys all of its electricity from BPA — recently wrote a letter to the agency, outlining why negative pricing is a bad idea.

For BPA to pay wind developers, he wrote, “fundamentally means that there would be a transfer of money from public power customers to the wind industry. This is neither an appropriate or tenable solution.”

Saven said his group was also concerned about the consequences of integrating more wind projects into BPA’s system. If overgeneration becomes more common, it could cause wear and tear on the hydro system and on the Columbia Generating System — the nuclear power plant at Hanford — due to operating it in a non-optimal fashion, he said.

More overgeneration would be harmful to fish, he added, and cause stressful conditions for system operators and staff.

After two stakeholder meetings this fall, BPA announced Dec. 3 it would not pay negative prices.

Its reason was essentially the same as Savens’. Currently, the cost of wind developers’ tax credits is broadly shared by taxpayers. But if BPA were to pay negative prices to comply with the Endangered Species Act and the Clean Water Act during high runoff events, the cost burden would be narrowly focused onto BPA customers.

“We do not think the law was designed to place this cost burden on a narrow class of utility rate payers, and we are not prepared to initiate this change,” BPA said.

It proposed establishing an “environmental redispatch mechanism” that would force wind projects to shut down during overgeneration events. BPA would provide no-cost federal hydropower in place of wind power or other energy in its system. This would happen only when necessary for BPA to comply with Endangered Species Act or Clean Water Act requirements during high water.

“Utilities and consumers who purchase wind power or other energy still would receive full energy deliveries,” BPA said, “Environmental redispatch would simply temporarily substitute renewable, carbon-free hydropower for renewable, carbon-free wind power or other energy to protect fish.”

BPA said it is willing to find other solutions to wind developers’ dilemma during overgeneration. For example, it urged the California Public Utility Commission to allow replacement hydropower to qualify for the tax incentives during those times.

BPA will produce a more complete decision on the issue in January.

Meanwhile, the cost of power continues to rise for all, in part because green energy standards force utilities to purchase expensive wind power.

Hermiston Energy Services, for example, must use 5 precent renewable energy, which it purchases from BPA. The utility began paying 7.5 percent more for all of its electricity in the fall of 2009, and will start absorbing another 10.5 percent increase in the fall of 2011.

Superintendent Russ Dorran said the increase will amount to an extra cost of between $350,000 to $400,000 per year. But homeowners will probably not see an immediate increase in their electric bill, he said.

“We’ll probably just hang on until we see it dipping into reserves, then we’ll be forced to raise our rates,” he said.