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FERC's Golden Rule

by NIPCC Staff
Juice, February 21, 2012

Wind energy operators say the Bonneville Power Administration's latest proposal falls short. The message the Federal Energy Regulatory Commission (FERC) delivered to the Bonneville Power Administration (BPA) on December 7th came as a surprise to its sister agency and to the public power community. FERC invoked The Golden Rule over BPA on the 70th anniversary of Pearl Harbor, exercising authority Congress granted the Commission with the passage of EPAct 2005. In rolling back Bonneville's controversial Environmental Redispatch policy (ER), FERC directed BPA to manage challenges posed by an "over supply" of renewable power with methods that "...are comparable to those under which Bonneville provides transmission services to itself and that are not unduly discriminatory or preferential." FERC acknowledged BPA's other statutory obligations, but asserting that going forward, Bonneville must also manage its transmission system consistent with the law of the land.

Everyone affected by BPA's gargantuan influence in the Western power markets sees what only a few trade publications have reported: that FERC's Order is about fish AND the unjustifiable taking of customers' transmission rights so as to deliver its hydropower to market. In exercising Section 211A two months ago, the Commission has taken action that NIPPC had long urged it to do: require BPA, a Federal agency, to follow Federal law.

Follow the Golden Rule?

The Berenstain Bears have it right of course, but some beg to differ. BPA is ignoring - some might say defying - FERC's December 7th Order.

BPA and its public power constituency countered the complaint that generators, led by Ibedrola, filed at FERC while also filing at the Ninth Circuit. Meanwhile, at the prompting of Members of Congress, BPA convened settlement discussions with several of the generators' senior managers and trusted public power executives. After months of secret meetings, BPA released a "proposed resolution" to ER on February 7th, intimating that a settlement had been reached. But there was no settlement, and within days, the complainants wrote DOE Secretary Chu strongly supporting FERC's Order.

NIPPC opposes the Over-Generation Management Protocol (OMP) that BPA rolled out on February 7th, along with many other transmission customers. BPA's proposal, seen through the razzle-dazzle, merely adds staged curtailments and modest compensation to last year's ER. And OMP can't be fully implemented until it survives BPA's next rate case.

BPA won't deliver an alternative to ER that FERC requires. Instead, BPA has a gift for FERC in place of complying with the Section 211A standard. BPA plans to submit a "reciprocity" tariff - with deviations - after declining to do so for three years. Too little, too late.

Peaceful Kingdom

Rally everyone around an illusory settlement? Convince FERC to accept a BPA-version of "reciprocity" instead of adopting the Golden Rule? Call in Members of Congress to pressure DOE?

The Northwest isn't a Peaceable Kingdom - it's more like the Hatfields and McCoys' neighborhood. Only here, as this list confirms, does energy policy often gets made at the Ninth Circuit. True to form, and despite the convenient myth of "consensus in The Region," that's where ER is headed.

Frustratingly, there are cost-effective, equitable market solutions that optimize transmission operations while assuring non-discriminatory transmission service. For starters, there's the option of paying power plants to curtail overgeneration at negative prices that could best be set by auction. No mystery here. An example of "negative prices" is when an airline pays a ticket-holding passenger to legally bump him/her off an over-sold flight.

BPA has a pilot project that directs power generated during light load hours to heat up electric water heaters. But as one energy efficiency veteran argues, that's an easy fix that could be swiftly expanded. BPA's Customer-Supplied Generation Imbalance pilot proved out, but its expansion has been held back by transmission constraints and what might be gently described as "institutional barriers." And as WECC recently reported, ambitious plans to optimize transmission services across the West are still under interminable discussion.

The present isn't pretty, but change is possible. Who thought FERC, the agency created to be hated and do what needs to be done, would force the Northwest to finally meet the future

FERC's Golden Rule
Juice, February 21, 2012

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