On November 10, 2009, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) rejected a proposal by NorthWestern Energy (“NorthWestern”) to amend its Open Access Transmission Tariff (“OATT”) to require that wind generators provide their own regulation services for power exported outside of its balancing authority area.
Under North American Electric Reliability Corporation (“NERC”) mandatory reliability standards, NorthWestern must maintain minimum regulating reserves that can respond to and balance out frequency fluctuations over 10-minute intervals between generation output and load usage on the transmission grid. NorthWestern does not own or operate any generation facilities to supply regulation service. Instead, it relies on contracts with third parties for capacity and energy in order to meet its balancing energy obligations.
Several thousand megawatts of wind generation is seeking to interconnect with NorthWestern’s transmission system, most of which would be exported outside of its balancing authority area. NorthWestern stated that it is not obligated to provide regulation services when its transmission lines are used to transport power outside its balancing authority area. Furthermore, NorthWestern said that it has no mechanism under its tariff to recover the cost of providing regulation service for exported power.
NorthWestern proposed to amend its OATT to require intermittent renewable generators that use its transmission service to export power outside its balancing authority area to make arrangements to provide their own regulation service. FERC rejected the proposal, finding that NorthWestern may not require intermittent renewable generators to provide or otherwise account for their own regulation service without offering generator regulation service itself.
The Commission’s rejection of the tariff amendment proposal was without prejudice to NorthWestern making a revised filing seeking recovery of the incremental cost of additional regulation services.
The Order is available at: http://www.ferc.gov/EventCalendar/Files/20091110162425-ER09-1314-000.pdf.