On December 20, 2012, FERC issued two orders related to the Bonneville Power Administration’s (“Bonneville”) transmission service curtailment practices under a protocol originally called the Environmental Redispatch and Negative Pricing Policies (“Environmental Redispatch Policies”). FERC both: (1) reaffirmed its authority under Federal Power Act (“FPA”) Section 211A and its exercise of that authority in this case in order to remedy Bonneville’s unduly discriminatory practices against wind generation; and (2) directed Bonneville to significantly revise its proposed oversupply curtailment policies and cost allocation mechanisms in order to ensure comparability and eliminate undue discrimination.
In May 2011, Bonneville adopted its Environmental Redispatch Policies, under which it unilaterally curtailed generators and utilized their firm transmission rights without compensation to deliver federal hydropower during certain high water situations. Bonneville stated that this policy was necessary to ensure that BPA fully comply with its organic statutory requirements, as well as other applicable environmental statutory requirements. In June 2011, a coalition of wind energy facility owners filed with FERC a complaint and petition for order under Section 211A of the FPA, requesting FERC order Bonneville to discontinue its discriminatory practices.
In December 2011, FERC granted this complaint, directing Bonneville to file revisions to its Open Access Transmission Tariff (“OATT”) to provide for transmission service on terms and conditions that are comparable to those under which Bonneville provides service to itself and that are not unduly discriminatory or preferential (see December 12, 2011 edition of the WER). Subsequent to this order, Bonneville, along with others, filed a request for rehearing and/or clarification of the order. Bonneville also made a subsequent compliance filing, proposing a new protocol to govern during oversupply conditions, called the Oversupply Management Protocol (“OMP”). Under the OMP, Bonneville proposed to displace certain non-Federal generation during oversupply events using a least-cost displacement curve. Generators that elected to be compensated for displacement in accordance with the least-cost displacement curve would be allocated back 50 percent of the total displacement costs through the proposed cost allocation methodology. Generators that did not elect to be compensated would be assigned a zero displacement cost and be displaced first, without receiving any compensation or cost allocation (see March 19, 2012 edition of the WER).
In the pair of newly issued orders, FERC ruled on both requests for rehearing of the December 2011 order and Bonneville’s OMP compliance filing, affirming its prior determinations and ordering Bonneville to significantly revise its proposed oversupply curtailment policies and cost allocation mechanisms in order to ensure comparability and eliminate undue discrimination.
In its rehearing order, FERC affirmed its prior determination that it has authority under FPA Section 211A to direct Bonneville to provide transmission service prospectively under terms and conditions that are comparable to those under which it provides transmission service to itself, and are not unduly discriminatory or preferential. FERC stated that FPA Section 211A grants it broad legal authority to require unregulated transmitting utilities to provide comparable transmission service, and, as a result, Section 211A “is an appropriate statutory tool in this instance to ensure transmission service on a comparable basis for all resources connected to Bonneville’s transmission system. In our December order, we determined that Bonneville’s Environmental Redispatch Policy significantly diminished access to Bonneville’s transmission system for certain resources, which compelled us to act pursuant to this statutory authority.”
Additionally, FERC clarified, with very little explanation, that its December 2011 order did not expressly require that Bonneville file and maintain an entirely new, updated OATT pursuant to FPA Section 211A, but rather directed Bonneville to file revisions to its tariff to address FERC’s comparability concerns with respect to its Environmental Redispatch Policy. Consequently, given the fact that the ruling is specific to Bonneville’s Environmental Redispatch Policies, transmission customers with objections to Bonneville OATT practices they believe to be noncomparable or unduly discriminatory will need to file additional, new FPA Section 211A requests in order to get relief.
With regard to Bonneville’s OMP compliance filing, FERC found that, “taken together, the rates and non-rate terms and conditions of the OMP and the cost sharing arrangement proposed by Bonneville do not result in transmission service for generating resources at rates that are comparable to those Bonneville charges itself, and on terms and conditions that are comparable to those under which Bonneville provides to itself and that are not unduly discriminatory or preferential.” FERC went on to observe that transmission service for wind generators that submit displacement costs represents a fraction of the firm transmission service on Bonneville’s system during oversupply situations, yet those entities are allocated half of displacement costs. FERC stated that “[b]ased on the record in this proceeding, we are not persuaded that a 50/50 sharing of displacement costs results in comparable transmission service for displaced wind generators.” FERC directed BPA to make a compliance filing within 90 days, “setting forth a methodology to allocate displacement costs in a manner that equitably allocates such costs to all firm transmission customers based on their respective transmission usage during oversupply events, or setting forth a different method altogether that ensures comparability in the provision of transmission service by Bonneville.”
To view the complete rehearing order, click here.
To view the complete compliance order, click here.
*Disclosure – Troutman Sanders LLP represented Iberdrola Renewables, LLC in this FERC proceeding