On Wednesday, June 26, 2013, FERC issued an order denying rehearing (“Order Denying Rehearing”) of two prior orders related to the Bonneville Power Administration’s (“Bonneville”) transmission service curtailment practices under a protocol currently named the “Oversupply Management Protocol” (“OMP”). In those prior orders FERC: (1) reaffirmed its authority under Federal Power Act (“FPA”) Section 211A and its use of that authority 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 (see January 8, 2013 edition of the WER). The Order Denying Rehearing again affirmed FERC’s authority to act under FPA Section 211A and further clarified the revisions Bonneville must make to its OMP schema.
In May 2011, Bonneville adopted a transmission service curtailment practice called the Environmental Redispatch and Negative Pricing Policies (“Environmental Redispatch Policies”), under which it unilaterally curtailed certain 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 Bonneville fully complied with its organic statutory requirements, as well as other applicable environmental statutory requirements. In June 2011, a coalition of wind energy facility owners (“211A Complainants”) filed with FERC a complaint and petition for order under Section 211A of the FPA, requesting that FERC order Bonneville to discontinue its discriminatory practices.
In December 2011, FERC granted the 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 revisions to the Environmental Redispatch Policies, renaming them the 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 Bonneville’s proposed cost allocation methodology. Generators that did not elect to be compensated would be assigned a zero displacement cost and would be displaced first, without receiving any compensation or cost allocation (see March 19, 2012 edition of the WER).
The 211A Complainants, in partnership with Northwest and Intermountain Power Producers Coalition and TransAlta Energy Marketing (U.S.), had requested clarification, or in the alternative, rehearing of FERC’s Order relating to Bonneville’s compliance filing (“Compliance Order”). Public Power Council, Pacific Northwest Generating Cooperative, Northwest Requirements Utilities and the Western Public Agencies Group (as Joint Intervenors); Bonneville; E.ON Climate & Renewables North America, LLC; American Wind Energy Association; Renewable Northwest Project and Powerex Corp. also each requested clarification and/or rehearing of the Compliance Order. The Joint Intervenors also filed a request for rehearing of the Original Order Denying Rehearing.
In the Order Denying Rehearing, FERC restated that the rates, terms and conditions of Bonneville’s OMP are inextricably linked, and the non-rate aspects are not “approved” separate from the rate aspects. Thus, FERC stated that its approval or disapproval of Bonneville’s OMP will only be determined once Bonneville completes its currently ongoing OS-14 Oversupply Management Protocol Rate Proceeding and submits its complete proposal to FERC. The Order Denying Rehearing also clarified that FERC’s Compliance Order did not suggest that allocation of OMP costs to transmission would be appropriate under any laws other than FPA Section 211A, leaving Bonneville the responsibility to choose a mechanism addressing oversupply that satisfies all of its statutory requirements. Furthermore, FERC stated that discussions pertaining to the highly contested Dispatcher Standing Order 216 (“DSO 216”), a different curtailment protocol, were out of the scope of the current proceeding, and clarified that FERC did not sanction Bonneville’s unilateral inclusion of the DSO 216 in its Large Generator Interconnection Agreements. FERC also made clear that Bonneville is free to submit other solutions in place of OMP, including, specifically, voluntary curtailments with compensation.
In addition to the topics outlined above, FERC accepted Bonneville’s exclusion of compensation for contracts executed after March 6, 2012, and rejected claims of undue discrimination as between thermal and non-thermal generators. FERC also found that neither the Joint Intervenors nor Bonneville raised any arguments on rehearing that indicated that their proposal to allocate half of the displacement costs to wind generation, a group that utilizes only a small percentage of the overall transmission system, would satisfy FERC’s comparability standards. FERC summarily denied rehearing of the Original Order Denying Rehearing, stating that it has not preempted Bonneville’s other statutory obligations through the use of FPA Section 211A.
For a copy of the Order Denying Rehearing, click here.
To view more information on Bonneville’s Oversupply Rates Proceeding, click here.
*Disclosure – Troutman Sanders LLP represented Iberdrola Renewables, LLC in this FERC proceeding