US renewables developer Cannon Power and law firm Windy Flats Partners filed an initial law suit in late July, which was followed by an August suit from wind firms NextEra, Caithness, Iberdrola, Invenergy, EDP Renewables North America and PacifiCorp.
The litigation hinges on the Energy Policy Act of 2005, where the US Congress seemingly gave Ferc the authority to prohibit discriminatory transmission policies.
At issue is whether the Bonneville Power Administration (BPA), a federal agency that operates roughly 75% of the region's transmission grid, can legally curtail wind turbines during the snow-melt season, when hydroelectric dams often produce power that far exceeds demand. BPA insists it can dump only a limited amount of water over the dams because excess spillage creates dangerous levels of nitrogen that are harmful to salmon and contends that the Clean Water Act and the Endangered Species Act supersede Ferc's authority.
BPA, which has integrated roughly 3.5GW of new wind capacity since 2005, adopted its so-called environmental dispatch policy after excessive snowmelt in 2010 caused havoc on the grid. Critics, however, claim that the premise of protecting salmon is unwarranted. "Not even the fish people are saying BPA needed to do this," said Robert Kahn, executive director of Northwest InterMountain Power Producers Coalition, a group of US electricity producers.
The agency's actions resulted in nearly 10,000MWh of curtailed wind power over a 53-day period that ended in mid-July - about 6% of the scheduled output from three dozen wind farms. BPA made up for those losses by providing free hydropower to fulfil existing power purchase agreements.
Monopolistic practice
For its part, Iberdrola maintains that BPA is using what is essentially a transmission monopoly to discriminate between different resources and customers. "We think a monopoly is a monopoly," said Iberdrola spokeswoman Jan Johnson. "Being a government-owned monopoly doesn't mean BPA can play by different rules and break contracts with private companies."
The problems the curtailments cause wind generators and their customers are twofold. Vital renewable-energy credits and production tax credits are accrued by wind projects only when power is produced. Moreover, wind generators contend that the breeched transmission contracts could ultimately result in wind developers taking future projects elsewhere if the policy continues in 2012 and beyond.
Ultimately, Ferc could side with BPA, agree with the wind generators, or punt the problem into court.
"It will come down to how Ferc interprets the law," said Kahn. "Ferc has the authority it would need to exercise to provide the relief that Iberdrola and others are looking for. I think that the 9th Circuit will wait for a decision from Ferc."
As of late September, Ferc had no timeline for making a ruling, said commission spokesman Craig Cano. Meanwhile, settlement discussions between the wind generators and BPA are continuing, according to Johnson.
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