Following cost-allocation recommendations from the Federal Energy Regulatory Commission (FERC), the Bonneville Power Administration (BPA) has released a revised proposal to share the costs of oversupply among customers using its transmission system, including hydropower and wind energy generators.
BPA says each user, including BPA Power Services, would bear its proportionate share of the costs based on its level of use. In 2011, BPA curtailed approximately 97.5 MWh of generation, including 350 MW of wind power, during a period of hydropower oversupply. BPA's policy at that time, called Environmental Redispatch, did not include a mechanism to reimburse generators for the cost of displacement, and FERC ruled in December 2011 that the BPA's actions unduly discriminated against wind energy.
In March 2012, BPA filed the original Oversupply Management Protocol (OMP) with FERC and proposed to allocate oversupply costs equally between power customers and generators that elect compensation under the OMP.
In December 2012, FERC issued a ruling conditionally accepting the OMP contingent upon BPA's submitting a different cost-allocation methodology within 90 days of the ruling. BPA then requested a stay of that order so that it could finish its oversupply rate case, now scheduled to conclude in August, before submitting a cost-allocation proposal. FERC accepted this request. On April 12, BPA released a new rate proposal and is seeking comment. It expects to issue a final record of decision on August 28, 2013.
In March, BPA modified its analysis for estimating the likelihood of oversupply conditions and conducted an updated analysis for 2013. For this year, BPA projects a 50% probability of oversupply conditions leading to displacement under the OMP, compared to a 65% probability in the 2012 study.
If the protocol is needed, BPA projects the midpoint of the range of possible costs to be approximately $10 million, but under extreme conditions, costs could exceed $50 million, depending on the timing of the spring runoff.