FERC Fires Another Shot In Northwest Wind Wars

After a hiatus for its August break, FERC this week leaped back into the fray between Pacific Northwest wind developers and utilities, issuing another ruling addressing the contentious — and intensely litigated — issue of whether wind generation can be curtailed during periods of low demand. The order, Idaho Wind Partners 1, LLC, addresses a dispute between the Idaho Public Utility Commission (“IPUC”) and wind developers concerning whether Idaho Power Company can curtail production from wind generators. In the Idaho Wind order, FERC concludes that the IPUC’s proposal to allow curtailments of purchases from wind generators violates FERC rules.

Idaho Wind involves eleven wind projects that sell to Idaho Power under twenty-year contracts at avoided-cost rates set in accordance with the Public Utility Regulatory Policies Act of 1978 (“PURPA”). Generally considered the first act in the ongoing drama of restructuring the electric utility regulation, PURPA requires utilities to purchase power produced by “Qualifying Facilities” (“QFs”) (relatively small, independently-owned generators fired by cogeneration or renewable technologies) at “avoided-cost” rates (the cost the utility would otherwise incur to purchase power from marginal resources).

Idaho Wind addresses one of a number of policies the IPUC has recently considered related to QFs and wind generation, in this case IPUC’s proposed Schedule 74. Schedule 74 would have allowed Idaho Power to unilaterally curtail wind production from wind QFs in periods where Idaho Power might otherwise have to dispatch higher-cost resources or curtail base load resources to address system contingencies, such as high wind production during periods of low demand. Seeking to preempt these curtailments, the wind producers asked FERC to issue a declaration that Schedule 74, if implemented, would violate PURPA and FERC’s PURPA rules.

FERC’s order, issued September 20, declares that Schedule 74 would violate PURPA’s mandatory purchase requirement and the FERC regulations implementing that requirement. The order concludes, “Idaho Power may not use curtailment under light loading periods to avoid its contractual obligations” under long-term QF contracts and, therefore, “Schedule 74 is inconsistent with PURPA.” When considered in light of FERC’s December 7, 2011, order rejecting Bonneville Power Administration’s “Environmental Redispatch” policy, which similarly allowed Bonneville to curtail wind production in low-demand periods, it is clear that a policy simply curtailing wind production in low-load conditions is unlikely to pass muster with FERC. It is therefore imperative for the region to work with all deliberate speed toward more creative solutions to integrating variable renewable resources, such as wind, that move beyond simple curtailments.