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BPA Interim Decision on Excess Hydro to Cut Wind, Gas

Sparks flew Tuesday between national wind industry interests and the federal Bonneville Power Administration (BPA) over the large Pacific Northwest power market/transporter's interim decision to temporarily limit nonhydroelectric supplies, such as wind and natural gas-produced power, due to the region's record-breaking levels of water.

Last month natural gas was already preparing to take a hit, and the region's increased wind power supplies knew they were in peril in the face of excess hydroelectric supplies that have caused the Northwest River Forecast Center to predict the highest runoff in more than a decade (see Daily GPI, April 25). BPA could delay no longer a proposal to begin curtailing large chunks of wind power, based on last Friday's action.

BPA Administrator Steve Wright called the move "an extremely difficult decision" for which he could find "no good choice."

The American Wind Energy Association (AWEA) said wind operators in the region will be curtailed without compensation because of Wright's "wrongheaded decision" that potentially "will cost wind companies tens of millions of dollars and stifle new investment in the Pacific Northwest."

The BPA's Environmental Redispatch Record of Decision more appropriately should be dubbed "Anti-Environmental Redispatch," according to AWEA CEO Denise Bode. "[It] flies in the face of [BPA's] obligation under the Northwest Power Act to promote renewable electricity in the region."

Wright said the interim decision to cope with the upcoming runoff from the largest snowpack in the region in years will protect grid reliability and the salmon, along with avoiding increased costs on average Northwest electric ratepayers.

The federal power agency's officials acknowledged that wind producers may lose tax credits and other revenues when their turbines are shut. "However, BPA will not reimburse wind energy producers for lost tax credits or other revenues because that would shift costs to Northwest [power] ratepayers who do not receive the wind power," a BPA spokesperson said.

In April energy consultant Bentek Energy LLC released a report saying excess hydroelectric supplies in the West could cut natural gas demand by one-third through August, and forward gas prices in the western United States and Canada were overvalued as a result of demand loss that Bentek calculated to be 295 Bcf (see Daily GPI, April 15).

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