At its monthly meeting last week, the Federal Energy Regulatory Commission ("FERC") approved the Bonneville Power Administration's "Oversupply Management Protocol," marking a major litigation milestone in Bonneville's controversial efforts to address those periods when the combined output of federal dams and wind generation in the Pacific Northwest exceeds electric demand in the region and in areas where power can be exported. While FERC's decision does not resolve the litigation, it is a major step toward final resolution of the matter.
As we have previously discussed at length, the oversupply problem arises when heavy spring runoff in the Columbia Basin coincides with high spring-time winds, producing a simultaneous surge in power production from the region's hydroelectric dams and wind generators. While Bonneville can generally manage these events through, for example, backing down the region's thermal generators and providing them with free or nearly-free replacement power from federal dams, this solution does not work for wind generation. Even when output is replaced with free or low-cost power, forced curtailments of wind generation can impose substantial costs on wind generators from lost tax credits based on production, as well as lost RECs and, in some cases, violations of contractual minimum production requirements.