GP: News from AWEA: FERC order on Cal/ISO, wind generation

["Tom Gray" <tomgray@igc.org>]

American Wind Energy Association
www.awea.org

FOR IMMEDIATE 
RELEASE:  March 28, 
2002

          
Contact

:  
Tom Gray (802) 649-2112
Christine Real de Azua (202) 383-2508

FERC ENDORSES FAIR TREATMENT OF WIND
IN WHOLESALE ELECTRICITY MARKETS
Commission Order Backs California ISO in Providing
Access to Transmission System at Reasonable Cost

Wind energy should benefit substantially from a 
ruling issued March 27 by the Federal Energy Regulatory Commission (FERC) 
providing fair access to utility transmission lines in California, according to 
the American Wind Energy Association (AWEA).

The Commission order, AWEA 
said, makes it possible for wind plant owners to ship the electricity they 
generate to buyers over the transmission system without being subject to heavy 
non-cost-based penalties because they cannot predict, days or hours in advance, 
precisely how much transmission capacity they will need.

The Commission 
issued a strong endorsement of a proposal by the California Independent 
[Transmission] System Operator (Cal-ISO) to require wind plants instead to pay 
for forecasts of their transmission needs on an hourly basis, and for schedules 
based on those forecasts to be used to assign transmission 
capacity.

"It's hard to overstate the importance of this to the wind 
energy industry," said AWEA Policy Director Jim Caldwell.  "We were subject 
to unfair penalties of up to 100% of the cost of our product under the 
traditional system, which was a terrible economic burden and a potential 
show-stopper for future development in California.  Instead, FERC has found 
that wind energy's transmission needs can be met fairly, without extra costs for 
either the transmission system or for owners of other types of power 
plants."

The penalty system was developed in the past to keep owners of 
large conventional power plants from "gaming" the transmission system to boost 
their profits at competitors' expense.  But since wind is an intermittent 
energy source, AWEA and other wind advocates have argued that wind plants should 
not be penalized except to the degree that their inability to forecast 
transmission needs causes actual economic cost to the transmission system 
owner.  In its order, FERC agreed.

"This order benefits customers 
by addressing a major obstacle to development of new wind and other intermittent 
generation," the Commission said, adding, "Encouraging the development of 
intermittent generation will increase diversity in the resource base, thereby 
improving system reliability as a whole."

With respect to the 
specific proposal developed by Cal-ISO, FERC said, "The Commission commends 
the Cal-ISO’s efforts to facilitate entry of intermittent resources, and to 
develop the Intermittent Resource Proposal through extensive collaborative 
discussions between the Cal-ISO, regulators, utilities, and other market 
participants. With this proposal, the Cal-ISO provides a fair and effective 
means of accommodating the scheduling needs of intermittent generation, while 
avoiding imposing additional costs on other market participants." 

"With this ruling, FERC has demonstrated that it understands the unique 
situation facing a variable energy source like wind, and that it is willing to 
find ways to ensure that this new, clean, potentially huge source of electricity 
is not unfairly barred from the market," Caldwell said.  "We are greatly 
encouraged by the vision the Commission has shown."

The Cal-ISO ruling, 
he added, should help wind's chances of obtaining similar nondiscriminatory 
treatment in other major areas of the country, such as the Pacific Northwest and 
the Midwest, where the penalty issue has yet to be 
resolved.

        

The 
text of the order (Docket Nos. ER02-922-000 and EL02-51-000) is available on the 
FERC Web site.  Go to http://cips.ferc.fed.us/cips/default.htm and search by text for "new wind and other 
intermittent generation" or by docket number 
(er02-922.00)

AWEA, formed in 1974, is the national trade association of the U.S. wind energy industry.  The association’s membership of more than 700 includes turbine manufacturers, wind project developers, utilities, academicians,
and interested individuals from 49 states.  More information on wind energy is available at the AWEA web site:  www.awea.org

0328-FERC on transmission.doc

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