FERC Order 890 Transmission Integration of Renewable Energy Projects

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FERC Order 890 Transmission Integration of
Renewable Energy Projects

• Geothermal Resources Council
• John Pease PE, MBA
• Project Manager
• Technology Innovation
• Bonneville Power Administration
• October 2, 2007

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FERC Order 890 Be Careful of What You Ask For

• BPA initiates action with FERC in 2005 to make
  use of transmission that is often oversubscribed
  but under utilized
• Conditional Firm Proposal Presented by BPA to
  FERC March 16th, 2005 in Portland
• Conditional firm holder knows maximum curtailment
  exposure 100s hours/month
• In Conditional Firms final state, if not told in
  the preschedule (24 hour notice) that a
  curtailment may occur, then considered firm.
  Before systems are developed, cuts will be within
  hour.
• Uses additional Available Transmission Capacity
  (ATC) that currently goes unused most hours of
  the year
• Bounds transmission availability risk to enable
  project financing!

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• Reliability Redispatch Pilot Presented by BPA
  to FERC March 16th, 2005 in Portland (BPA feels
  it can not do an economic redispatch, but other
  transmission providers may be able to)
• Transmission provider will adjust generation
  within the hour from bidders of Incremental and
  Decremental resources to alleviate a transmission
  event that pushes flows up against the Operating
  Transfer limits (OTC). Does not increasing
  available ATC, but does reduce curtailment of
  schedules.
• Done for Network (native load) customers only
  historically again, this is only reliability
  redispatch
• Pay for net costs of generation (or loads) who
  may reduce generation to alleviate constraint
• Prototype project scheduled for BPA summer, 2007
  for reliability redispatch
• Problem
• FERC issues 1200 page document that helps to
  utilize unused transmission
• Lots of strings attached.

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890 Goal Nondiscriminatory Open Access
Highlights

• Open Access Transmission Planning
• Utilities must submit an Attachment K to describe
  its transmission planning process
• Must address the following principles
  Coordination, Openness, Transparency, Information
  exchange, Comparability, Dispute Resolution,
  Regional Participation, Congestion Studies and
  Cost allocation.
• FERC hopes to see greater coordination between
  interconnected systems, state authorities and
  stakeholders

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Order 890 Highlights

• Energy Imbalance (EI)
• Difference between actual scheduled energy
• Must be based on incremental costs so deviations
  are not punitive
• Primarily helps wind that cannot accurately
  schedule their energy output
• Was largely based on BPAs methodology, with some
  new twists
• BPA will finalize its EI in its next rate case

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Order 890 Highlights

• Planning Redispatch to Increase ATC
• Utilities must study two different types of
  redispatch Planning and Reliability
• Planning Redispatch
• Utilities must expand or upgrade its transmission
  service, or if more cost effective, redispatch to
  meet a PTP request if ATC is not available, if
  they can do so reliably
• Can be used as a bridge until new transmission
  is built
• Non-binding estimates of cost must be provided
• Study must be requested by the transmission
  customer
• Due to non-power constraints (flows for fish,
  etc), BPA is not able to commit to redispatch of
  the Federal Hydro system

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Order 890 Highlights

• Redispatch Service
• Reliability Redispatch
• Used for redispatch of resources to ease a system
  constraint that would result in curtailment of
  network service or transmission providers loads
• What is used today
• If your resource is designated a Network resource
  or not may be critical on how costs for the
  service are allocated.

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Order 890 Highlights

• Conditional Firm Service
• Tutorial
• Access to transmission determined by Available
  Transfer Capability (ATC) needed for the
  requested POR and POD (based on a Path
  Utilization Factor analysis)
• Rights can be requested on a Firm or non-Firm
  curtailment priority basis
• Firm transmission available in all hours when
  all lines are in service (unless there is
  parallel path flow on another system
• Non-Firm firm rights not used or unallocated
  transmission made available on an hourly basis in
  pre-schedule and real-time (it has a higher
  chance of curtailment than firm.)
• Conditional firm Firm except when the
  transmission provider uses the Conditional Firm
  Hours (if that option was chosen) or when the
  system conditions defined in the contract are
  occurring (if that option was chosen) choice is
  made by the customer, then non-Firm, but
  curtailed last (non-firm curtailment order)

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Order 890 Highlights

• Conditional Firm (CF) Service Two Types
• Ability to Financially Support New Transmission
• Offered as a bridge until new transmission is
  placed in service
• Planning redispatch study is offered as well (not
  tied to CF, in no way guarantees an offer)
• Pricing of LTF CF is at the LTF PTP rate.
  Pricing (of upgrade) is either the higher of
  actual incremental costs or imbedded rate of the
  transmission provider
• May be able to negotiate a fixed rate, capped at
  the total fixed and variable costs of the
  generation resources providing the resource
• If a customer doesnt elect a fixed rate, then
  transmission provider can calculate costs on a
  monthly basis

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Order 890 Highlights

• Do Not Support the Building of New Transmission
• Planning Redispatch and Conditional Firm subject
  to limitations
• Term of conditions is locked for two years, then
  will be reassessed to see if transmission
  provider can continue to provide the service
  reliability and if any change in the number of CF
  hours or the system conditions are needed
• Pricing is either the higher of actual
  incremental costs or imbedded rate of the
  transmission provider (BPA pricing of CF is at
  the LTF PTP rate)
• Limiting the hours of curtailment (original
  proposal) is replaced by potentially ending
  transmission service altogether if system
  conditions change! However, TP must be able to
  demonstrate that they can no longer provide the
  service

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Order 890 Area of Concern

• A Network resource is typically served by the
  respective transmission provider
• If a Network resource wants to sell to a third
  party (not a required load in a control area),
  that resource may lose preferential transmission
  access. (BPA - actual requirement is for
  undesignation of the network resource to sell to
  a third party, but can do so temporarily and not
  lose TX access. BPA is currently considering
  removing this requirement in the OATT that will
  be filed)
• May then have to compete for what transmission is
  still available concern that resources will be
  captured by the control area. (BPA - the
  undesignation can be done temporarily and then
  the transmission beyond that period is still
  reserved for that partys use in serving its
  load. BPA is considering trying to remove this
  requirement altogether)

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Conclusion

• BPA is non-FERC jurisdictional, but chooses to
  comply
• BPA is currently holding public discussions with
  its customers to determine what portions of the
  new pro forma OATT it will modify in its Order
  890 tariff filing
• BPA (or respective control area) website to stay
  up to date http//www.transmission.bpa.gov/Busine
  ss/Rates_and_Tariff/order890.cfm
• BPA account executives will help get your energy
  to load