Bonneville Power's Changing Realities

A Conversation with Elliot Mainzer

BY MARTIN ROSENBERG
Editor-in-chief, EnergyBiz

The Bonneville Power Administration was launched in the 1930s to help harness the electric power potential of the Columbia River and power the Northwest. Today, its concerns include wind power and the fate of the August salmon. We recently discussed the agency's evolving mission with Elliot Mainzer, who became BPA's administrator in January.

ENERGYBIZ: What are the main challenges facing BPA?

MAINZER: We've been experiencing some pretty significant volatility in our power supply. We started out in the early part of the year looking a lot like California with a dire water forecast. Then we had a miracle February and a miracle March with an incredible snow pack building up in the Cascades and in the Rockies. So now we are in pretty good shape from a power-side perspective. The biggest existential challenge that we are facing at Bonneville is our aging asset fleet, a big fleet of hydroelectric dams and transmission lines built in the 1930s, 1940s and 1950s that are aging. We are spending several hundred million dollars a year on refurbishing the power and transmission system.

ENERGYBIZ: Is there too much wind generation in the Northwest now?

MAINZER: No. There is not too much wind. We've been able to successfully leverage zero-carbon-emissions hydroelectric resources to get 5,000 megawatts of wind energy on our grid. We've had to adapt. We've had to change the way we schedule power. We've had to change the way we carry reserves in the system. We've had to increase coordination between our power and transmission business lines. One problem is that in the springtime we have run into periodic oversupply. That was a very controversial issue for a number of years. It ended up in court. We've learned a lot. We've worked very collaboratively with the Army Corps of Engineers and with the wind community and we've found a way for managing that oversupply. It's not entirely without controversy. We are still debating who pays the cost of turning off the wind turbines. But from a physical, operational perspective, we've been able to solve the issue.

ENERGYBIZ: Which has priority right now - using the hydropower and preserve salmon runs or running the wind assets to make sure that their owners are not penalized?

MAINZER: The fish have priority. We will do what we need to do to maintain reliability and to maintain the health of the endangered salmon. What Bonneville initially did was elect to turn the wind turbines off without compensating the owners. That was litigated. We lost that case, originally, at the Federal Energy Regulatory Commission. FERC came back and said, "You can't just do that unilaterally without compensating them." Now when the Columbia River is too close to nitrogen saturation, which harms the salmon, we do turn the wind turbines off. But we now compensate them.

ENERGYBIZ: So it's revenue neutral to the wind owners?

MAINZER: Largely. We recently put forth a cost allocation methodology for how we will recover those funds. At Bonneville, our business is based on selling services and applying the costs to our customers. The proposal we have put forward to FERC has about 70 percent of those costs of wind shutdown being borne by our traditional public power customers - 15 percent by the wind fleet and 15 percent by other generators. The Endangered Species Act is something that we take extraordinarily seriously. We have invested so much time, resources and money in protecting fish over the last 30 years that we are very sensitive to that. The wind folks understand that. They just expect compensation.

ENERGYBIZ: Wind generation in the Northwest represents a greater percentage of load than any other part of the country.

MAINZER: That's probably true under certain conditions. There are times now in the middle of the night when we are getting close to serving all of the load in our system with wind. I've got 40, 50 people inside this building who work day and night trying to figure out how to effectively integrate renewables onto our grid. I think that's why we've been one of the leaders in the country on this. We have a wind integration rate. We allocate those costs. We bring in about $60 million a year doing that. We have also acknowledged that there is only a finite amount of balancing capability from those hydro dams that can actually be available for wind integration. As a result, we've been working very actively on two fronts. We've been working to bring non-federal balancing capacity resources into our dispatch. We are also looking for ways to buy flexibility from demand response resources.

ENERGYBIZ: Can you handle another 5,000 megawatts of wind generation?

MAINZER: We'd need help. We have a pretty good concentration of wind in our system now.