Blowing in the Spin

Have you noticed that when telling friends or acquaintances good news, be it about your job, health, or relationships, their eyes glaze over? But those same uninterested eyes often light up when the details are not so cheery. In spite of this all-too-familiar phenomenon, companies and agencies often do their best to ignore the obvious and instead pump out good, dull news releases, most of which reporters delete, toss, or recycle. Take Pacific Gas & Electric, which routinely sends news agencies positive-sounding updates, from residential tips aimed at avoiding home conflagration while deep-frying Thanksgiving turkeys to announcing that the utility is drag-racing its natural gas?powered heavy-duty trucks against other alternatively fueled vehicles. PG&E, of course, is not alone. Recently, the California Independent System Operator (CAISO) announced it is fostering wind turbine development. According to the news release, representatives from the grid operator were partaking in the mid-September launch of a new 162 MW wind farm in Solano County to highlight the agency?s support of wind energy. With CAISO driven by a reliability mandate, the agency and wind generators have been at odds over wind power bids. Electricity generated by breezes, which have unscheduled arrivals and departures, traditionally has not fit into CAISO?s strict definition of reliability based on dispatchability of gas-fired and nuclear plants. CAISO slapped hefty penalties on wind generators beginning in 2000 for over- and underscheduling power, which producers said seriously undermined their beleaguered industry. Before the state?s energy crisis, the penalties were not a big deal, but once the imbalance energy market went haywire, power prices and penalties soared. Given the history, I wondered about the significance, if any, of CAISO?s recent press release. I began asking around, and a response I heard more than once was that not a whole lot had changed, the culture clash continues, and CAISO likely was looking for some good PR. Some said, however, that CAISO was moving in the right direction, albeit slowly, to accommodate intermittent power resources in its forward market. ?It is an innovative program, but it is too early to say whether it will work,? said Steven Kelly, policy director for the Independent Energy Producers. Last year, CAISO passed Amendment 42, which set scheduling criteria for wind generators. The Federal Energy Regulatory Commission approved it in March 2002. The Participating Intermittent Resource Program that implements the rule, now in start-up mode, averages over a month?s worth of scheduling deviations?whether from too much wind power flowing into the grid or not enough. The presumption is that averaging the over- and underscheduling over 30 days will result in a wash. Therefore, wind generators would not be hit with penalties to cover the cost of buying replacement energy when they underschedule and would not have to cover CAISO?s costs to pay other traders to decrease their scheduled power input because of too much wind energy on the transmission system. In spite of the mid-September fanfare and CAISO efforts to ease the way for wind producers, the agency will not be able to schedule wind into its forward market before next year. That is because the intermittent power program is tied up with the next phase of CAISO?s Market Design 2002, which deals with changes to settlement hardware and software and will allow for wind scheduling. There is not a lot of wind in the technical changes? sail, and that phase of the redesign is not expected to be implemented before next year. CAISO, therefore, has begun exploring how to manually accommodate wind bids in the meantime, said CAISO spokesperson Gregg Fishman. That would involve CAISO people taking forecasts from wind farms and feeding them into a computer. Three wind producers have, however, signed up for CAISO?s program. Florida Power & Light, Whitewater Wind Partners, and Cabazon will offer 300 MW under the program. Although the long-awaited intermittent resources program is just getting off the ground, the development is good news to Nancy Rader, executive director of the California Wind Energy Association (CWEA). ?There is finally a program for intermittent scheduling,? she said. This is critical to getting financing for wind projects, she added. At this point, the grid operator is accumulating and compiling data to verify wind forecasts, the latter considered the linchpin of the wind scheduling program. Part and parcel of CAISO?s program is wind forecasting by True Wind Solutions, which is expected to ensure more accurate scheduling into the real-time market. True Wind?s computer-generated forecasts will be hard-wired into CAISO and will act as the scheduler. At the federal level, wind producers are awaiting word on the extension of the federal production tax credit, which is included in the energy bill pending before Congress. Currently, wind and certain biomass producers receive a credit of $0.018/kWh. Under the latest version of the legislation, the credit would be extended for another three years to December 31, 2006, and would be adjusted for inflation. According to Jaime Steve, legislative director of the American Wind Energy Association, ?The inflation adjustment is of critical importance.? So far, renewable power resources are getting little good news out of the House-Senate conference committee, which is whittling down the differences between the two bodies? energy bills. A provision in the Senate measure that would have required utilities to boost the amount of wind, solar, and other green energy in their portfolios was cut out of a compromise package this week. Back at the state level, California regulators this week rejected wind generators? emergency motion urging that Southern California Edison be required to recast its interim renewables solicitation issued August 29. In its brief to the California Public Utilities Commission, the association argued that the RFP was discriminatory and undermined the state?s renewables portfolio standard process. Edison replied that it issued the RFP voluntarily and was not required to put out such a bid at this time. Administrative law judge Peter Allen directed the utility to correct its RFP process so that it complies with criteria set out in earlier CPUC rulings. CWEA was less than thrilled with the September 30 ruling but indicated that it wasn?t all bad news. Rader said she wished the CPUC judge ?had been more proscriptive to remedy the problems? with Edison?s interim renewables solicitation approach but was pleased the CPUC promised to scrutinize how Edison treats the bids. While real developments may spin slowly in and outside the state, the PR machines will nonetheless continue to generate a lot of hot air. CPUC ALJ Allen?s ruling: 01-10-024

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Blowing in the Spin

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