Dive Brief:
- Xcel Energy Inc. is asking the Federal Energy Regulatory Commission (FERC) for permission to charge utilities that use its Colorado transmission lines to move wind-energy generated electricity for a tariff to cover the cost of having reserves available, a cost now paid by Xcel.
- Xcel’s filing with FERC proposes new rates, effective January 1, 2015, that would include payments amounting to an estimated $727,000 per year for the supply of reserve power when wind’s variability makes it necessary.
- This is the first filing with FERC that proposes a tariff covering the cost of reserves and stipulates that, under Xcel’s rate proposal, utilities that supply their own reserves would still incur no extra charges.
Dive Insight:
This proposal is part of the larger discussion about the cost of renewables integration on the grid, an issue utilities and regulators are raising as penetrations of wind and solar reach increasingly significant levels.
Only about 25 megawatts of the 2,200-plus megawatts of wind-generated electricity on Xcel’s Colorado transmission lines are for other utilities but those numbers are expected to grow quickly because (1) Xcel has plans to add 450 megawatts of wind by 2018, (2) a just-passed law requires Colorado rural co-ops to get 20% of their power from renewables by 2020, and (3) there is an increasing commitment to wind from the state’s municipal utilities.
Charges for the wind Xcel now carries would be $326,447 per year to the Platte River Power Authority and $105,144 per year to the Arkansas River Power Authority.
Sudden wind changes have occurred on Xcel’s grid that caused the need for “hundreds of megawatts” of reserve generation from its natural gas-fired power plants, according to an Xcel spokesperson. Xcel has conferred with the American Wind Energy Association (AWEA) on the proposal and AWEA plans to weigh in at FERC on the final filing after a study of whether it fairly allocates the cost of wind integration.
A fundamental question is whether users of wind power on Xcel’s lines would be charged for output drop-offs in the same way users of electricity from fossil and nuclear plant are charged when those plants fail, according to AWEA Director of Research Michael Goggin.
