As wind energy grows as a power source in Colorado, Xcel Energy Inc. is asking federal regulators for permission to change the way it charges other utilities that use Xcel’s transmission lines to move their wind-based power to their customers.
Xcel wants the utilities to pay for its costs associated with having supplies of reserve power ready to go in case the wind suddenly dies, said Terri Eaton, Xcel’s director of federal regulatory and compliance efforts.
Currently, those costs are paid by Xcel’s business and residential customers, Eaton said.
If the transmission lines customers can supply their own back-up power supplies, they wouldn’t be charged under the proposed rates, she said.
Readily available, back-up power supplies are critical to keep the transmission grid in balance and avoid blackouts that can occur when a big source of power suddenly disappears, Eaton said.
Under the proposal Xcel filed with the Federal Energy Regulatory Commission (FERC) on May 15, the new rates would bring in about $727,000 a year, according to the filing.
The new rates, if approved, would become effective Jan. 1, 2015.
“What we’re trying to do is to have the costs we’re now paying to integrate wind on our system allocated to all the parties who have wind on our system – as well as those who will add wind on our system in the future,” Eaton said.
While FERC has discussed the challenges with adding wind to the nation’s grid, Xcel’s filing is the first to ask for a special charge, or tariff, to pay for backup power supplies in case the wind suddenly dies, Eaton said.
“We’ve seen some dramatic wind fall-offs in really short periods of time,” Eaton said.
Xcel has already experienced such falls offs, when “several hundreds of megawatts of wind” drops dramatically – and swiftly – due to changes in the wind, she said.
“Sometimes the wind is just howling, and an hour later the wind has calmed – and it’s in those circumstances that we need to have reserves available to pick up the load,” Eaton said.
In such cases, backup power supplies typically come from natural gas-fueled power plants, she said.
If FERC approves the new charges, the rates only would be applicable to Xcel’s power lines in Colorado, she said.
Xcel worked hard with representatives of the wind industry to draft its proposed rates, said Michael Goggin, director of research for the American Wind Energy Association, an industry trade group.
“We plan on taking a close look at the filing to ensure that Xcel’s proposal is consistent with FERC precedent and cost allocation rules,” Goggin said.
“It’s important that all energy sources be treated fairly, particularly because ratepayers pick up the tab for the integration cost of accommodating the abrupt failures of conventional power plants,” he said.
Xcel’s Colorado transmission lines currently carry about 25 megawatts of wind power owned by other utilities, specifically the Platte River Power Authority and the Arkansas River Power Authority, Eaton said.
It’s not a big amount, but the total is expected to grow as other rural cooperatives and city-owned utilities add wind farms to their power portfolios and need to use Xcel’s transmission lines to move the power to their customers, Eaton said.
Xcel currently has about 2,200 megawatts of its own wind power moving across its transmission lines in Colorado, and expects to add about 450 megawatts of wind power by 2018.
Rural cooperatives must get 20 percent of their power supplies from renewable energy by 2020 under a controversial 2013 bill, Senate Bill 252, that Gov. John Hickenlooper signed into law in June 2013.
Under the proposal, the new rates would raise transmission costs for the Arkansas River Power Authority by $105,144 a year, while the Platte River Power Authority’s rates would rise an estimated $326,447 per year, according to Xcel.
Eaton stressed that the proposal doesn’t mean Xcel is hostile toward wind energy, or renewable power.
“This isn’t a money maker for the company,” Eaton said.
Lee Boughey, a spokesman for Tri-State Generation and Transmission Association, said the association doesn’t currently send the its wind power over Xcel’s transmission lines, but understands Xcel’s concerns.
Tri-State supplies power to 18 member electric cooperatives in Colorado, which are affected by the new renewable energy goal, in addition to serving customers in Nebraska, Wyoming and New Mexico,
“As more intermittent resources are added in the region, we understand the need to address the higher costs of integrating and balancing power,” Boughey said.
“It’s important that costs be addressed in a transparent fashion,” he added.