4 May 2005 - From Glen Schleede:

Several of you brought to my attention a Federal Energy Regulatory Commission (FERC) press release and report issued on April 13, 2005, dealing with "proposed rules designed to better accommodate an increased participation of wind energy in wholesale markets."

The press release can be found at
http://www.ferc.gov/press-room/pr-current/04-13-05-windnopr.asp

The staff report can be found at
http://www.ferc.gov/legal/ferc-regs/land-docs/11-04-wind-report.pdf

The staff report is highly biased in favor of the wind industry and parrots propaganda from the industry.

The proposed rules were published in the Federal Register on April 26, 2005, beginning at page 21349 and ending on page 21361. You can find the proposed regulations here.

This is a formal "Notice of Proposed Rulemaking" (NOPR) so it must be taken very seriously. Comments must be received by FERC no later than 30 days from April 26.

Based on a cursory review, I believe the FERC proposed regulation 1s "bad news" and would constitute one more de facto subsidy for the wind industry. What the proposed regulation appears to do is to require "transmission providers" (i.e., the organizations controlling access to transmission lines which would be individual utilities or grid managers) to excuse the fact that "wind farms" that did not deliver electricity when they had contracted for capacity for up to 10% plus or minus their contracted amounts.

In effect this would seem to ignore a large share of the fact that electricity from wind turbines is intermittent, volatile and largely unpredictable and, therefore, has less real value than electricity from dispatchable generating units. It appears to be one more way to subsidize the wind industry and give its inferior product a greater value than it really has in the real world.

While I didn't need one more thing to do -- and I'm overdue on other long-standing and grossly delayed commitments -- I believe it's necessary to take some time to understand the proposed regulations in detail and file negative comments.

I hope that those of you who work in the electric industry, who have analysts with electric industry knowledge working with you, or who have friends working in the electric industry -- will review the proposed regulation and, ideally, file comments.

FERC's justification for the proposed regulation and, even more specifically, the "staff report" read as if they were written by the wind industry. Further, the logic for the proposed regulation provided by FERC "turns logic on its head." It appears to claim that existing rules that distinguish between unreliable electricity from wind turbines and electricity from reliable sources are "unjust, unreasonable, unduly discriminatory or preferential, as applied to intermittent sources."

In summary, this note is:
a. A notice that commitments I have made to some of you will be delayed even longer.
b. An indication that I will develop some comments and get copies to you as soon as possible with the hope that you will also file comments.
c. Urge anyone who can undertake a review of the proposal to do so -- and to file comments.
d. Ask you to consider urging (i) your utility, (ii) your state PUC or (iii) anyone else you can think of to file comments with FERC challenging the proposed rules.
e. Send me any suggestions you have for comments and/or a copy of any comments you file.

It will take many comments to have any impact. Again, those comments must arrive at FERC by May 26. Instructions on where and how to file (including electronically) can be found in the Federal Register notice.