The Federal Energy Regulatory Commission has ruled against the Bonneville Power Administration, which is itself a creature of the Federal Government. The case provides an interesting microcosm of the difficulties encountered in doing any kind of large-scale productive work in the increasingly rule-driven environment of contemporary America.
BPA’s mission is to provide electrical generation and transmission services in the Pacific Northwest. In May-July of this year, the agency suffered from an embarrassment of riches: owing to weather conditions, vast amounts of both water power and wind power were available. Storing large amounts of electricity, though, is not a very practical proposition: in most cases, supply and demand needs to be balanced on an instant-by-instant basis. Hence BPA needed to cut either its hydroelectric generation or its wind generation, the latter of which comes in substantial part from independent businesses which sell their output to the BPA. The only alternative was to engage in “negative pricing”–ie, paying various entities–either customers or other power providers–to take its excess electricity.
The agency did not believe it could legally cut the hydropower generation below a certain level: routing excess water over spillways causes it to pick up nitrogen, which is believed to be harmful to salmon, and hence in BPA’s interpretation would be in violation of the Clean Water Act and the Endangered Species Act. What BPA did instead was to tell the the wind operators that during this time period it didn’t need or want all of their output–100,000 megawatt-hours of potential generation was turned away. The wind operators, unsurprisingly, filed a complaint, and FERC sided with the operators. So next time there is an oversupply situation in the Pacific Northwest, BPA will be paying to give its power away–ultimately resulting, of course, in higher electricity bills for its customers.
Various technical fixes for problems of this kind are being discussed, such as the remote control of water-heater thermostats in homes and businesses (which would allow excess electricity to be stored in the form of heat) and the interconnection of power grids across wider geographies. But basically, operating a power grid reliably and economically is already a difficult problem. Adding substantial amounts of relatively-unpredictable capacity such as wind makes it harder still, and each additional regulatory constraint makes it even more so.
The continuing proliferation of rules, many of them adopted without any deep consideration of their implications, makes increasingly difficult the running of productive activities of any kind.
Related: Frankly, my dear, I do need a dam