So getting the [wind] plants built, getting the generation built is a very big step, but it's not the ultimate step. The ultimate step is getting that renewable power to the customer. . . . Barriers to entry for the wind energy have been and continue to be significant. . . . Because it's all about nondiscrimination. . . . It's giving a new technology which has a popular appeal, which has good environmental attributes, giving that technology a fair seat at the table with coal, nuclear, hydro, and gas. . . . I think the biggest barrier today that's preventing wide access to wind resources reaching customers is [the lack of] a robust transmission grid.1
I. INTRODUCTION AND SUMMARY
The wind energy industry is experiencing a phenomenal period of growth. It has become the fastest growing fuel-type for electrical generation installed in the U.S., with an average annual growth rate of over 27% from 2000-2004.2 Its growth has been spurred by public sentiment, state and federal policies, economics, technological improvements, increasing utility acceptance, and evidence from other countries that integrating large amounts of wind-generated electricity into the system does not degrade system operations. In particular, this growth is motivated by a growing public concern about pollution from conventional fossil-fuel energy sources, about enhancing national energy security by decreasing dependence on imported fuel, and the possible adverse climate effects from accumulating carbon dioxide in our atmosphere. The growing commercial interest in wind energy, and other forms of renewables, has also been driven by dramatic increases in the prices of fossil fuels-crude oil, gasoline, natural gas, and coal-and thus electricity. These price increases, with little hope for future reductions, have made various renewable energy technologies economically competitive.
Once built, however, wind generation faces stiff obstacles in reaching customers. Optimal wind resources are often located far from load, which may require additional transmission investment and construction. Wind developers and other generators might better utilize existing transmission paths by means of new transmission services that use transmission capacity during all but peak periods of transmission usage. Rules for financing and allocating costs of transmission facilities need to be re-examined in connection with developing wind resource areas. In response to these issues, the Federal Energy Regulatory Commission (FERC or Commission) has undertaken a series of steps to reexamine many of its rules to ensure they are not discriminatory against wind and other emerging renewable energy technologies.
First, the Commission conducted a rulemaking proceeding to establish special standards and procedures for interconnecting wind generation resources to the transmission system, because of their different characteristics compared to other conventional generation resources. After initiating the rulemaking proceeding, the Commission issued a Staff Briefing paper assessing the state of wind energy in the wholesale electricity markets, and conducted a public hearing on this topic. The Commission then convened a two-day public workshop to consider proposals for establishing new conditional firm and priority non-firm transmission services as a means of serving new wind developments because of insufficient additional firm transmission capacity. The Commission initiated a second rulemaking to establish non-punitive imbalance penalties for wind generators. Finally, the Commission acted on a filing to determine the mechanisms for recovery of the costs of transmission facilities needed to provide access to the grid for potential wind developments in the Tehachapi wind resource area of California.
A. History of Recent Commission Actions Affecting Wind Energy
Beginning in 2004, the FERC initiated a series of proceedings to address the problems faced by the wind industry, and particularly the problem of gaining access to the transmission system on reasonable and nondiscriminatory terms. …