UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Westar Energy, Inc. Docket No. ER09-1273-000
THE AMERICAN WIND ENERGY ASSOCIATION AND THE WIND
COALITION'S PROTEST AND REQUEST FOR REJECTION, OR
AND FIVE-MONTH SUSPENSION
Pursuant to Rule 211 of the Rules of Practice and Procedure of the Federal
Energy Regulatory Commission ("Commission"), 18 C.F.R. § 85.211 (2009), and
the Commission’s January 20 Notice of Filing, the American Wind Energy
Association ("AWEA") and the Wind Coalition hereby respectfully file this
protest in the captioned proceeding initiated by Westar Energy, Inc. ("Westar") on
January 19, 2010, requesting Commission approval of its proposed standard form
of a Balancing Area Services Agreement as a new attachment to its Open Access
Transmission Tariff ("OATT") and Schedule 3A to its OATT ("Proposal").
AWEA and the Wind Coalition submit that Westar’s filing has not been shown to
be just and reasonable and requests that the Commission reject the filing or, in the
alternative, require Westar to make a supplemental filing addressing the issues, as
discussed below, that it failed to address in its response to the deficiency letter
issued in this proceeding. If the Commission is not inclined to take either of these
paths, we respectfully request that it suspend the proposed rate for intermittent
generators for the maximum statutory period and set it for hearing and settlement
Westar made its initial filing in this docket to implement its proposed
standard form of a Balancing Area Services Agreement as a new attachment to its
OATT and Schedule 3A thereto. Westar intended for the Balancing Area Services
Agreement and Schedule 3A, titled Generator Regulation and Frequency Response
Service, to allow it to contract with and charge for regulation services provided to
generators located within its Balancing Authority Area ("Balancing Area" or
"BA") whose output is delivered to load outside its Balancing Area or to the
Southwest Power Pool, Inc. ("SPP") Energy Imbalance Services ("EIS") Market.
Westar currently recovers certain regulation costs under Schedule 3 of its
OATT. Schedule 3, however, only authorizes it to charge for Regulation and
Frequency Response Service “when the transmission service is used to serve load
within its Control Area.” The Schedule 3 charge was calculated based solely on
the regulation burden imposed on Westar by the load in its Balancing Area.
Westar states that it developed Schedule 3 based on Westar’s need (as the
Balancing Area Operator in its Balancing Area) to maintain enough on-line
generation in order to match generation output to load.
Any regulation burden imposed by sources other than load is not accounted
for or recovered for in the Schedule 3 charge. Westar states that all of the costs
associated with the regulation burden imposed by sources other than load are
currently being absorbed by its wholesale and retail customers through their
respective fuel clauses. According to Westar, there are "two specific instances
when a regulation burden is imposed on Westar" that are "inappropriate for Westar
customers to absorb the related costs."1
First, Westar states that for generators inside the Westar Balancing Area
which are not Designated Resources for load inside the Balancing Area and are
exporting power out of the Balancing Area, Westar must hold sufficient on-line
generating capacity in reserve to make up the moment-to-moment differences
between scheduled generator output and actual generator output to match the
transmission schedules at the control area interface. Westar further explains that
the costs it incurs for maintaining that capacity are not currently collected from the
generators making export transactions because neither SPP nor Westar is
authorized to charge the transmission customer or generator-supplier for such
Second, when a generator sells its output into the SPP EIS Market, Westar
maintains that action is essentially an export of power to SPP for which there is no
identifiable load. Again, Westar states that it is unable to assess a regulation
charge for balancing the delivery from the generator to the SPP. Each of these two
circumstances imposes a cost on Westar for which it states that it is not currently
compensated. As a result, Westar maintains that these costs are borne by Westar’s
retail and wholesale customers.
Westar Filing at p. 2.
The proposed Schedule 3A would require generators that are not
Designated Resources for load within Westar’s Balancing Area that export energy
or deliver output into the EIS market to purchase or self-provide regulating
capacity as set forth in the tariff. Westar proposes to calculate the charge under
Schedule 3A by multiplying the applicable Regulation Percentage as indicated in
the tariff times the generator’s nameplate capacity and then times the $/MW rate
set forth in the tariff. Westar proposes to apply a Regulation Percentage of 7.8
percent to intermittent generators purchasing regulating capacity under Schedule
3A and of 1.35 percent to dispatchable generators purchasing such service.
A. Intermittent Generators Should not be Charged for Costs that
are a Product of Outdated Power System Operating Procedures
For the reasons discussed in the sections below, the costs Westar proposes
to assign to intermittent generators are grossly overstated. To the extent that any
level of integration costs for intermittent generators exist, we note that these costs
are largely a product of outdated power system operating procedures. In other
words, these costs are the result of a failure on behalf of Westar to take cost
effective steps to adopt updated grid operating procedures that would eliminate the
necessity for any such charges. As such, charging intermittent generators for
perceived costs caused by the fact that current grid operating procedures are
poorly suited for accommodating intermittent generators is discriminatory and
unjust and unreasonable.
For example, a number of studies have demonstrated that balancing area
consolidation or coordination greatly reduces the perceived cost, if any, of
integrating intermittent generators with the power system.2 In addition, analysis
has shown that balancing area consolidation or coordination is a highly cost
effective step for reducing the cost of operating the power system even in the
absence of intermittent generators.3
Studies have identified several other operating procedure reforms that are
highly cost effective in the absence of wind energy and greatly reduce the cost of
integrating intermittent generation. These reforms include the use of dynamic
scheduling on transmission ties to neighboring balancing areas, faster generator
dispatch intervals, and more comprehensive energy and ancillary services
The costs of Westar’s decision not to undertake these operating reforms
should not be borne by intermittent generators, which are not responsible for the
incompatibility of Westar’s current operating procedures with integrating
intermittent generation. Therefore, we urge the Commission to encourage Westar
to take the pro-active measures discussed above, among others, that would reduce
the regulation percentage required for intermittent generators.
Lori A. Spence, “Informational Filing of Midwest Independent Transmission System Operator, Inc.
Docket No. EL06-000,” Letter to Magalie R. Salas, Federal Energy Regulatory Commission, April 3, 2006.
B. Westar Has Not Demonstrated That Its Regulation Percentage
for Intermittent Generators Is Reasonable Or Necessary
For the reasons discussed below, the proposed rate for intermittent
resources has not been shown to be just and reasonable and will result in rates that
are unjust, unreasonable, unduly discriminatory or preferential, or otherwise
unlawful. Numerous methodological flaws employed by Westar in its “stand-
alone” and “portfolio-wide” analyses result in a proposed rate that grossly
overstates the incremental regulation need associated with adding wind energy to
the power system and would result in excessive and unjust charges to intermittent
Westar further provides no evidence that it is experiencing a need for
additional regulation capability beyond the amount identified as needed to serve
load within its territory under Schedule 3. Wind integration studies that use
methodologies consistent with best practices indicate that any additional
regulation requirement for a small amount of additional wind on a system is
Westar also does not adequately address the concerns raised by FERC staff's
deficiency letter of August 3, 2009, to demonstrate that the proposed regulation
percentage is necessary. The Commission requested that Westar “demonstrate
that the regulation requirement of 1.35 percent in Schedule 3 does not already
reflect regulation capacity required for exports and sales into the EIS market
(regardless of the customer ultimately charged).”5 However, Westar's response
fails to show that the regulation requirement identified under Schedule 3 does not
already cover regulation needed for exporting generators.6
Westar states that “[a]ny regulation burden imposed by sources other than
load is not accounted for in the Schedule 3 charge.” Yet, it offers no data to show
that it is actually experiencing an additional regulation burden. Westar indicates
that it calculated the amount of regulation needed based on what would ensure
CPS2 compliance 95 percent of the time.7 However, Westar provides no
indication that it is currently experiencing challenges meeting its CPS2
requirement or that it has required additional regulation capacity in order to avoid
CPS2 violations. In short, Westar has failed to demonstrate that the proposed
regulation requirement and percentage are necessary. If the Commission does not
reject the filing outright, as requested herein, the Commission should require
Westar to make a supplemental filing addressing the issues, discussed above, that
it failed to adequately respond to in its supplemental filing.
C. Westar’s Proposed “Stand-Alone” Methodology Has Not Been
Demonstrated to Produce Just and Reasonable Rates
Accurately calculating an “incremental” regulation burden associated with
adding non-Designated Resource wind energy to Westar’s power system
inherently requires analyzing the net effect of all sources of variability on Westar's
Question 1 from Deficiency Letter.
Westar also does not demonstrate support for its statement that “Schedule 3A . . . does not result in the
double recovery of costs.”
Westar Filing p. 4.
power system. Nevertheless, Westar insists on calculating the variability of wind
energy on a stand-alone basis.
Westar explains that it is responsible for maintaining adequate regulation
reserves to keep aggregate electricity supply and aggregate electricity demand in
close enough proximity to ensure that the frequency on its power system remains
within an acceptable range and to ensure that power flows across its interties to
neighboring balancing areas are maintained as scheduled. Since these goals are
achieved by responding to aggregate power system variability, identifying the
incremental burden posed to the system by a particular resource must, in turn, take
into consideration the aggregate variability of the system with the resource added
minus the aggregate variability of the system without that resource.
Westar’s proposal to examine the variability of wind energy on a stand-
alone basis therefore results in an overstatement of the impact of its variability by
assuming that the variability of the resource alone is identical to the incremental
impact of that resource on aggregate power system variability. In reality, wind
energy’s incremental impact is a fraction of its stand-alone impact, since its
variability is largely uncorrelated with the variability of load and other power
system components over the 10-minute time scale relevant for regulation needs (as
demonstrated on page 12 of Mr. Dietz’s testimony), and thus wind's variability and
the variability of other power system components tend to cancel each other out to
a large extent. Therefore, Westar’s proposal would grossly overcharge wind
generators relative to any incremental regulation burden they might actually
impose. Mr. Kirby's declaration provides a more detailed discussion of this crucial
flaw in Westar's analysis.
In the way of an analogy, Westar’s proposal is the equivalent of asking a
new residential customer to pay for enough regulation services to cover the full
range of expected variability in that household’s electricity demand, even though
the true incremental impact of that household on the power system’s aggregate
need for regulation would be an incredibly small fraction of that amount (due to
the fact that the electricity usage of different households is almost perfectly
uncorrelated over the regulation time period).
D. Westar's Methodology Would Result in an Overcharge for Total
System Regulation Costs
Question 2b from FERC staff's deficiency letter asks Westar to “explain
why, without reflecting the diversity of deviations among generators and load, the
proposed regulation requirements for Schedule 3-A, combined with those in
Schedule 3, will not result in over-recovery of total system regulation costs.”
Westar's answer to this question details the methodology it uses to determine the
amount of regulation required to serve the balancing needs of intermittent
generators, assuming those generators were operating on a “stand-alone” basis,
and offers an explanation as to why it believes that is the appropriate approach.
Westar's answer, however, is not responsive to the Commission staff's
question: whether Westar's proposed regulation amount and rate, in addition to the
regulation and rate identified for load, would result in overcharging. Specifically,
there is no analysis regarding the amount of regulation used in total under each
scenario or the costs recovered under each scenario. Westar argues that if wind
resources are not treated on a stand-alone basis, its customers would be
subsidizing intermittent generators. However, the contrary is in fact true; that is, if
intermittent resources are treated in a stand-alone basis, wind generators would be
subsidizing load in the Westar balancing area. As proposed, Westar’s
methodology would significantly overcharge intermittent generators.
The proposed charge to exporting generators does not charge those
generators the “incremental” costs of regulation needed to balance the system
beyond the needs of load, but instead reduces the costs to load within the Westar
service territory at the intermittent generator's expense. AWEA and the Wind
Coalition believe that additional generation in Westar’s Balancing Area should be
charged only for the incremental amount of regulation needed to serve the
incremental increase in net deviations caused by load, internal generation, and
exporting generation in Westar’s Balancing Area.
As FERC staff rightly pointed out in its deficiency letter, when sources of
variability are analyzed alone, the total amount of regulation to serve all of them
individually is larger than the amount required to serve them if they were
operating together and their variability were netted in real-time. In that way, there
is an overall benefit in allowing netting to happen, and that is in fact what happens
in Balancing Authorities today. In other words, each Balancing Authority is
required to ensure that load is balanced with generation within certain parameters,
such as NERC’s CPS2 requirement. Therefore, the Balancing Authority does not
follow each load in its service territory individually, or balance each load with a
single generator. To do so would be far too complicated, costly, and inefficient.
Rather, all loads and generation are netted, and the single deviation from a zero
balance is followed and adjusted with regulation in real-time. There is great
benefit to the fact that as one load is increasing, there is often another load that is
decreasing. The same can be true of generators or of load and generation together.
As Westar’s load is increasing, intermittent generators may also be increasing and
should not be penalized for their assistance in keeping load and generation in
balance within the Balancing Authority. In short, since intermittent generators are
not balanced separately from Westar’s load and other generation, they should not
be charged for the amount of regulation that would be required if they were
operating in their own Balancing Authority separate from load and other
E. Westar’s Alternate “Portfolio-Wide” Methodology Has Also Not
Been Demonstrated to Produce Just and Reasonable Rates
In its filing, Westar indicates that FERC staff raised, in its deficiency letter,
many of the concerns expressed above regarding Westar's stand-alone
methodology, including overstating total system regulation needs and resulting in
an over-collection of total regulation costs. Westar attempted to respond to those
concerns by providing information that it thought could be used for an alternative
method to determine the incremental regulation burden of non-designated
intermittent resources. However, this alternate “portfolio-wide” methodology
suffers from many of the same flaws as Westar's stand-alone methodology. As
discussed below, the “portfolio-wide” approach to the study, which indicates that
wind resources require 4.05 percent of their nameplate in addition to regulation
resources, is also not an appropriate incremental approach to charging for
Westar's portfolio approach attempts to use a mathematical formula to scale
all estimated regulation needs down to ensure that the total estimated regulation
need is equal to the total actual regulation need. However, this fails to resolve the
critical issue that wind facilities, and other intermittent generators, are being
assigned an excessively large share of total regulation needs, which is what has
always made Westar’s proposed rate for intermittent generators unjust and
unreasonable. In other words, when FERC staff pointed out that Westar had
possibly made its pie too large by grossly overstating the size of one piece (the
“incremental” regulation needs associated with wind energy), Westar responded
by proportionally shrinking all pieces of the pie to make the overall pie the right
size, even though this fails to resolve the underlying problem that intermittent
generators' share of the pie is still too large.
F. Westar’s “Portfolio-Wide” Analysis Is Based On Potentially
Flawed Extrapolations from Limited Data
As explained in the testimony of Mr. Dietz, the “portfolio-wide” analysis is
based only on nine months’ worth of output data collected from only five wind
plants. As Mr. Dietz himself admits, the results of the analysis may be inaccurate
because they do not represent a full assessment of wind plant variability and
aggregate power system variability over all seasons of the year.
There is strong reason to believe that the data collected from such a short
time period could be anomalous for other reasons as well. Other wind integration
studies have found significant inter-annual differences in the variability of wind
plant output. For this reason, most wind integration studies examine wind’s
variability over a period of three years or more. In addition, several of the wind
plants in Westar’s sample were just commencing commercial operation at the start
of the study period. Since many wind plants experience a higher frequency of
wind turbine outages and other anomalous events in the first months of
commercial operation, as do conventional generators, this means that the data may
not be a valid representation of normal wind plant output.
Finally, a sample of only five wind plants may not yield data that can be
used to reliably predict the performance of other wind plants. If even one or two
of the wind plants were anomalous in some way (for example, the plant were laid
out in a unique way or located near a geographic feature that causes it to have
unusually variable output) this would significantly skew the results of the study
and thus potentially cause an even larger overestimate of the true incremental
regulation burden, if any, associated with intermittent resources.
While Westar acknowledges some of the potential flaws in its data, the
proposal to submit revised data and calculations to the Commission in three years
is an insufficient remedy and would result in significant and unjust overpayment
by intermittent resources in the interim. It is also important to emphasize that
these concerns about the reliability of Westar's data are secondary in comparison
to concerns about the severe methodological flaws discussed above and below.
Even if Westar had used, or were to use, more reliable data in its analysis, the
resulting rate would still be unjust and unreasonable because of these
G. Westar’s Study Methodology and Findings Are Inconsistent
With Peer-Reviewed Wind Integration Studies As Well As Real-
World Operating Experience
As discussed above, Westar's proposed methodology for calculating the
regulation reserves required for accommodating wind plant variability is seriously
flawed in that it looks at wind plant variability in isolation from all other sources
of variability on the power system. As explained in further detail in Mr. Kirby's
attached declaration, the correct methodology for calculating the true incremental
regulation reserve requirement added by wind plants would be to subtract the
aggregate variability of the power system without wind energy from the aggregate
variability of the power system with wind energy. This is the methodology that
has been employed in a large number of peer-reviewed wind integration studies,
and unsurprisingly, the incremental regulation burden identified in these studies is
a fraction of what has been proposed by Westar. The results of a number of these
studies and how they compare to the results of Westar's proposal are discussed in
detail in Mr. Kirby's statement.
H. Westar’s Proposed Methodologies Also Overstate Any
Incremental Variability Associated With Wind Plants Added In
While both the stand-alone and portfolio-wide methods are flawed in that
they overstate the incremental regulation burden associated with wind plants in
existence today, these proposed methodologies are even more flawed when they
are applied to future wind plants.
As Mr. Dietz demonstrates on page 12 of his testimony, there is almost no
correlation between the outputs of different wind plants in Westar’s service
territory over the 10-minute interval that is relevant for regulation. As a result, the
aggregate variability of two wind plants is almost always going to be smaller (on a
share-of-nameplate-capacity basis) than the variability of one of those wind plants.
Thus, the incremental, system-wide variability associated with future wind plants
will tend to be smaller than the incremental variability associated with a wind
plant installed today.
Westar’s proposed methodologies fail to account for that decrease in
incremental variability; instead, it imposes the same regulation requirement on
future wind plants as it would impose on wind plants operating today. This is yet
another reason why Westar’s proposed methodologies are unjust and
unreasonable, as it would over-collect funds from intermittent resources.
I. Westar’s Methodologies Overstate Wind’s Incremental
Regulation Needs By Inaccurately Assuming That Reserves
Would Need To Be Maintained At Uniform Levels At All Times
Recent peer-reviewed wind integration studies (and common sense),
including the National Renewable Energy Laboratory’s Eastern Wind Integration
and Transmission Study, have found that the actual incremental regulation needs
for wind energy vary depending on the level of wind output at any one point in
For example, a group of wind plants at zero or low output has very little
room for its output level to decrease, just as a group of wind plants at or near
maximum output has very little room for its level to increase. Thus, it is possible
to significantly reduce wind’s incremental regulation needs during those and other
time periods that are statistically unlikely to see major wind ramps in a certain
direction. Wind energy forecasting can also assist grid operators with identifying
periods when the incremental regulation needs associated with wind plants are
reduced. Westar’s methodologies overstate wind’s incremental regulation needs
by inaccurately assuming that reserves would need to be maintained at uniform
levels at all times.
In light of the failures of Westar's proposed regulation charge methodology
discussed above, AWEA and the Wind Coalition assert that intermittent generators
will be overcharged for the total amount of regulation needed to serve both
Westar’s load and exporting generators. In other words, Westar’s proposed rate
for intermittent resources should be rejected because it would result in intermittent
exporting generators subsidizing the costs to Westar’s load. Accordingly, we
submit that Westar’s filing has not been shown to be just and reasonable and
should be rejected. If the Commission chooses not to reject the proposed rate
outright or require Westar to make a supplemental filing addressing the issues that
it failed to adequately respond to in its deficiency letter, AWEA and the Wind
Coalition respectfully request that the Commission suspend the rate for five
months8 and set the matter for a formal hearing and settlement proceedings.
WHEREFORE, for the foregoing reasons, AWEA and the Wind Coalition
request that the Commission find that Westar’s proposed rate for intermittent
generators and tariff changes have not been shown to be just and reasonable, and
either reject Westar’s filing, require Westar to make a supplemental filing
addressing the issues that it failed to adequately respond to in its deficiency letter,
or order that a formal hearing be established. In addition, if the Commission
accepts the filing, it should suspend collection of the proposed rates for the
maximum statutory period of five months.
By: _____/s/ _Gene Grace_
In West Texas Utilities Company, the Commission explained that when preliminary analysis indicates that
a proposed rate may be unjust and unreasonable, and may be substantially excessive (more than 10% of the
increase under the interim rate is preliminarily found to be excessive.), the Commission will generally
impose a five-month suspension. In the instant proceeding, our preliminary analysis indicates that the
proposed rates may be substantially excessive. 18 FERC ¶ 61,189 (1982) (West Texas). For the reasons
discussed herein, AWEA asserts that the rates proposed by Westar meet the definition of substantially
excessive set forth in West Texas.
Dated: February 10, 2010
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Westar Energy, Inc. Docket No. ER09-1273-000
DECLARATION OF BRENDAN KIRBY
ON BEHALF OF AWEA AND THE WIND COALITION
I. PROFESSIONAL QUALIFICATIONS AND SUMMARY OF AFFIDAVIT
Q: Please state your name and qualifications.
A: My name is Brendan Kirby, and I am a licensed professional engineer
and a Senior Member of the IEEE and the IEEE Power Engineering Society. I
hold a Bachelor’s Degree in Electrical Engineering from Lehigh University, and a
Master’s Degree in Electrical Engineering from Carnegie-Mellon University. I am
retired from the position of Senior Engineer in the Power Systems Research
Program at Oak Ridge National Laboratory and now work as a private consultant.
In that capacity, I have served on the Technical Review Committees of many of
the wind integration studies that have been conducted in the U.S. to date.
Q: Have you reviewed Westar’s initial filing in this case, their response to
FERC’s deficiency letter, and the supplemental testimony submitted in this case?
A: Yes, I have.
Q: What is your assessment of the methodology employed in Westar’s
A: Accurately calculating any “incremental” regulation burden associated
with adding wind energy to a power system requires analyzing the net effect of all
sources of variability on the power system. To calculate the incremental burden
posed to the power system by a particular resource, one must look at the aggregate
variability of the system with that resource minus the aggregate variability of the
system without that resource. Thus, Westar’s insistence on attempting to calculate
the incremental impact of wind by calculating the variability of wind energy on a
stand-alone basis is flawed.
Q: Why does wind's variability need to be considered along with the
variability of other resources?
A: A power system operator, as Westar notes in its filing, is responsible for
maintaining adequate regulation reserves to keep aggregate electricity supply and
aggregate electricity demand in close enough proximity to ensure that the
frequency on its power system remains within an acceptable range and to ensure
that power flows across its interties to neighboring balancing areas are maintained
as scheduled. These goals are achieved by responding to aggregate power system
variability, so identifying the incremental burden posed to the system by a
particular resource, which is what Westar repeatedly states is its goal, must look at
the aggregate variability of the system with that resource compared with the
aggregate variability of the system without that resource.
Wind and other sources of variability on the power system are largely
uncorrelated over the 10-minute time scale relevant for regulation needs (as
demonstrated on page 12 of Mr. Dietz’s testimony) and thus tend to cancel each
other out to a large extent. More precisely, the variabilities of different resources
and loads do not add arithmetically; rather, they are determined by taking the
square root of the sum or the squares of their variabilities—the same method one
would use for summing the variabilities of any other uncorrelated factors. The
result of this calculation is that the incremental variability of wind is dwarfed by
the variability of load and other factors at the regulation time-scale, since the
variability of those factors is so much larger to begin with. This finding has been
confirmed by a number of other wind integration studies.9 This means that
Westar’s proposed method would grossly overcharge wind generators relative to
any incremental regulation burden they might actually impose.
In the way of a hypothetical, a typical power system might have 100 MW
as the average 10-minute variability of load, while the variability of wind output
over this time scale might be 5 MW (data from actual wind plants shows us that
the output of wind plants, particularly multiple wind plants spread over a broad
area, tends to remain relatively constant over the 10-minute time frame)10.
Westar's proposed stand-alone methodology would require wind plants to provide
that 5 MW of regulation capability, as Westar would have, pursuant to its
proposal, calculated that the total system regulation need would be 105 MW
(100+5). However, the total system regulation burden would in fact be the square
Available at http://www.uwig.org/windrpt_vol%201.pdf , page 35.
Available at http://www.nrel.gov/wind/systemsintegration/pdfs/2004/wan_wind_plant_behaviors.pdf
root of 1002+52, or 100.125. Thus, the wind plant's actual incremental regulation
burden would be 0.125 MW, not 5 MW. In this case, Westar's methodology
would have overcharged the wind plant by a factor of 40 and Westar would collect
revenue for 4.875 MW it did not require or deliver.
Westar argues that if wind resources are not treated on a “stand-alone”
basis, its customers would be subsidizing intermittent generators. However, if
intermittent resources are treated in such a manner, the reverse is true: wind
generators would be subsidizing load in the Westar balancing area. The proposed
"stand-alone" charge to exporting intermittent generators does not charge these
generators the “incremental” costs of regulation needed to balance the system
beyond the needs of load, but rather either reduces the costs to load within the
Westar service territory or increases Westar’s profits at the wind generator's
Q: Does the "portfolio-wide" approach proposed in Mr. Dietz's testimony
address these concerns?
A: No. The alternate “portfolio-wide” methodology still suffers from many
of the same mistakes as the stand-alone methodology. As discussed below, the
“portfolio” approach to the study, which indicates that wind resources require 4.05
percent of their nameplate in additional regulation resources, is also not an
incremental approach to charging for regulation.
After FERC staff raised the concern that Westar’s proposed stand-alone
methodology overstated total system regulation needs, resulting in an over-
collection of total regulation costs, Westar attempted to use a mathematical
shortcut to scale all estimated regulation needs down to ensure that the total
estimated regulation need was equal to the total actual regulation need.
Unfortunately, this shortcut failed to resolve the critical issue that wind plants
were being assigned an excessively large share of the total regulation needs.
To continue with the hypothetical power system example cited earlier, with
100 MW of load variability and 5 MW of wind variability, Westar's portfolio-wide
methodology acknowledges that total power system variability in that case would
only be 100.125 MW. However, it does not assign wind plants the true
incremental burden they are causing to the power system, 0.125 MW, but rather
uses the allocation share that it had calculated under the flawed stand-alone
approach to assign wind plants 5/105ths of the total regulation burden, or in this
case (5/105)x100.125 = 4.82 MW. This amount is still 38.5 times larger than the
true incremental regulation burden imposed by the wind plants.
Q: Based on the data available in Mr. Dietz's testimony, what is the correct
way to calculate the incremental regulation burden imposed by non-Designated
Resource wind generators?
A: Table 2 from the Non-Public Version of the Supplemental Testimony of
Paul Dietz is reproduced below. As explained above, Westar correctly calculated
the 123.7 MW “Total” system regulation requirement by summing the
“Unadjusted Variance” values from all of the components and taking two times
the square root of the total. This is the amount of regulation Westar says the
system needs to balance both wind and load. To calculate the incremental
regulation requirement that results from the “Other Wind,” it is necessary to
calculate the regulation requirement of the Westar system without the Other Wind.
This 121.7 MW regulation requirement is shown on the first line of the table
immediately below Westar’s Table 2. It is calculated exactly as Westar calculated
the Total system regulation requirements with the data Westar provided in Table
2. The Westar data shows that the Westar system requires 2.0 MW of additional
regulation (123.7 MW – 121.7 MW) when Other Wind is added to the system.
This is a 0.69% Regulation Percentage, based on the incremental additional
regulation requirement and the amount of Other Wind.
If Westar were allowed to charge the Other Wind 7.63% for regulation,
Westar would collect for 20.3 MW (22.3 MW charged for – 2.0 MW actually
needed) of regulation that it did not physically require or supply.
Westar Table 2
Regulation Unadjusted 2 x StDev 12 CP for Average Max Unadjusted
Element Variance (MW) Load (MW) Peak Observation Regulation
(MW2) Regulation Generation (MW) Percentage
Other Wind 7.63%
RBASE Gen 2.26%
Correct Incremental Regulation Calculation Based on Westar Data
Q: How does the methodology of Westar's analyses compare with those of
peer-reviewed wind integration studies?
A. As explained above, the correct methodology for calculating the true
incremental regulation reserve requirement added by wind plants would be to
subtract the aggregate variability of the power system without wind energy from
the aggregate variability of the power system with wind energy. This is the
methodology that has been employed in a large number of peer-reviewed wind
integration studies (many of which are discussed below), but was not employed by
Westar's analyses. For the reasons explained above, Westar's methodology tends
to greatly overestimate wind's incremental regulation burden.
Q: How do the results of Westar's analyses compare with those of peer-
reviewed wind integration studies?
A: The regulation burden identified in Westar's analyses is an order of
magnitude larger than the incremental regulation burden identified in nearly all
peer-reviewed wind integration studies, which is unsurprising since Westar's
methodology tends to greatly overestimate wind's incremental regulation burden.
The 2006 Minnesota wind integration study, conducted for the Minnesota
Public Utilities Commission, is a peer-reviewed and widely respected study in the
wind integration community. Among other results, this study calculated the
incremental regulation burden associated with obtaining 15%, 20%, and 25% of
Minnesota's electricity from wind energy. The results, presented in Table 1 below,
show an incremental regulation burden, above the amount of regulation needed in
a scenario with no wind energy, of 12 MW of regulation for 3441 MW of wind, 16
MW for 4582 MW of wind, and 20 MW for 5688 MW wind, respectively, or in
each case about 0.35% of the nameplate amount of wind. In contrast, Westar's
proposal calls for intermittent resources to provide regulation equal to 7.8% of
nameplate wind, an amount that is more than 20 times larger than calculated in the
2006 Minnesota wind integration study.
Table 1: 2006 Minnesota Wind Integration Study, Total Regulating Reserve
Base 15% Wind 20% Wind 25% Wind
Regulation MW 137 MW 149 MW 153 MW 157 MW
This result is comparable to other peer-reviewed wind integration studies.
Table 2 summarizes the regulation costs calculated in a number of the wind
integration studies conducted in the United States. In these studies, the regulation
cost per MWh of wind energy is typically found to be under $0.50/MWh of wind
energy, with the exception of the 2003 We Energies studies that found regulation
costs of just over $1/MWh of wind energy. For comparison, Westar's proposal
Available at http://www.uwig.org/windrpt_vol%201.pdf , page xviii.
would result in a regulation cost of about $11.14/MWh of wind energy (based on
an assumed cost of $50/MW of regulation, Westar's requirement that a wind plant
provide regulation equal to 7.8% of nameplate capacity, and an assumed 35%
wind plant capacity factor).
Table 2: Regulation Costs in Various Wind Integration Studies12
A 2008 wind integration study in ERCOT similarly found that adding
5,000, 10,000, or 15,000 MW of wind capacity would only add incrementally to
Dr. Michael Milligan, January 2010, NREL webinar, page 23, available at
the need for regulation reserves. As shown in Figure 1, each additional 5,000 MW
of wind added about 4-5 MW to the amount of regulation deployed on average, or
15-20 MW even at the 98th percentile of the largest 5-minute changes in net load,
which corresponds to about 0.33% of the nameplate amount of wind.
Figure 1: Deployed Regulation Statistics, ERCOT13
Q: Are there any other comments you would like to make at this time?
A: I would like to note that I have reviewed AWEA and the Wind Coalition’s
filing in this case and have found the statements and conclusions in the filing to be
accurate and consistent with the body of peer-reviewed wind integration literature.
I declare under penalty of perjury that the foregoing is true and correct.
Executed on February 10, 2010, in Washington, DC.
________/s/ Brendan Kirby_______
Avaialable at http://www.ercot.com/meetings/ros/keydocs/2008/0227/ERCOT_final_pres_d1_w-
o_backup.pdf , page 85.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that the foregoing protest of the American Wind Energy
Association has been served in accordance with 18 C.F.R. § 385.2010 upon each
person designated on the official service list compiled by the Secretary in this
________/s/ Gene Grace_______
Dated at Washington, DC, this February 10, 2010.