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Managing with Wind and Water

by Ted Sickinger
The Oregonian, October 12, 2008

BPA - Elliot Mainzer takes the key role in developing energy agency policy on climate change, planning and renewables

As renewable energy becomes a bigger slice of the Northwest's energy pie, few institutions have as important a role to play as the Bonneville Power Administration, the federal agency that markets electricity generated at 31 dams and a nuclear plant in the region.

BPA's regionwide web of transmission lines delivers electrons generated at wind farms east of the Cascades to power-hungry consumers in the Willamette Valley. The agency's flexibility to modulate electricity production at dams on the Columbia allows utilities to safely feed their spiky supply of wind energy onto the grid.

In late September, BPA appointed Elliot Mainzer to the newly created position of executive vice president of strategic planning. Mainzer will be responsible for developing agency policy on climate change, resource planning and integration of renewables.

Mainzer, 42, has been with Bonneville since leaving Enron on Pearl Harbor day in 2001, as the company crashed into bankruptcy. He since has worked on both the power and transmission sides of BPA's business, and led the team that developed the Northwest Wind Integration Action Plan.

Mainzer spent some time earlier this week describing his new role and BPA's strategic challenges. Questions and answers were edited for length.

Q: A number of BPA's most senior leaders have left in the past 18 months, and there's always a chance that there will be a new leader of the agency after a presidential election. Are we seeing a changing of the guard at BPA, and what are the implications?

A: Certainly not officially. There's no doubt that some of our long-standing leadership is taking off. I'd certainly like to see (BPA chief) Steve Wright stick around for a while. He's been a great leader for Bonneville during some turbulent times. I come to the executive team as a relatively young member. Where you'll see some differences, the new generation tends to like to move a little quicker, and we're infused with the sense of importance of some of the environmental issues facing the industry. I hope being in this position will allow me to work with folks and show some leadership on this topic.

Q: Bonneville just created this position. Does it signal a shift in strategy, or a shift in focus from energy acquisition toward the transmission world, where you've recently focused?

A: It's less a shift in strategy than a shift in our approach to strategy-making. Since the mid-'90s when restructuring came along, we've been operating as two distinct businesses: power business line and transmission business line. When we look out in the future and see these big issues looming in front of us on energy and the environment, there needs to be better cross-agency planning. You need to bring the best thinking from the power and transmission sides, and create a forum in which those issues can vetted, defined and articulated throughout the organization, then acted on and implemented.

Q: BPA has always faced conflicting demands from ratepayers, utilities and salmon protection. What's the agency's strategy to balance those needs with new mandates on global warming and renewable energy?

A: One of the things we know is we are beginning to approach the limits of the capability of this hydroelectric resource. At the same time, there's a lot more pressure on the system to do more things: meeting load growth, spill requirements to protect fish, integrating wind power . . . Wind has very appealing environmental characteristics. But as you put more and more wind on the system, it increases the demand for system flexibility (the ability to balance spikes in wind power by ramping up and down electricity generation at the dams). Anything we can do to extend the flexibility of the hydro system within regional bounds is a good thing. But we're also going to have to bring other resources into the system to manage that flexibility. Gas resources and demand side management are going to have to be part of this.

One of the things I'll be looking at in my new job is how do we bring that flexibility into the equation and how do we collaborate with other utilities. We have a very balkanized operating environment in the Northwest, and if we're truly going to go big on renewables, it will take a lot more collaboration among the utilities. So I consider that part of my job, to facilitate that planning and those conversations.

Q: Growing demand for wind power is intensifying the call for more high-voltage transmission capacity in the region. What is BPA's responsibility to build that transmission?

A: Our underlying obligation is to expand the transmission system to the extent it'snecessary to meet our public utility customers' loads. At the same time, many other entities depend on our transmission system to get electricity to their loads. Our footprint is so extensive that it's hard for anybody to build new lines without there being implications for BPA.

We need to be part of the regional solution as well. Our open season process this spring allowed other entities, the big investor-owned utilities and independent power producers, to sign up to pay for additional transmission capacity that's above and beyond what we might otherwise have to build. We said, "If you guys are prepared to commit to long-term contracts and provide us with sufficient revenue, we're prepared to go out there and build transmission to help meet your needs."

We know that transmission expansion is going to be essential to building a diversified resource portfolio in the Northwest. Right now, you have a lot of individual entities working on their own transmission plans. We really need to promote more effective regional transmission planning, so we can access the best resources and provide incremental capacity at the overall lowest cost to consumers.

Q: An increasing share of Northwest wind power is going to California. Is BPA facilitating that, and how much of the hydro system's flexibility are you selling that benefits California consumers versus those in the Northwest?

A: We are absolutely seeing the California utilities buying the output of projects in the Pacific Northwest. It's a relatively modest fraction today but it's quickly increasing. Capacity on transmission lines to California is for all intents and purposes sold out. So if California utilities want to continue to purchase the output of wind projects in the Northwest, which may make sense to promote rural economic development, we are going to have to have a strategy to build out those lines. We're headed for a period very shortly where the level of coordination and conversation with those California parties is going to have to increase dramatically. Regional preference is one of the criteria we'll be using to determine how much of our scarce system flexibility we're willing to sell to different entities.

Ted Sickinger
Managing with Wind and Water
The Oregonian, October 12, 2008

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