[Federal Register Volume 81, Number 218 (Thursday, November 10, 2016)]
[Notices]
[Pages 78999-79005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27181]
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DEPARTMENT OF ENERGY
Bonneville Power Administration
[BPA File No.: BP-18]
Fiscal Year (FY) 2018-2019 Proposed Power and Transmission Rate
Adjustments Public Hearing and Opportunities for Public Review and
Comment
AGENCY: Bonneville Power Administration (BPA or Bonneville), Department
of Energy (DOE).
ACTION: Notice of FY 2018-2019 Proposed Power and Transmission Rate
Adjustments.
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SUMMARY: BPA is holding a consolidated rate proceeding, Docket No. BP-
18, to establish power and transmission rates for FY 2018-2019.
The Pacific Northwest Electric Power Planning and Conservation Act
(Northwest Power Act) provides that BPA must establish and periodically
review and revise its rates so that they recover, in accordance with
sound business principles, the costs associated with the acquisition,
conservation, and transmission of electric power, including
amortization of the Federal investment in the Federal Columbia River
Power System (FCRPS) over a reasonable number of years, and BPA's other
costs and expenses. The Northwest Power Act requires that BPA's rates
be established based on the record of a formal hearing. For
transmission rates only, the Northwest Power Act requires that the
costs of the Federal transmission system be equitably allocated between
Federal and non-Federal power utilizing the system. By this notice, BPA
announces the commencement of a power and transmission rate adjustment
proceeding for power, transmission, ancillary, and control area
services rates to be effective on October 1, 2017.
DATES: Anyone wishing to become a party to the BP-18 proceeding must
provide written notice by U.S. Mail or electronic mail. BPA must
receive such notice no later than 3:00 p.m. on November 18, 2016.
The BP-18 rate adjustment proceeding begins with a prehearing
conference at 9:00 a.m. on November 17, 2016, in the BPA Rates Hearing
Room, 1201 NE Lloyd Boulevard, Suite 200, Portland, Oregon 97232.
Written comments by non-party participants must be received by
February 17, 2017, to be considered in the Administrator's Record of
Decision (ROD).
ADDRESSES:
1. Petitions to intervene should be directed to: Hearing Clerk--L-
7, Bonneville Power Administration, 905 NE 11th Avenue, Portland,
Oregon 97232 or may be emailed to [email protected]. In addition,
copies of the petition must be served concurrently on BPA's General
Counsel and directed to both Mr. Kurt Casad, LP-7, and Mr. Matthew
Perkins, LT-7, Office of General Counsel, 905 NE 11th Avenue, Portland,
Oregon 97232, or by email to [email protected] and [email protected] (see
section III.A. for more information regarding interventions).
2. Written comments by participants should be submitted to BPA
Public Involvement, Bonneville Power Administration, P.O. Box 14428,
Portland, Oregon 97293. Participants may also submit comments
electronically at www.bpa.gov/comment. BPA requests that all comments
and documents intended to be part of the Official Record in this rate
proceeding contain the designation BP-18 in the subject line.
FOR FURTHER INFORMATION CONTACT: Ms. Ebony Amato, DKE-7, BPA
Communications, Bonneville Power Administration, P.O. Box 3621,
Portland, Oregon 97208; by phone toll free at 1-800-622-4520; or by
email to [email protected].
Responsible Officials: Mr. Daniel H. Fisher, Power Rates Manager,
is the official responsible for the development of BPA's power rates,
and Ms. Rebecca E. Fredrickson, Transmission Rates Manager, is the
official responsible for the development of BPA's transmission,
[[Page 79000]]
ancillary, and control area services rates.
SUPPLEMENTARY INFORMATION:
Table of Contents
Part I. Introduction and Procedural Background
Part II. Scope of BP-18 Rate Proceeding
Part III. Public Participation in BP-18
Part IV. Summary of Rate Proposals
Part V. Proposed BP-18 Rate Schedules
Part I--Introduction and Procedural Background
Section 7(i) of the Northwest Power Act, 16 U.S.C. 839e(i),
requires that BPA's rates be established according to certain
procedures, including publication in the Federal Register of this
notice of the proposed rates; one or more hearings conducted as
expeditiously as practicable by a Hearing Officer; opportunity for both
oral presentation and written submission of views, data, questions, and
arguments related to the proposed rates; and a decision by the
Administrator based on the record. BPA's rate proceedings are further
governed by BPA's Procedures Governing Bonneville Power Administration
Rate Hearings, 51 Federal Register 7611 (1986), which implement and
expand the statutory requirements.
This proceeding is being conducted under the rule for general rate
proceedings, section 1010.4 of BPA's Procedures. A proposed schedule
for the proceeding is provided below. A final schedule will be
established by the Hearing Officer at the prehearing conference.
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Prehearing Conference/BPA Initial November 17, 2016.
Proposal.
Parties File Petitions to Intervene. November 18, 2016.
Clarification....................... December 6-7, 2016.
Motions to Strike................... December 16, 2016.
Data Request Deadline............... December 16, 2016.
Answers to Motions to Strike Due.... January 10, 2017.
Data Response Deadline.............. January 10, 2017.
Parties File Direct Cases........... January 31, 2017.
Clarification....................... February 7-8, 2017.
Motions to Strike Due............... February 14, 2017.
Data Request Deadline............... February 14, 2017.
Close of Participant Comments....... February 17, 2017.
Answers to Motions to Strike Due.... February 21, 2017.
Data Response Deadline.............. February 21, 2017.
Litigants File Rebuttal Cases....... March 14, 2017.
Clarification....................... March 20, 2017.
Motions to Strike Due............... March 24, 2017.
Data Request Deadline............... March 24, 2017.
Answers to Motions to Strike Due.... March 31, 2017.
Data Response Deadline.............. March 31, 2017.
Parties Give Notice of Intent to March 31, 2017.
Cross-Examine.
Cross-Examination................... April 6-7, 2017.
Initial Briefs Filed................ May 2, 2017.
Oral Argument....................... May 9, 2017.
Draft ROD issued.................... June 13, 2017.
Briefs on Exceptions Filed.......... June 30, 2017.
Final ROD and Final Studies issued.. July 26, 2017.
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Section 1010.7 of BPA's Procedures prohibits ex parte
communications. The ex parte rule applies to all BPA and DOE employees
and contractors. Except as provided below, any outside communications
with BPA and/or DOE personnel regarding the merits of any issue in
BPA's rate proceeding by other Executive Branch agencies, Congress,
existing or potential BPA customers (including tribes), or nonprofit or
public interest groups are considered outside communications and are
subject to the ex parte rule. The rule does not apply to communications
relating to (1) matters of procedure only (the status of the rate
proceeding, for example); (2) exchanges of data in the course of
business or under the Freedom of Information Act; (3) requests for
factual information; (4) matters for which BPA is responsible under
statutes other than the ratemaking provisions; or (5) matters which all
parties agree may be made on an ex parte basis. The ex parte rule
remains in effect until the Administrator's Final ROD is issued, which
is scheduled to occur on or about July 26, 2017.
Part II--Scope of BP-18 Rate Proceeding
A. Joint Rate Proceeding
BPA is holding one power and transmission rate proceeding with one
procedural schedule, one record, and one ROD.
B. 2016 Integrated Program Review
BPA began its 2016 Integrated Program Review (IPR) and Capital
Investment Review (CIR) process in June 2016. The IPR/CIR process is
designed to allow an opportunity to review and comment on BPA's expense
and capital spending level estimates before the spending levels are
used to set rates. On October 12, 2016, BPA issued the Final Close-Out
Report for the IPR/CIR process. In the Final Close-Out Report, BPA
established the program level cost estimates that are used in the BP-18
Initial Proposal. Starting this fall, BPA will engage customers and
stakeholders in a discussion to consider additional cost management
alternatives which, if adopted, would be reflected in BPA's final
rates.
C. Scope of the Rate Proceeding
This section provides guidance to the Hearing Officer as to those
matters that are within the scope of the rate proceeding and those that
are outside the scope. In addition to the items listed below, any other
issue that is not a ratemaking issue is outside the scope of this
proceeding.
1. Program Cost Estimates
Some of the decisions that determine program costs and spending
levels have been made in the IPR/CIR public review process outside the
rate proceeding. See section II.B. BPA's spending levels for
[[Page 79001]]
investments and expenses are not determined or subject to review in
rate proceedings.
Pursuant to section 1010.3(f) of BPA's Procedures, the
Administrator directs the Hearing Officer to exclude from the record
all argument, testimony, or other evidence that challenges the
appropriateness or reasonableness of the Administrator's decisions on
cost and spending levels. If any re-examination of spending levels is
necessary, such re-examination will occur outside of the rate
proceeding. The above exclusion does not extend to those portions of
the revenue requirements related to interest rate forecasts, interest
expense and credit, Treasury repayment schedules, forecasts of
depreciation and amortization expense, forecasts of system replacements
used in repayment studies, Residential Exchange Program benefits,
purchased power expenses, transmission acquisition expense incurred by
Power Services, generation acquisition expense incurred by Transmission
Services, minimum required net revenue, use of financial reserves, and
the costs of risk mitigation actions resulting from the expense and
revenue uncertainties included in the risk analysis. The Administrator
also directs the Hearing Officer to exclude argument and evidence
regarding BPA's debt management practices and policies. See section
II.C.5.
2. Tiered Rate Methodology (TRM)
The TRM restricts BPA and customers with Contract High Water Mark
(CHWM) contracts from proposing changes to the TRM's ratesetting
guidelines unless certain procedures have been successfully concluded.
No proposed changes have been subjected to the required procedures.
Pursuant to Sec. 1010.3(f) of BPA's Procedures, the Administrator
hereby directs the Hearing Officer to exclude from the record all
argument, testimony, or other evidence that seeks in any way to propose
revisions to the TRM made by BPA, customers with a CHWM contract, or
their representatives. This restriction does not extend to a party or
customer that does not have a CHWM contract.
3. Service to the Direct Service Industries (DSIs)
The level and method of service to DSIs during the FY 2018-2019
rate period are established in existing contractual arrangements with
Alcoa, Inc. and Port Townsend Paper Corporation. Neither the contracts
nor the records of decision supporting those contracts were subject to
any petition for review in the Ninth Circuit. For this reason, pursuant
to Sec. 1010.3(f) of BPA's Procedures, the Administrator directs the
Hearing Officer to exclude from the record all argument, testimony, or
other evidence that seeks in any way to revisit the appropriateness or
reasonableness of BPA's decisions regarding service to the DSIs,
including BPA's decision to offer contracts to the DSIs and the method,
level of service, or other terms embodied in the existing contracts
with Alcoa and Port Townsend.
4. Generation Inputs
BPA provides a portion of the available generation from the FCRPS
to enable Transmission Services to meet its various requirements.
Transmission Services uses these generation inputs to provide ancillary
and control area services.
Pursuant to Sec. 1010.3(f) of BPA's Procedures, the Administrator
directs the Hearing Officer to exclude from the record all argument,
testimony, or other evidence that seeks in any way to revisit issues
regarding reliability of the transmission system, dispatcher standing
orders, e-Tag requirements and definitions, open access transmission
tariff (OATT) provisions, and business practices. These non-rates
issues are generally addressed by BPA in accordance with industry,
reliability, and other compliance standards and criteria and are not
matters appropriate for the rate proceeding.
5. Federal and Non-Federal Debt Service and Debt Management
During the 2016 IPR/CIR process and in other forums, BPA provided
the public with background information on BPA's internal Federal and
non-Federal debt management policies and practices. While these
policies and practices are not decided in the IPR/CIR forum, these
discussions were intended to inform interested parties about these
matters so the parties would better understand BPA's debt structure.
BPA's debt management policies and practices remain outside the scope
of the rate proceeding.
Pursuant to Sec. 1010.3(f) of BPA's Procedures, the Administrator
hereby directs the Hearing Officer to exclude from the record all
argument, testimony, or other evidence that seeks in any way to address
the appropriateness or reasonableness of BPA's debt management policies
and practices. This exclusion does not encompass how debt management
actions are reflected in ratemaking.
6. Potential Environmental Impacts
Environmental impacts are addressed in a National Environmental
Policy Act (NEPA) process BPA conducts concurrent with the rate
proceeding. See section II.D.
Pursuant to Sec. 1010.3(f) of BPA's Procedures, the Administrator
directs the Hearing Officer to exclude from the record all argument,
testimony, or other evidence that seeks in any way to address the
potential environmental impacts of the rates being developed in this
rate proceeding.
7. 2008 Average System Cost Methodology (2008 ASCM) and Average System
Cost Determinations
Section 5(c) of the Northwest Power Act established the Residential
Exchange Program, which provides benefits to residential and farm
consumers of Pacific Northwest utilities based, in part, on a utility's
``average system cost'' (ASC) of resources. On September 4, 2009, the
Federal Energy Regulatory Commission (Commission) granted final
approval of BPA's 2008 ASCM. The 2008 ASCM is not subject to challenge
or review in a section 7(i) proceeding. Determinations of the ASCs of
participating utilities are made in separate processes conducted
pursuant to the ASCM. Those processes began with ASC filings on June 1,
2016, and are continuing through July 2017. The determinations of ASCs
are not subject to challenge or review in a section 7(i) proceeding.
Pursuant to Sec. 1010.3(f) of BPA's Procedures, the Administrator
hereby directs the Hearing Officer to exclude from the record all
argument, testimony, or other evidence that seeks in any way to visit
or revisit the appropriateness or reasonableness of the 2008 ASCM or
that seeks in any way to visit or revisit the appropriateness or
reasonableness of any of the ongoing ASC determinations.
8. Rate Period High Water Mark (RHWM) Process
The RHWM Process preceded the BP-18 rate proceeding. In that
process, as directed by the TRM, BPA established FY 2018-2019 RHWMs for
Public customers that signed contracts for firm requirements power
service providing for tiered rates, referred to as CHWM contracts. BPA
established the maximum planned amount of power a customer is eligible
to purchase at Tier 1 rates during the rate period, the Above-RHWM
Loads for each customer, the System Shaped Load for each customer, the
Tier 1 System Firm Critical Output, RHWM Augmentation, the Rate Period
Tier 1 System Capability (RT1SC), and the monthly/diurnal shape of
RT1SC. The RHWM Process provided customers an opportunity to
[[Page 79002]]
review, comment on, and challenge BPA's RHWM determinations.
Pursuant to Sec. 1010.3(f) of BPA's Procedures, the Administrator
hereby directs the Hearing Officer to exclude from the record all
argument, testimony, or other evidence that seeks in any way to visit
or revisit BPA's determination of a customer's FY 2018-2019 RHWM or
other RHWM Process determinations.
9. 2012 Residential Exchange Program Settlement Agreement (2012 REP
Settlement)
On July 26, 2011, the Administrator executed the 2012 REP
Settlement, which resolved longstanding litigation over BPA's
implementation of the Residential Exchange Program (REP) under section
5(c) of the Northwest Power Act, 16 U.S.C. 839c(c). The Administrator's
findings regarding the legal, factual, and policy challenges to the
2012 REP Settlement are explained in the REP-12 Record of Decision
(REP-12 ROD). The 2012 REP Settlement and REP-12 ROD were approved by
U.S. Court of Appeals for the Ninth Circuit in Association of Public
Agency Customers v. Bonneville Power Administration, 733 F.3d 939 (9th
Cir. 2013). Because the 2012 REP Settlement was part of the REP-12 ROD
and was approved by the Court, challenges to BPA's decision to adopt
the 2012 REP Settlement and implement its terms in BPA's rate
proceedings are not within the scope of this proceeding. Pursuant to
Sec. 1010.3(f) of BPA's Procedures, the Administrator hereby directs
the Hearing Officer to exclude from the record all argument, testimony,
or other evidence that seeks in any way to visit or revisit BPA's
determination to adopt the 2012 REP Settlement or its terms in this
rate proceeding.
10. Financial Reserves Policy
BPA is proposing in this rate case a policy to establish targets
(and upper and lower thresholds) for financial reserves for each of its
business units and the agency as a whole. BPA's financial policies are
normally not within the scope of BPA's rate cases; however, for
administrative convenience BPA is using the BP-18 rate case process to
develop the Financial Reserves Policy in lieu of conducting a parallel,
but separate, public process. Therefore, the Financial Reserves Policy,
and its implementation in the BP-18 rates, is within the scope of this
rate proceeding.
11. Oversupply Management Protocol
The proposed OS-18 Oversupply rate is a formula rate designed to
recover BPA's oversupply costs. BPA incurs oversupply costs pursuant to
the Oversupply Management Protocol, Attachment P of BPA's OATT. Under
the proposed formula rates, BPA would recover actual costs incurred
during the BP-18 rate period rather than forecast costs, therefore
avoiding the need to perform a later true-up between forecast costs and
actual costs. Pursuant to Rule 1010.3(f) of BPA's Procedures, the
Administrator limits the scope of this proceeding to issues concerning
the rates for recovering the costs of the Oversupply Management
Protocol. In particular, the following issues are not part of the scope
of the case, and the Hearing Officer is directed to strike all
argument, testimony, or other evidence concerning these issues: the
terms of the Oversupply Management Protocol; whether the Oversupply
Management Protocol complies with orders of the Commission; and whether
BPA took all actions to avoid using the Oversupply Management Protocol,
including the payment of negative prices to generators outside of BPA's
balancing authority area.
12. Power Product Switching
On July 18, 2016, BPA issued a letter informing interested parties
that Seattle City Light (Seattle) and Klickitat PUD (Klickitat) had
requested an early change in their purchase obligations under their
Regional Dialogue Power Sales Agreements (Regional Dialogue contracts).
In the letter, BPA included its analysis of the proposed early change
in purchase obligations and solicited comments from customers and other
interested parties. On August 26, 2016, BPA issued a decision letter
allowing Seattle and Klickitat to change their purchase obligations
from the Slice/Block product to the Block product and Load Following
product, respectively, effective October 1, 2017.
Because BPA has already issued a decision document on Seattle and
Klickitat's request for an early change in purchase obligations under
their Regional Dialogue contracts, this issue is not within the scope
of this proceeding. Pursuant to Sec. 1010.3(f) of BPA's Procedures,
the Administrator hereby directs the Hearing Officer to exclude from
the record all argument, testimony, or other evidence that seeks in any
way to visit or revisit BPA's determination to grant Seattle and
Klickitat's request for a change in purchase obligations in this rate
proceeding.
D. The National Environmental Policy Act (NEPA)
BPA is in the process of assessing the potential environmental
effects of its proposed power and transmission rates, consistent with
NEPA. The NEPA process is conducted separately from the rate
proceeding. As discussed in section II.C.6., all evidence and argument
addressing potential environmental impacts of rates being developed in
the BP-18 rate proceeding are excluded from the rate proceeding record.
Instead, comments on environmental effects should be directed to the
NEPA process.
Because this proposal involves BPA's ongoing business practices
related to rates, BPA is reviewing the proposal for consistency with
BPA's Business Plan Environmental Impact Statement (Business Plan EIS),
completed in June 1995 (BOE/EIS-0183). This policy-level EIS evaluates
the environmental impacts of a range of business plan alternatives for
BPA that could be varied by applying various policy alternatives,
including one for rates. Any combination of alternative policy choices
should allow BPA to balance its costs and revenues. The Business Plan
EIS also includes response strategies, such as adjustments to rates,
that BPA could implement if BPA's costs exceed its revenues.
In August 1995, the BPA Administrator issued a ROD (Business Plan
ROD) that adopted the Market-Driven Alternative from the Business Plan
EIS. This alternative was selected because, among other reasons, it
allows BPA to (1) recover costs through rates; (2) competitively market
BPA's products and services; (3) develop rates that meet customer needs
for clarity and simplicity; (4) continue to meet BPA's legal mandates;
and (5) avoid adverse environmental impacts. BPA also committed to
apply as many response strategies as necessary when BPA's costs and
revenues do not balance.
In April 2007, BPA completed and issued a Supplement Analysis to
the Business Plan EIS. This Supplement Analysis found that the Business
Plan EIS's relationship-based and policy-level analysis of potential
environmental impacts from BPA's business practices remains valid and
that BPA's current business practices remain consistent with BPA's
Market-Driven Alternative approach. The Business Plan EIS and ROD thus
continue to provide a sound basis for making determinations under NEPA
concerning BPA's policy-level decisions, including rates.
Because the proposed rates likely would assist BPA in accomplishing
the goals identified in the Business Plan ROD, the proposal appears
consistent with these aspects of the Market-Driven Alternative. In
addition, this rate
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proposal is similar to the type of rate designs evaluated in the
Business Plan EIS; thus, implementation of this rate proposal would not
be expected to result in environmental impacts significantly different
from those examined in the Business Plan EIS. Therefore, BPA expects
that this rate proposal will likely fall within the scope of the
Market-Driven Alternative that was evaluated in the Business Plan EIS
and adopted in the Business Plan ROD.
As part of the Administrator's ROD that will be prepared for the
BP-18 rate proceeding, BPA may tier its decision under NEPA to the
Business Plan ROD. However, depending upon the ongoing environmental
review, BPA may instead issue another appropriate NEPA document.
Comments regarding the potential environmental effects of the proposal
may be submitted to Stacy Mason, NEPA Compliance Officer, ECP-4,
Bonneville Power Administration, 905 NE 11th Avenue, Portland, Oregon
97232. Any such comments received by the comment deadline for
Participant Comments identified in section III.A. below will be
considered by BPA's NEPA compliance staff in the NEPA process that is
being conducted for this proposal.
Part III--Public Participation in BP-18
A. Distinguishing Between ``Participants'' and ``Parties''
BPA distinguishes between ``participants in'' and ``parties to''
the hearings. Separate from the formal hearing process, BPA will
receive written comments, views, opinions, and information from
participants, who may submit comments without being subject to the
duties of, or having the privileges of, parties. Participants' written
comments will be made part of the official record and considered by the
Administrator. Participants are not entitled to participate in the
prehearing conference; may not cross-examine parties' witnesses, seek
discovery, or serve or be served with documents; and are not subject to
the same procedural requirements as parties. BPA customers whose rates
are subject to this proceeding, or their affiliated customer groups,
may not submit participant comments. Members or employees of
organizations that have intervened in the rate proceeding may submit
participant comments as private individuals (that is, not speaking for
their organizations) but may not use the comment procedures to address
specific issues raised by their intervenor organizations.
Written comments by participants will be included in the record if
they are received by February 17, 2017. Written views, supporting
information, questions, and arguments should be submitted to the
address listed in the ADDRESSES section of this notice.
An entity or person becomes a party to the proceeding by filing a
petition to intervene, which must state the name and address of the
entity or person requesting party status and the entity's or person's
interest in the hearing. BPA customers and affiliated customer groups
will be granted intervention based on petitions filed in conformance
with BPA's Procedures. Other petitioners must explain their interests
in sufficient detail to permit the Hearing Officer to determine whether
the petitioners have a relevant interest in the hearing. Pursuant to
Rule 1010.1(d) of BPA's Procedures, BPA waives the requirement in Rule
1010.4(d) that an opposition to an intervention petition be filed and
served 24 hours before the prehearing conference. The time limit for
opposing a timely intervention will be established at the prehearing
conference. Any party, including BPA, may oppose a petition for
intervention. All petitions will be ruled on by the Hearing Officer.
Late interventions are strongly disfavored. Opposition to an untimely
petition to intervene must be filed and received by BPA within two days
after service of the petition.
B. Developing the Record
The hearing record will include, among other things, the
transcripts of the hearing, written evidence and argument entered into
the record by BPA and the parties, written comments from participants,
and other material accepted into the record by the Hearing Officer. The
Hearing Officer will review the record and certify the record to the
Administrator for final decision.
The Administrator will develop final rates based on the record and
such other materials and information as may have been submitted to or
developed by the Administrator. The Administrator will serve copies of
the Final ROD on all parties. BPA will file its rates with the
Commission for confirmation and approval after issuance of the Final
ROD.
Part IV--Summary of Rate Proposals
A. Summary of the Power Rate Proposal
BPA is proposing four rates for Federal power sales and services:
Priority Firm Power Rate (PF-18)--The PF rate schedule applies to
net requirements power sales to public body, cooperative, and Federal
agency customers made pursuant to section 5(b) of the Northwest Power
Act. It also includes the PF Public rates for the sale of firm
requirements power under CHWM contracts and the PF Exchange rates for
sales under Residential Purchase and Sale Agreements. The PF Public
rate applies to customers taking Load Following, Block, or Slice/Block
service. Consistent with the TRM, Tier 1 rates include three charges:
(1) Customer charges; (2) a demand charge; and (3) a load shaping
charge. In addition, four Tier 2 rates, corresponding to contract
options, are applied to customers that have elected to purchase power
from BPA for service to their Above-RHWM Load.
Because very few of BPA's customers are subject to exactly the same
mix of PF rate components, BPA has developed a PF rate measure for an
average customer purchasing at PF Tier 1 rates. This quantification,
the Tier 1 Average Net Cost, is increasing from $33.75/MWh for the PF-
16 rate to $34.94/MWh for the PF-18 rate, which is an increase of 3.5
percent for the two-year rate period, or 1.7 percent on an average
annual basis.
The Base PF Exchange rate and its associated surcharges apply to
the sale of power to regional utilities that participate in the REP
established under section 5(c) of the Northwest Power Act. 16 U.S.C.
839c(c). The Base PF Exchange rate establishes the threshold for
participation in the REP; only utilities with ASCs above the
appropriate Base PF Exchange rate may receive REP benefits. If a
utility meets the threshold, a utility-specific PF Exchange rate will
be established in this proceeding for each eligible utility. The
utility-specific PF Exchange rate is used in calculating the REP
benefits each participant will receive during FY 2018-2019.
The proposed PF-18 rate schedule also includes resource support
services rates for customers with non-Federal resources, and a melded
PF rate for any Public customer that elects a power sales contract
other than a CHWM contract for firm requirements service. Transfer
service charges for delivery, operating reserves, and Western
Electricity Coordinating Council (WECC) assessments are applicable to
customers served under non-Federal transmission service agreements.
New Resource Firm Power Rate (NR-18)--The NR-18 rate applies to net
requirements power sales to investor-owned utilities (IOUs) made
pursuant to section 5(b) of the Northwest Power Act for resale to
ultimate consumers; direct consumption; construction, testing and
start-up; and station service. The NR-18
[[Page 79004]]
rate is also applied to sales of firm power to Public customers when
this power is used to serve new large single loads. In addition, the NR
rate schedule includes rates for services to support Public customers
serving new large single loads with non-Federal resources. In the BP-18
Initial Proposal BPA is forecasting no sales at the NR rate. The
average NR-18 rate in the Initial Proposal is $79.63/MWh, an increase
of 7.9 percent from the NR-16 rate.
Industrial Firm Power Rate (IP-18)--The IP rate is applicable to
firm power sales to DSI customers authorized by section 5(d)(1)(A) of
the Northwest Power Act. 16 U.S.C. 839c(d)(1)(A). In the Initial
Proposal BPA is forecasting annual sales of 75 average megawatts (aMW)
to DSIs at the IP rate. The average IP-18 rate in the Initial Proposal
is $42.82/MWh, an increase of 2.1 percent over the IP-16 rate.
Firm Power and Surplus Products and Services Rate (FPS-18)--The FPS
rate schedule is applicable to sales of various surplus power products
and surplus transmission capacity for use inside and outside the
Pacific Northwest. The rates for these products are negotiated between
BPA and the purchasers. The FPS-18 rate schedule also includes rates
for customers with non-Federal resources; the Unanticipated Load
Service rate; rates for other capacity, energy, and scheduling products
and services; and rates for reserve services for use outside the BPA
balancing authority area.
B. Summary of the Transmission Rate Proposal
BPA is proposing an overall 1.1 percent increase in transmission
rates for the two-year rate period, or 0.5 percent on an average annual
basis. BPA is proposing four rates for the use of its Network segment,
four rates for use of intertie segments, and several other rates for
various purposes. The four rates for use of the Network segment are:
Formula Power Transmission Rate (FPT-18)--The FPT rate is based on
the cost of using specific types of facilities, including a distance
component for the use of transmission lines, and is charged on a
contract demand basis.
Integration of Resources Rate (IR-18)--The IR rate is a postage
stamp, contract demand rate for use of the Network, similar to Point-
to-Point (PTP) service (see below), and includes Scheduling, System
Control, and Dispatch Service.
Network Integration Transmission Rate (NT-18)--The NT rate applies
to customers taking network integration service under BPA's OATT and
allows customers to flexibly serve their retail load.
Point-to-Point Rate (PTP-18)--The PTP rate is a contract demand
rate that applies to customers taking Point-to-Point service on BPA's
network facilities under the OATT. It provides customers with flexible
service from identified Points of Receipt to identified Points of
Delivery. There are separate PTP rates for long-term firm service,
daily firm and non-firm service, and hourly firm and non-firm service.
BPA is proposing four rates for intertie use:
The Southern Intertie Rate (IS-18) is a contract demand rate that
applies to customers taking Point-to-Point service under BPA's OATT on
the Southern Intertie. BPA is proposing to recognize a reduction in the
number of high demand hours which results in a 225 percent increase in
the Southern Intertie hourly rate.
The Montana Intertie Rate (IM-18) applies to customers taking
Point-to-Point service on the Eastern Intertie.
The Townsend-Garrison Transmission Rate (TGT-18) is a rate for firm
service over BPA's section of the Montana Intertie and is available to
parties to the Montana Intertie Agreement.
The Eastern Intertie Rate (IE-18) is a rate for non-firm service on
the portion of the Eastern Intertie capacity that exceeds BPA's firm
transmission rights and is available to parties to the Montana Intertie
Agreement.
Other proposed transmission rates are:
The Use-of-Facilities Rate (UFT-18) establishes a formula rate for
the use of a specific facility based on the annual cost of that
facility.
The Advance Funding Rate (AF-18) allows BPA to collect the capital
and related costs of specific facilities through an advance-funding
mechanism.
The Scheduling, System Control, and Dispatch Service Rate and the
Reactive Supply and Voltage Control from Generation Sources Service
Rate are required ancillary services for transmission service on the
Network, the Southern Intertie, and the Montana Intertie.
The WECC and Peak rates (PW-18) are rates for costs assessed to BPA
to cover WECC and Peak reliability functions.
The Oversupply Rate (OS-18) recovers the costs BPA incurs to
displace generation under the Oversupply Management Protocol,
Attachment P to BPA's OATT.
Other charges that may apply include a Delivery Charge for the use
of low-voltage delivery substations; a Reservation Fee for customers
that postpone their service commencement dates; incremental rates for
transmission requests that require new facilities; a penalty charge for
failure to comply with dispatch, curtailment, redispatch, or load
shedding orders; and an Unauthorized Increase Charge for customers
whose use exceeds their contracted amounts.
C. Ancillary Service and Control Area Service Rates
Beginning in January 2016, BPA held rate case workshops and
solicited stakeholder comments concerning generation inputs issues that
form the foundation of most ancillary service and control area service
rates. Starting in the summer of 2016, BPA and stakeholders developed a
settlement agreement that would set the rates for most ancillary and
control area services, including the Variable Energy Resource Balancing
Service (VERBS) rates for wind and solar resources, the Dispatchable
Energy Resource Balancing Service (DERBS) rate, the two Operating
Reserves rates, and the Regulation and Frequency Response rate. The
settlement agreement also provides for other limited changes to the
rate schedules, as well as BPA's agreement to conduct certain
analytical work associated with the future integration of solar
generation into BPA's Balancing Authority Area.
BPA asked all entities that intended to be parties to the BP-18
rate proceeding to either sign the agreement or declare their intention
to contest the agreement by October 5, 2016. By that deadline, 20
parties signed or agreed not to contest the settlement agreement. No
party declared an intent to contest the agreement.
BPA will file the BP-18 generation inputs settlement agreement as
part of the BP-18 Initial Proposal. Parties will be given an
opportunity to contest the agreement pursuant to a timeline established
by the Hearing Officer.
D. Financial Reserves Policy
In March 2016 BPA began public workshops to discuss establishing a
financial reserves policy to guide management of the level of financial
reserves available for risk (financial reserves) for BPA as a whole and
for Power Services and Transmission Services separately. BPA received
customer comment and feedback and used it to develop a financial
reserves policy that will be filed as part of the BP-18 Initial
Proposal.
The financial reserves policy is intended to provide a consistent,
transparent, and financially prudent method for determining target
financial
[[Page 79005]]
reserves levels and upper and lower financial reserves thresholds for
Power Services, Transmission Services, and BPA as a whole. The policy
also describes the actions BPA may take in response to financial
reserves levels that either fall below a lower threshold or exceed an
upper threshold.
E. Risk Mitigation Tools
BPA uses risk mitigation tools to buffer against poor financial
performance over the rate period to protect the agency's solvency and
strong credit rating. The main financial risk mitigation tool BPA
relies upon is financial liquidity, which consists of financial
reserves and a short-term liquidity facility with the U.S. Treasury.
1. Power Risk Mitigation Tools
For Power Services, BPA proposes to use financial reserves
attributed to Power Services and the short-term liquidity facility as
primary risk mitigation tools. In addition, BPA proposes to include two
rate adjustment mechanisms in the power rate schedules (and in certain
ancillary and control area services rate schedules) that may adjust
rates in the event Power Service's financial reserves fall below or
exceed certain thresholds. The Cost Recovery Adjustment Clause (CRAC)
will adjust rates upward to generate additional cash within the rate
period if financial reserves attributed to Power Services fall below a
defined lower threshold. BPA is proposing to replace the current
Dividend Distribution Clause with a provision that expands the
Administrator's options for using financial reserves attributed to
Power Services when Power Services financial reserves and agency
financial reserves are above established thresholds. When available
liquidity and the CRAC are insufficient to meet the Power Services
Treasury Payment Probability (TPP) standard of at least 95 percent, BPA
includes Planned Net Revenues for Risk (PNRR) in Power rates. The TPP
is the probability of BPA making its Treasury payments on time and in
full each year of the two-year rate period.
In the Initial Proposal, BPA proposes to include no PNRR and to cap
the maximum revenue recoverable through the Power CRAC at $300 million
per year. BPA also proposes to continue the National Marine Fisheries
Service FCRPS Biological Opinion Adjustment (NFB Adjustment) and the
Emergency NFB Surcharge, given the continuation of litigation regarding
the Biological Opinion.
2. Transmission Risk Mitigation Tools
BPA proposes to use financial reserves attributed to Transmission
Services as the primary risk mitigation tool. BPA also proposes to
include provisions for two rate adjustments in the Transmission rate
schedules similar to those in the Power rate schedules: (1) The CRAC,
and (2) an adjustment that provides options for using financial
reserves attributed to Transmission Services when Transmission Services
financial reserves and agency financial reserves are above established
thresholds. When available liquidity and the CRAC are insufficient for
Transmission Services to meet the TPP standard, BPA includes PNRR in
Transmission rates. In the Initial Proposal, BPA proposes to include no
PNRR and to cap the maximum revenue recoverable through the
Transmission CRAC at $100 million per year.
Part V--Proposed BP-18 Rate Schedules
BPA's proposed BP-18 Power Rate Schedules and Transmission Rate
Schedules are a part of this notice and are available for viewing and
downloading on BPA's Web site at http://www.bpa.gov/goto/BP18.
Issued this 1st day of November, 2016.
Elliot E. Mainzer,
Administrator and Chief Executive Officer.
[FR Doc. 2016-27181 Filed 11-9-16; 8:45 am]
BILLING CODE 6450-01-P