2024-26243. Fiscal Year (FY) 2029 Public Rate Design Methodology; Public Hearing and Opportunities for Public Review and Comment

Document Headings

Document headings vary by document type but may contain the following:

1. the agency or agencies that issued and signed a document
2. the number of the CFR title and the number of each part the document amends, proposes to amend, or is directly related to
3. the agency docket number / agency internal file number
4. the RIN which identifies each regulatory action listed in the Unified Agenda of Federal Regulatory and Deregulatory Actions

See the Document Drafting Handbook for more details.

Department of Energy

Bonneville Power Administration

1. [BPA File No.: PRDM-26]

AGENCY:

Bonneville Power Administration (Bonneville or BPA), Department of Energy (DOE).

ACTION:

Notice of FY 2029 public rate design methodology proceeding.

SUMMARY:

BPA is proposing to adopt a new tiered rate design for setting its Priority Firm Power (PFp) rates for the period beginning October 1, 2028. The primary feature of the Public Rate Design Methodology (PRDM) is the establishment of two tiers of rates: one rate tier (Tier 1) will be based on generation output and costs attributed to BPA's current system resources and a second rate tier (Tier 2) will be based on the generation and costs associated with newly acquired resources.

DATES:

Prehearing Conference: The prehearing conference in the PRDM-26 proceeding will be held on November 15, 2024, immediately following the conclusion of the prehearing conferences for Bonneville's TC-26 tariff proceeding and BP-26 rate proceeding, which begin at 2:00 p.m. The ADDRESSES section of this notice provides details on participating in the prehearing conference.

Intervention: Petitions to intervene in the PRDM-26 proceeding must be filed on Bonneville's secure website no later than 4:30 p.m. on November 19, 2024. Part III of this notice, “Public Participation in PRDM-26,” provides details on requesting access to the secure website and filing a petition to intervene.

Participant Comments: Written comments by non-party participants must be received by January 30, 2025, to be considered in the Administrator's Record of Decision (ROD). Part III of this notice, “Public Participation in PRDM-26,” provides details on submitting participant comments.

ADDRESSES:

Prehearing Conference: The prehearing conference in the PRDM-26 proceeding will be held in the Bonneville Rates Hearing Room, 1201 NE Lloyd Boulevard, Suite 200, Portland, Oregon 97232. Interested parties may attend in person or participate virtually via WebEx. The WebEx information will be available on Bonneville's PRDM web page at https://www.bpa.gov/​prdm2029 or from the Hearing Clerk at [e-mail].

Intervention: Anyone intending to become a party to the PRDM-26 proceeding must file a petition to intervene on BPA's secure website. Petitions to intervene may be filed beginning on the date of publication of this Notice and are due no later than 4:30 p.m. on November 19, 2024. Part III of this notice, “Public Participation in PRDM-26,” provides details on requesting access to the secure website and filing a petition to intervene.

Participant Comments: Written comments by non-party participants may be submitted through Bonneville's website at www.bpa.gov/​comment or by hard copy to: BPA Public Involvement, Bonneville Power Administration, P.O. Box 14428, Portland, Oregon 97293. Part III of this notice, “Public Participation ( print page 89634) in PRDM-26,” provides details on submitting participant comments.

FOR FURTHER INFORMATION CONTACT:

Ms. Amanda Gobrele, DKS-7, BPA Communications, Bonneville Power Administration, P.O. Box 14428, Portland, Oregon 97293; by phone toll-free at 1-800-622-4519; or by email to [e-mail].

The Hearing Clerk for this proceeding can be reached via email at [e-mail] or via telephone at [phone].

Please direct questions regarding BPA's secure website to the Hearing Coordinator via email at [e-mail] or, if the question is time-sensitive, via telephone at [phone].

Responsible Officials: Mr. Daniel H. Fisher, Power Rates Manager, is the official responsible for the development of the PRDM.

SUPPLEMENTARY INFORMATION:

Table of Contents

Part I—Introduction and Procedural Matters

Part II—Scope of PRDM Proceeding

Part III—Public Participation in PRDM-26

Part IV—The Public Rate Design Methodology

Part I—Introduction and Procedural Matters

A. Background and Statutory Context

BPA is a power marketing administration within the Department of Energy (DOE). BPA markets the output of 31 federal dams and one nuclear power plant located in the Pacific Northwest. Among other statutory duties, BPA is required to sell firm power to meet the net requirements of utilities within the Pacific Northwest region. Section 5(b) of the Northwest Power Act (NWPA or Act) establishes BPA's power supply obligation to these customers. Power supplied under section 5(b) is sold at rates established by section 7.

Under section 7(b) of the NWPA, BPA is required to set power rates for the “general requirements” of its public body and cooperative customers pursuant to certain statutory directives. The section 7(b) rate that BPA charges its public body and cooperative customers is called the Priority Firm Power (PFp) rate. BPA establishes the PFp rate in a formal hearing conducted in accordance with section 7(i) of the NWPA.

Historically, BPA designed the PFp rate in each section 7(i) rate proceeding. This approach meant the types of resource costs and credits included in the PFp rate, and the method for assessing the resulting rate, could change within each section 7(i) rate proceeding. In 2009, BPA adopted a standalone rate design for the PFp rate, known as the Tiered Rates Methodology (TRM). The TRM is not a rate, but a rate design that established the methods and allocations for developing the PFp rate in future section 7(i) proceedings. In effect, through the TRM, BPA agreed to establish the PFp rate in future section 7(i) proceedings consistent with the TRM's terms. The TRM was established in a section 7(i) proceeding and was designed to operate in conjunction with the terms of the then-applicable section 5(b) power contract (known colloquially as the Regional Dialogue Contract). The Regional Dialogue Contract commenced on October 1, 2011, and expires on September 30, 2028. The TRM also expires on September 30, 2028.

The purpose of the PRDM-26 proceeding is to develop the rate design methodology for the period following the expiration of the TRM ( i.e., beginning October 1, 2028). This rate methodology is called the Public Rate Design Methodology (PRDM). Concurrent with the PRDM-26 proceeding, BPA is also negotiating the section 5(b) contract for the supply of firm power for BPA's customers' requirements for the period covering October 1, 2028-September 30, 2044. The new section 5(b) contract is colloquially referred to as the “Provider of Choice” contract. The Provider of Choice contract and the PRDM are designed to work in tandem. Customers that elect to purchase their section 5(b) power under a Provider of Choice contract will also agree to have their PFp power rate set pursuant to the PRDM.

B. Procedural Context

Section 7(i) of the Northwest Power Act, 16 U.S.C. 839e(i), sets forth the rules and procedures for the establishment of BPA's rates. The Public Rate Design Methodology (PRDM) is a rate methodology that will apply to customers that execute a Provider of Choice contract. No rates are being established through the PRDM-26 proceeding. Instead, this proceeding will develop the terms of the PRDM, which will become effective in the section 7(i) proceeding that establishes the PFp rate for the period beginning October 1, 2028. Because the PRDM will affect future power rates, BPA is using the procedural rules of section 7(i) to establish this methodology. The procedures applicable to this proceeding include, among other things: Publication of a notice of the proposed rates in the Federal Register ; one or more hearings conducted as expeditiously as practicable by a Hearing Officer; public opportunity to provide both oral and written views related to the proposed rates; opportunity to offer refutation or rebuttal of submitted material; and a decision by the Administrator based on the record. BPA's Rules of Procedure will govern the PRDM-26 proceeding. Those procedural rules are posted on BPA's website at https://www.bpa.gov/​energy-and-services/​rate-and-tariff-proceedings/​rules-of-procedure-revision-process.

C. Proposed Procedural Schedule

A proposed schedule for the PRDM-26 proceeding is provided below. The official schedule will be established by the Hearing Officer and may be amended by the Hearing Officer as needed during the proceeding.

Prehearing Conference—November 15, 2024

BPA Initial Proposal—November 15, 2024

Petition to Intervene Deadline—November 19, 2024

Clarification of BPA's Initial Proposal—November 22, 2024

Notice of Objections Due—December 6, 2024

Motions to Strike Due—December 12, 2024

Data Request Deadline for BPA's Initial Proposal—December 12, 2024

Parties File Direct Cases (Prehearing Brief Optional)—January 15, 2025

Clarification of Parties' Direct Cases—January 22, 2025

Motions to Strike Due—January 29, 2025

Data Request Deadline for Parties' Direct Cases—January 29, 2025

Close of Participant Comments—January 30, 2025

Litigants File Rebuttal Cases—February 14, 2025

Clarification of Litigants' Rebuttal Cases—February 18, 2025

Motions to Strike Due—February 18, 2025

Data Request Deadline for Litigants' Rebuttal—February 19, 2025

Parties Give Notice of Intent to Cross Examine—February 21, 2025

Cross-Examination—February 26, 2025

Initial Briefs Filed—March 1, 2025

Parties Give Notice of Intent to Present Oral Argument—March 5, 2025

Oral Argument—March 12, 2025

Draft Record of Decision—April 9, 2025

Briefs on Exceptions—April 23, 2025

Deadline for Parties to Adopt the Position of Another Party—May 2, 2025

Final ROD and Studies—May 21, 2025 ( print page 89635)

D. Ex Parte Communications

Section 1010.5 of BPA's Rules of Procedure prohibits ex parte communications. Ex parte communications include any oral or written communication (1) relevant to the merits of any issue in the proceeding; (2) that is not on the record; and (3) with respect to which reasonable prior notice has not been given. The ex parte rule applies to communications with all BPA and DOE employees and contractors, the Hearing Officer, and the Hearing Clerk during the proceeding. Except as provided, any communications with persons covered by the rule regarding the merits of any issue in the proceeding by other executive branch agencies, Congress, existing or potential BPA customers, nonprofit or public interest groups, or any other non-DOE parties are prohibited. The rule explicitly excludes and does not prohibit communications (1) relating to matters of procedure; (2) otherwise authorized by law or the Rules of Procedure; (3) from or to the Federal Energy Regulatory Commission (Commission); (4) that all litigants agree may be made on an ex parte basis; (5) in the ordinary course of business, about information required to be exchanged under contracts, or in information responding to a Freedom of Information Act request; (6) between the Hearing Officer and Hearing Clerk; (7) in meetings for which prior notice has been given; or (8) as otherwise specified in section 1010.5(b) of BPA's Rules of Procedure. The ex parte rule is effective upon publication of this FRN and remains in effect until the Administrator's Final ROD is issued.

Part II—Scope of PRDM-26

A. Issues Within and Outside the Scope of PRDM-26

This section provides guidance to the Hearing Officer regarding the scope of the PRDM proceeding and identifies specific issues that are outside the scope. In addition to the issues specifically listed below, any other issue that is not a matter relevant to the PRDM is outside the scope of this proceeding.

BPA may revise the scope of the proceeding to include new issues that arise as a result of circumstances or events occurring outside the proceeding that are substantially related to the rates under consideration in the proceeding. See Rules of Procedure, section 1010.4(b)(8)(iii), (iv). If BPA revises the scope of the proceeding to include new issues, BPA will provide public notice on its website, present testimony or other information regarding such issues, and provide a reasonable opportunity to intervene and respond to BPA's testimony or other information. Id.

1. Matters Within the Scope of the PRDM-26 Proceeding

The scope of PRDM-26 is limited to issues and evidence regarding the terms of the PRDM. As noted above, the PRDM describes the cost allocation and rate design treatment of the PFp rate for the period beginning October 1, 2028, for customers that elect to purchase section 5(b) power under a Provider of Choice contract. The terms of the PRDM are available on Bonneville's PRDM web page https://www.bpa.gov/​prdm2029.

2. Matters Not Within the Scope of the PRDM-26 Proceeding

The PRDM-26 proceeding is focused on the development of the PRDM. No rates are being established through this proceeding. Parties that seek to raise arguments and or present evidence that address matters unrelated to the PRDM are outside the scope of this proceeding. Pursuant to section 1010.4(b)(8) of the Rules of Procedure, the Administrator directs the Hearing Officer to exclude from the record all argument, testimony, or other evidence that seeks in any way to address matters unrelated to the terms of the PRDM. This exclusion incudes, but is not limited to, the following areas: (a) matters within the scope of the BP-26 rate case, (b) BPA program and cost projections, (c) statutory issues unrelated to the PRDM, (d) matters that have been, or will be addressed in, the Provider of Choice Policy, Policy Record of Decision, or related contract negotiation processes, (e) matters related to the Residential Exchange Program, (f) matters related to any other rate set pursuant to section 7 of the Northwest Power Act, and (g) matters related to the environmental impacts of the PRDM.

B. The National Environmental Policy Act

BPA is in the process of assessing the potential environmental effects of its proposed rate design methodology, consistent with NEPA. The NEPA process is conducted separately from this proceeding. As discussed above, all evidence and argument addressing potential environmental impacts of the PRDM are excluded from the proceeding record. Instead, comments on environmental effects should be directed to the NEPA process.

Based on its most current assessment of the PRDM, BPA believes this proposal may be the type of action typically excluded from further NEPA review pursuant to U.S. DOE NEPA regulations, which apply to BPA. More specifically, the proposal appears to solely involve changes to BPA's rates and other cost recovery and management mechanisms to ensure that there are sufficient revenues to meet BPA's financial obligations and other costs and expenses, while using existing generation sources operating within normal limits. As such, it appears the PRDM falls within Categorical Exclusion B4.3, found at 10 CFR part 1021, subpart D, app. B4.3, which provides for the categorical exclusion from further NEPA review of “[r]ate changes for electric power, power transmission, and other products or services provided by a Power Marketing Administration that are based on a change in revenue requirements if the operations of generation projects would remain within normal operating limits.”

Nonetheless, BPA is still assessing the proposal, and, 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 Katey Grange, NEPA Compliance Officer, EC-4, Bonneville Power Administration, 905 NE 11th Avenue, Portland, Oregon 97232, and to [e-mail]. Any such comments received by the comment deadline for Participant Comments identified in section III.A of this notice 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 PRDM-26

A. Interventions

Any entity or person intending to become a party in the PRDM proceeding must file a petition to intervene through BPA's secure website ( https://proceedings.bpa.gov/​). Because Bonneville is introducing a new secure website interface, all prospective users must create a new user account to submit an intervention. The secure website contains a link to the user guide, which provides step-by-step instructions for creating user accounts, submitting filings, and uploading interventions. Please contact the Hearing Coordinator via email at [e-mail] or, if the question is time-sensitive, via telephone at [phone], with any questions regarding the registration and submission process.

All petitions to intervene must be submitted through BPA's secure website by the deadline in the procedural schedule adopted by the Hearing Officer. Late interventions are strongly ( print page 89636) disfavored. Petitions to intervene must conform to the format and content requirements in sections 1010.6 and 1010.11 of BPA's Rules of Procedure. Petitions must state the name and address of the entity or person requesting party status and the entity or person's interest in the hearing.

The Hearing Officer will rule on all petitions to intervene. BPA customers and affiliated customer groups will be granted intervention based on petitions filed in conformance with the Rules of Procedure. 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.

BPA or any party may oppose a petition to intervene. The deadline for opposing a timely petition to intervene is two business days after the deadline for filing the petition. Opposition to an untimely petition to intervene must be filed within two business days after service of the petition.

B. Participant Comments

BPA distinguishes between “participants in” and “parties to” the PRDM proceeding. Separate from the formal hearing process, BPA will accept written comments, views, opinions, and information from participants who have not intervened in the PRDM proceeding and been granted “party” status by the Hearing Officer. 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. Entities who intervene in this proceeding may not submit participant comments. Members or employees of organizations that have intervened in the 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 intervener organizations.

Written comments by participants must be received by January 30, 2025, to be included in the record and considered by the Administrator. Participants should submit comments through BPA's website at www.bpa.gov/​comment or by hard copy to: BPA Public Involvement, Bonneville Power Administration, P.O. Box 14428, Portland, Oregon 97293. All comments should contain the designation “PRDM-26” in the subject line.

C. 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 and certify the record to the Administrator for final decision.

Part IV—Public Rate Design Methodology

The PRDM establishes a predictable and durable means by which to tier and calculate BPA's Priority Firm (PFp) power rate. Specific determinations of rate levels will be made in each general rate case in a manner consistent with the PRDM in the respective section 7(i) proceedings applicable during the term of this PRDM. Tiered PFp rates consistent with the PRDM will be implemented beginning in FY 2029 (October 1, 2028) when power deliveries under the Provider of Choice contracts commence.

The PRDM provides for a two-tiered PFp rate design that will be applicable to the general requirements portion of BPA's customer's firm power service. The “general requirements” of BPA's customers are defined by section 7(b)(4) of the Act, and exclude service to a customer's New Large Single Load, as defined by section 3(13)(A)-(B) of the Act. Section 7(b) establishes the power “rate or rates” applicable to a customer's general requirements. That rate is called the PFp rate. The PRDM operates within the section 7(b) rate statutory construct by developing multiple PFp rates for service to a customer's general requirements. The PRDM uses a “tiered” rate design to establish two primary PFp rates. The first tier, Tier 1, recovers the costs of service associated with BPA's existing power system up to a specified amount. The second tier, Tier 2, recovers the costs associated with additional amounts of power needed to serve any remaining portion of the customers' general requirements ( i.e., the portion not otherwise served by Tier 1). The PRDM specifies how the Tier 1 and Tier 2 rates will be developed and charged.

The PRDM addresses: (1) how the cost pools for the Tier 1 and Tier 2 PFp rates will be established and what costs, or category of costs, will be included in those pools; (2) how the resource costs for the existing power system will be differentiated from the cost of new resources; (3) how the costs described in the above categories will be allocated to the Tier 1 and Tier 2 cost pools; (4) how rates for Tier 1 and Tier 2 sales will be designed; (5) how rates for resource support services will be designed; (6) how the PRDM interacts with other services and credits; and (7) how changes and disputes regarding the PRDM are addressed. The full terms of the proposed PRDM is available on Bonneville's PRDM webpage at https://www.bpa.gov/​prdm2029.

The cost allocation and rate design methods will be implemented in each BPA power rate case during the term of the Provider of Choice contracts. Power rates will be calculated on at least a two-year cycle under the PRDM.

Signing Authority

This document of the Department of Energy was signed on October 31, 2024, by John L. Hairston, Administrator and Chief Executive Officer of the Bonneville Power Administration, pursuant to delegated authority from the Secretary of Energy. This document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

Signed in Washington, DC, on November 7, 2024.

Treena V. Garrett,

Federal Register Liaison Officer, U.S. Department of Energy.