[Federal Register Volume 60, Number 30 (Tuesday, February 14, 1995)]
[Notices]
[Pages 8505-8511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3535]
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Proposed Transmission Rate Adjustment, Public Hearing, and
Opportunities for Public Review and Comment
AGENCY: Bonneville Power Administration (BPA), DOE.
ACTION: Notice and Opportunities for Review and Comment.
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SUMMARY: BPA File No: TR-95. BPA requests that all comments and
documents intended to become part of the Official Record in this
process contain the file number designation TR-95.
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 are adequate to recover, in
accordance with sound business principles, the costs associated with
the acquisition, conservation, and transmission of electric power, and
to recover the Federal investment in the Federal Columbia River Power
System (FCRPS) and other costs incurred by BPA. BPA is proposing to
revise its transmission rate schedules to be effective October 1, 1995,
through September 30, 1997, to produce sufficient revenues for BPA to
meet its costs for Fiscal Year (FY) 1996 and FY 1997.
Opportunities will be available for interested persons to review
BPA's rate proposal, to participate in the rate hearing, and to submit
oral and written comments. During the development of the final rate
proposal, BPA will evaluate all written and oral comments received in
the rate proceeding. Consideration of comments and more current data
may result in the final rate proposal differing from the rates proposed
in this Notice.
DATES: Persons wishing to become a formal ``party'' to the proceedings
must notify BPA in writing of their intention to do so in accordance
with requirements stated in this Notice. Petitions to intervene must be
received by 9 a.m. February 13, 1995, and should be addressed as
follows: Hearing Officer, c/o Francis (Jamie) Troy, Hearing Clerk--LQ,
Bonneville Power Administration, NE. 11th Ave., Box 12999, Portland,
Oregon 97212.
In addition, a copy of the petition must be served concurrently on
BPA's Office of Legal Services: Janet L. Prewitt, Office of Legal
Services--LQ, Bonneville Power Administration, Box 3621, Portland,
Oregon 97208.
Persons who have been denied party status in any past BPA rate
proceeding shall continue to be denied party status unless they
establish a significant change of circumstances.
A prehearing conference will be held before the Hearing Officer at
9 a.m. on February 13, 1995, in the BPA Rates Hearing Room, 3rd Level,
2032 Lloyd Center, Portland, Oregon. Registration for the prehearing
conference will begin at 8:30 a.m. BPA will prefile preliminary
proposal studies at the prehearing conference. The Hearing Officer will
act on all intervention petitions and oppositions to intervention
petitions, rule on any motions, establish additional procedures,
establish a service list, establish a procedural schedule, and
consolidate parties with similar interests for purposes of filing
jointly sponsored testimony and briefs, and for expediting any
necessary cross-examination. A notice of the dates and times of any
hearings will be mailed to all parties of record. Objections to orders
made by the Hearing Officer at the prehearing conference must be made
in person or through a representative at the prehearing conference. The
rate hearing schedule will be published in the Federal Register
immediately following the prehearing conference.
The following schedule information is provided for informational
purposes.
On or about February 9, 1995
Rate Schedules, General Rate Schedule Provisions, and Transmission
Tariffs mailed to customers and 1993 rate case Parties, and available
from BPA's Public Information Center; 905 NE. 11th, 1st Floor,
Portland, Oregon.
February 13, 1995
Deadline for interventions to be filed with Hearing Clerk at above
address.
On or about February 13, 1995
Preliminary proposal studies available at BPA's Rates Hearing Room,
2032 Lloyd Center, Portland, Oregon and BPA's Public Information
Center, 905 NE. 11th, 1st Floor, Portland, Oregon.
February 13, 1995
Prehearing conference to set schedule and act on petitions to
intervene.
On or about April 5, 1995
BPA Initial Proposal filed.
October 29, 1995
Final Record of Decision published.
BPA also will be conducting public field hearings. A field hearing
schedule will be announced at the prehearing conference. A notice of
the dates, times, and locations of the field hearings will be made
later through mailings and public advertising.
When BPA holds public field hearings, written transcripts are made
[[Page 8506]] and included in the official record. A notice of the
dates and times of the field hearings also will be published in the
Federal Register.
ADDRESSES: Written comments by participants must be received by May 15,
1995, to be considered in the Draft Record of Decision (ROD). Written
comments should be submitted to the Manager; Corporate Communications--
CK; Bonneville Power Administration; 905 NE. 11th; P.O. Box 12999;
Portland, Oregon 97212.
FOR FURTHER INFORMATION CONTACT: Mr. Michael Hansen, Public Involvement
and Information Specialist, at the address listed above, (503) 230-4328
or call toll-free 1-800-622-4519. Information also may be obtained
from:
Mr. Steve Hickok; Group Vice President, Sales and Customer Service;
P.O. Box 3621; Portland, OR 97208, (503) 230-5356.
Mr. George Eskridge; Manager, SE Sales and Customer Service District;
1101 W. River, Suite 250; Boise, ID 83702, (208) 334-9137.
Mr. Ken Hustad; Manager, NE Sales and Customer Service District;
Crescent Court, Suite 500; 707 Main; Spokane, WA 99201, (509) 353-2518.
Ms. Ruth Bennett; Manager, SW Sales and Customer Service District; 703
Broadway; Vancouver, WA 98660, (360) 418-8600.
Ms. Marg Nelson; Manager, NW Sales and Customer Service District; Suite
400, 201 Queen Anne Ave. N.; Seattle, WA 98109-1030, (206) 216-4272.
Responsible Official: Mr. Geoff Moorman, Manager for Pricing,
Marginal Cost and Ratemaking, is the official responsible for the
development of BPA's rates.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Purpose and Scope of Hearing
III. Procedures Governing Rate Adjustments and Public Participation
IV. Major Studies
V. Major Studies
Transmission Rates
Transmission Rate Schedules
I. Introduction
After the 1993 Rate Case, BPA conducted a series of workshops on
subjects relevant to BPA's ratemaking. The purpose of the workshops was
to identify, simplify, and reduce the number of issues that might
become part of the 1995 rate case and to reduce the amount of discovery
normally required during the formal rate proceedings. Opportunity was
provided to address the impacts of reinvention, transmission issues,
risk mitigation, forecasted revenue requirements, and rate design
issues. The workshops provided opportunity for informal public comment
on issues prior to the formal hearing process.
On December 28, 1994, BPA published in the Federal Register a
Notice of ``Intent to Revise Transmission Rates to Become Effective
October 1, 1995,'' 57 FR 66946, in order to satisfy contractual
provisions between BPA and its customers. Since then, BPA has continued
to study the adequacy of its current rates and has concluded that
current rates must be adjusted for the FY 1996 and FY 1997 rate period.
In order to assess its current rates, BPA first determined the
amount of revenues required to meet its financial obligations in FY
1996 and FY 1997. BPA has determined that the revenues it would expect
to collect from projected sales under its current rates will not
recover these revenue requirements. Therefore, BPA proposes to revise
its current transmission rates. At the conclusion of this rate
proceeding, BPA will file its rates with FERC for confirmation and
approval.
The proposed transmission rates were prepared in accordance with
BPA's statutory authority to develop rates, including the Bonneville
Project Act of 1937, as amended, 16 U.S.C. 832 (1982); the Flood
Control Act of 1944, 16 U.S.C. 825s (1982); the Federal Columbia River
Transmission System Act (Transmission System Act), 16 U.S.C. 838
(1982); the Pacific Northwest Electric Power Planning and Conservation
Act, 16 U.S.C. 839 (1982); and the Energy Policy Act of 1992, Pub. L.
No. 102-486, 106 Stat. 2776 (1992).
In the Energy Policy Act of 1992, Congress approved amendments to
the Federal Power Act that allow FERC to order access to transmitting
utilities' systems. As a result, FERC has developed standards for
providing comparable access including guidelines for pricing such
access. This rate proposal includes two new rate schedules (the Network
Integration and Point-to-Point Firm rates) to be used for FERC-ordered
transmission access and which are designed to allow comparable access
to BPA's transmission system. BPA's Energy Transmission rate schedule
will be used to price comparable service for nonfirm uses of the
transmission system. In a process concurrent with the 1995 rate case,
BPA is proposing terms and conditions for these new services for FERC
approval. For further information about the terms and conditions
process, please contact Mr. Dennis Metcalf, Transmission Team Lead,
(503) 230-3410 or Mr. Michael Hansen, Public Involvement and
Information Specialist, (503) 230-4328.
BPA proposes that its transmission rate schedules, including the
adjustments, charges and special rate provisions, and the General Rate
Schedule Provisions (GRSPs) associated with these rate schedules,
become effective upon interim approval or upon final confirmation and
approval by FERC. (BPA's proposal combines the general rate schedule
provisions for wholesale power rates and transmission rates into one
document--the GRSPs.) BPA currently anticipates that it will request
FERC approval effective October 1, 1995, or at the same time as its
revised power rates. The 1995 transmission rate schedules and the GRSPs
shall supersede BPA's 1993 rate schedules and General Transmission Rate
Schedule Provisions (which became effective October 1, 1993) to the
extent stated in the Availability section of each 1995 rate schedule.
BPA is proposing extension of the Townsend-Garrison Transmission
rate and the Use of Facilities rate with no changes. The Market
Transmission rate is being revised only to the extent that the Reactive
Power Charge is being included in the rate schedule. Three new rates
are proposed: the Network Integration Transmission rate; the Point-to-
Point Firm Transmission rate; and the Advance Funding rate. The
proposed Southern Intertie Annual Costs rate is substantially changed
to reflect the outcome of contract negotiations. In addition, a
Reservation Charge for Transmission Capacity and a Reactive Power
Charge are included in many of the transmission rate schedules. BPA
also has provided for charging opportunity costs in the firm
transmission rates for new requests for transmission capacity.
In developing the proposed transmission rates, BPA considered many
factors, including revenue requirements, ease of administration,
revenue stability, rate continuity, comparability, ease of
comprehension, contract provisions, and BPA's statutory obligations.
The studies that have been prepared to support the proposed preliminary
transmission rates will be mailed to all parties in BPA's 1993 rate
case and will be available for examination on February 13, 1995, at
BPA's Public Information Center; BPA Headquarters Building; 1st Floor;
905 NE. 11th; Portland, and will be available at the prehearing
conference, to the extent they are available. The preliminary studies
and documents that relate to transmission rates are:
[[Page 8507]] 1. Loads and Resources Study and Documentation
2. Revenue Requirement Study and Documentation
3. Segmentation Study
4. Wholesale Power Rate Development Study and Documentation
5. Transmission Rate Design Study
6. Wholesale Power Rate and Transmission Rate Schedules
BPA's proposed Wholesale Power and Transmission Rate Schedules, General
Rate Schedule Provisions, and Transmission Tariffs will be published in
a separate Federal Register Notice on or about February 13, 1995. The
documents described above will be mailed to BPA's customers, 1993 rate
case parties, and other interested persons, and will be available from
BPA's Public Information Center on or about February 9, 1995.
To request any of the above documents by telephone, call BPA's
document request line: (503) 230-3478 or call toll-free 1-800-622-4520.
Please request the document by its above-listed title. Also state
whether you require the accompanying documentation (these can be quite
lengthy); otherwise the study alone will be provided. (For example, ask
for the ``Revenue Requirement Study and Documentation.'')
Because of the complexity of the issues in this rate case, in part
occasioned by continuing contract negotiations between BPA and its
customers as well as BPA's ``reinvention'' and Competitiveness Project,
BPA anticipates that there will be a need to meet with customers and
other interested third parties during the rate case on a very frequent,
and possibly extended, basis. To comport with the rate case procedural
rule prohibiting ex parte communications, BPA will provide necessary
notice of meetings involving rate case issues for participation by all
rate case parties. Parties should be aware, however, that such meetings
may be held on very short notice and they should be prepared to devote
the necessary resources to fully participate in every aspect of the
rate proceeding. Consequently, parties should be prepared to attend
meetings every day during the course of the rate case.
II. Purpose and Scope of Hearing
BPA's proposal to revise its rates is needed in order to continue
to recover all costs and expenses allocated to the power system,
including amortization of the Federal investment in the FCRPS over a
reasonable period of time, and to recover costs in a way that achieves
the goals of BPA's Competitiveness Project.
BPA began its Competitiveness Project in early 1993 in response to
market forces and deregulation of the electric utility industry. The
project, a re-invention of the agency to make it more competitive in
the new marketplace, included the development of a new business
concept, a marketing plan, a review of all of BPA's activities leading
to structural reorganization, strategic action plans for each of BPA`s
major activities, an internal effort to promote leadership and employee
empowerment, and proposals to eliminate unnecessary administrative and
regulatory requirements.
BPA's Draft Strategic Business Plan and the Draft Business Plan EIS
were released to the public in June 1994. The Draft Strategic Business
Plan sets the overall strategic direction for both serving BPA's
customers and meeting BPA's legislated responsibilities, including new
statements of BPA's mission, values, and strategic business objectives
to guide BPA's activities. The Draft Strategic Business Plan also
describes the conceptual framework for the products BPA is offering. As
stated in the Draft Strategic Business Plan, BPA's pricing policies are
designed to meet many objectives, including: (1) providing maximum
customer choice and encouraging optimal use of the FCRPS; (2)
contributing to BPA's continued viability in an increasingly
competitive energy market environment; and (3) allowing BPA to take
full advantage of its responsibility and authority to manage the FCRPS,
consistent with all statutory requirements.
The Draft Strategic Business Plan envisions BPA as having three
separate and distinct business lines--power, transmission, and energy
services (conservation)--which will be self-supporting and serve
customers according to their unique needs. The Draft Strategic Business
Plan also outlines a number of initiatives to improve BPA's
competitiveness, including strategies to close the projected gap
between BPA's costs and revenues, a financial strategy, and proposals
to change BPA's power rate structures to give customers more choice, to
more accurately reflect BPA's costs associated with providing the
discrete components of electric service selected by customers, and
thereby to encourage investment in cost-effective conservation. BPA
proposes to close the revenue gap by exerting strict cost management
and becoming market driven.
To provide customers with a price signal that encourages efficient
resource investment decisions, including conservation resources, and
appropriately shares the benefits of the relatively low-cost Federal
power and transmission systems, BPA is proposing to tier its power
rates for requirements service and for the residential exchange. The
rate for requirements service would be divided into two parts: a Tier 1
rate, and one or several alternative Tier 2 rates. BPA expects that the
Tier 1 rate will be available to serve most of the existing customers'
firm loads. The Tier 1 rate is expected to be a lower rate than Tier 2
because it will be based primarily on the costs associated with the
existing Federal system. The Tier 2 rates will be available to serve
regional firm requirements in excess of Tier 1, including future load
growth, and will be based on the costs associated with supplying power
to meet these loads.
To address the increasingly competitive market for power,
transmission, and energy services, BPA is proposing to offer a limited
menu of unbundled products in the 1995 rate case. BPA expects that the
products offered will be available both under the current power sales
contracts and under new power sales contracts. BPA expects to offer
additional unbundled products in future rate cases and to price these
products to meet market conditions and its cost recovery obligations.
In some cases, BPA expects the market will require flexible pricing.
BPA is planning to ``unbundle'' what it offers so customers can choose
among products and services based on what they need to meet their loads
and support their own resources, if any.
BPA owns most of the high-voltage transmission system in the PNW
and recognizes the need to ensure that BPA's transmission system is not
an impediment to a fully functioning and competitive bulk power market.
To assure that the transmission system does not provide BPA with
anticompetitive market power, BPA is proposing network transmission
services and prices for such services on a basis comparable to its own
use of its system. In setting rates, terms, and conditions of service,
BPA will be consistent with FERC comparability standards applicable to
other transmitting utilities under sections 210 and 211 of the Federal
Power Act except where prohibited by statute or regulation.
BPA is assessing the potential environmental effects of its rate
proposal as required by the National Environmental Policy Act (NEPA) as
part of the Business Plan Environmental Impact Statement (EIS).
Beginning in June 1994, BPA solicited input to the Draft Strategic
Business Plan and the Draft Business Plan EIS from customers
[[Page 8508]] throughout the region. From August 3 - August 9, BPA held
numerous public comment meetings throughout the region. Additionally,
BPA held a Draft Business Plan EIS workshop where participants were
invited to design their own alternatives and consider the environmental
and fiscal results. The draft EIS evaluates BPA's Business Plan
proposal and a range of alternatives, including the impacts of the
range of potential rate designs for BPA's power and transmission
services. It also documents the impact of the current rate proposal for
purposes of the National Environmental Policy Act. A supplemental Draft
Business Plan EIS, revised in response to comments received, will be
available for public comment in February. Comments will be received
outside the formal rate hearing process, but will be included in the
rate case record and considered by the Administrator in making a final
decision establishing BPA's 1995 rates. The Final Strategic Business
Plan and the Business Plan EIS that elaborates BPA's strategic action
plans will be released in June 1995.
Spending levels are developed as a part of the BPA Strategic
Business Plan, with the benefit of a public comment process. They also
are determined as a part of the Federal budget process. Consistent with
the Business Plan, the Administrator formally announced spending levels
for FYs 1996-2001 to the public on January 12, 1995. BPA will continue
to refine its strategic business objectives, goals, and spending
levels, and inform the public accordingly, as part of its Strategic
Business Plan development process. That process is expected to
culminate in a Final Strategic Business Plan published in June 1995.
Therefore, except for the limited exceptions hereafter noted, spending
level decisions will not be addressed in this rate case. Accordingly,
pursuant to Sec. 1010.3(f) of the ``Procedures Governing Bonneville
Power Administration Rate Hearings,'' 51 FR 7611 (March 5, 1986)
(hereinafter Procedures), the Administrator directs the Hearing Officer
to exclude from the record any material attempted to be submitted or
arguments attempted to be made in the hearing which seek to visit in
any way the appropriateness or reasonableness of BPA's decisions on
spending levels, as included in BPA's cost evaluation period of FY 1995
through FY 1997 and its test period revenue requirements for FYs 1996
and 1997. If, and to the extent, any re-examination of spending levels
is necessary, that re-examination will occur outside of the rate case.
The Revenue Requirement Study will incorporate BPA's spending levels
and reflect BPA's risk mitigation, capital funding, and other financial
goals in the rates. Excepted from this direction on account of their
variable nature, dependency on BPA's rate case models, or timing, are:
(1) Forecasts of residential exchange benefits; (2) forecasts of short-
term purchase power costs; (3) provision in BPA's revenue requirement
for cash working capital or cash lag needs; (4) repayment matters such
as interest rate forecasts, scheduled amortization, depreciation,
replacements, and interest expense; and (5) updates to forecasts by BPA
which may occur in the Spring of 1995 and for which no other review
forum has been provided.
III. Procedures Governing Rate Adjustments and Public Participation
Section 7(i) of the Northwest Power Act, 16 U.S.C. Sec. 839e(i),
requires that BPA's rates be established according to certain
procedures. These procedures include, among other things, issuance of a
Federal Register Notice announcing the proposed rates; one or more
hearings; the opportunity to submit written views, supporting
information, questions, and arguments; and a decision by the
Administrator based on the record. The proceedings for BPA's proposal
to adjust transmission rates will be combined with the proceedings for
BPA's proposal to adjust wholesale power rates. This proceeding will be
governed by BPA's rule for general rate proceedings, Sec. 1010.9 of
BPA's Procedures. These Procedures implement the statutory section 7(i)
requirements. Section 1010.7 of the Procedures prohibits ex parte
communications.
BPA distinguishes between ``participants in'' and ``parties to''
the hearings. Apart from the formal hearing process, BPA will receive
comments, views, opinions, and information from ``participants,'' who
are defined in the procedures as any person who may express views, but
who does not petition successfully to intervene as a party.
Participants' written comments will be made part of the official record
of the case and considered by the Administrator. The participant
category gives the public the opportunity to participate and have its
views considered without assuming the obligations incumbent upon
``parties.'' Participants are not entitled to participate in the
prehearing conference, cross-examine parties' witnesses, seek
discovery, or serve or be served with documents, and are not subject to
the same procedural requirements as parties.
Written comments by participants will be included in the record if
they are received by May 15, 1995. This date follows the anticipated
submission of BPA's and all other parties' direct cases. Written views,
supporting information, questions, and arguments should be submitted to
BPA's Manager of Corporate Communications at the address listed in
Section I of this Notice. In addition, BPA will hold several field
hearings in the Pacific Northwest Region. Participants may appear at
the field hearings and present oral testimony. The transcripts of these
hearings will be a part of the record upon which the Administrator
makes the rate decision.
The second category of interest is that of a ``party'' as defined
in Secs. 1010.2 and 1010.4 of BPA's Procedures. Parties may participate
in any aspect of the hearing process.
Persons wishing to become a party to BPA's rate proceeding must
notify the Hearing Officer and BPA in writing of their request.
Petitions to intervene shall state the name and address of the person
and the person's interests in the outcome of the hearing. Petitioners
may designate no more than two representatives upon whom service of
documents will be made. BPA customers and customer groups whose rates
are subject to revision in the hearing will be granted intervention
based on a petition filed in conformance with this section. Other
petitioners must explain their interests in sufficient detail to permit
the Hearing Officer to determine whether they have a relevant interest
in the hearing. Intervention petitions will be available for inspection
in BPA's Public Information Center, 1st Floor, 905 NE. 11th, Portland,
Oregon. Any opposition to a petition to intervene must be raised at the
February 13, 1995, prehearing conference. All timely applications will
be ruled on by the Hearing Officer. Opposition to an untimely petition
to intervene shall be filed and served within 2 days after service of
the petition. Interventions are subject to Sec. 1010.4 of the
Procedures.
The record will include, among other things, the transcripts of any
hearings, any written material submitted by the parties and
participants, documents developed by BPA staff, BPA's environmental
analysis and comments accepted on it, and other material accepted into
the record by the Hearing Officer. The Hearing Officer then will review
the record, will supplement it if necessary, and will certify the
record to the Administrator for decision. [[Page 8509]]
The Administrator will develop final proposed rates based on the
entire record, including the record certified by the Hearing Officer,
comments received from participants, other material and information
submitted to or developed by the Administrator, and any other comments
received during the rate development process. The basis for the final
proposed rates first will be expressed in the Administrator's Draft
ROD. Parties will have an opportunity to comment on the Draft ROD as
provided in BPA's hearing procedures. The Administrator will serve
copies of the Final ROD on all parties and will file the final proposed
wholesale power and transmission rates together with the record with
FERC for confirmation and approval.
IV. Major Studies
A. Major Studies
1. Loads and Resources Study
BPA's forecast of regional loads by customer group are the basis
from which public utility and direct service industry (DSI) customer
purchases from BPA (Federal system firm loads) are projected. BPA also
projects Federal transmission losses, obligations to regional investor-
owned utilities (IOUs) under their power sales contracts, and other
inter- and intraregional contractual obligations.
BPA's resource acquisition plans are based on work by BPA and the
Northwest Power Planning Council staff and reflect extensive input and
review by the general public and the region's utilities. The specific
resource acquisitions and associated costs included in this proposal
are based on BPA's 1994 Draft Strategic Business Plan.
The load/resource balance determines BPA's obligation to serve firm
loads during the test years under 1930 water conditions. It also
contributes to the determination of the supply of surplus firm power in
the region and on the Federal system. A related hydro regulation study
incorporates the operation of thermal plants, exports and imports of
power, projected resource acquisitions, and system constraints such as
the Columbia River flow augmentation project, ``spill'', and the water
budget for fish migration. For this proposal, a 50-year hydro study was
completed which includes assumptions regarding the Columbia River flow
augmentation. The hydro study starts in August 1995. The 50-year study
determines nonfirm energy availability for the region.
2. Revenue Requirement Study
The Bonneville Project Act, the Flood Control Act of 1944, the
Transmission System Act, and the Northwest Power Act require BPA to set
rates that are projected to collect revenues sufficient to recover the
cost of acquiring, conserving, and transmitting the electric power that
BPA markets, including amortization of the Federal investment in the
FCRPS over a reasonable period, and to recover BPA's other costs and
expenses. The Revenue Requirement Study determines whether current
rates will produce enough revenues to recover all BPA costs and
expenses, including BPA's repayment obligations to the U.S. Treasury.
Revenue requirements are the major factor in determining the overall
level of BPA's proposed power and transmission rates.
The Transmission System Act and the Northwest Power Act require
that transmission rates be based on an equitable allocation of the
costs of the Federal transmission system between Federal and non-
Federal power using the system. In compliance with a FERC order dated
January 27, 1984, 26 FERC 61,096, the Revenue Requirement Study
incorporates the results of separate repayment studies for the
generation and transmission components of the FCRPS. The repayment
studies for generation and transmission demonstrate the adequacy of the
projected revenues to recover all of the Federal investment in the
FCRPS over the allowable repayment period. Separate generation and
transmission revenue requirements are developed in the Revenue
Requirement Study. The adequacy of projected revenues to recover test
period revenue requirements and to meet repayment period recovery of
the Federal investment is tested and demonstrated separately for the
generation and transmission functions.
The Revenue Requirement Study for the 1995 preliminary rate
proposal is based on revenues and cost estimates for FY 1996 and FY
1997. BPA's Revenue Requirement Study reflects actual amortization and
interest payments paid through September 30, 1994. In addition, it
reflects all FCRPS obligations incurred pursuant to the Northwest Power
Act, including residential exchange costs.
3. Segmentation Study
BPA operates and maintains the Federal Columbia River Transmission
System (FCRTS) to provide transmission services throughout the region.
Because most services do not require the use of the entire system, the
FCRTS is divided into nine segments, each providing a distinct type of
service. The nine segments are: integrated network; Pacific Northwest-
Pacific Southwest (Southern) Intertie; Northern Intertie; Eastern
Intertie; generation integration; fringe area; and delivery segments
for public agency, DSI, and IOU customers.
The Segmentation Study categorizes the facilities of the FCRTS
according to the types of services they provide. This provides the
basis for segmenting the projected transmission revenue requirements
used in BPA's rate proposals. The results of the Study include the
historical investment and the average of the last 3 years' operations
and maintenance expenses. In addition, the facilities of the integrated
network similarly are divided among distinct services. This division of
the FCRTS into segments provides for equitable allocation of
transmission costs between Federal and non-Federal customers based on
their usage of the segments.
4. Wholesale Power Rate Development Study (WPRDS)
BPA is proposing substantial changes in the method used to develop
its wholesale power rates. The cost of service analysis (COSA) and rate
design adjustments are the two central parts of the rate development
process. The COSA apportions BPA's test year generation and
transmission revenue requirements to customer classes based on the use
of specific types of service by each customer class and in accord with
the rate directives of the Northwest Power Act. Costs are allocated to
classes of service on the basis of the relative use of services. The
coincidental peak (CP) allocation of network transmission costs to
customer classes uses an average of a 12-CP and 3-CP (December,
January, and February) method to reflect transmission cost causation.
The transmission costs allocated to the Federal power uses of the
transmission system form the basis for the power rates' demand charge;
the transmission costs allocated to non-Federal uses form the basis for
the transmission, or wheeling, rates that are calculated in the
Transmission Rate Design Study (discussed below).
The rate design adjustment portion of the WPRDS modifies the
allocated costs developed in the COSA to: (1) Reflect BPA's rate design
objectives; (2) conform with contractual requirements; (3) reflect the
results of other BPA studies and commitments made in other public
involvement processes under section 7(i) of the Northwest Power Act;
and (4) conform with requirements of applicable legislation. BPA's rate
design [[Page 8510]] objectives include recovery of BPA's revenue
requirement, rate and revenue stability, practicality, fairness,
comparability, and efficiency. All of the rate design adjustments are
functionalized, classified, segmented, and seasonalized where
appropriate. After all adjustments are made, the final power rates are
calculated.
5. Transmission Rate Design Study (TRDS)
In the TRDS, rates for various transmission services are calculated
using the portion of the transmission revenue requirement allocated to
non-Federal uses of the transmission system. Wheeling load forecasts
are developed in the TRDS in order to calculate rates. The design of
individual rate schedules also is accomplished in the TRDS.
B. Transmission Rates
In a process concurrent with the 1995 rate case, BPA is proposing
terms and conditions for new and existing services (network
integration, point-to-point firm, and nonfirm) that allow comparable
access to the Federal transmission system. Two new rate schedules (the
Network Integration Transmission rate and the Point-to-Point Firm
Transmission rate) are proposed to price the new services. BPA's Energy
Transmission rate is proposed to price comparable nonfirm transmission
services. These new services ensure that all parties have access to the
Federal transmission system under comparable terms, conditions, and
rates as BPA. Such comparability allows for a competitive marketplace
for power products.
BPA also is proposing the Advance Funding rate to allow BPA to
collect the cost of specified BPA-owned transmission facilities through
advance payment. In addition to the three new rate schedules, all of
BPA's traditional transmission rate schedules are proposed to be
confirmed. A charge is included in the firm transmission rates to allow
BPA to charge opportunity cost when that is higher than the embedded
cost charge for new requests for transmission capacity. BPA also
provides notice in the firm rate schedules that requests for new or
increased firm transmission service may be subject to incremental cost
rates that would be developed pursuant to section 7(i) of the Northwest
Power Act. In applying incremental or opportunity cost rates, BPA would
be consistent with FERC's ``or'' pricing--the higher of embedded cost
or incremental cost (or, the higher of embedded cost or opportunity
cost), but not the sum of the two. Finally, a Reservation Charge for
Transmission Capacity and a Reactive Power Charge are included in the
many of the transmission rate schedules.
1. Formula Power Transmission (FPT)
The FPT-95 rate schedule is available for the firm wheeling of
power on the network segment of the FCRTS. This rate includes a
distance or mileage component for transmission lines and various
transformation and terminal charges. The FPT rate form is designed to
reflect a wheeling formula that is prescribed by contract provisions.
In calculating the FPT-95 rate, the first step is to quantify costs
for the specific types of transmission facilities treated in the rate
components. Estimates of the use of these facilities are determined
from a simulation of the power flow of the projected peak load during
the test period. Unit costs for the FPT rate components are derived by
dividing facility cost by facility use as determined in a power flow
study.
2. Integration of Resources (IR)
The IR service is a flexible transmission service that may be used
to integrate multiple resources and transmit non-Federal power to
multiple points of delivery on the FCRTS Integrated Network facilities.
The IR-95 rate is structured as a postage-stamp (independent of
distance) rate with a demand and energy charge. The proposed IR-95 rate
schedule continues to include the Short-Distance Discount, an exception
to the postage stamp rate design for contractually specified points of
integration.
The IR-95 rate is calculated by dividing the revenue requirement
for the class into two equal parts to reflect a 50-50 classification of
costs to capacity and energy. The quotient of these costs and the
appropriate billing determinant (contract demand for capacity-related
costs; total energy usage for energy) yields the rates.
3. Energy Transmission (ET); Southern Intertie (IS), Northern Intertie
(IN), and Eastern Intertie (IE) Transmission; and Market Transmission
(MT)
The ET-95 rate is designed to approximate the average cost of firm
wheeling on the network. It is calculated by dividing the costs
allocated to the FPT/IR class of service by all wheeling under firm
wheeling contracts. The ET rate applies to use of intra-regional FCRTS
facilities excluding the Interties and will provide comparable nonfirm
transmission service.
The proposed IS-95 rate consists of two parts: a nonfirm energy-
only rate, and a firm rate with separate demand and energy components.
BPA also is proposing two rates for the IN-95 rate schedule: an
energy-only rate for nonfirm wheeling, and a rate with demand and
energy components for firm wheeling. The cost of the Northern Intertie
is allocated to Federal and non-Federal power; the cost allocated to
non-Federal power is the basis for the calculation of the rate.
The IE-95 rate is available for nonfirm transmission on the Eastern
Intertie. It is calculated as the ratio of the Eastern Intertie segment
cost to the projected wheeling of energy from the Colstrip plant.
BPA is continuing its MT-95 rate unchanged, except for the addition
of the Reactive Power Charge. This rate schedule was developed for use
among Western Systems Power Pool (WSPP) participants and allows for
flexible hourly, daily, weekly, and monthly charges.
4. Use of Facilities Transmission (UFT) and Townsend-Garrison
Transmission (TGT)
The UFT-95 and TGT-95 rate schedules are formula rates that are
being proposed unchanged from the current 1993 rates. The UFT rate
recovers the annual cost of identified facilities over which specific
wheeling transactions occur. The TGT rate is a contract rate that
recovers the cost of the Montana (Eastern) Intertie.
5. Southern Intertie Annual Costs (AC)
BPA is proposing the AC-95 rate to be applied to owners of AC
Intertie capacity. This rate recovers the Capacity Owner's prorata
share of actual AC Intertie costs: Operations, maintenance, general
plant, and other identified expenses, as well as capital costs of
replacements and reinforcements. The proposed AC-95 rate takes the
place of the AC-93 rate which was a ``bridge'' rate until Capacity
Ownership contracts were complete.
6. Network Integration Transmission (NT) and Point-to-Point Firm
Transmission (PT)
The proposed NT-95 and PT-95 rates, along with the associated terms
and conditions of service, are designed to provide customers with
transmission service that is comparable to what BPA provides itself in
serving its power customers. Network Integration transmission service
allows customers to serve their load located in the PNW region. The
proposed NT-95 rate is based on a load-ratio share concept. The load-
ratio share measures the Network [[Page 8511]] Integration customer's
contribution to the FCRTS peak.
The proposed PT rate, along with terms and conditions of service,
provides transmission service for customer's native load and/or
transactions with third parties over the FCRTS Integrated Network. The
PT rate is based on transmission costs allocated to the FPT/IR class of
service and is structured as a monthly demand charge.
7. Advance Funding (AF)
The proposed AF rate allows BPA to collect the capital and related
costs of specified BPA-owned transmission facilities through advance
payment. Such facilities could include interconnection and resource
integration facilities, and upgrades or reinforcements to the FCRTS.
Following commercial operation of the specified facilities, a true-up
of estimated costs with actual costs would occur.
8. Reservation Charge for Transmission Capacity, and Reactive Power
Charge
The proposed Reservation Charge is included in the firm
transmission rate schedules for application to customers who enter into
a contract with BPA for new or increased firm transmission service on
the FCRTS and want to reserve transmission capacity to accommodate such
service. Payment of the Reservation Charge for Transmission Capacity
would allow a customer to reserve capacity for up to 3 years, with the
possibility of two annual extensions granted by BPA on a case-by-case
basis.
The proposed Reactive Power Charge is included in BPA's
transmission rate schedules as well as BPA's power rate schedules, and
charges customers for their reactive power requirements by point of
delivery.
V. Transmission Rate Schedules
The proposed transmission rates are incorporated in the Wholesale
Power and Transmission Rate Schedules. The rate schedule document
includes three sections. The first section contains the wholesale power
and transmission rate schedules. Each schedule is comprised of sections
stating to whom the rate schedule is available, rates for the products
offered under the schedule, and billing factors. Each rate schedule
also lists the adjustments, charges, and special provisions that apply
to that rate schedule.
The second section contains detailed descriptions of the
adjustments, charges, and special provisions that apply to the various
rate schedules. The third section contains the GRSPs for power and
transmission rates. The GRSPs include a lengthy list of definitions,
both of products and services and of rate schedule terms.
The Wholesale Power and Transmission Rate Schedules and the GRSPs
will be published in a separate Federal Register Notice as described in
Section I of this Notice.
Issued in Portland, Oregon, on February 7, 1995.
J.H. Curtis,
Acting Administrator.
[FR Doc. 95-3535 Filed 2-13-95; 8:45 am]
BILLING CODE 6450-01-P
