02-9274. Proposed Adjustment to the ACS-02 Generation Imbalance Service Rate

AGENCY:

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

ACTION:

Notice of Proposed Adjustment to the Rate for Generation Imbalance Service, Schedule ACS-02.

SUMMARY:

By this notice, BPA's Transmission Business Line (TBL) announces its proposal to revise the ACS-02 Generation Imbalance Service rate (rate) found in its 2002 Transmission and Ancillary Service Rate Schedules. BPA proposes to eliminate the 100 mills per kilowatthour minimum rate for wind resources for imbalances that exceed the Generation Imbalance Deviation Band and where energy delivered in a schedule hour is less than the energy scheduled. The revision will remove an impediment to continued development of wind resources in the BPA Control Area.

DATES:

A proposed schedule for the proceeding is supplied in Supplementary Information, Section I.B. Petitions to Intervene must be received by BPA at the address below no later than 12:00 noon on April 22, 2002. All references to timelines are Pacific prevailing time. At 10:00 a.m. on April 24, 2002, a scheduling conference will be held in the BPA Rate Hearing Room to discuss the proposed schedule. The rate adjustment proceeding will begin with a pre-hearing conference at 9:00 a.m. on April 25, 2002. Persons intending to intervene in the proceeding as a party must appear in person at the pre-hearing conference. Written comments by non-party participants must be received by BPA no later than 4:30 p.m. May 28, 2002, at the address below.

ADDRESSES:

BPA File No. GI-02. BPA requests that all comments and documents intended to become a part of the Official Record in this proceeding refer to this file number.

Persons wishing to become a party to the proceeding must notify BPA in writing of their intention to do so. Petitions to Intervene as a party in the proceeding must be submitted to Judy Cornish, Hearing Clerk—L-7, Bonneville Power Administration, P.O. Box 3621, 905 NE 11th Ave., Portland, OR, 97208-3621. In addition, petitioners must concurrently serve a copy of their Petition to Intervene on BPA's Office of General Counsel, directed to Eric H. Carter, Bonneville Power Administration, Office of General Counsel—LT-7, P.O. Box 3621, 905 N.E. 11th Ave., Portland, OR, 97208-3621.

Written comments must be submitted to BPA Communications—KC-7, Comments, Bonneville Power Administration, P.O. Box 12999, Portland, Oregon 97212. Comments may also be sent by facsimile to [phone], or by e-mail to [e-mail].

The pre-hearing conference on April 25, 2002, will be held in the BPA Rate Hearing Room, 2nd Floor, Room 223, 911 NE 11th Ave., Portland, Oregon. The Hearing Officer will establish a final schedule at the pre-hearing conference. During or after the pre-hearing conference the Hearing Officer will also issue orders addressing special rules of practice to govern the proceedings, document handling, and discovery.

BPA's Initial Proposal to revise the rate will be provided at the April 24th scheduling conference and at the April 25th pre-hearing conference and will be available for public viewing after that date at BPA's Public Information Center, BPA Headquarters Building, 1st Floor, 905 NE 11th Avenue, Portland, Oregon. The documents will also be available on BPA's Web site at www.transmission.bpa.gov/​giratecase.

FOR FURTHER INFORMATION CONTACT:

Information related to this proceeding may also be obtained by telephone at [phone] or toll free at 1-800-622-4519. Ms. Mary A. Dalton, Transmission Rates Manager, is the official responsible for this rate case. Ms. Dalton may be contacted at P.O. Box 491, 5411 NE Hwy 99, Vancouver, WA 98663.

SUPPLEMENTARY INFORMATION:

 

Table of Contents

Part I: Introduction and Procedural Background

A. Relevant Statutory Provisions Governing This Rate Proceeding

B. Proposed Schedule Concerning This Rate Proceeding

Part II: Purpose and Scope of Hearing

A. The Circumstances Necessitating Adjustment

B. Scope

C. NEPA Evaluation

Part III: Public Participation

A. Distinguishing Between “Participants” and “Parties”

B. Petitions for Intervention

C. Developing the Record

Part IV: Summary of the Proposal

Part I—Introduction and Procedural Background

The Pacific Northwest Electric Power Planning and Conservation Act (Northwest Power Act) provides that BPA must establish and periodically review 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. Section 7(i) of the Northwest Power Act requires that BPA's rates be established based on the record in a formal hearing (proceeding).

By this notice, BPA's Transmission Business Line (TBL) announces its proposal to revise the ACS-02 Generation Imbalance Service rate (rate) found in its 2002 Transmission and Ancillary Service Rate Schedules. Generation Imbalance Service is taken when there is a difference between scheduled and actual energy delivered from a generation resource in the BPA Control Area during a schedule hour. The existing Generation Imbalance Service rate was established in BPA's 2002 Transmission and Ancillary Service rate proceeding and subsequently was approved by the Federal Energy Regulatory Commission (FERC) for use during the October 1, 2001 to September 30, 2003 rate period.^[1] For imbalances outside the Generation Imbalance Deviation Band, the current rate charges the greater of: (i) BPA's incremental cost for energy, plus 10 percent, or (ii) 100 mills per kilowatthour when the actual energy delivered from a resource in a schedule hour is less than the energy scheduled for that hour. The 100 mills per kilowatthour minimum rate is designed to encourage accurate scheduling by generators. TBL proposes to eliminate the 100 mills per kilowatthour minimum rate when applying the rate to wind generation resources because wind generators are not currently able to accurately schedule their output during each delivery hour. This proposed change will result in the Generation Imbalance Service rate for wind resource imbalances outside the Deviation Band being BPA's incremental cost for energy plus 10 percent when delivered energy in an hour is less than scheduled energy. All other aspects of the existing Generation Imbalance Service rate are unchanged.

A. Relevant Statutory Provisions Governing This Rate Proceeding

Section 7 of the Northwest Power Act, 16 U.S.C. 839e, contains a number of general directives that the BPA Administrator must consider in establishing rates for the sale of electric energy and transmission capacity. In particular, section 7(a)(1), 16 U.S.C. 839e(a)(1), provides in part that:

Such rates shall be established and, as appropriate, revised to recover, in accordance with sound business principles, the costs associated with the acquisition, conservation, and transmission of electric power, including the amortization of the Federal investment in the Federal Columbia River Power System (including irrigation costs required to be repaid out of power revenues) over a reasonable period of years and the other costs and expenses incurred by the Administrator pursuant to this Act and other provisions of law.

Rates established by BPA are effective on an interim or final basis when approved by the Federal Energy Regulatory Commission (FERC). 16 U.S.C. 839e(a)(2). In addition to the Northwest Power Act, BPA ratemaking is governed by the Federal Columbia River Transmission System Act, 16 U.S.C. 838 et seq., and the Flood Control Act of 1944, 16 U.S.C. 825 et seq. The Federal Power Act, 16 U.S.C. 212(i)(1)(B)(ii), provides additional guidance regarding BPA's ratemaking.

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. These procedures include issuance of a Federal Register Notice announcing the proposed rates; one or more hearings; the opportunity to submit written views, supporting information, questions, or arguments; and a decision by the Administrator based on the record developed during the hearing process.

This proceeding is governed by the Procedures Governing Bonneville Power Administration Rate Hearings (BPA's Procedures), 51 FR 7611 (March 5, 1986), which implement and expand upon these statutory requirements.

Pursuant to Rule 1010.3(c) of BPA's Procedures, this hearing will be conducted as a 90-day Expedited Rate Proceeding under section 1010.10 of BPA's Procedures. The expedited procedures will be used rather than the procedures for General Rate Proceedings (Rule 1010.9), which are intended for use when the Administrator proposes to revise all, or substantially all, of BPA's wholesale power and transmission rates.

The Administrator has elected to do an expedited rate procedure because this proceeding is limited in scope, involves the revision of a single rate, and the rate revision adopted as a result of this proceeding, if any, will be in effect for one year, the remainder of the current rate period for BPA's 2002 Transmission and Ancillary Services Rate Schedules. A 90-day rate proceeding will be adequate to develop a full and complete record, and receive public comment and argument related to the proposed rate, upon which the Administrator will establish the final rate.

B. Proposed Schedule Concerning This Rate Proceeding

BPA expects to issue a final Record of Decision related to this rate revision on July 15, 2002. The following proposed schedule is provided for informational purposes. The Hearing Officer will establish a final schedule at the pre-hearing conference.

Date	Action
April 22	Deadline for Petitions to Intervene (Noon).
April 24	Scheduling Conference.
April 25	Pre-hearing Conference and Filing of BPA's Direct Case.
May 10	Parties File Direct Cases.
May 28	Close of Participant Comments.
May 31	Litigants File Rebuttal Testimony.
June 13	Cross-Examination.
June 18	Initial Briefs Filed.
June 28	BPA Files Draft Record of Decision.*
July 8	Parties File Briefs on Exceptions, if applicable.
July 15	Administrator Issues Final Record of Decision.
* Pursuant to 1010.10(c) of BPA's Procedures, oral argument will not be heard in expedited rate proceedings unleess all parties agree to subtitute Oral Arugment for a brief on exceptions.

The procedural schedule established for Docket No. GI-02 will provide an opportunity for interested persons to review BPA's proposed rate adjustment, to participate in the rate hearing, and to submit oral and written comments.

Part II—Purpose and Scope of Hearing

The purpose of the hearing is to revise the ACS-02 Generation Imbalance Service charge under BPA's 2002 Transmission and Ancillary Service Rate Schedules. BPA proposes to eliminate the 100 mills per kilowatthour minimum rate for wind resources for imbalances that exceed the Generation Imbalance Deviation Band and where energy delivered in a schedule hour is less than the energy scheduled.

A. The Circumstances Necessitating Adjustment

TBL's ACS-02 Ancillary Services and Control Area Services Rate Schedule includes a Control Area Service Rate for Generation Imbalance Service (see ACS-02, Section III.B). The current ACS-02 Generation Imbalance Service rate schedule charges the greater of BPA's incremental cost plus 10 percent or 100 mills per kilowatthour for imbalances outside the Deviation Band when the actual energy delivered from a resource in a schedule hour is less than the energy scheduled for that hour. The 100 mills per kilowatthour minimum charge is designed to encourage generators to operate their resources so that the difference between scheduled and actual energy delivered is within the Deviation Band. Wind resource developers and operators assert that they are not able to operate their resources to schedule with sufficient accuracy to avoid incurring substantial Generation Imbalance Service charges, and thus, wind resources cannot respond to this rate design. TBL's proposal to eliminate the 100 mills per kilowatthour minimum rate for wind resources in the ACS-02 Generation Imbalance Service rate would result in the rate for these imbalances being BPA's incremental cost plus 10 percent.

B. Scope

This section provides guidance to the Hearing Officer as to those matters that are within the scope of this transmission rate proceeding and those that are outside the scope of this proceeding.

Pursuant to Rule 1010.3(f) of BPA's Procedures, the Administrator directs the Hearing Officer to limit the scope of this hearing to the rate adjustment proposed herein. No other issues will be considered in this proceeding, including without limitation: (1) Issues related to any other rates adopted in BPA's 2002 Transmission and Ancillary Service rates proceeding; (2) other rates within the ACS-02 rate schedule; (3) aspects of the existing Generation Imbalance Service rate other than those relating to the rate adjustment proposed herein; (4) the General Rate Schedule Provisions; (5) revenue requirements; (6) rate design issues; (7) segmentation studies; and (8) transmission rate studies or other rate issues. Further, no issues relating to BPA's Open Access Transmission Tariff will be considered in this proceeding. The Hearing Officer will interpret the scope of this proceeding in the narrowest possible manner.

C. NEPA Evaluation

BPA has assessed the potential environmental effects of its rate proposal, as required by the National Environmental Policy Act (NEPA). In the Business Plan Environmental Impact Statement (Business Plan EIS) BPA evaluated the environmental impacts of a range of business structure alternatives that included, among other things, various combinations of rate designs and resulting rate levels for BPA's transmission services. In August 1995, the BPA Administrator issued a Record of Decision (Business Plan ROD) that adopted the Market-Driven Alternative from the Business Plan Final EIS completed in June 1995. In the Business Plan ROD, the Administrator committed to avoid the environmental impacts from new generation resources by not discouraging renewable resources. This rate proposal would reduce the additional environmental impacts associated with non-renewable resources, and it would remove the unintended burden BPA's current Generation Imbalance Service rate structure imposes on wind resources. The impacts from these actions were examined in the Business Plan EIS. Therefore, BPA expects the proposal to revise the ACS-02 rate for Generation Imbalance Service under BPA's 2002 Transmission and Ancillary Service Rate Schedules will fall within the scope of the Market-Driven Alternative that was evaluated in the Final Business Plan EIS and adopted in the Business Plan ROD.

Part III—Public Participation

A. Distinguishing Between Participants and Parties

BPA distinguishes between “participants in” and “parties to” its ratemaking hearings. Apart from the formal hearing process, BPA will receive comments, views, opinions, and information from “participants,” who are defined in the BPA Procedures as persons 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 pre-hearing 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.

Written comments by participants will be included in the record if they are received by BPA on or before May 28, 2002. Participants' written views, supporting information, questions, and arguments should be submitted to the Hearing Clerk at the address listed in the ADDRESSES section of this Notice.

The second category of interest is that of a “party” as defined in Rules 1010.2 and 1010.4 of the BPA Procedures. 51 FR 7611 (1986). Parties may participate in any aspect of the hearing process after intervening in the proceeding as provided below.

B. Petitions for Intervention

Persons wishing to become a party to BPA's rate proceeding must notify BPA in writing of their interest. Petitioners may designate no more than two representatives upon whom service of documents will be made. Petitions to Intervene shall state the name and address of the person requesting party status and the person's interest in the hearing. Petitioners must also explain their interest in the outcome of the hearing in sufficient detail to permit the Hearing Officer to determine whether they have a relevant interest in the hearing to be a party. Finally, petitioners must state whether they intend to file a brief on exceptions.

Petitions to Intervene as a party in the rate proceeding are due to the Hearing Officer by 12 noon on April 22, 2002. Petitions to Intervene should be directed to the Hearing Clerk at the address specified in the ADDRESSES section of this Notice. A copy of the petition shall be served upon BPA's Office of General Counsel at the address specified in the ADDRESSES section of this Notice.

Pursuant to Rule 1010.1(d) of the BPA Procedures, BPA waives the requirement in Rule 1010.4(d) that an opposition to a Petition to Intervene be filed and served 24 hours before the pre-hearing conference. Any opposition to a Petition to Intervene may instead be made orally at the pre-hearing conference. Any party, including BPA, may oppose a Petition to Intervene. 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. The Hearing Officer will rule on all timely Petitions to Intervene at the pre-hearing conference. Late interventions are strongly disfavored. Oppositions to an untimely Petition to Intervene shall be filed and served on BPA within two days after service of the untimely petition.

C. Developing the Record

The hearing record will include, among other things, the transcripts of the hearing, written materials entered into the record by BPA and the parties, written comments from participants and other materials accepted into the record by the Hearing Officer. The Hearing Officer will then review, supplement (if necessary) and certify the record to the BPA Administrator for decision.

The Hearing Officer, at his discretion, may schedule reasonable opportunity for cross-examination following completion of the filing of all parties and BPA's direct cases, and rebuttal testimony. Parties will have the opportunity to file initial briefs at the close of the evidentiary portion of the hearing. Parties may file briefs on exceptions, or if all parties have previously agreed, oral argument may be substituted for briefs on exceptions. If oral argument is scheduled in lieu of briefs on exceptions, the argument will be transcribed and made part of the record. After the close of the hearing, and following submission of initial briefs, BPA will issue a Draft Record of Decision (ROD).

The Administrator will develop the final rate for Generation Imbalance Service based on the entire record, documents prepared pursuant to the National Environmental Policy Act and other statutes and such other material or information as may have been submitted to or developed by the Administrator. The basis for the final adjustment will be expressed in the Administrator's Final ROD, which shall be issued July 15, 2002. The Administrator will serve copies of the Final ROD on all parties and will file the final proposed rate adjustment, together with the record, with the Federal Energy Regulatory Commission for confirmation and approval.

BPA must continue to meet with customers in the ordinary course of business during the rate proceeding. To comport with section 1010.7 of BPA's Procedural Rules on ex parte communications, BPA will provide notice of meetings involving rate proceeding issues to provide an opportunity for participation by all parties to the proceeding. Such meetings may be held on short notice and parties should be prepared to devote necessary resources to fully participate in every aspect of the rate proceeding.

Part IV—Summary of the Proposal

BPA proposes to revise the rate for Generation Imbalance Service by eliminating the 100 mills per kilowatthour floor rate when actual energy is less than scheduled energy for wind generation resources. The revision will remove an impediment to continued development of wind resources in the BPA Control Area.

Below is the proposed adjustment to the Generation Imbalance Service rate. The proposed revision to the rate is the addition of the second sentence in the first paragraph of section III.B.1.b.(i), below (in italics). All capitalized terms have the meaning accorded them in TBL's Open Access Transmission Tariff and 2002 Transmission and Ancillary Service Rate Schedules. TBL intends to seek FERC approval of the revised rate beginning October 1, 2002 and intends the revised rate to remain in effect until September 30, 2003, the expiration date of BPA's 2002 Transmission and Ancillary Service Rate Schedules.

Schedule ACS-02 Ancillary Services and Control Area Services Rate

Section III. Control Area Service Rates

B. Generation Imbalance Service

The rates below apply to generation resources in the BPA Control Area if Generation Imbalance Service is provided for in an interconnection agreement or other arrangement. Generation Imbalance Service is taken when there is a difference between scheduled and actual energy delivered from generation resources in the BPA Control Area during a schedule hour. The rates for this service differ depending upon whether the Generation Imbalance occurs within the Generation Imbalance Deviation Band or outside the Generation Imbalance Deviation Band. The Generation Imbalance Deviation Band is + or −1.5% of the scheduled amount of energy, or 2 MW, whichever is larger (absolute value).

1. Rates

a. For Imbalance Within the Generation Imbalance Deviation Band

BPA-TBL will maintain a deviation account showing the net Generation Imbalance (the sum of positive and negative deviations from schedule for each hour). Return energy must be scheduled to bring the deviation account balance to zero each month. BPA-TBL will designate the hours and amounts of return energy for each hour that will be scheduled. The customer shall make the arrangements and submit the schedule for the balancing transaction.

b. For Imbalance Outside the Generation Imbalance Deviation Band

i. When energy delivered in a schedule hour by the generation resource, not including wind generation resources, is less than the energy scheduled, the charge will be the greater of: (I) BPA's incremental cost plus 10%, or (ii) 100 mills per kilowatthour. When energy delivered in a schedule hour by a wind generation resource is less than the energy scheduled, the charge will be BPA's incremental cost plus 10%.

BPA's incremental cost will be based on an hourly energy index in the PNW, if one exists. If one does not exist, an alternative index will be based on: The Dow-Jones Mid-Columbia, California PX, or NYMEX Mid-Columbia index prices. On September 30 each year, BPA-TBL will post on the OASIS the index to be used for the ensuing fiscal year.

ii. When energy delivered by the generation resource is greater than the scheduled amount, a credit equal to 90% of BPA's decremental cost may be given for deviations.

2. Billing Factors

For each hour a Generation Imbalance occurs, the Billing Factor for the rates specified in section 1.b. for Imbalance Outside the Generation Imbalance Deviation Band, is:

a. The amount of energy that the customer delivers, in kilowatthours, less than the lower limit of the Generation Imbalance Deviation Band, or

b. The amount of energy the customer delivers, in kilowatthours, in excess of the upper limit of the Generation Imbalance Deviation Band. No credit will be given for an energy difference if: (a) The imbalance was an Intentional Deviation (as determined by BPA-TBL); or (b) the Federal System was in a Spill Condition at any time during the month.

Issued in Portland, Oregon, this 3rd day of April, 2002.

Stephen J. Wright,

Administrator and Chief Executive Officer, Bonneville Power Administration.

Footnotes

1.  FERC later approved BPA's request to accelerate the effective date to July 1, 2001.