E9-12489. 2012 Tiered Rate Methodology Supplemental Proceeding; Public Hearings and Opportunities for Public Review and Comment

AGENCY:

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

ACTION:

Notice of proposed modifications to the Tiered Rate Methodology.

SUMMARY:

BPA is proposing modifications to its Tiered Rate Methodology (TRM), TRM-12-A-02, which specifies the methodology to be used in setting BPA's Priority Firm Power (PF) rates beginning with the FY 2012-2013 rate period and continuing through the life of the Regional Dialogue Contracts. The TRM was established on November 10, 2008, by the Administrator's Record of Decision (ROD), TRM-12-A-01, following a procedural hearing held pursuant to section 7(i) of the Pacific Northwest Electric Power Planning and Conservation Act (Northwest Power Act), 16 U.S.C., section 839e(i). The TRM contains specified procedures that govern its modification. The modifications proposed here are made in accordance with the provisions in section 12 of the TRM, which include changes to the TRM that were identified and agreed to between BPA and preference customer representatives designated by the Public Power Council prior to February 1, 2009.

One of those modifications would substantively change the calculation of Contract High Water Marks (CHWM) under the TRM. Another proposed modification changes one public utility customer's existing resource amount shown in Attachment C to the TRM. The remaining proposed modifications are offered to clarify the TRM language in specific places.

Determinations of specific rate levels applicable to sales under the Regional Dialogue Contracts will not be made in this proceeding. Rather, the specific rate levels will be developed consistent with the TRM in the respective Northwest Power Act section 7(i) rate proceedings.

BPA is reopening the TRM proceeding pursuant to section 7 of the Northwest Power Act to consider the proposed TRM modifications. Entities that were parties to TRM-12 do not need to intervene again in this reopened proceeding. Other entities wishing to become a formal party to the proceeding must file a petition to intervene, notifying BPA in writing of their intention to do so in conformance with the requirements stated in this Notice.

DATES:

Petitions to intervene must be received no later than 5 p.m., Pacific Daylight Time (PDT), on June 2, 2009. Proposed hearing dates are supplied in SUPPLEMENTARY INFORMATION, Part I.A. below. Non-party participants may make written comments between May 28, 2009, and July 8, 2009. Comments must be received by 5 p.m., PDT, on July 8, 2009, in order to be considered in the Administrator's ROD.

ADDRESSES:

Petitions to intervene should be directed to Ericka Doot, Hearing Clerk, LP-7, Bonneville Power Administration, 905 NE 11th Avenue, Portland, OR 97232 or by e-mail to: [e-mail], and must be received no later than 5 p.m., PDT, on June 2, 2009. In addition, a copy of the petition must be served concurrently on BPA's General Counsel directed to Peter J. Burger, LP-7, Office of General Counsel, Bonneville Power Administration, 905 NE. 11th Avenue, Portland, OR 97232 or by e-mail to: [e-mail]. (See Part III (A) for more information.) Written comments can be submitted online at BPA's Web site http://www.bpa.gov/​comment,, or by mail to: BPA Public Affairs, DKE-7, P.O. Box 14428, Portland, OR 97293-4428. Please identify written or electronic comments as “TRM-12S Proceeding” comments. Documents will be available for public viewing after June 4, 2009. The documents are available at: http://www.bpa.gov/​corporate/​ratecase,, or at BPA's Public Information Center, BPA Headquarters Building, 1st Floor; 905 NE. 11th, Portland, Oregon. The prehearing conference will be held on June 4, 2009, beginning at 1:30 p.m. in Room 223, 911 NE. 11th, Portland, Oregon. Due to increased security requirements, attendees should allow sufficient time to enter the building and complete the required screening process. Photo identification will be required for entry.

FOR FURTHER INFORMATION CONTACT:

Ms. Nita Burbank, Public Utilities Specialist, Power Policy Development, PFP-6, P.O. Box 3621, Portland, OR 97208. Interested persons may also call 503-230-3935 or 1-800-622-4519 (toll-free).

SUPPLEMENTARY INFORMATION:

Table of Contents

Part I. Introduction and Procedural Background

Part II. Purpose and Scope of Proceeding

Part III. Public Participation

Part IV. Tiered Rate Methodology Proposed Modifications

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. These procedures 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. This proceeding is governed by section 1010 of BPA's Rules of Procedure Governing Rate Hearings, 51 FR 7611 (1986) (Procedures). These Procedures implement the statutory section 7(i) requirements.

This proceeding will be conducted under section 1010.10 of the Procedures—Expedited Rate Proceedings. Expedited Rate Proceedings provide for a ROD to be issued 90 days after this Notice. The Administrator has chosen an Expedited Rate Proceeding because of the limited scope of issues that will be addressed in this reopened proceeding and that such issues will not require extensive examination of factual material by BPA or parties.

Section 1010.7 of the BPA Hearing 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 BPA's rate case by other Executive Branch agencies, Congress, existing or potential BPA customers (including Tribes), and nonprofit or public interest groups are considered outside communications and are subject to the ex parte rule. The general rule does not apply to communications relating to: (1) Matters of procedure only (the status of the rate case, 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 BPA is responsible for under statutes other than the ratemaking provisions; or (5) matters that 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 September 2, 2009.

The Bonneville Project Act, 16 U.S.C. 832, the Flood Control Act of 1944, 16 U.S.C. section 825s, the Federal Columbia River Transmission System Act, 16 U.S.C. 838, and the Northwest Power Act, 16 U.S.C. 839, provide guidance regarding BPA ratemaking. The Northwest Power Act requires BPA to set rates that are sufficient to recover, in accordance with sound business principles, the cost of acquiring, conserving and transmitting electric power, including amortization of the Federal investment in the Federal Columbia River Power System (FCRPS) over a reasonable period of years, and certain other costs and expenses incurred by the Administrator.

BPA's proposed TRM modifications are available for viewing and downloading on BPA's Web site at http://www.bpa.gov/​corporate/​ratecase and are discussed in Part IV below. BPA will be conducting a formal rate proceeding open to rate case parties. Interested parties must file petitions to intervene in order to take part in the formal hearing, as discussed in Part III (A) below. A proposed schedule is as follows. The Hearing Officer will establish a final procedural schedule.

Prehearing/Initial Proposal	June 4.
Clarification	June 9.
Data Requests Deadline	June 10.
Data Responses Deadline	June 16.
Parties file their Direct Case	June 22.
Clarification	June 25.
Data Requests Deadline	June 25.
Data Responses Deadline	July 1.
Rebuttal	July 8.
Public Comments Deadline	July 8.
Clarification	July 10.
Cross Examination	July 16.
Initial Briefs	July 28.
Oral Argument	August 2.
Final Record of Decision	September 2.

Part II—Purpose and Scope of Proceeding

A. Purpose of Proceeding

The TRM, together with new power sales contracts, is a key component implementing BPA's post-2011 power marketing policy and tiered rate construct as defined in BPA's Long-Term Regional Dialogue Final Policy and the corresponding Record of Decision, which were published on July 19, 2007. Because the TRM was developed and established prior to BPA's 135 PF rate customers signing Regional Dialogue Contracts, the TRM included a special modification provision to allow BPA to propose changes, if BPA and representatives of its PF customers identified and agreed on the changes that would be needed prior to February 1, 2009. These changes would not be subject to the more restrictive requirements under the TRM for modifications after that date. The purpose of the special modification provision was to assure BPA and its customers that the TRM and the accompanying power sales contracts would be consistent and work together.

The TRM provides for a two-tiered PF rate design applicable to firm requirements power service for public utility customers that have signed an applicable Regional Dialogue Contract. The tiered rate design differentiates between the cost of service associated with Tier 1 System Resources and the cost associated with additional amounts of power sold by BPA to serve any remaining portion of a public utility customer's Net Requirement (Tier 2). Contract High Water Marks (CHWM), determined according to the TRM, are one basis for determining how much of each customer's Net Requirement purchase from BPA is charged Tier 1 rates and how much may be charged Tier 2 rates. The TRM specifies that CHWMs will be developed based on public utility customers' FY 2010 load with certain modifications.

B. Scope of the Proceeding

This additional hearing will address the issues as discussed below in Section IV. In this supplemental TRM rate proceeding, the Administrator will not open issues previously determined to be outside the scope of the TRM rate case, as described in the original 2007 Federal Register notice ^[1] and in the final TRM ROD, TRM-12-A-01. Under the TRM, this proceeding is limited to reviewing only the proposed modifications and does not allow BPA or other parties to reexamine issues that was already debated and decided in the prior proceeding.

Therefore, the scope of this supplemental proceeding is limited by those guidelines the Administrator established during the first TRM proceeding and limited to the parameters of the specific issues that are being addressed in Section IV below. Additionally, the TRM defines specific procedures to be followed to propose a modification of the TRM. Any modification that is proposed contrary to the TRM's procedures will not be considered in this proceeding. Pursuant to section 1010.3(f) of the Procedures, the Administrator directs the Hearing Officer to exclude from the record any materials attempted to be submitted or arguments attempted to be made in the proceeding that seek to in any way address the decisions made in the prior proceeding as well as any other modifications to the TRM that were not identified and agreed to by BPA and PF customer representatives prior to February 1, 2009.

C. The National Environmental Policy Act

BPA has previously completed an evaluation under the National Environmental Policy Act (NEPA), 42 U.S.C. 4321 et seq., of the TRM and its provisions as part of the Administrator's ROD for TRM-12-A-01 (see Administrator's ROD, Section 8.0). This NEPA evaluation found that the TRM is an implementation of an already-adopted policy concerning tiered rates with little to no environmental impact, and any potential environmental effects had already been considered and evaluated in prior BPA NEPA documentation. The TRM NEPA evaluation also found that the TRM is consistent with the Market-Driven Alternative that was evaluated in BPA's Business Plan Environmental Impact Statement (DOE/EIS-0183, June 1995) and adopted in BPA's Business Plan ROD (August 1995), as well as with the Long-Term Regional Dialogue Policy and its associated NEPA ROD.

BPA is in the process of assessing whether the proposed TRM modifications identified in Part IV represent a significant change in the TRM relevant to environmental effects such that additional evaluation under NEPA from what was included in the TRM-12-A-01 Administrator's ROD is required. The NEPA process is conducted separately from BPA's formal rate proceedings. Therefore, pursuant to section 1010.3(f) of the Procedures, the Administrator directs the Hearing Officer to exclude from the record all evidence and argument that addresses the potential environmental impacts of the proposed TRM modifications.

During the public review and comment period for the proposed TRM modifications, persons interested in submitting comments regarding the potential environmental effects of the proposal may do so by submitting comments to Katherine Pierce, NEPA Compliance Officer, KEC-4, Bonneville Power Administration, 905 NE. 11th Avenue, Portland, OR 97232. Any such comments received by July 8, 2009 will be considered by BPA's NEPA compliance staff in their review of the proposal.

Part III—Public Participation

A. Distinguishing Between “Participants” and “Parties”

BPA distinguishes between “participants in” and “parties to” the section 7(i) hearing process. Apart from the formal hearing process, BPA will accept comments, views, opinions, and information from “participants,” who are defined in BPA's Procedures as persons who may submit comments without being subject to the duties of, or having the privileges of, parties. Participants' comments will be made a part of the official record and considered by the Administrator when making his decision. 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. Any entity that has intervened in this proceeding may not submit participant comments. Persons who are members or employees of organizations that have intervened in the rate proceeding may submit general comments as participants but may not use the comment procedures to address specific issues raised by their intervenor organization.

The views of participants are important to BPA. Written comments by participants will be included in the record if they are received by 5 p.m. PDT on July 8, 2009. Written views, supporting information, questions, and arguments should be submitted to BPA Public Affairs at the Web or postal address listed in the ADDRESSES section.

Persons wishing to become a party to BPA's rate proceeding must notify BPA in writing and file a Petition to Intervene with the Hearing Officer. Petitioners may designate no more than two representatives upon whom service of documents will be made. Petitions to Intervene must state the name and address of the person requesting party status and the person's interest in the hearing. Petitions to Intervene as parties in the rate proceeding are due to the Hearing Officer by 5 p.m. PDT on June 2, 2009, and should be directed as stated in the ADDRESSES section above.

Petitioners must explain their interests in sufficient detail to permit the Hearing Officer to determine whether they have a relevant interest in the proceeding. Pursuant to section 1010.1(d) of BPA's Procedures, BPA waives the requirement in section 1010.4(d) that an opposition to an intervention petition must be filed and served 24 hours before the prehearing conference. Any opposition to an intervention petition may instead be made at the prehearing conference. Any party, including BPA, may oppose a petition for intervention. 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. All timely applications will be ruled on by the Hearing Officer. Late interventions are strongly disfavored.

B. Developing the Record

The record of this proceeding will comprise, among other things, comments made by participants, transcripts of all hearings, any written materials submitted by the parties, documents developed by BPA staff, and other materials accepted into the record by the Hearing Officer. Written comments by participants will be included in the record if they are received by 5 p.m., PDT, on July 8, 2009. The Hearing Officer will review the record, supplement it if necessary, and will certify the record to the Administrator for decision.

The Administrator will adopt the final TRM modifications based on the entire record, which includes the record certified by the Hearing Officer, as described above. The basis for the final TRM modifications will be expressed in the Administrator's ROD. BPA will serve copies of the Final ROD on all parties. The ROD will also be publicly available at http://www.bpa.gov/​corporate/​ratecase.

BPA must continue to meet with customers in the ordinary course of business during the rate case. To comport with the rate case procedural rule prohibiting ex parte communications, BPA will provide the prescribed notice of meetings involving rate case issues in order to permit the opportunity for participation by all rate case parties. These meetings may be held on very short notice. Consequently, parties should be prepared to devote the necessary resources to participate fully in every aspect of the rate proceeding and attend meetings any day during the course of the rate proceeding.

Part IV—Tiered Rate Methodology Proposed Modifications

On January 30, 2009, BPA published the Final TRM Clean Up List pursuant to section 12 of the TRM. The Clean Up List identified nine revisions agreed to by BPA and preference customer representatives designated by the Public Power Council. Revision 1 provides an amendment to the amount of Pend Oreille Public Utility District's Box Canyon Dam resource specified in TRM Attachment C—Existing Resources for CHWMs.

Revision 2, the CHWM adjustment, provides an amendment to the calculation of the CHWM pursuant to section 4.1 of the TRM. During the Clean-Up review, some of BPA's customers became concerned that the effects of the current economic recession may adversely affect their FY 2010 load, thereby reducing their CHWM. BPA met with public power representatives and jointly developed the proposed modification to the calculation of CHWM. The proposed modification would provide each customer with an option to include provisional amounts in its CHWM if it has experienced qualifying load reductions due to the current economic recession. The provisional CHWM would be made permanent if the load recovers within specified parameters.

Revision 3 proposes clarification to certain language regarding Forecast Monthly/Diurnal Tier 1 Load throughout the TRM. These proposed modifications do not change the intent of the original language, but change certain terms to add clarity.

Revision 4 deletes certain language from TRM section 8.5. This proposed modification does not change the intent of the original language, but removes unnecessary language.

Revision 5 adds a minimum duration for public comment during the Rate Period High Water Mark process. The original language in TRM section 4.2.2 provided for public comment, but did not specify a length of time for such comment.

Revision 6 proposes clarification to certain language in TRM section 1.2 regarding cost allocation. This proposed modification does not change the intent of the original language, but changes certain terms to add clarity.

Revision 7 proposes clarification to certain language in TRM sections 4 and 4.2 regarding Net Requirements. This modification will also add a definition of net requirement consistent with the power sales contract definition. These proposed modifications do not change the intent of the original language, but change certain terms to add clarity.

Revision 8 proposes to add language to TRM section 12.5, an action that is not considered to be a revision to the TRM. This proposed modification does not change the intent of the original language, but includes an inadvertent oversight of the basis for allocating an interest credit.

BPA's proposed modifications to the TRM are available for viewing and downloading on BPA's Web site at http://www.bpa.gov/​corporate/​ratecase. Copies will also be available for viewing at BPA's Public Information Center, BPA Headquarters Building, 1st Floor, 905 NE. 11th Avenue, Portland, Oregon.

Issued in Portland, Oregon, the 21st of May 2009.

Stephen J. Wright,

Administrator and Chief Executive Officer.

Footnotes

1.  The details of the elements that were excluded from the earlier proceeding are described in detail at 73 FR 24961, at 24962-63 (2008).