[Federal Register: May 6, 2008 (Volume 73, Number 88)]
[Notices]
[Page 24961-24964]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my08-65]
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DEPARTMENT OF ENERGY
Bonneville Power Administration
[BPA File No.: TRM-12]
2012 Tiered Rate Methodology Proceeding; Public Hearings and
Opportunities for Public Review and Comment
Editorial Note: FR Doc. E8-9572 was originally published at
page 24059 in the issue of May 1, 2008. That document was
inadvertently published prior to the requested publication date, as
stated in an Office of the Federal Register correction notice
published at 73 FR 24496, May 2, 2008. FR Doc. E8-9572 is being
republished in its entirety in this issue of the Federal Register.
AGENCY: Bonneville Power Administration (BPA), Department of Energy
(DOE).
ACTION: Notice of Proposed Tiered Rate Methodology.
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SUMMARY: BPA is proposing to adopt a new tiered rate design for setting
its Priority Firm Power (PF) rates beginning with the FY 2012-2013 rate
period. The primary feature of this Tiered Rate Methodology (TRM)
proposal is one rate tier (Tier 1) based on generation output and costs
attributed to BPA's current Federal base system resources and a second
rate tier (Tier 2) based on the generation and costs associated with
newly acquired resources.
The TRM is part of BPA's effort to achieve the overall policy
objectives of the Long-Term Regional Dialogue Policy (Policy). Under
this Policy, BPA will offer 20-year Regional Dialogue Contracts to its
Federal agency and public utility customers for power priced at a
tiered PF rate. The TRM is intended to provide customers with a
predictable and durable means by which to calculate BPA's PF tiered
rate for the term of these contracts.
Determinations of specific rate levels applicable to these
contracts will not be established in this proceeding. Rather the
specific rate levels will be developed consistent with the TRM in the
respective Pacific Northwest Electric Power Planning and Conservation
Act (Northwest Power Act) section 7(i) rate proceedings during the term
of this TRM. BPA intends to set the actual power rates on a two-year
cycle throughout the term of the Regional Dialogue contracts beginning
with the FY 2012-2013 rate period.
BPA is commencing this proceeding under section 7 of the Northwest
Power Act to establish the TRM. 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 May 7, 2008. Proposed hearing dates are
supplied in Supplementary Information, Part I.A. below. Non-party
participants may make written comments between May 2, 2008, and July
10, 2008. Comments must be received by 5 p.m., PDT, on July 10, 2008,
in order to be considered in the Record of Decision.
ADDRESSES: Petitions to intervene should be directed to Camille
Blakely, Hearing Clerk, LP-7, Bonneville Power Administration, 905 NE
11th Avenue, Portland, OR 97232 or by e-mail to: trm12rate@bpa.gov, and
must be received no later than 5 p.m., PDT, on May 7, 2008. 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: pjburger@bpa.gov. (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-12 Proceeding'' comments. Documents
will be available for public viewing after May 9, 2008. 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, and will be provided to parties on a
compact disk (CD) at the prehearing conference to be held on May 9,
2008, beginning at 1:30 p.m., Room 223, 911 NE. 11th, Portland, Oregon.
Due to increased security requirements, attendees should allow
additional 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, Lead Public Affairs
Specialist, Power Policy Development, PFP-6, P.O. Box 3621, Portland,
OR 97208. Interested persons may also call 503-230-3458 or 1-800-622-
4519 (toll-free).
SUPPLEMENTARY INFORMATION:
Table of Contents
Part I. Introduction and Procedural Background
Part II. Policy Guidance and Scope of Hearing
Part III. Public Participation
Part IV. The Tiered Rates Methodology
Part I--Introduction and Procedural Background
Section 7(i) of the Northwest Power Act, 16 U.S.C. section 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)
(BPA Hearing Procedures). These procedures implement the statutory
section 7(i) requirements.
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
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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 or about September 29, 2008.
The Bonneville Project Act, 16 U.S.C. section 832, the Flood
Control Act of 1944, 16 U.S.C. 825s, the Federal Columbia River
Transmission System Act, 16 U.S.C. section 838, and the Northwest Power
Act, 16 U.S.C. section 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 FCRPS over a reasonable
period of years, and certain other costs and expenses incurred by the
Administrator.
BPA's proposed TRM is available for viewing and downloading on
BPA's Web site at http://www.bpa.gov/corporate/ratecase and is
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 for the formal
process is as follows. The Hearing Officer will establish a final
schedule at the prehearing conference.
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Prehearing/BPA Direct Case............................. 05/09/08
Clarification.......................................... 05/14-15/08
Motions to Strike...................................... 05/16/08
Data Request Deadline.................................. 05/16/08
Answers to Motions to Strike........................... 05/22/08
Data Response Deadline................................. 05/22/08
Parties File Direct Cases.............................. 06/13/08
Clarification.......................................... 06/18-19/08
Motions to Strike...................................... 06/20/08
Data Request Deadline.................................. 06/20/08
Answers to Motions to Strike........................... 06/26/08
Data Response Deadline................................. 06/26/08
Litigants File Rebuttal................................ 07/10/08
Close of Participant Comments.......................... 07/10/08
Clarification.......................................... 07/14-15/08
Motions to Strike...................................... 07/16/08
Data Request Deadline.................................. 07/16/08
Answers to Motions to Strike........................... 07/22/08
Data Response Deadline................................. 07/22/08
Cross-Examination...................................... 07/24-25/08
Initial Briefs Filed................................... 08/04/08
Oral Argument.......................................... 08/07/08
Draft ROD Issued....................................... 09/02/08
Briefs on Exceptions................................... 09/08/08
Final ROD and Final TRM Issued........................ 09/29/08
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Part II--Policy Guidance and Scope of Hearing
A. Overview and Background
The Regional Dialogue process began in April 2002 when a group of
BPA's Pacific Northwest electric utility customers submitted a joint
customer proposal to BPA that addressed both near-term and long-term
contract and rate issues. Since then, BPA, the Northwest Power and
Conservation Council (Council), customers, and other interested parties
have worked on these near- and long-term issues. Considering the depth
and complexity of many of these issues, BPA determined that it would
address the issues in two phases. The first phase of the Regional
Dialogue, referred to as the Near-Term Policy, addressed issues that
had to be resolved in order to replace power rates that expired in
September 2006. See Bonneville Power Administration's Policy for Power
Supply Role for Fiscal Years 2007-2011 (February 2005). The issues in
the second phase were addressed in BPA's Long-Term Regional Dialogue
Final Policy and Record of Decision, which were published on July 19,
2007. The Long-Term Regional Dialogue Final Policy is expected to be
implemented through new power sales contracts and the TRM, which will
be established in this rate case.
This proposed TRM provides for a two-tiered PF rate design
applicable to firm requirements power service for public utility
customers that sign a Regional Dialogue Contract that provides for
tiered rates. The TRM establishes a predictable and durable means by
which to calculate BPA's PF tiered rate, beginning in FY 2012 when
power deliveries commence. Tiered rate design differentiates between
the costs of service associated with Tier 1 System Resources and the
cost associated with additional amounts of power needed to serve any
remaining portion of public utility customers' Net Requirement (Tier
2). Rate Period High Water Marks (RHWM), determined according to this
TRM, are the 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. This TRM specifies how rates will be developed
that ensure to the maximum extent possible that customers purchasing at
Tier 1 rates do not pay any of the costs of serving other public
utility customers' above RHWH load. Each customer may purchase up to
its RHWM, limited by its Net Requirement, at Tier 1 rates. To meet its
above-RHWM load, a customer may purchase Federal power, procure non-
Federal power or a combination of the two. To the extent a customer
purchases Federal power for its above-RHWM load, a PF Tier 2 rate(s)
will be applied to this portion of their Federal power service.
B. Scope of the TRM-12 Proceeding
This section provides guidance to the Hearing Officer as to those
matters that are within the scope of the rate case, and those that are
outside the scope.
1. Regional Dialogue Policy and Contracts
The design and scope of the power products and issues related to
the terms and conditions of the Regional Dialogue contract are not
determined in rate cases nor are they established by the TRM. Pursuant
to section 1010.3(f) of BPA Hearing Procedures, the Administrator
hereby 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 address the design and scope of the
power products and terms and conditions of the Regional Dialogue
contracts.
2. DSI Service
The decision regarding whether BPA will provide service and/or
benefits to its Direct Service Industry (DSI) customers beginning in FY
2012 will be made in a supplemental process as outlined in the Long-
Term Regional Dialogue Final Policy. It should be noted that while the
decision on DSI service and the manner, if any of such service will be
determined in a separate process, the allocation of any cost associated
with any DSI service under the TRM is a proper issue in this
proceeding. Pursuant to section 1010.3(f) of the BPA Hearing
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 decision to serve the DSIs and the nature and manner of such
service, except as any such material is relevant to the issue of the
appropriate allocation of any cost associated with any DSI service
under the TRM.
C. The National Environmental Policy Act
1. Potential Environmental Impacts
As discussed in this section, potential environmental impacts of
BPA's proposed actions are assessed through appropriate analysis and
documentation under the NEPA. The NEPA process is conducted separately
from BPA's formal rate proceedings. Therefore, pursuant to
[[Page 24963]]
section 1010.3(f) of the BPA Hearing Procedures, the Administrator
directs the Hearing Officer to exclude from the record all evidence and
argument that seek in any way to address the potential environmental
impacts of the proposed TRM.
2. The National Environmental Policy Act
BPA is in the process of assessing the potential environmental
effects that could result from implementation of its proposed TRM,
consistent with the National Environmental Policy Act (NEPA). Because
this proposal implicates BPA's ongoing business practices, BPA is
reviewing the proposal in light of BPA's Business Plan Environmental
Impact Statement (Business Plan EIS), completed in June 1995 (DOE/EIS-
0183), as refreshed April 2007. This EIS evaluates environmental
impacts potentially resulting from a range of business plan
alternatives that can be varied by applying policy modules, including
modules specifically designed for varying tiered rate methodologies.
Any combination of alternative policy modules should allow BPA to
balance its costs and revenues.
In August 1995, the BPA Administrator issued a Record of Decision
(Business Plan ROD) that adopted the Market-Driven Alternative from the
Business Plan EIS. This alternative was selected because, among other
reasons, it allows BPA to: (1) Recover costs through rates; (2)
competitively market BPA's products and services; (3) develop rates
that meet customer needs for clarity and simplicity; (4) continue to
meet BPA's legal mandates; and (5) avoid adverse environmental impacts.
In April 2007, BPA completed and issued a Supplement Analysis to
the Business Plan EIS. The Supplement Analysis found that the Business
Plan EIS's relationship-based and policy-level analysis of potential
environmental impacts from BPA's business practices remains valid, and
that BPA's current business practices are still consistent with BPA's
Market-Driven approach. The Business Plan EIS and ROD thus continue to
provide a sound basis for making determinations under NEPA concerning
BPA's business-related decisions.
Because the proposed TRM likely would assist BPA in accomplishing
the goals identified in the Business Plan ROD, the proposal appears
consistent with these aspects of the Market-Driven Alternative. In
addition, the proposed TRM is similar to the types of tiered rate
constructs identified and considered in the Business Plan EIS; thus,
implementation of this proposal would not be expected to result in
significantly different environmental impacts from those examined in
the Business Plan EIS. Therefore, BPA expects that the proposed TRM
likely will fall within the scope of the Market-Driven Alternative that
was evaluated in the Business Plan EIS and adopted in the Business Plan
ROD.
As part of the Administrator's ROD that will be prepared for the
proposed TRM, BPA may tier its decision under NEPA to the Business Plan
ROD. However, depending upon the ongoing environmental review, BPA may,
instead, issue another appropriate NEPA document. During the public
review and comment period for the TRM, persons interested in submitting
comments regarding its potential environmental effects 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 10, 2008, will be considered
by BPA's NEPA compliance staff in the NEPA process that will be
conducted for the proposed TRM.
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 the BPA Hearing Procedures as
persons who may submit comments without being subject to the duties of,
or having the privileges of, parties. Participants' written and oral
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.
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 10, 2008. Written views, supporting information,
questions, and arguments should be submitted to BPA Public Affairs at
the 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 May 7, 2008, and should be directed as stated in
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
Hearing 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 will comprise, among other things, verbal and written
comments made by participants, including the 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 10, 2008.
The Hearing Officer will then review the record, supplement it if
necessary, and will certify the record to the Administrator for
decision.
The Administrator will adopt the final TRM based on the entire
record, which includes the record certified by the Hearing Officer, as
described above. The basis for the final TRM first will be expressed in
the Administrator's Draft ROD. Parties will have an opportunity to
respond to the Draft ROD as provided in the BPA Hearing Procedures. The
Administrator 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
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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 case.
Part IV--The Tiered Rate Methodology
The TRM establishes a predictable and durable means by which to
tier and calculate BPA's Priority Firm (PF) power rate. Specific
determinations of rate levels will be made in each general rate case in
a manner consistent with the TRM in the respective section 7(i)
proceedings applicable during the term of this TRM. Tiered PF rates
will be implemented beginning in FY 2012 when power deliveries under
new contracts commence. The TRM provides for a two-tiered PF rate
design applicable to requirements firm power service for those
customers that participate in the contracts that provide for tiered
rate service. Tiered rate design differentiates between the costs of
service associated with the existing Federal system (Tier 1) and the
cost associated with additional amounts of power needed to serve the
remaining portion of customers' net requirements (Tier 2). This TRM
specifies how rates will be developed that assure to the extent
possible that customers will be able to purchase Tier 1 power that does
not include the costs of serving other customers' load growth.
The TRM addresses: (1) How to determine a customer's eligibility to
purchase power at Tier 1 rates; (2) how to determine the amount of
power to be charged at Tier 1 rates; (3) how costs will be allocated to
the PF Tier 1 and Tier 2 rate pools; (4) how rates for Tier 1 and Tier
2 sales will be designed; and (5) how rates for resource support
services will be designed.
The cost allocation and rate design methods will be implemented in
each BPA power rate case during the term of the Regional Dialogue
contracts, except under limited circumstances. Power rates will be
calculated on a two-year cycle under the TRM.
Rate Period High Water Marks (RHWM), determined according to this
TRM, are the basis for separating which portion of each customer's net
requirements purchase from BPA is charged Tier 1 rates and which is
charged Tier 2 rates. Each customer may purchase up to its RHWM,
limited by its net requirement, at Tier 1 rates. To meet its above-RHWM
load, a customer may purchase Federal power, procure non-Federal power
or both. To the extent a customer purchases Federal power to meet its
above RHWH load, a PF Tier 2 rate will be applied to the Federal power
service.
BPA will limit the sum of all RHWMs to the planned firm power
output of the existing Federal system as it is currently defined, plus
a limited amount of augmentation.
For purposes of the TRM, BPA will calculate the projected amounts
of Federal system resource output, contract purchases, and contract
obligations necessary for developing tiered rates for each rate period.
The projected output of resources assigned to each rate tier will be
used in the determination of RHWMs, which will be incorporated in the
ratemaking process.
In each applicable rate proposal, BPA will allocate all of its
costs into three cost pools for determining Tier 1 rates and a number
of Tier 2 cost pools corresponding to the Tier 2 rate alternatives that
customers have selected.
In each rate case, BPA will define risk mitigation mechanisms and
set rates to support BPA's then-current Agency financial risk
standard(s). The Agency financial risk standard(s) is (are) set in
BPA's 10-Year Financial Plan, or its successor, subject to any required
review in a 7(i) rate proceeding.
The proposed TRM includes a rate design for Tier 1 rates that
includes three components: Customer charges, demand rates and load
shaping rates. However, there are significant changes in the billing
determinants to which these rates apply from BPA's current rate
structure. There will be three customer charges, only two of which will
be applicable to any particular product selected by the customer. The
Composite Customer Charge and the Non-Slice Customer Charge will be
applicable to purchasers of the Load Following and Block products,
including the block portion of the Slice/Block product. The Composite
Customer Charge and the Slice Customer Charge will be applicable to
purchasers of the Slice portion of the Slice/Block product. The Demand
Charge will apply to Load Following and Block with Shaping Capacity
purchasers and will be charged to a portion of each customer's maximum
hourly load in each month. The Load Shaping Charge will apply to Load
Following and Block purchasers and will be charged to a portion of each
customer's energy load during each diurnal period of each month.
BPA's proposed TRM is 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 this 24th day of April, 2008.
Stephen J. Wright,
Administrator and Chief Executive Officer.
[FR Doc. E8-9572 Filed 4-30-08; 8:45 am]
BILLING CODE 1505-02-P