# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 002

**Request**: Witnesses: Keep, *et al.*

Exhibit: SN-03-E-BPA-04

> Page(s) Page 9, lines 18-21.

Please provide the assurances by ENW, COE and the Bureau of Reclamation
mentioned in this testimony.

**Response**:

Please see Response No. AL-GN/BPA:002.

# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 003

**Request**: Witnesses: Keep, *et al.*

Exhibit: SN-03-E-BPA-04

> Page(s): Page 12, lines 14-16.

In this section, BPA indicates that if fish spending levels needed to
implement the Action Agencies\' Implementation Plan, as well as measures
to protect, mitigate and enhance non-ESA listed species, are changed
before the Final ROD is prepared, those changes will be reflected in the
Final ROD. How will changes, specifically [increases]{.underline} in
needed funding levels, made after the Final ROD is prepared be dealt
with?

**Response:**

First, see the correspondence between the BPA Administrator and the
Power Council at CR-BPA-046A.pdf. The challenge the Administrator has
offered the Council is to find efficiencies that would get costs no
higher than, and potentially below, the levels currently forecasted.

Second, should costs increase, the variable SN CRAC adjustment BPA staff
has proposed would allow for the SN CRAC to be adjusted upward, within
limits. If overall costs cannot be recovered by the current SN CRAC
adjustment, BPA could potentially seek to cut costs in various
categories, and also could potentially trigger an additional SN CRAC
process.

Third, an increase in one type of cost will not necessarily present an
immediate problem, since there may be off-setting changes in other costs
and revenues, especially changes due to variation in hydro supply and
secondary marketing.

# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 004

**Request**: Witnesses: Keep, *et al.*

Exhibit: SN-03-E-BPA-04

> Page(s): Page 11, line 22, to page12, line 16.

In this section, BPA states that fish spending levels needed to
implement the Action Agencies\' Implementation Plan, as well as measures
to protect, mitigate and enhance non-ESA listed species, may be changed
after there is an opportunity to include those changes in the Final ROD.
How has BPA incorporated the risk that its funding obligation may
increase, after the Final Rod has been issued, into its rate proposal?
Please provide any analysis BPA has done to investigate this issue.

**Response**:

Please see Response No. SA-BPA-03. More specific analyses of the
question have not been performed.

# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 005

**Request**: Witnesses: Keep, *et al*

Exhibit: SN-03-E-BPA-04

> Page(s): Page 14, line 25.

Is BPA still committed to honoring the Fish and Wildlife Funding
Principles in this rate proposal?

**Response**:

To the extent issues addressed in the Fish and Wildlife Funding
Principles are still relevant, BPA is committed to meeting them. For
example, Principle No. 1 states "Bonneville will meet all of its fish
and wildlife obligations once they have been established, including its
trust and treaty responsibilities." BPA is fully committed to meeting
its trust and treaty responsibilities. As stated in the May 2000 Record
of Decision, WP-02-A-02, page 5-36, "BPA fulfills its trust
responsibility by working with the PNW region's tribes in the manner
prescribed by DOE and BPA tribal policies and by fully complying with
the laws governing its activities, including the Northwest Power Act,
ESA, and NEPA." For purposes of the SN-03 proposal, BPA is implementing
Principle No. 1 by setting rates to recover costs sufficient to meet
BPA's fish and wildlife obligations. Proposing a variable SN CRAC
mechanism and leaving open the option of triggering an additional SN
CRAC process, if necessary, accommodate the continued uncertainty with
respect to fish and wildlife costs.

However, as the principles indicate, "\[t\]he principles are intended to
"keep the options open" for future fish and wildlife decisions that are
anticipated to be made in late 1999 on reconfiguration of the
hydrosystem and in early 2000 on the Northwest Power Planning Council's
Fish and Wildlife Program." As stated in the testimony of Keep, *et
al*., SN-03-E-BPA-04 pg 11, lines 5-21, those decisions have now been
made. Therefore, BPA need not model the complete range of potential fish
and wildlife costs as described in Principle No. 2. Also, the actual
forecasts used in the SN-03 initial proposal are well within the range
anticipated in Principle No. 2. Response No. CR-YA/BPA-099, Attachment
A, a December 3, 2001, Steve Wright letter to Larry Cassidy, addresses
this issue.

BPA's proposal is designed to meet the intent of the balance that is
implied when Principles 3 and 5 are taken together.

Principles 4, 6, and 7, as well as parts of Principle 8, address BPA's
rate and contract designs, neither of which are at issue in this rate
case.

Regarding Principle 8, BPA continues to implement prudent additional
cost-reduction efforts and is implementing the SN CRAC through this 7(i)
process. As mentioned above, the portions of Principle 8 that deal with
contracts or rate design are not at issue in this SN CRAC proceeding.

# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 006

**Request:** Witnesses: Keep, *et al.*

Exhibit: SN-03-E-BPA-04

> Page(s): Page 14, line 24, to page15, line 4.

In this section, BPA states that its proposal will put BPA \"on a path
to meet the intent of the Fish and Wildlife Funding Principles, given
the [state of the economy]{.underline}.\" (emphasis added) Please
explain the underlined phrase. Should it be taken to mean that BPA
believes it has discretion to relax the Principles given the state of
the economy?

**Response**:

By "state of the economy", BPA meant the general economic conditions of
the Pacific Northwest. The poor state of the Pacific Northwest economy
has been well documented by the press, e.g., high unemployment rates,
companies laying off workers, 0% interest rates to spur demand, etc. BPA
also meant the concern expressed by its customers about BPA raising
rates too high. *See* Response No. Al-GN/BPA:006 for further discussion.

As BPA indicates in Response No. SA-BPA: 005, BPA remains committed to
the Fish and Wildlife Funding Principles, however, BPA believes that
some of the Principles are either no longer relevant or are not at issue
in this rate case. The Principles were time-specific ("keep the options
open" while BPA completed the Subscription and 2000 power rate case
processes). That is the reason many of the Principles are no longer
relevant. Therefore, BPA must take current circumstances into
consideration in implementing the Principles.

With respect to Principle 3, which the above-referenced testimony
discusses, BPA believes, as stated in the testimony, that the SN CRAC
proposal, including the combination of Treasury Payment Probability
(TPP), Treasury Recovery Probability (TRP), and accumulated net revenue
targets, will put BPA on a path to meet the intent of Principle 3. The
TRP, specifically, was developed to address the intent of Principle 3,
which states "Bonneville will demonstrate a high probability of Treasury
payment in full and on time over the 5-year rate period." (*See* Revenue
Requirement Study Documentation, WP-02-FS-BPA-02A, p. 344). The TRP
standard requires BPA to meet or exceed an 80 percent probability that
BPAA will be able to make all of its FY 2006 payments to the U.S.
Treasury, including repayment of any amounts missed in years FY
2003-2005.

# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 006B

**Request:** Witnesses: Keep, *et al.*

Exhibit: SN-03-E-BPA-04

> Page(s): Page 14, line 24, to page15, line 4.

In our previous data request (SA/BPA:006A) we asked the following
question:

> In this section, BPA states that its proposal will put BPA \"on a path
> to meet the intent of the Fish and Wildlife Funding Principles, given
> the [state of the economy]{.underline}.\" (emphasis added) Please
> explain the underlined phrase. Should it be taken to mean that BPA
> believes it has discretion to relax the Principles given the state of
> the economy?

If BPA believes it does have the discretion to relax the Fish and
Wildlife Funding Principles under certain conditions, please provide
your justification for this position.

**Response:**

As BPA indicates in Response No. SA-BPA: 005, BPA remains committed to
the Fish and Wildlife Funding Principles, however, BPA believes that
some of the Principles are either no longer relevant or are not at issue
in this rate case. The Principles were time-specific ("keep the options
open" while BPA completed the Subscription and 2000 power rate case
processes). That is the reason many of the Principles are no longer
relevant. Therefore, BPA must take current circumstances into
consideration when implementing the Principles.

# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 006C

**Request**: Witnesses: Keep, *et al.*

Exhibit: SN-03-E-BPA-04

> Page(s): Page14, line 24 to page 15, line 4.

In our previous data request (SA/BPA:006B) we asked the following
question:

> If BPA believes it does have the discretion to relax the Fish and
> Wildlife Funding Principles under certain conditions, please provide
> your justification for this position.

Please provide any written communications or summaries of oral
communications with the Administration, etc., regarding relaxation of
the Principles and the description of any process, (public or otherwise)
that Bonneville carried out to come to this conclusion.

**Response**:

BPA has no written communications or summaries of oral communications
with the Administration, etc., regarding relaxation of the Principles.

# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 007A

**Request**: Witnesses: Keep, *et al.*

Exhibit: SN-03-E-BPA-04

Page(s) : Page 17, lines 17-22.

BPA indicates it will consider a mechanism such that it would be
precluded from recovering certain \"excess BPA internal operating
costs\" in the SN CRAC rate design under specified conditions. How would
Bonneville treat such non-recovery in its TPP and TRP calculations?

**Response:**

Such "non-recovery" would not affect TPP and TRP calculations. First,
TPP looks forward in time, and non-recovery can only have occurred in
the past. By the time a non-recovery could have occurred, it would be in
the past, and BPA's TPP calculations do not include past events. Second,
BPA is taking cost control very seriously. In effect, BPA is planning in
the rate case to used stiffened management resolve to mitigate the risk
of cost increases instead of modeling cost uncertainty and using Planned
Net Revenues for Risk to mitigate the risk.

# [SN-03 BPA Data Response]{.underline}

## Request No.: SA-BPA: 007B

**Request**: Witnesses: Keep, *et al.*

Exhibit: SN-03-E-BPA-04

> Page(s): Page 17, lines 17-22.

BPA indicates it will consider a mechanism such that it would be
precluded from recovering certain \"excess BPA internal operating
costs\" in the SN CRAC rate design under specified conditions. Would BPA
adopt such a mechanism if it had the effect of lowering its TPP or TRP
below the criteria the agency is proposing to use in this proceeding?

**Response:**

BPA staff would not support such a mechanism unless other rate case
parties present convincing arguments as to why BPA should use different
TPP or TRP standards.