**Issue 1**

**Schedule 1**

**Account 303**

> **[Issue-Generic Direct Analysis Issue]{.underline}**
>
> Should BPA adopt common functionalization for similar types of
> software assets?
>
> **[Discussion]{.underline}**
>
> Inconsistency between how the IOUs functionalize certain types of
> software, i.e. metering, customer information systems, work
> management, etc. The issue is whether BPA should maintain consistency
> in the functionalization of these common types of programs amongst
> utilities when calculating ASC.
>
> **[IOU Response]{.underline}**
>
> BPA should maintain consistency in the functionalization of these
> common types of programs, with costs greater than an identified
> threshold value, amongst utilities when calculating ASC. In our
> initial Appendix 1 filings the IOUs have not functionalized certain
> software the same, we are all in agreement that given a determination
> by BPA on the proper functionalization of these items the IOUs will
> support a consistent treatment.

**Issue 2**

**Schedule 1**

**Account 182.3 and Account 254**

> **[Issue-]{.underline}Generic Direct Analysis Issue**
>
> Should BPA adopt common functionalization for similar types of
> regulatory assets and liabilities?
>
> **[Discussion]{.underline}**
>
> Inconsistency in the way the IOUs functionalize Deferred Pension, Pay
> and other labor related Assets and Liabilities.  PGE and Avista and NW
> use the Labor Ratio.  IPC uses PTD.  PSE and PAC functionalize these
> assets to Distribution.  The issue is whether BPA should maintain
> consistency in the functionalization of deferred pension, pay and
> other labor related assets and liabilities amongst utilities when
> calculating ASC.  
>
> **[Response]{.underline}**
>
> BPA should maintain consistency in the functionalization of deferred
> pension, pay and other labor related assets and liabilities amongst
> utilities when calculating ASC. All of the IOUs agree that it is
> appropriate for purposes of determining a utility's ASC to
> functionalize these accounts by the LABOR ratio.

**Issue 3**

**Schedules 1 & 3**

**Accounts 182.3, 186, 253, and 254**

> **[Issue-Generic Direct Analysis Issue]{.underline}**
>
> Should BPA require that asset accounts that have a corresponding
> liability account have a common functionalization? For example, should
> pension costs in Accounts 182.3 and 254 have the same
> functionalization?
>
> **[Discussion]{.underline}**
>
> Direct analysis is required in the functionalization of Other
> Regulatory Assets (Account 182.3), Miscellaneous Deferred Debits
> (Account 186), Other Deferred Credits (Account 253), and Other
> Regulatory Liabilities (Account 254). Direct analysis should include
> maintaining a consistency in functionalization where there is an asset
> in either Account 182.3 or 186 and offsetting liabilities in either
> Account 253 or 254. Direct analysis also requires showing how the
> assets and liabilities flow through the Income Statement
>
> **[Response]{.underline}**
>
> The IOUs agree that BPA should require that accounts that have a
> corresponding asset and liability account have the same
> functionalization.

**Issue 4**

**Schedule 3, Schedule 3B, 3-yr pp & OSS**

**Account 555 & 447**

> **[Issue-Generic Issue - Purchased Power Expense, Sales for Resale,
> and Price Spread]{.underline}**
>
> How should book-outs and trading adjustments be treated for
> calculations of purchased power expense and sales for resale revenue
> and the price spread calculation?Should the treatment be consistent
> across utilities.
>
> **[Discussion]{.underline}**
>
> PacifiCorp is reducing the amount of its purchased power expense and
> sales for resale revenue by book-outs and trading adjustments. It
> appears that the other utilities do not. The inclusion or exclusion of
> book-outs and trading adjustments in purchased power and sales for
> resale numbers affects the price spread calculation. BPA is
> considering whether it is appropriate to remove these adjustments when
> performing the price spread calculation and the ASCs.
>
> **[Response]{.underline}**
>
> The IOUs support a consistent reporting of purchase power expenses and
> sales for resale among the exchanging utilities for the determination
> of price spread. If Bonneville determines the amounts used to
> calculate each company's price spread and reported in the FERC Form 1
> should be without bookouts the IOUs agree to report and calculate
> accordingly.

**Issue 5**

**ASC Forecast Model**

> **[Issue-Generic Issue - New Plant Additions -- Natural Gas
> Prices]{.underline}**
>
> Should BPA adopt a common natural gas price forecast in the ASC
> Forecast Model for all *new* natural gas-fired plant additions?
>
> **[Discussion]{.underline}**
>
> Forecasted natural gas prices vary significantly between utilities
> forecasting natural gas burning new additions. None of the utilities
> submitted documentation on long term firm natural gas supply
> contracts, so it is assumed that the differences are a result of
> different natural gas price forecasting techniques.
>
> **[Response]{.underline}**
>
> The IOUs propose that it is reasonable to use a third party gas price
> forecast in the determination of an exchanging utility's ASC. The IOUs
> believe that the third party gas price forecast that BPA uses would be
> appropriate or another publicly available gas price forecast. In
> addition, if a given exchanging utility desires to use a different gas
> price for their new resource it is understood that they will have to
> supply all necessary data in support of their alternative gas price
> forecast.

**Issue 6**

**ASC Forecast Model**

> **[Issue-Generic Issue - New Plant Additions - Capacity
> Factor]{.underline}**
>
> Should BPA use common representative capacity factors in the ASC
> Forecast model for estimating the operating costs and expected energy
> output for plant additions of similar type?
>
> **[Discussion]{.underline}**
>
> Projected capacity factors vary significantly between utilities for
> similar types of new resources
>
> **[Response]{.underline}**
>
> The IOUs propose that they will use a capacity factor within the range
> of capacity factors listed below for new resources coming online
> during the rate period.
>
> [Resource Type]{.underline} [Capacity Factor]{.underline}
>
> Combined Cycle CT 45% to 75%
>
> Simple Cycle CT 1% to 30%
>
> Wind 25% to 45%
>
> Geothermal greater than 90%
>
> Again, it is understood that if a utility chooses to use capacity
> factor outside the above range for a given new resource that utility
> will have to supply complete justification for such capacity factor.

**Issue 7**

**Schedule 1, Income Statement**

**Various Accounts**

> **[Issue-Generic Issue -- Inclusion - Other Regulatory Assets and
> Liabilities]{.underline}**
>
> What should be the functionalization of Other Regulatory Assets and
> Liabilities that are not included in rate base by the regulatory
> authority? What should be the functionalization of the corresponding
> income statement accounts for the Regulatory Assets and Liabilities
> that are not included in rate base by the regulatory authority?
>
> **[Discussion]{.underline}**
>
> There is inconsistency between utilities in the functionalization of
> Regulatory Assets and Liabilities when not included in rate base. For
> example, PAC functionalized all Other Regulatory Assets and
> Liabilities that are not in its retail rate base to distribution.
> Idaho functionalized several items in these same accounts, also not
> included in its retail rate base, to PTD. Many of these accounts are
> included in working capital for ratemaking purposes. There is concern
> that the treatment of the income statement accounts for Other
> Regulatory Assets and Liabilities are not consistent with the asset
> and liability treatment for ASC purposes.
>
> **[Response]{.underline}**
>
> There should be consistency between utilities in the functionalization
> of Regulatory Assets and Liabilities when not included in rate base.
> Regulatory Assets and Liabilities not included in Rate Base have no
> effect on the Company's income statement. All entries affect only the
> balance sheet.