78694 Federal Register / Vol. 75, No. 241 / Thursday, December 16, 2010 / Notices 

signatories to the settlement agreement 

agree not to present evidence or 

argument that either rate should be 

higher than the existing rates. 

The Partial Settlement Agreement 

recognizes the possibility that parties to 

the BP–12 rate proceeding that have not 

signed the Partial Settlement Agreement 

may object to the Settlement Proposal. 

If any party objects to the Settlement 

Proposal, BPA has the right to submit a 

revised proposal. If BPA submits a 

revised proposal, signatories to the 

Partial Settlement Agreement may 

contest any aspect of the revised 

proposal. If BPA does not revise the 

Settlement Proposal, and the 

Administrator establishes transmission 

rates consistent with the Settlement 

Proposal, the signatories may not 

challenge approval of the rates by the 

Commission or in any judicial forum. 

B. Transmission Rates 

BPA is proposing four different rates 

for the use of its Integrated Network 

segment, four different rates for use of 

intertie segments, and several other 

rates for various purposes. 

The four rates for use of the Integrated 

Network segment are: 

Formula Power Transmission (FPT– 

12) rate—The FPT rate is based on the 

cost of using specific types of facilities, 

including a distance component for the 

use of transmission lines, and is charged 

on a contract demand basis. 

Integration of Resources (IR–12) rate— 

The IR rate is a postage stamp, contract 

demand rate for the use of the Integrated 

Network, similar to Point-to-Point (PTP) 

service. 

Network Integration Transmission 

(NT–12) rate—The NT rate applies to 

customers taking network integration 

service under the Open Access 

Transmission Tariff (OATT) and allows 

customers to flexibly serve their retail 

load. 

Point-to-Point (PTP–12) rate—The 

PTP rate is a contract demand rate that 

applies to customers taking point-topoint service on BPA’s network 

facilities under the OATT. It provides 

customers with flexible service from 

identified Points of Receipt to identified 

Points of Delivery. There are separate 

PTP rates for: Long-term firm service; 

daily firm and non-firm service; and 

hourly firm and non-firm service. 

In addition to the four rates for 

network use, other proposed 

transmission rates include the 

following: 

The Southern Intertie (IS–12) and the 

Montana Intertie (IM–12) rates are 

contract demand rates that apply to 

customers taking point-to-point service 

under the OATT on the Southern 

Intertie and Montana Intertie. These 

rates are structured similarly to the rate 

for point-to-point service on network 

facilities. 

The Townsend-Garrison Transmission 

(TGT–12) and the Eastern Intertie (IE– 

12) rates are developed pursuant to the 

Montana Intertie agreement. 

The Use-of-Facilities (UFT–12) rate 

establishes a formula for charging for 

the use of a specific facility based on the 

annual cost of that facility. 

The Advance Funding (AF–12) rate 

allows Transmission Services to collect 

the capital and related costs of specific 

facilities through an advance-funding 

mechanism. 

Other charges that may apply include: 

A Delivery Charge for the use of lowvoltage delivery substations; a Power 

Factor Penalty Charge; a Reservation Fee 

for customers that postpone their 

service commencement dates; 

incremental rates for transmission 

requests that require new facilities; a 

penalty charge for failure to comply 

with dispatch, curtailment, redispatch, 

or load shedding orders; and an 

Unauthorized Increase Charge for 

customers that exceed their contracted 

amounts. 

C. Ancillary Services Rates 

In this Federal Register notice BPA is 

proposing rates for two ancillary 

services: Scheduling, System Control, 

and Dispatch Service, and Reactive 

Supply and Voltage Control from 

Generation Sources Service. 

3. Changes to Transmission Rates and 

Rate Schedules 

a. Network Integration Transmission 

(NT–12) rate 

The NT rate applies to customers 

taking network integration service under 

the OATT and allows customers to 

flexibly serve their retail load. 

Transmission Services is proposing to 

delete CSL and add a Short Distance 

Discount (SDD) to the NT rate, applied 

to the NT Base Charge. The SDD would 

apply when a Customer has a resource 

that: (i) Is designated as a Network 

Resource in the customer’s NT Service 

Agreement for at least 12 months; and 

(ii) uses FCRTS facilities for less than 75 

circuit miles for delivery to the 

Customer’s Network Load. A designated 

network resource that is a system sale 

(the designated resource is not 

associated with a specific generating 

resource) would not qualify for the SDD. 

Additionally, any designated resource 

that is eligible for the SDD must be 

noted as such in the NT Service 

Agreement to receive the billing credit. 

b. Failure To Comply Penalty Charge 

BPA proposes to change the rate for 

the Failure to Comply Penalty Charge 

from 1000 mills per kilowatthour to the 

greater of 500 mills per kilowatthour or 

150% of an hourly energy index in the 

Pacific Northwest. 

c. Integration of Resources (IR–12)— 

Ratchet Demand Relief 

BPA proposes to add language to the 

section on Ratchet Demand Relief 

providing that relief from the Ratchet 

Demand is not available in the month in 

which the Ratchet Demand was 

established. For that month, the 

customer will be assessed charges based 

upon the highest hourly Scheduled 

Demand Billing Factor. 

d. Changes to Definitions 

BPA proposes to modify the 

definitions of Dynamic Schedule, 

Dynamic Transfer, Daily Service, 

Monthly Service, and Weekly Service. 

Part V—Proposed 2012 Rate Schedules 

BPA’s proposed 2012 Transmission 

Rate Schedules are a part of this notice 

and are available for viewing and 

downloading on BPA’s Web site at 

http://www.bpa.gov/corporate/ratecase/ 

2012/. Copies of the proposed rate 

schedules also are available for viewing 

in BPA’s Public Reference Room at the 

BPA Headquarters, 1st Floor, 905 NE 

11th Avenue, Portland, OR 97232. 

Issued this 7th day of December, 2010. 

Stephen J. Wright, 

Administrator and Chief Executive Officer. 

[FR Doc. 2010–31621 Filed 12–15–10; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF ENERGY 

Bonneville Power Administration 

[BPA File No.: REP–12] 

Proposed Residential Exchange 

Program Settlement Agreement 

Proceeding (REP–12); Public Hearing 

and Opportunities for Public Review 

and Comment 

AGENCY: Bonneville Power 

Administration (BPA), Department of 

Energy (DOE). 

ACTION: Notice of Residential Exchange 

Program Settlement Agreement 

Proceeding (REP–12). 

SUMMARY: BPA is conducting the 2012 

Residential Exchange Program 

Settlement Agreement Proceeding (REP– 

12) to review the terms and conditions 

of a proposed 17-year settlement of 

issues regarding the implementation of 


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the Residential Exchange Program 

(REP). The REP is a statutory power 

exchange program established by 

section 5(c) of the Pacific Northwest 

Electric Power Planning and 

Conservation Act (Northwest Power 

Act). The proposed settlement under 

review is the 2012 REP Settlement 

Agreement (2012 REP Settlement). If 

adopted, BPA will include in its power 

rates for FY 2012–2028 the REP benefits 

stated in the proposed 2012 REP 

Settlement. 

In addition to reviewing the terms of 

the proposed 2012 REP Settlement, 

BPA’s REP–12 initial proposal will 

describe BPA’s proposed 

implementation of the REP for its FY 

2012–2013 rates in the event the 2012 

REP Settlement is not adopted. The 

REP–12 initial proposal will include 

studies and testimony supporting BPA’s 

proposed implementation of the section 

7(b)(2) rate test for the FY 2012–2013 

rate period, the section 7(b)(3) surcharge 

allocation, Average System Cost (ASC) 

forecasts, and the amount of refunds to 

be provided to BPA customers 

overcharged during the FY 2002–2006 

rate period, (i.e., Lookback repayments). 

If, at the conclusion of the REP–12 

proceeding the Administrator decides 

not to adopt the 2012 REP Settlement, 

BPA will incorporate into the BP–12 

rate proceeding the studies, testimony, 

and documentation associated with the 

section 7(b)(2) rate test, the section 

7(b)(3) surcharge allocation, ASC 

forecasts, and Lookback repayment and 

use such studies and documentation in 

establishing the BP–12 rates. 

DATES: Anyone wishing to become a 

party to the REP–12 proceeding must 

provide written notice, via U.S. Mail or 

electronic mail, which must be received 

by BPA no later than 3 p.m. on 

December 23, 2010. 

The REP–12 proceeding begins with a 

prehearing conference at 9:00 a.m. on 

December 17, 2010, in the BPA Rates 

Hearing Room, 2nd Floor, 911 NE 11th 

Avenue, Portland, Oregon 97232. 

ADDRESSES: 1. Petitions to intervene 

should be directed to: Hearing Clerk— 

L–7, Bonneville Power Administration, 

905 NE 11th Avenue, Portland, Oregon 

97232, or may be e-mailed to 

rateclerk@bpa.gov. In addition, copies 

of the petition must be served 

concurrently on BPA’s General Counsel 

and directed to Mr. Kurt R. Casad, 

Office of General Counsel, 905 NE 11th 

Avenue, Portland, Oregon 97232, or via 

e-mail to krcasad@bpa.gov (see section 

III.A. for more information regarding 

interventions). 

2. Written comments by participants 

should be submitted to the Public 

Engagement Office, DKE–7, Bonneville 

Power Administration, P.O. Box 14428, 

Portland, Oregon 97293. Participants 

may also submit comments by e-mail at: 

http://www.bpa.gov/comment. BPA 

requests that all comments and 

documents intended to be part of the 

Official Record in this rate proceeding 

contain the designation REP–12 in the 

subject line. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Heidi Y. Helwig, DKC–7, Public Affairs 

Specialist, Bonneville Power 

Administration, P.O. Box 3621, 

Portland, Oregon 97208; by phone toll 

free at 1–800–622–4520; or via e-mail to 

hyhelwig@bpa.gov. 

Responsible Official: Mr. Raymond D. 

Bliven, Power Rates Manager, is the 

official responsible for the development 

of BPA’s power rates. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

Part I. Introduction 

Part II. Procedures and Scope of Hearing 

Part III. Public Participation in REP–12 

Part IV. Background of REP Litigation 

Part V. Summary of Proposal and Description 

of Major Studies 

Part VI. Proposed 2012 REP Settlement 

Agreement 

Part I. Introduction 

BPA is conducting an evidentiary 

hearing, Docket No. REP–12, to review 

the terms and conditions of a proposed 

17-year settlement of issues regarding 

the implementation of the Residential 

Exchange Program (REP). The REP is a 

statutory power exchange program 

established by section 5(c) of the 

Northwest Power Act (Act). See 16 

U.S.C. 839c(c). The proposed settlement 

under review, the 2012 REP Settlement, 

reflects the efforts of a broad group of 

regional parties to resolve litigation over 

BPA’s implementation of the REP 

through a legally sustainable and 

equitable settlement agreement. If 

adopted by the Administrator, BPA will 

include in its power rates for FY 2012– 

2028 the REP benefits stated in the 

proposed 2012 REP Settlement. 

In addition to reviewing the terms of 

the proposed 2012 REP Settlement, 

BPA’s REP–12 initial proposal will 

describe BPA’s proposed 

implementation of the REP for its FY 

2012–2013 rates in the event the 2012 

REP Settlement is not adopted. The 

REP–12 initial proposal will include 

studies and testimony supporting BPA’s 

proposed implementation of the section 

7(b)(2) rate test, the section 7(b)(3) 

surcharge allocation, ASC forecasts, and 

Lookback repayments for the FY 2012– 

2013 rate period. Any party wishing to 

contest BPA’s proposed implementation 

of the section 7(b)(2) rate test, allocation 

of section 7(b)(3) surcharge amounts, 

development of the ASC forecasts, or 

determination of Lookback refund 

amounts must raise such arguments in 

the REP–12 proceeding. At the same 

time BPA is reviewing the proposed 

2012 REP Settlement in the REP–12 

proceeding, BPA is separately 

conducting a BP–12 rate proceeding to 

establish power rates for FY 2012–2013. 

If, at the conclusion of the REP–12 

proceeding, the Administrator decides 

not to adopt the 2012 REP Settlement, 

BPA will incorporate into the BP–12 

rate proceeding the studies, testimony, 

and documentation associated with the 

section 7(b)(2) rate test, the section 

7(b)(3) surcharge allocation, ASC 

forecasts, and Lookback repayment, and 

use such studies and documentation in 

establishing the BP–12 rates. 

Part II. Procedures and Scope of 

Hearing 

A. Procedures Governing the REP–12 

Proceeding 

Because the proposed 2012 REP 

Settlement includes features that are 

directly related to BPA’s rates and 

ratemaking, the proposed Settlement 

will be evaluated under the procedural 

terms of section 7(i) of the Act, 16 

U.S.C. 839e(i). 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 REP–12 proceeding is 

governed by § 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 BPA’s Hearing 

Procedures prohibits ex parte 

communications. The ex parte rule 

applies to all BPA and DOE employees 

and contractors. Except as provided 

below, any communications with BPA 

and/or DOE personnel regarding BPA’s 

rate proceeding 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) 


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Matters of procedure only (the status of 

the rate proceeding, 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 for which BPA 

is responsible under statutes other than 

the ratemaking provisions; or (5) matters 

which all parties agree may be made on 

an ex parte basis. The ex parte rule 

remains in effect until the 

Administrator’s Final Record of 

Decision (ROD) is issued. 

The Flood Control Act of 1944, 16 

U.S.C. 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 proposal, study documentation, 

and the proposed 2012 REP Settlement 

will be available for examination 

beginning December 17, 2010, on BPA’s 

Web site at http://www.bpa.gov/ 

corporate/ratecase/2012/rep-12.cfm. 

Hard copies of these documents will be 

available beginning December 17, 2010, 

at BPA’s Public Information Center, 

BPA Headquarters Building, 1st Floor, 

905 NE. 11th Avenue, Portland, Oregon. 

A formal evidentiary rate hearing will 

be conducted that is open to rate 

proceeding parties. Interested parties 

that previously intervened in BPA’s BP– 

12 rate proceeding must also file 

petitions to intervene in order to take 

part in the REP–12 formal hearing. A 

proposed schedule for the REP–12 

proceeding is stated below. A Hearing 

Officer will establish a final schedule at 

the prehearing conference. 

Intervention Deadline ............. December 

23. 

Prehearing/BPA Direct Case December 

17. 

Clarification ............................ January 4–7. 

Motions to Strike .................... January 11. 

Data Request Deadline .......... January 11. 

Answers to Motions to Strike January 18. 

Data Response Deadline ....... January 18. 

Parties File Direct Case ......... February 8. 

Clarification ............................ February 14– 

15. 

Motions to Strike .................... February 22. 

Data Request Deadline .......... February 22. 

Answers to Motions to Strike March 1. 

Data Response Deadline ....... March 1. 

Close of Participant Comments.March 8. 

Litigants File Rebuttal ............ March 8. 

Clarification ............................ March 14–15. 

Motions to Strike .................... March 17. 

Data Request Deadline .......... March 17. 

Answers to Motions to Strike March 25. 

Data Response Deadline ....... March 25. 

Cross-Examination ................. March 28– 

April 1. 

Initial Briefs Filed ................... April 25. 

Oral Argument ........................ May 12. 

Draft ROD Issued .................. May 23. 

Briefs on Exceptions .............. June 6. 

Final ROD—Final Studies ...... June 27. 

No field hearings will be conducted in 

this proceeding. 

B. Scope of the REP–12 Proceeding 

This section provides guidance to the 

Hearing Officer regarding the matters 

within the scope of the REP–12 

proceeding and the matters not within 

the scope of this proceeding. 

1. Matters Within the Scope of This 

Proceeding 

a. Proposed 2012 REP Settlement 

All issues related to BPA’s analysis, 

methodology, or review of the proposed 

2012 REP Settlement, including any 

issues related to the models developed 

by BPA to evaluate the 2012 REP 

Settlement, are expressly within the 

scope of this proceeding. Parties 

wishing to challenge any aspect of the 

proposed 2012 REP Settlement, 

including but not limited to any term of 

the proposed Settlement or whether 

BPA should adopt the Settlement, must 

raise such arguments in this proceeding. 

b. Section 7(b)(2) Rate Test 

Implementation 

All issues related to BPA’s 

implementation, interpretation, and 

forecast of the section 7(b)(2) rate test 

are within the scope of this proceeding. 

Parties wishing to challenge any aspect 

of the implementation of the section 

7(b)(2) rate test for either the 2012 REP 

Settlement implementation period (FY 

2012–2028) or the BP–12 rate period 

(FY 2012–2013) must raise such 

arguments in this proceeding. 

c. Section 7(b)(3) Surcharge 

Implementation 

All issues related to BPA’s 

implementation, interpretation, and 

forecast of the section 7(b)(3) 

reallocations or surcharges are within 

the scope of this proceeding. Parties 

wishing to challenge any aspect of the 

implementation of section 7(b)(3) for 

either the 2012 REP Settlement 

implementation period (FY 2012–2028) 

or the BP–12 rate period (FY 2012– 

2013) must raise such arguments in this 

proceeding. 

d. Lookback Assumptions 

All issues related to BPA’s 

implementation, determination, 

recovery, and repayment of Lookback 

Amounts are within the scope of this 

proceeding. Parties wishing to challenge 

any aspect of BPA’s Lookback recovery 

or repayment for either the 2012 REP 

Settlement implementation period (FY 

2012–2028) or the BP–12 rate period 

(FY 2012–2013) must raise such 

arguments in this proceeding. 

e. ASC Forecasts 

Except as provided below in section 

II.B.2.h, all issues related to BPA’s 

forecast of utilities’ ASCs for the BP–12 

rate test period (FY 2014–2017) and the 

2012 REP Settlement implementation 

period (FY 2012–2028) are within the 

scope of this proceeding. Parties 

wishing to challenge any aspect of 

BPA’s ASC forecasts for these periods 

must raise their arguments in this 

proceeding. Challenges to the ASCs 

determined in the Draft and Final ASC 

reports for FY 2012–2013 are expressly 

excluded from the scope of this 

proceeding. See Section II.B.2.h. 

2. Matters Not Within the Scope of This 

Proceeding 

a. BP–12 Rate Proceeding Issues 

As noted above, BPA is conducting a 

rate proceeding to establish wholesale 

power and transmission rates for FY 

2012–2013 (BP–12) at the same time 

BPA is conducting the REP–12 

proceeding. Although some of the 

information developed in the BP–12 rate 

proceeding will be used in the models 

in the REP–12 proceeding, parties may 

not raise arguments or issues with such 

data in the REP–12 proceeding. Instead, 

such arguments or issues should be 

raised in the BP–12 rate proceeding if 

and to the extent such issues are within 

the scope of that proceeding. Pursuant 

to section 1010.3(f) of BPA’s Hearing 

Procedures, the Administrator directs 

the Hearing Officer to exclude from the 

record all argument, testimony, or other 

evidence that seeks in any way to 

address the appropriateness or 

reasonableness of any issue being 

addressed in the BP–12 rate proceeding. 

b. Program Cost Estimates 

BPA began its 2010 Integrated 

Program Review (IPR) process in May 

2010. The IPR process is designed to 

allow people interested in BPA’s 

program levels an opportunity to review 

and comment on all of BPA’s expense 

and capital spending level estimates in 

the same forum prior to the use of those 

estimates in setting rates. Concurrent 

with the IPR, BPA held regional 


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conversations about risk mitigation and 

debt management practices. 

The 2010 IPR focused on FY 2012 and 

2013 program levels for BPA’s Power 

Services and Transmission Services as 

well as a review of FY 2011 program 

levels. BPA held 19 technical 

workshops and two general manager 

meetings at which proposed spending 

levels were presented for each of BPA’s 

programs. BPA carefully reviewed and 

considered the 26 written comments 

and numerous oral comments on FY 

2012 and 2013 program levels that were 

provided during this public process. 

On October 27, 2010, BPA issued a 

Final Close-Out Letter and 

accompanying final report for the IPR, 

which summarizes the comments 

received and outlines BPA’s responses. 

The report also summarizes comments 

and BPA’s responses on the regional 

conversations about risk mitigation and 

debt management. In the Final CloseOut Letter and report, BPA established 

the program level cost estimates for both 

power and transmission rates that are 

used in the BP–12 and REP–12 Initial 

Proposals. BPA does not anticipate 

additional public review of proposed 

spending levels. However, an 

abbreviated IPR process may be held if 

conditions warrant. BPA would conduct 

this process separately from the REP–12 

and BP–12 proceedings to share updates 

and solicit feedback from customers and 

constituents before the final program 

levels are incorporated into BPA’s final 

rates. BPA’s spending levels for 

investments and expenses are not 

determined or subject to review in the 

REP–12 or BP–12 proceedings. 

Pursuant to section 1010.3(f) of BPA’s 

Hearing Procedures, the Administrator 

directs the Hearing Officer to exclude 

from the record all argument, testimony, 

or other evidence that seeks in any 

manner to address the appropriateness 

or reasonableness of the Administrator’s 

decisions on cost and spending levels. 

If and to the extent that any reexamination of spending levels is 

necessary, such re-examination will 

occur outside of the REP–12 and BP–12 

proceedings. This exclusion does not 

extend to portions of BPA’s revenue 

requirements related to REP benefits, 

Lookback payments, or interest on 

Lookback payments. The Administrator 

also directs the Hearing Officer to 

exclude argument and evidence 

regarding BPA’s debt management 

practices and policies. 

c. Regional Dialogue Policy Decisions 

BPA’s Subscription contracts expire 

on September 30, 2011, at the end of the 

current rate period. BPA previously 

engaged customers and interested 

stakeholders in an extensive Regional 

Dialogue process that led to new power 

sales contracts. BPA issued its LongTerm Regional Dialogue Final Policy 

and ROD on July 19, 2007; its LongTerm Regional Dialogue Contract Policy 

and ROD on October 31, 2008; the 

Tiered Rate Methodology and ROD on 

November 10, 2008; and the Tiered Rate 

Methodology Supplemental ROD on 

September 2, 2009. On or about 

December 1, 2008, BPA and its 

customers signed new power sales 

contracts under which the customers 

will purchase Federal power for the FY 

2012–2028 period. Several aspects of 

the Regional Dialogue process are still 

ongoing, such as establishing customer 

contract high water marks and contract 

demand quantities, and these processes 

and decisions are outside the scope of 

the REP–12 proceeding. 

Pursuant to § 1010.3(f) of BPA’s 

Hearing Procedures, the Administrator 

hereby directs the Hearing Officer to 

exclude from the record all argument, 

testimony, or other evidence that seeks 

in any way to address the 

appropriateness or reasonableness of 

BPA’s decisions made in the Long-Term 

Regional Dialogue Final Policy ROD, 

Long-Term Regional Dialogue Contract 

Policy ROD, the Tiered Rate 

Methodology ROD, and the Tiered Rate 

Methodology Supplemental ROD. 

d. Tiered Rate Methodology (TRM) 

BPA previously established the TRM 

in a section 7(i) rate hearing. The issues 

being examined in the REP–12 

proceeding are not governed by the 

TRM. Modifications to the TRM are not 

within the scope of this proceeding. 

Pursuant to § 1010.3(f) of BPA’s Hearing 

Procedures, the Administrator hereby 

directs the Hearing Officer to exclude 

from the record all argument, testimony, 

or other evidence that seeks in any way 

to propose to revise the TRM developed 

by BPA. 

e. Service to the Direct Service 

Industries (DSIs) 

The manner and method by which 

BPA could provide service or financial 

payments to its DSI customers were 

evaluated in Pacific Northwest 

Generating Cooperative, et al., v. 

Bonneville Power Administration, 580 

F.3d 792 (9th Cir. 2008) (PNGC I) and 

Pacific Northwest Generating 

Cooperative, et al., v. Bonneville Power 

Administration, 590 F.3d 1065 (9th Cir. 

2010) (PNGC II). In BPA’s BP–12 rate 

proceeding, BPA has assumed that it 

will continue to serve Alcoa, Inc. 

(Alcoa) as well as Port Townsend Paper 

Corporation (Port Townsend) during FY 

2012–2013. BPA’s decisions to serve the 

DSIs, along with the method and level 

of service to be provided DSIs in the FY 

2012–2013 rate period, will not be 

determined in this proceeding. 

Pursuant to § 1010.3(f) of BPA’s 

Hearing Procedures, the Administrator 

directs the Hearing Officer to exclude 

from the record all argument, testimony, 

or other evidence that seeks in any way 

to revisit the appropriateness or 

reasonableness of BPA’s decisions 

regarding the service to the DSIs, 

including BPA’s decision to offer a 

contract and the method or level of such 

service. 

f. Potential Environmental Impacts 

Environmental impacts are addressed 

in a concurrent National Environmental 

Policy Act (NEPA) process. Pursuant to 

§ 1010.3(f) of BPA’s Hearing Procedures, 

the Administrator directs the Hearing 

Officer to exclude from the record all 

argument, testimony, or other evidence 

that seeks in any way to address the 

potential environmental impacts of the 

rates being developed in this rate 

proceeding. 

g. Average System Cost Methodology 

Section 5(c) of the Northwest Power 

Act established the REP, which provides 

benefits to residential and small-farm 

consumers of Pacific Northwest utilities 

based, in part, on a utility’s ‘‘average 

system cost’’ (ASC) of resources. Section 

5(c)(7) of the Act requires the 

Administrator to consult with regional 

interests to develop an ASC 

Methodology (ASCM). BPA uses the 

ASCM to calculate utilities’ ASCs. On 

September 4, 2009, the Federal Energy 

Regulatory Commission (Commission) 

granted final approval of BPA’s 2008 

ASCM. The 2008 ASCM is not subject 

to challenge or review in a section 7(i) 

proceeding. 

Pursuant to § 1010.3(f) of BPA’s 

Hearing Procedures, the Administrator 

hereby directs the Hearing Officer to 

exclude from the record all argument, 

testimony, or other evidence that seeks 

in any way to address the 

appropriateness or reasonableness of the 

2008 ASCM. 

h. Average System Cost Review 

Processes 

To receive REP benefits for FY 2012– 

2013, utilities must file proposed ASCs 

with BPA pursuant to the terms and 

conditions of the 2008 ASCM. These 

filings are reviewed by BPA staff and 

other interested parties in ASC review 

processes, which are separate 

administrative proceedings conducted 

by BPA under the terms of the 2008 

ASCM. In the review processes, BPA 

staff and other parties evaluate the ASCs 


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filed by participating utilities for 

conformance with the requirements of 

the 2008 ASCM. At the conclusion of 

the processes, BPA issues ASC Reports, 

which formally establish the utilities’ 

ASCs for the Exchange Period, which 

coincides with BPA’s rate period. 

On June 1, 2010, ten utilities filed 

proposed ASCs with BPA for FY 2012– 

2013. One utility subsequently 

withdrew its ASC filing. BPA staff and 

other parties are currently reviewing the 

remaining nine filings in the ASC 

review processes. Once these ASC 

review processes are complete, and BPA 

has issued final ASC Reports, BPA will 

incorporate the final ASCs into the 

administrative record of the REP–12 

proceeding. Although these ASC 

determinations provide important 

information for setting BPA’s rates, they 

are not made in section 7(i) hearings. 

Parties intending to challenge BPA’s 

draft or final ASC determinations for FY 

2012–2013 must raise such issues in the 

ASC review processes according to the 

procedures established in the 2008 

ASCM. 

Pursuant to § 1010.3(f) of BPA’s 

Hearing Procedures, the Administrator 

hereby directs the Hearing Officer to 

exclude from the record all argument, 

testimony, or other evidence that seeks 

in any way to address BPA’s draft or 

final ASC determinations for FY 2012– 

2013. 

i. Contract High Water Mark (CHWM) 

Process 

Under the Tiered Rate Methodology 

(TRM), BPA will establish both CHWMs 

and FY 2012–2013 Rate Period High 

Water Mark (RHWMs) for public agency 

customers that signed contracts for firm 

requirements power service at tiered 

rates, referred to as CHWM contracts. 

The CHWMs and RHWMs will be 

established in the CHWM Process, 

which will occur mainly in Spring 2011. 

In this process, BPA will establish the 

maximum planned amount of power a 

customer is eligible to purchase at Tier 

1 rates during the rate period. The 

CHWM Process provides customers an 

opportunity to review, comment, and, if 

necessary, challenge BPA’s 

determinations regarding certain CHWM 

and RHWM determinations. 

Pursuant to § 1010.3(f) of BPA’s 

Hearing Procedures, the Administrator 

hereby directs the Hearing Officer to 

exclude from the record all argument, 

testimony, or other evidence that seeks 

in any way to address BPA’s 

determination of a customer’s CHWM or 

FY 2012–2013 RHWM. 

C. The National Environmental Policy 

Act 

BPA is in the process of assessing the 

potential environmental effects that 

could result from implementation of the 

proposed 2012 REP Settlement, 

consistent with NEPA requirements. 

BPA is reviewing this proposal for 

consistency with BPA’s Business Plan 

Environmental Impact Statement 

(Business Plan EIS), completed in June 

1995 (DOE/EIS–0183). This policy-level 

EIS evaluates the environmental 

impacts of a range of business plan 

alternatives for BPA and is intended to 

support a wide range of subsequent BPA 

business-related decisions. In the 

Record of Decision for the Business Plan 

ROD (Business Plan ROD, August 1995), 

the BPA Administrator 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 a 

Supplement Analysis confirming the 

Business Plan EIS’s environmental 

analysis in light of current regional 

conditions and BPA’s current business 

practices. The Business Plan EIS and 

ROD thus continue to provide a sound 

basis for making determinations under 

NEPA concerning BPA’s businessrelated decisions. 

BPA will document its environmental 

evaluation for the proposed 2012 REP 

Settlement as part of the Administrator’s 

Record of Decision that will be prepared 

for this proposal. During the public 

review and comment period for the 

proposed 2012 REP Settlement, 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 the Close of 

Participant Comments deadline 

identified in Part II.A will be considered 

by BPA’s NEPA compliance staff in the 

NEPA evaluation that will be prepared 

for this proposal. 

Part III. Public Participation in REP–12 

A. Distinguishing Between 

‘‘Participants’’ and ‘‘Parties’’ 

BPA distinguishes between 

‘‘participants in’’ and ‘‘parties to’’ the 

hearings. Apart from the formal hearing 

process, BPA will receive written 

comments, views, opinions, and 

information from ‘‘participants,’’ 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 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. BPA customers 

whose rates are subject to this 

proceeding, or their affiliated customer 

groups, may not submit participant 

comments. 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 

organizations. 

Written comments by participants 

will be included in the record if they are 

received by March 8, 2011. Written 

views, supporting information, 

questions, and arguments should be 

submitted to the address listed in the 

ADDRESSES section of this Notice. 

Entities or individuals become parties 

to the proceeding by filing petitions to 

intervene, which must state the name 

and address of the entity or person 

requesting party status and the entity’s 

or person’s interest in the hearing. 

BPA’s customers and affiliated customer 

groups will be granted intervention 

based on petitions filed in conformance 

with BPA’s Hearing Procedures. Other 

petitioners must explain their interests 

in sufficient detail to permit the Hearing 

Officer to determine whether the 

petitioners have a relevant interest in 

the hearing. Pursuant to Rule 1010.1(d) 

of BPA’s Hearing Procedures, BPA 

waives the requirement in Rule 

1010.4(d) that an opposition to an 

intervention petition be filed and served 

24 hours before the prehearing 

conference. The time limit for opposing 

a timely intervention will be established 

at the prehearing conference. Any party, 

including BPA, may oppose a petition 

for intervention. All petitions will be 

ruled on by the Hearing Officer. Late 

interventions are strongly disfavored. 

Opposition to an untimely petition to 

intervene must be filed and received by 

BPA within two days after service of the 

petition. 

B. Developing the Record 

The hearing record will include, 

among other things, the transcripts of 

the hearing, written evidence and 

argument entered into the record by 

BPA and the parties, written comments 


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from participants, and other material 

accepted into the record by the Hearing 

Officer. The Hearing Officer will then 

review the record and certify the record 

to the Administrator. 

The Administrator will develop the 

Final ROD in the REP–12 proceeding 

based on the record and such other 

materials and information as may have 

been submitted to or developed by the 

Administrator. The Administrator will 

serve copies of the Final ROD on all 

parties. BPA will incorporate the 

Administrator’s final decision in this 

proceeding into its BP–12 Final Rate 

Proposal. 

Part IV. Background of REP Litigation 

A. Background on the REP 

1. Section 5(c) of the Northwest Power 

Act 

As noted previously, section 5(c) of 

the Northwest Power Act established 

the REP. 16 U.S.C. 839c(c)(1). Under the 

REP, any Pacific Northwest utility may 

sell power to BPA at the utility’s ASC. 

A utility’s ASC is determined in 

accordance with an ASC Methodology 

that BPA develops pursuant to the 

requirements in the Act. In calculating 

a utility’s ASC, section 5(c)(7) of the Act 

mandates that BPA exclude from ASC 

the cost of resources in an amount 

sufficient to serve a new large single 

load (NLSL), the cost of additional 

resources in an amount sufficient to 

meet any additional load outside the 

region occurring after the effective date 

of the Act, and any costs of any 

generating facility which is terminated 

prior to initial commercial operation. 16 

U.S.C. 839c(c)(7)(A)–(C). 

When a utility offers to sell its power 

to BPA at its ASC, BPA must purchase 

such power and, in return, sell an 

equivalent amount of power to the 

utility at BPA’s rate for purchases under 

the REP, known as the ‘‘PF Exchange 

rate.’’ The PF Exchange rate is 

developed in accordance with section 7 

of the Northwest Power Act. The 

amount of power that is bought and sold 

under the REP is equal to the utility’s 

qualified residential and small farm 

load (exchange load). Because the 

purchase and sale between BPA and the 

utility involves the same amount of 

power and is simultaneous, in almost all 

instances no actual power is bought or 

sold under the REP. Instead, the REP is 

generally implemented as a paper 

transaction where the net difference 

between the utility’s ASC and BPA’s PF 

Exchange rate is multiplied by the 

utility’s exchange load and converted 

into a cash payment to the utility. The 

utility is required by law to pass these 

payments onto its residential and small 

farm consumers. 16 U.S.C. 839c(c)(3). 

The REP is implemented through a 

Residential Purchase and Sale 

Agreement (RPSA) executed by BPA 

and the utility. The REP is intended to 

provide regional residential and small 

farm consumers a form of access to the 

power produced by the FCRPS. 

Although intended primarily for the 

benefit of consumers located in 

investor-owned utilities’ (IOUs) service 

areas, any utility within the region may 

participate. 

2. Section 7(b)(2) of the Northwest 

Power Act and the PF Exchange Rate 

The PF Exchange rate is the rate at 

which BPA ‘‘sells’’ power to utilities 

participating in the REP. Section 7 of 

the Act prescribes the manner in which 

this rate is set. Under section 7(b)(1), 

BPA establishes the PF Exchange rate in 

much the same way BPA develops its 

PF Public rate. See 16 U.S.C. 839e(b)(1). 

Section 7(b)(2) of the Act, however, 

requires BPA to perform a ‘‘rate test’’ to 

determine whether the PF Public rate 

charged to BPA’s consumer-owned 

utility customers (COUs) under the Act 

would be greater than a rate developed 

under five specific assumptions stated 

in section 7(b)(2). These five 

assumptions are: 

(A) The [COUs’] general requirements 

had included during such five-year 

period the direct service industrial 

customer loads which are (i) served by 

the Administrator, and (ii) located 

within or adjacent to the geographic 

service boundaries of such public 

bodies and cooperatives; 

(B) [the COUs] were served, during 

such five-year period, with Federal base 

system resources not obligated to other 

entities under contracts existing as of 

December 5, 1980 (during the remaining 

term of such contracts) excluding 

obligations to direct service industrial 

customer loads included in 

subparagraph (A) of this paragraph; 

(C) No purchases or sales by the 

Administrator as provided in [section 

5(c)] of this section were made during 

such five-year period; 

(D) All resources that would have 

been required, during such five-year 

period, to meet remaining general 

requirements of the public body, 

cooperative and Federal agency 

customers (other than requirements met 

by the available Federal base system 

resources determined under 

subparagraph (B) of this paragraph) 

were (i) purchased from such customers 

by the Administrator pursuant to 

section 839d of this title, or (ii) not 

committed to load pursuant to section 

839c(b) of this section and were the 

least expensive resources owned or 

purchased by public bodies or 

cooperatives; and any additional needed 

resources were obtained at the average 

cost of all other new resources acquired 

by the Administrator; and 

(E) The quantifiable monetary savings, 

during such five-year period, to public 

body, cooperative and Federal agency 

customers resulting from (i) reduced 

public body and cooperative financing 

costs as applied to the total amount of 

resources, other than Federal base 

system resources, identified under 

subparagraph (D) of this paragraph, and 

(ii) reserve benefits as a result of the 

Administrator’s actions under this 

chapter were not achieved. 

If BPA’s proposed rates developed 

under section 7(b)(1) are greater than the 

rates calculated under the section 

7(b)(2) assumptions, BPA must reduce 

the costs included in the 7(b)(1) rate 

charged to COUs by assessing a 

surcharge pursuant to section 7(b)(3) to 

‘‘all other power sold by the 

Administrator to all customers.’’ 16 

U.S.C. 839e(b)(3). One of the rates 

assessed this surcharge is the PF 

Exchange rate. Application of the 7(b)(3) 

surcharge to the PF Exchange rate has 

the effect of increasing the level of the 

PF Exchange rate and reducing the 

amount of REP benefits paid by COUs 

in their PF Public rates. 

B. History of the REP 

The history of BPA’s implementation 

of the REP is marked by controversy and 

litigation. Shortly after the passage of 

the Northwest Power Act in 1980, BPA 

and regional parties negotiated the 

terms of BPA’s first ASC Methodology 

(1981 ASC Methodology) and the 

provisions of 20-year RPSAs that would 

be used to implement the REP. After 

three years of experience under the 1981 

ASC Methodology, BPA’s DSI and COU 

customers requested that a consultation 

process be held to consider revisions to 

the 1981 ASC Methodology. BPA 

granted the requests and commenced a 

consultation process in 1983. In the 

consultation, BPA determined that the 

source of data used in the 1981 ASC 

Methodology did not include sufficient 

detail to ensure that BPA was excluding 

terminated plant costs as required by 

section 5(c)(7) of the Northwest Power 

Act. Consequently, BPA proposed to 

revise the ASC Methodology by 

expanding the procedures used to 

review ASCs and excluding certain 

costs that BPA determined were too 

difficult to accurately monitor. The 

revised ASC Methodology was 

completed in 1984 and received 

approval from the Commission shortly 

thereafter. 


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BPA’s IOU customers vigorously 

opposed the changes to the 1981 ASC 

Methodology. Eight IOUs and four State 

regulatory agencies filed petitions with 

the United States Court of Appeals for 

the Ninth Circuit challenging the 

Commission’s final approval of the 

revised ASC Methodology (1984 ASC 

Methodology). See PacifiCorp v. FERC, 

795 F.2d 816 (9th Cir. 1986) 

(PacifiCorp). In PacifiCorp, the Court 

affirmed the Commission’s approval and 

BPA’s decision to adopt the 1984 ASC 

Methodology. Id. Even though the 1984 

ASC Methodology was sustained by the 

Court, litigation continued over BPA’s 

implementation of the ASC 

Methodology. Dozens of BPA’s ASC 

determinations were contested before 

the Commission, several of which were 

ultimately resolved by the Court. See 

Wash. Util. & Transp. Comm’n v. FERC, 

26 F.3d 935 (9th Cir. 1994); CP Nat. 

Corp. v. Bonneville Power Admin., 928 

F.2d 905 (9th Cir. 1991). 

Due to the burdensome, expensive 

and contentious nature of implementing 

the 1984 ASC Methodology, BPA and 

regional exchanging utilities began 

negotiating settlements of the 

implementation of the REP. Throughout 

the late 1980s and into the 1990s, BPA 

and regional exchanging utilities 

entered into multiple REP settlements. 

By the late 1990s, BPA and five of the 

six exchanging IOUs executed REP 

settlement agreements that resolved the 

implementation of the REP until June 

30, 2001. 

C. The 2000 REP Settlement Agreements 

In early 1996, the governors of Idaho, 

Montana, Oregon and Washington 

convened the Comprehensive Review of 

the Northwest Energy System. The goal 

of the review was to develop 

recommendations for changes in the 

region’s electric utility industry, 

focusing on BPA, through an open 

public process involving a broad crosssection of regional interests. In 

December 1996, after over a year of 

intense study, the Comprehensive 

Review Steering Committee released its 

Final Report. The Final Report proposed 

a subscription system for purchasing 

specified amounts of power from BPA at 

cost with incentives for customers to 

take longer-term subscriptions 

(Subscription). In connection with its 

Subscription proposal, the Steering 

Committee encouraged BPA and other 

parties in the region to explore a 

settlement of the REP with the region’s 

IOUs for the FY 2002–2011 period. 

In response to the Steering 

Committee’s recommendation, BPA and 

regional IOUs developed the 2000 

Residential Exchange Program 

Settlement Agreements (2000 REP 

Settlement Agreements). Under the 2000 

REP Settlement Agreements, the IOUs 

agreed to forgo their participation in the 

traditional REP for a period of ten years 

(FY 2002–2011) in return for certain 

payments and deliveries of firm power 

from BPA. To recover the costs of the 

2000 REP Settlement Agreements for the 

FY 2002–2006 rate period, BPA 

proposed in its WP–02 Wholesale Power 

Rate Proceeding to allocate a significant 

portion of the costs of the 2000 REP 

Settlement Agreements to the rates 

charged to COUs. 

D. Challenges to the 2000 REP 

Settlements: The Ninth Circuit’s 

Decisions in Portland General Electric v. 

BPA, Golden Northwest Aluminum v. 

BPA, and Snohomish PUD v. BPA 

In January of 2001, certain parties 

filed petitions with the Ninth Circuit 

challenging BPA’s statutory authority to 

implement the REP through the 2000 

REP Settlement Agreements. In 

September of 2003, following final 

Commission confirmation and approval 

of BPA’s WP–02 rates, parties also filed 

challenges to BPA’s decision to recover 

the costs of the 2000 REP Settlement 

Agreements from the PF rates without 

BPA’s traditional manner of 

implementing the 7(b)(2) rate test. 

While these challenges were pending 

before the Court, BPA commenced a 

new rate proceeding, the 2007 

Wholesale Power Rate Proceeding, to 

establish rates for the FY 2007–2009 

period (WP–07 rates). In the WP–07 

rates, BPA again allocated a significant 

portion of the costs of the 2000 REP 

Settlement Agreements to the PF rates. 

The WP–07 rates were filed with the 

Commission on July 28, 2006, and 

received interim approval from the 

Commission on September 21, 2006. 

On May 3, 2007, before final 

Commission approval of BPA’s WP–07 

rates, the Court issued two decisions in 

the pending challenges to the 2000 REP 

Settlement Agreements and the thenexpired WP–02 rates. In Portland 

General Electric v. Bonneville Power 

Admin., 501 F.3d 1009 (9th Cir. 2007) 

(PGE), the Court found that BPA had 

exceeded its settlement authority when 

it entered into the 2000 REP Settlement 

Agreements. 501 F.3d at 1037. In a 

companion case, Golden Northwest 

Aluminum v. Bonneville Power Admin., 

501 F.3d 1037 (9th Cir. 2007) (Golden 

NW), the Court also held that BPA had 

improperly allocated the cost of the 

2000 REP Settlement Agreements to 

rates charged to the COUs in violation 

of section 7(b)(2). 501 F.3d at 1048. The 

Court then remanded the WP–02 rates to 

BPA with the instruction to ‘‘set rates in 

accordance with this opinion.’’ Id. at 

1053. 

After issuing the PGE and Golden NW 

decisions, the Court also reviewed 

challenges to certain amendments to the 

2000 REP Settlement Agreements signed 

in 2004. See Pub. Util. Dist. No. 1 of 

Snohomish County, Wa. v. Bonneville 

Power Admin., 506 F.3d 1145 (9th Cir. 

2007) (Snohomish). In Snohomish, the 

Court remanded the 2004 amendments 

to the 2000 REP Settlement Agreements 

and a ‘‘Reduction of Risk’’ provision 

amended by the 2004 amendments to 

BPA. Id. at 1154. The Court explained 

that it was remanding these 

amendments to BPA in order to permit 

BPA to determine ‘‘in the first instance’’ 

whether these amendments remained 

valid in light of the Court’s opinions in 

PGE and Golden NW. Id. 

E. BPA’s Response to PGE, Golden NW, 

and Snohomish: The WP–07 

Supplemental Hearing and the 

Development of the 2008 RPSAs 

Following the issuance of the PGE, 

Golden NW, and Snohomish decisions, 

BPA ceased making payments under the 

2000 REP Settlement Agreements. 

Thereafter, BPA commenced a series of 

public meetings to discuss with 

interested parties BPA’s response to the 

Court’s opinions. At the conclusion of 

these meetings, BPA announced that it 

was commencing a section 7(i) process 

to determine whether and to what 

extent the 2000 REP Settlement 

Agreements caused illegal costs to be 

included in rates charged to the COUs. 

This proceeding, referred to as the 

WP–07 Supplemental Rate Hearing, 

began in February of 2008. In the WP– 

07 Supplemental Rate Hearing, BPA 

proposed to revise its prospective 

WP–07 rates for FY 2009 (the third year 

of the rate period), replacing the costs of 

the 2000 REP Settlement Agreements 

with REP benefits calculated in 

accordance with sections 5(c) and 

7(b)(2) of the Northwest Power Act. In 

addition, BPA proposed to perform an 

analysis, referred to as the ‘‘Lookback,’’ 

to determine whether BPA had 

overcharged the COUs during the WP– 

02 rate period (i.e., FY 2002–2006) and 

the first two years of the WP–07 rate 

period (i.e., FY 2007–2008). The 

Lookback compared the payments the 

IOUs received or would have received 

under the 2000 REP Settlement 

Agreements with the amount of REP 

benefits the IOUs would have received 

under a traditional implementation of 

the REP pursuant to sections 5(c) and 

7(b) of the Northwest Power Act. For 

those IOUs that received more in REP 

benefits under the 2000 REP Settlement 

Agreements than allowed by sections 


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5(c) and 7(b)(2) of the Act, BPA assessed 

a refund obligation known as a 

‘‘Lookback Amount.’’ BPA proposed to 

collect the Lookback Amounts from the 

IOUs by withholding future benefits 

owed to the IOUs under the REP and 

issuing refunds to the injured COUs. 

At the conclusion of the WP–07 

Supplemental Hearing in September of 

2008, BPA presented its final findings in 

the WP–07 Supplemental Record of 

Decision (WP–07 Supplemental ROD). 

In the WP–07 Supplemental ROD, BPA 

determined that the COUs had been 

overcharged by approximately $1 billion 

during the FY 2002–2008 period. BPA 

proposed to return these overcharges to 

the injured COUs with an initial lumpsum cash payment in 2008 and then 

through future reductions in REP benefit 

payments to the applicable IOUs. 

In addition to determining the refunds 

and overcharges caused by the 2000 REP 

Settlement Agreements, the WP–07 

Supplemental ROD also addressed 

BPA’s final decisions on the appropriate 

amount of REP benefits to pay the IOUs, 

and include in rates, for FY 2009. To 

make this determination, BPA had to 

address a host of controversial issues 

related to the section 7(b)(2) rate test. 

Over 270 pages of the WP–07 

Supplemental ROD were dedicated to 

addressing the issues and arguments 

presented by the parties on the section 

7(b)(2) rate test. 

Because the traditional REP was being 

implemented for FY 2009, BPA also 

needed to negotiate and execute new 

RPSAs with the IOUs intending to 

participate in the REP. Thus, concurrent 

with the WP–07 Supplemental Hearing, 

BPA also engaged in a public process to 

develop a new RPSA. After taking 

public comment on a prototype RPSA, 

BPA published a final RPSA in 

September of 2008. Among other terms 

included in the RPSA, BPA adopted a 

provision that would allow BPA to 

recover the Lookback Amounts from the 

IOUs by reducing future REP benefit 

payments. BPA’s justification for 

including this and other provisions in 

the RPSA were explained in the 2008 

RPSA Record of Decision (2008 RPSA 

ROD). 

F. Challenges to BPA’s WP–07 

Supplemental ROD and RPSA 

Decisions: The Assoc. of Pub. Agency 

Customers v. Bonneville Power Admin., 

Idaho Pub. Util. Comm’n v. Bonneville 

Power Admin, and Avista Corp. v. 

Bonneville Power Admin 

BPA’s decisions in the WP–07 

Supplemental ROD and the 2008 RPSA 

ROD were vigorously opposed by both 

COUs and IOUs. The COUs and entities 

supporting the COUs’ position claimed 

that BPA had grossly underestimated 

the IOUs’ refund obligation and that the 

actual overcharge to COUs for the FY 

2002–2008 period was at least $2 

billion. The IOUs, public utility 

commissions, and ratepayer advocacy 

groups, in contrast, argued that no 

refunds were owed at all because the 

Court did not direct BPA to provide 

refunds and because the terms of the 

2000 REP Settlement Agreements 

specifically prohibited BPA from 

recouping REP benefits paid under 

those agreements. The IOUs and COUs 

also opposed BPA’s interpretation and 

implementation of the section 7(b)(2) 

rate test for both the Lookback period 

and for setting rates in FY 2009. 

In December 2008, fourteen petitions 

were filed in the Ninth Circuit 

challenging the Lookback-related 

findings and decisions BPA reached in 

the WP–07 Supplemental ROD. These 

challenges were consolidated into The 

Assoc. of Pub. Agency Customers v. 

Bonneville Power Admin., et al. (APAC). 

Also in December 2008, seven petitions 

were filed by a number of IOUs and 

public utility commissions challenging 

BPA’s decision to adopt the final 

RPSAs. These challenges were 

consolidated into Idaho Pub. Util. 

Comm’n v. Bonneville Power Admin. 

(IPUC). On July 16, 2009, the 

Commission granted final approval to 

BPA’s WP–07 rates for FY 2009. Shortly 

thereafter, fifteen more petitions 

challenging BPA’s final WP–07 rates 

were filed with the Ninth Circuit and 

consolidated into Avista Corp., et al. v. 

Bonneville Power Admin. (Avista). 

Briefing on the issues in the APAC and 

IPUC cases began in August of 2009 and 

concluded in March of 2010. Briefing on 

the rate issues in Avista has yet to occur. 

Shortly after petitions were filed in 

the APAC and IPUC cases, BPA 

commenced a rate proceeding to 

establish rates for the FY 2010–2011 

period (WP–10 Rate Proceeding). In the 

WP–10 Rate Proceeding, BPA proposed 

to continue to implement its Lookback 

remedy by reducing the IOUs’ 

prospective REP benefit payments and 

paying refunds to the COUs based on 

the determinations made in the WP–07 

Supplemental ROD. BPA also proposed 

to implement the section 7(b)(2) rate test 

in the same manner as in the WP–07 

Supplemental ROD. On July 21, 2009, 

BPA issued its final ROD in the WP–10 

Rate Proceeding (WP–10 ROD.) In 

October and November of 2009, five 

IOUs filed precautionary petitions for 

review with the Ninth Circuit 

challenging BPA’s decision to continue 

to implement the Lookback remedy in 

the WP–10 ROD. These appeals were 

consolidated in Portland General Elec. 

et al. v. Bonneville Power Admin. (PGE 

II). On August 6, 2010, the Commission 

granted final approval to BPA’s WP–10 

rates. Subsequently, in November of 

2010, fifteen petitions were filed with 

the Ninth Circuit challenging the 

ratemaking decisions BPA reached in 

the WP–10 ROD. The petitions 

challenging BPA’s WP–10 rate making 

decision have yet to be consolidated. 

Following the completion of the 

briefing in the APAC and IPUC cases, 

the litigants in APAC, IPUC, Avista, and 

PGE II agreed to engage in mediation in 

an attempt to resolve their numerous 

disputes. Because many of the issues in 

the mediation would affect the 

prospective implementation of the REP, 

the litigants invited regional parties not 

involved in the litigation to participate 

in the mediation. The mediation 

sessions commenced in early April of 

2010 and continued through May of 

2010. Over fifty litigants and other 

parties participated in the mediation. 

Although by the conclusion of the 

scheduled mediation sessions the 

litigants and parties had not achieved a 

settlement, significant progress had 

been made toward reaching a 

compromise on all existing claims and 

the future implementation of the REP. 

Principals from most of the litigants 

agreed to continue meeting through 

August and September in an attempt to 

achieve a settlement. 

In mid-September 2010, with 

assistance from the mediator, a large 

contingent of COUs and IOUs agreed to 

pursue resolution of the outstanding 

litigation and the future implementation 

of the REP pursuant to the terms of a 

non-binding Agreement in Principle 

(AIP). The AIP committed the 

negotiated parties to work in good faith 

on a final settlement of the REP that 

adhered to certain terms and conditions. 

From September to December of 2010, 

the parties worked to transform the AIP 

into a final settlement document. The 

final version of the proposed 2012 REP 

Settlement is expected to be completed 

by mid-December. 

G. Proposed 2012 REP Settlement 

Agreement 

The proposed 2012 REP Settlement 

would resolve challenges over BPA’s 

implementation of the REP in return for 

a stream of REP benefits to the IOUs for 

a term of 17 years. The COUs’ obligation 

to pay REP benefits in rates would be 

limited to the COUs’ share of the stream 

of REP benefits as set forth in the 

agreement. The distribution of these 

REP payments to the IOUs would 

depend on each IOU’s respective ASC 

and exchange load. The IOUs would 

continue to file ASCs with BPA 


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78702 Federal Register / Vol. 75, No. 241 / Thursday, December 16, 2010 / Notices 

pursuant to the 2008 ASCM. In addition 

to the stream of REP benefits, the IOUs 

would receive a percentage of certain 

BPA Renewable Energy Credits (RECs) 

and the payment of certain outstanding 

interim payments due under the interim 

REP payment agreements between BPA 

and the IOUs. 

The 2012 REP Settlement reflects a 

compromise by a substantial majority of 

BPA’s customers and most of the 

litigants to the litigation on the 

outstanding REP-related issues. It was 

developed after extensive negotiations 

by representatives of COU customers, 

IOU customers, public utility 

commissions, and ratepayer advocacy 

groups. Many of these entities signed 

the AIP and are expected to sign the 

2012 REP Settlement once it is 

completed. These parties have requested 

that BPA review the proposed 

settlement, and, if consistent with law, 

execute the Agreement and set rates 

consistent with its terms. 

Part V. Summary of Proposal and 

Description of Major Studies 

A. Summary of Proposal 

Although BPA firmly believes that 

settlement of the existing REP litigation 

is in the interest of all BPA ratepayers, 

BPA must ensure that the terms and 

conditions in the 2012 REP Settlement 

are reasonable and comply with all 

relevant statutory provisions before 

executing the Agreement. BPA is 

conducting a section 7(i) proceeding to 

provide a forum in which BPA and 

other interested parties can evaluate the 

reasonableness and legal sufficiency of 

the proposed 2012 REP Settlement. 

At the conclusion of the REP–12 

proceeding, the Administrator will 

determine, after reviewing all evidence 

and arguments contained in the record, 

whether the terms of the proposed 2012 

REP Settlement comport with BPA’s 

statutory duties and authorities. If the 

Administrator determines that the 

settlement is consistent with applicable 

law, and is broadly supported by BPA’s 

customers and other interested parties, 

he will sign the proposed 2012 REP 

Settlement and set BPA’s FY 2012–2013 

rates in accordance with the terms of the 

2012 REP Settlement. In such case, the 

2012 REP Settlement would replace 

BPA’s current construct of withholding 

REP benefits due the IOUs and paying 

Lookback refund credits to eligible 

COUs as described in the WP–07 

Supplemental ROD. In addition, the 

2012 REP Settlement would settle the 

amount of rate protection afforded to 

COUs for the term of the agreement, 

obviating the need to continue the 

litigation over the section 7(b)(2) 

decisions BPA reached in the WP–07 

Supplemental ROD and the WP–10 

ROD. 

If the Administrator determines the 

proposed 2012 REP Settlement is not 

consistent with BPA’s statutory duties 

or is otherwise unreasonable, the 

Administrator will not sign the 2012 

REP Settlement but will instead 

continue to set rates, recover Lookback 

Amounts and issue refunds consistent 

with his decisions in the WP–07 

Supplemental ROD and the WP–10 

ROD. 

B. 2012 REP Settlement Analysis Initial 

Proposal 

To test the reasonableness of the 

proposed 2012 REP Settlement, BPA 

will perform an analysis that will 

develop a range of forecast REP benefits 

reflecting the likely amount of REP 

benefits the IOUs would receive (and 

conversely the amount of rate protection 

the COUs would likely receive) in the 

absence of the 2012 REP Settlement. 

The range of REP benefits will be 

developed by quantifying the major 

issues being litigated by BPA, the IOUs, 

and the COUs in the current and 

pending litigation. Broadly speaking, 

the major issues being litigated today 

are the implementation of the section 

7(b)(2) rate test, allocation of rate 

protection costs under section 7(b)(3), 

and the development and calculation of 

the Lookback Amounts. For each of 

these main issues, BPA will develop a 

17-year forecast of REP benefits that is 

based on the parties’ respective legal 

positions. The amount of REP benefits 

allowed under these various 

assumptions will then be compared to 

the REP benefits afforded to the IOUs 

under the 2012 REP Settlement to test 

whether the terms of the 2012 REP 

Settlement are reasonable and 

consistent with the protections provided 

by law. 

BPA has modified the near-term Rate 

Analysis Model and has developed a 

new long-term section 7(b)(2) rate test 

model to quantify the parties’ various 

litigation positions on rates and forecast 

REP benefits. The models will be used 

in tandem to quantify the near-term and 

long-term financial impacts on REP 

benefits under a variety of different 

litigation scenarios. Specifically, the 

models will evaluate the following 

contested issues: Rate test treatment of 

conservation resources and their effect 

on loads; treatment of conservation 

costs in the rate test; rate test accounting 

and financing treatment of conservation 

resource costs; rate test repayment 

study; treatment of Mid-Columbia 

resources; treatment of secondary 

energy credit; discounting of the stream 

of rate projections; elasticity of DSI 

loads; and allocation of rate protection 

costs to surplus power sales. Other 

scenarios may be added during the 

course of the proceeding. In addition to 

the rate modeling, the quantitative 

analysis will include the effect of 

parties’ positions on the amount of 

Lookback Amounts owed on future REP 

benefits. 

For purposes of the REP–12 Initial 

Proposal, BPA will use the above-noted 

issues to produce future REP benefits 

under different litigation scenarios. 

These scenarios are presented in the 

2012 REP Settlement Agreement Study 

and Analysis. The models also quantify 

the impacts of non-litigation issues on 

future REP benefits, such as future 

growth in ASCs and BPA program costs. 

C. Implementation of 2012 REP 

Settlement in Rates 

In addition to the settling of the 

various REP issues in litigation, the 

2012 REP Settlement also specifies 

certain ratemaking treatment of REPrelated costs. Implementing the 2012 

REP Settlement in ratemaking will affect 

the PF Exchange rate, the Industrial 

Firm Power rate (IP), and the New 

Resources rate (NR). While these 

ratemaking treatments have been 

already incorporated into the initial rate 

proposal in the BP–12 proceeding, the 

REP–12 proceeding will be examining 

these various ratemaking specifications 

to test whether the ratemaking 

treatments of the 2012 REP Settlement 

are reasonable and consistent with law. 

D. Initial Proposal for the Section 7(b)(2) 

Rate Test and Lookback Amount 

Determinations in the Absence of 

Settlement 

As noted above, BPA is evaluating the 

reasonableness and sustainability of the 

2012 REP Settlement in the REP–12 

proceeding. If the Administrator 

determines that the 2012 REP 

Settlement is not reasonable or is 

otherwise unlawful, the 2012 REP 

Settlement will not be executed and 

BPA will set rates assuming no 

settlement of the REP. Consequently, as 

an alternative to the 2012 REP 

Settlement, BPA is also proposing to 

implement the section 7(b)(2) rate test, 

the section 7(b)(3) allocations and 

surcharges, and the Lookback recovery 

and return for FY 2012–2013 in 

accordance with the decisions BPA 

reached in the WP–07 Supplemental 

ROD and WP–10 ROD, unless otherwise 

stated. If the 2012 REP Settlement is not 

adopted, the final decisions BPA 

reaches on these issues in this case will 

be incorporated into the BP–12 rate 

proceeding. 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 241 / Thursday, December 16, 2010 / Notices 78703 

E. Major Studies 

1. 2012 REP Settlement Agreement 

Study and Analysis 

The 2012 REP Settlement Agreement 

Study and Analysis (REP Study) 

describes the terms of the 2012 REP 

Settlement and provides the analytical 

work BPA staff is performing to test the 

reasonableness of the 2012 REP 

Settlement. The REP Study is comprised 

of two major parts. 

Part I of the REP Study reviews the 

history of the REP and the background 

underlying the current litigation. This 

portion of the REP Study also contains 

an overview of the section 7(b)(2) rate 

test and a description of how rate 

protection works in BPA ratemaking. 

Part I also describes the terms of the 

proposed 2012 REP Settlement and 

explains how BPA staff intends to 

implement the terms of the proposed 

settlement in BPA’s rates. 

Part II of the REP Study contains BPA 

staff’s evaluation and analysis of the 

2012 REP Settlement. This portion of 

the REP Study begins with an 

explanation of the criteria BPA staff is 

using to evaluate the 2012 REP 

Settlement. This section is followed by 

an overview of the models BPA staff 

developed to create a variety of nearand long-term forecasts of REP benefits 

under various scenarios. Part II of the 

REP Study also describes the various 

factors that will have an effect on REP 

benefits, such as the current and future 

issues in litigation and issues related to 

ASCs and the PF Exchange rate. At the 

end of Part II of the REP Study, BPA 

staff presents its scenario analysis. In 

this section, BPA staff presents nearand long-term REP benefits under 

different scenarios. These scenario REP 

benefits are compared to the REP 

benefits provided under the proposed 

2012 REP Settlement to determine, from 

an analytical perspective, whether the 

2012 REP Settlement affords rate 

protection to COUs and is otherwise 

reasonable. 

2. FY 2012–2013 7(b)(2) Rate Test and 

Documentation 

This Study will be used only if the 

2012 REP Settlement is not adopted. 

BPA has interpreted the Northwest 

Power Act and described how the 

section 7(b)(2) rate test will be 

performed in the Section 7(b)(2) Legal 

Interpretation (Legal Interpretation) and 

Section 7(b)(2) Implementation 

Methodology (Implementation 

Methodology) published in August, 

2008. The Section 7(b)(2) Rate Test 

Study explains and documents the 

results of the rate test. 

The 7(b)(2) rate test triggers in this 

proposal if no REP settlement is 

assumed, creating rate protection for 

preference customers and causing test 

period costs to be reallocated to others. 

The PF Public rate applied to the 

general requirements of COUs has been 

reduced by the rate protection amount 

and reallocated to other rates pursuant 

to section 7(b)(3). BPA’s other rates, the 

PF Exchange rate and the NR and IP 

rates, have been increased by an 

allocation of the rate protection amount. 

An allocation of the rate protection 

amount has also been assigned to 

surplus power sales. 

3. FY 2012–2013 Lookback Study 

This Study will only be used if the 

2012 REP Settlement is not adopted. 

This Study explains and documents 

BPA’s proposed modifications to the 

amounts to be recovered from the IOUs 

and applied to the Lookback Amounts 

determined in the final WP–07 

Supplemental Proposal. The Study also 

sets forth the accounting of the 

Lookback Amounts expected to be 

recovered from IOUs and repaid to 

COUs during the FY 2012–2013 rate 

period. BPA also explains in this Study 

what amount of Lookback will be 

recovered from IOUs and returned to 

applicable COUs for the FY 2012–2013 

rate period. 

Part VI—Proposed 2012 REP Settlement 

Agreement 

On December 17, 2010, a draft of the 

proposed 2012 REP Settlement will be 

available for viewing and downloading 

on BPA’s Web site at http:// 

www.bpa.gov/corporate/ratecase/2012/ 

rep-12.cfm. Copies of the draft 2012 REP 

Settlement will also be available for 

viewing in BPA’s Public Reference 

Room at the BPA Headquarters, 1st 

Floor, 905 NE. 11th Avenue, Portland, 

OR 97232. 

Issued this 7th day of December 2010. 

Stephen J. Wright, 

Administrator and Chief Executive Officer. 

[FR Doc. 2010–31622 Filed 12–15–10; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

[Docket No. IC10–542–001, FERC–542] 

Commission Information Collection 

Activities, Proposed Collection; 

Comment Request; Submitted for OMB 

Review 

December 9, 2010. 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Notice. 

SUMMARY: In compliance with the 

requirements of section 3507 of the 

Paperwork Reduction Act of 1995, 44 

U.S.C. 3507, the Federal Energy 

Regulatory Commission (FERC or the 

Commission) has submitted the 

information collection described below 

to the Office of Management and Budget 

(OMB) for review and extension of this 

information collection requirement. Any 

interested person may file comments 

directly with OMB and should address 

a copy of those comments to the 

Commission as explained below. The 

Commission received no comments in 

response to an earlier Federal Register 

notice of August 2010 (75 FR 45609) 

and has notified OMB of this in its 

submission. 

DATES: Further comments on this 

collection of information are due by 

January 18, 2011. 

ADDRESSES: Address further comments 

on this collection of information to the 

Office of Management and Budget, 

Office of Information and Regulatory 

Affairs, Attention: Federal Energy 

Regulatory Commission Desk Officer. 

Comments to OMB should be filed 

electronically, c/o 

oira_submission@omb.eop.gov and 

include OMB Control Number 1902– 

0070 for reference. The Desk Officer 

may be reached by telephone at 202– 

395–4638. 

A copy of the comments should also 

be sent to the Federal Energy Regulatory 

Commission and should refer to Docket 

No. IC10–542–001. Comments may be 

filed either electronically or in paper 

format. Those persons filing 

electronically do not need to make a 

paper filing. Documents filed 

electronically via the Internet must be 

prepared in an acceptable filing format 

and in compliance with the Federal 

Energy Regulatory Commission 

submission guidelines. Complete filing 

instructions and acceptable filing 

formats are available at http:// 

www.ferc.gov/help/submissionguide.asp. To file the document 


srobinson on DSKHWCL6B1PROD with NOTICES