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[Federal Register Volume 75, Number 241 (Thursday, December 16, 2010)]
[Notices]
[Pages 78690-78694]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31621]

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DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA File No.: BP-12]

Fiscal Year (FY) 2012-2013 Proposed Transmission Rate Adjustments 
Public Hearing and Opportunities for Public Review and Comment

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

ACTION: Notice of FY 2012-2013 proposed transmission rate adjustments.

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SUMMARY: BPA is holding a consolidated rate proceeding, Docket No. BP-
12, to establish power and transmission rates for FY 2012-2013. The 
purpose of this Federal Register Notice is to provide notice of the 
proposed rates for

[[Page 78691]]

transmission and for the two required ancillary services (listed below, 
part IV.C.). BPA has previously issued a separate Federal Register 
Notice to provide notice of the proposed rates for power, the other 
ancillary services, and all control area services.
    The Pacific Northwest Electric Power Planning and Conservation Act 
(Northwest Power Act) provides that BPA must establish and periodically 
review and revise its rates so that they are adequate to recover, in 
accordance with sound business principles, the costs associated with 
the acquisition, conservation, and transmission of electric power, 
including amortization of the Federal investment in the Federal 
Columbia River Power System (FCRPS) over a reasonable number of years 
and BPA's other costs and expenses. The Northwest Power Act also 
requires that BPA's rates be established based on the record of a 
formal hearing, and for transmission rates only, that the costs of the 
Federal transmission system be equitably allocated between Federal and 
non-Federal power utilizing the system. By this notice, BPA announces 
the commencement of the transmission portion of a power and 
transmission rate adjustment proceeding, for rates to become effective 
on October 1, 2011.

DATES: Anyone who has previously intervened in the BP-12 rate 
proceeding is automatically a party to this portion of the proceeding 
as well. Anyone who has not intervened in the BP-12 rate proceeding and 
wishes to become a party to the proceeding for purposes of the 
transmission portion of the case only must intervene by sending notice 
to the addresses listed below no later than 5 p.m. on December 23, 
2010. Parties that intervene at this time may not participate in the 
power portion of the rate proceeding.
    The transmission portion of the BP-12 rate adjustment proceeding 
begins with a prehearing conference at 9 a.m. on December 17, 2010, in 
the BPA Rates Hearing Room, 2nd floor, 911 NE. 11th Avenue, Portland, 
Oregon 97232.
    Written comments by non-party participants must be received by 
March 8, 2011 to be considered in the Administrator's ROD.

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 both Mr. Peter J. Burger, LP-7, and Mr. Barry 
Bennett, LC-7, Office of General Counsel, 905 NE. 11th Avenue, 
Portland, Oregon 97232, or via e-mail to pjburger@bpa.gov and 
bbennett@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 BP-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 Officials: Ms. Rebecca E. Fredrickson, Transmission 
Rates Manager, is the official responsible for the development of BPA's 
transmission, ancillary and control area services (ACS) rates.

SUPPLEMENTARY INFORMATION:

Table of Contents

Part I. Introduction and Procedural Background
Part II. Scope of 2012 Rate Proceeding
Part III. Public Participation in BP-12
Part IV. Summary of Rate Proposal
Part V. Proposed 2012 Rate Schedules

Part I--Introduction and Procedural Background

    Section 7(i) of the Northwest Power Act, 16 U.S.C. 839e(i), 
requires that BPA's rates be established according to certain 
procedures, including publication in the Federal Register of this 
notice of the proposed rates; one or more hearings conducted as 
expeditiously as practicable by a Hearing Officer; opportunity for both 
oral presentation and written submission of views, data, questions, and 
arguments related to the proposed rates; and a decision by the 
Administrator based on the record. BPA's rate proceedings are further 
governed by BPA's Procedures Governing Bonneville Power Administration 
Rate Hearings, 51 Federal Register 7611 (1986), which implement and 
expand the statutory requirements.
    This proceeding is being conducted under the rule for general rate 
proceedings, section 1010.4 of BPA's Procedures. A proposed schedule 
for the proceeding is provided below. A final schedule will be 
established by the Hearing Officer at the prehearing conference.

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Prehearing/BPA Direct Case.............  December 17.
Intervention Deadline..................  December 23.
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...................  May 2.
Oral Argument..........................  May 12.
Draft ROD Issued.......................  June 14.
Briefs on Exceptions...................  June 24.
Final ROD--Final Studies...............  July 25.
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    Section 1010.7 of BPA's Procedures prohibits ex parte 
communications. The ex parte rule applies to all BPA and DOE employees 
and contractors. Except as provided below, any outside communications 
with BPA and/or DOE personnel regarding the merits of any issue in 
BPA's rate proceeding by other Executive Branch agencies, Congress, 
existing or potential BPA customers (including Tribes), or nonprofit or 
public interest groups are considered outside communications and are 
subject to the ex parte rule. The rule does not apply to communications 
relating to: (1) 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 ROD is issued, which 
is scheduled to occur on or about July 25, 2011.

Part II--Scope of 2012 Rate Proceeding

A. Joint Rate Proceeding

    BPA is holding one wholesale power and transmission rate proceeding 
with

[[Page 78692]]

one schedule, one record, and one ROD. As noted above in the summary, 
BPA has issued a separate Federal Register Notice to provide notice of 
the proposed power rates and rates for certain ancillary services and 
all control area services.

B. 2010 Integrated Program Review

    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 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 the 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 Close-Out Letter and 
report, BPA established the program level cost estimates for both power 
and transmission rates that are used in the Initial Proposal. 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 rate proceeding to 
share updates and solicit feedback from customers and constituents 
before the final program levels are incorporated into the final rates.

C. Rate Case Workshops

    In preparation for the BP-12 rate proceeding, BPA held several 
public rate case workshops with customers and interested parties from 
March through September 2010. During the workshops, BPA staff presented 
and discussed information about costs, load and resource forecasting, 
generation inputs pricing, segmentation, revenue forecasts, load 
forecasts, risk analysis and mitigation, products, pricing, and rate 
design. Customers and interested parties had extensive opportunity to 
participate, raise issues, present alternative proposals, and comment 
on the information BPA staff presented. The comments and alternatives 
received during these workshops have assisted in the preparation of the 
Initial Proposal.

D. Scope of the Rate Proceeding

    This section provides guidance to the Hearing Officer as to those 
matters that are within the scope of the rate proceeding and those that 
are outside the scope.
1. Program Cost Estimates
    Some of the decisions that determine program costs and spending 
levels have been made in the IPR public review process outside the rate 
proceeding. See section II.B. BPA's spending levels for investments and 
expenses are not determined or subject to review in rate proceedings.
    Pursuant to section 1010.3(f) of BPA's Procedures, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that challenges the 
appropriateness or reasonableness of the Administrator's decisions on 
cost and spending levels. If, and to the extent that, any re-
examination of spending levels is necessary, such re-examination will 
occur outside of the rate proceeding. This exclusion does not extend to 
portions of the revenue requirements related to interest rate 
forecasts, interest expense and credit, Treasury repayment schedules, 
forecasts of depreciation, forecasts of system replacements used in 
repayment studies, generation acquisition expense incurred by 
Transmission Services, minimum required net revenue, and the costs of 
risk mitigation actions resulting from the expense and revenue 
uncertainties included in the risk analysis. The Administrator also 
directs the Hearing Officer to exclude argument and evidence regarding 
BPA's debt management practices and policies. See section II.D.2.
2. Federal and Non-Federal Debt Service and Debt Management
    During the 2010 IPR and in other forums, BPA provided the public 
with background information on BPA's internal Federal and non-Federal 
debt management policies and practices. While these policies and 
practices are not decided in the IPR forum, these discussions were 
intended to inform interested parties about these matters so that they 
would better understand BPA's debt structure. Notwithstanding the 
public discussions, BPA's debt management policies and practices remain 
outside the scope of the rate proceeding.
    Pursuant to Sec.  1010.3(f) of BPA's 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 debt management policies 
and practices.
3. Potential Environmental Impacts
    Environmental impacts are addressed in a concurrent National 
Environmental Policy Act (NEPA) process. See section II.E.
    Pursuant to Sec.  1010.3(f) of BPA's 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.

E. The National Environmental Policy Act

    BPA is in the process of assessing the potential environmental 
effects of its proposed power and transmission rates, consistent with 
the NEPA. The NEPA process is conducted separately from the rate 
proceeding. As discussed in section II.D.3., all evidence and argument 
addressing potential environmental impacts of rates being developed in 
the BP-12 rate proceeding are excluded from the rate proceeding hearing 
record. Rather, comments on environmental effects should be directed to 
the NEPA process.
    Because this proposal involves BPA's ongoing business practices 
related to rates, BPA is reviewing the proposal for consistency with 
BPA's Business Plan Environmental Impact Statement (Business Plan EIS), 
completed in June 1995 (BOE/EIS-0183). This policy-level EIS evaluates 
the environmental impacts of a range of business plan alternatives for 
BPA that could be varied by applying various policy modules, including 
one for rates. Any combination of alternative policy modules should 
allow BPA to balance its costs and revenues. The Business Plan EIS also 
includes response strategies, such as adjustments to rates, that BPA 
could implement if BPA's costs exceed its revenues.
    In August 1995, the BPA Administrator issued a ROD (Business Plan 
ROD) that adopted the Market-Driven Alternative from the Business Plan 
EIS. This alternative was selected because, among other reasons, it 
allows BPA to: (1) Recover costs through rates;

[[Page 78693]]

(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. 
BPA also committed to apply as many response strategies as necessary 
when BPA's costs and revenues do not balance.
    In April 2007, BPA completed and issued a Supplement Analysis to 
the Business Plan EIS. This Supplement Analysis found that the Business 
Plan EIS's relationship-based and policy-level analysis of potential 
environmental impacts from BPA's business practices remains valid, and 
that BPA's current business practices remain consistent with BPA's 
Market-Driven Alternative approach. The Business Plan EIS and ROD thus 
continue to provide a sound basis for making determinations under NEPA 
concerning BPA's policy-level decisions, including rates.
    Because the proposed rates likely would assist BPA in accomplishing 
the goals identified in the Business Plan ROD, the proposal appears 
consistent with these aspects of the Market-Driven Alternative. In 
addition, this rate proposal is similar to the type of rate designs 
evaluated in the Business Plan EIS; thus, implementation of this rate 
proposal would not be expected to result in environmental impacts 
significantly different from those examined in the Business Plan EIS. 
Therefore, BPA expects that this rate proposal likely will fall within 
the scope of the Market-Driven Alternative that was evaluated in the 
Business Plan EIS and adopted in the Business Plan ROD.
    As part of the Administrator's ROD that will be prepared for the 
BP-12 rate proceeding, BPA may tier its decision under NEPA to the 
Business Plan ROD. However, depending upon the ongoing environmental 
review, BPA may instead issue another appropriate NEPA document. 
Comments regarding the potential environmental effects of the proposal 
may be submitted to Katherine Pierce, NEPA Compliance Officer, KEC-4, 
Bonneville Power Administration, 905 NE 11th Avenue, Portland, OR 
97232. Any such comments received by the comment deadline for 
Participant Comments identified in section III.A. below will be 
considered by BPA's NEPA compliance staff in the NEPA process that will 
be conducted for this proposal.

Part III--Public Participation in BP-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 people 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 customers and affiliated customer groups 
will be granted intervention based on petitions filed in conformance 
with BPA's 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 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 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 for final decision.
    The Administrator will develop final rates 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 file its rates with the 
Commission for confirmation and approval after issuance of the Final 
ROD.

Part IV--Summary of Rate Proposal

A. Partial Settlement of Transmission Rates

    Transmission Services and most of its customers are parties to a 
Partial Settlement Agreement that provides for Transmission Services to 
submit a Settlement Proposal that incorporates the provisions of the 
agreement. Under the Partial Settlement Agreement, Transmission 
Services will propose maintaining current FY 2010-2011 rates, with no 
rate increase for the FY 2012-2013 period, for all transmission 
services and for two ancillary services: Scheduling, System Control and 
Dispatch Service and Reactive Supply and Voltage Control from 
Generation Sources Service. The remaining ancillary services and all 
control area services are not covered by the partial settlement.
    The Partial Settlement Agreement also includes changes to the 
Failure to Comply Penalty Charge, the Network Integration Rate, and the 
Integration of Resources Rate, as well as changes to several 
definitions in the General Rate Schedule Provisions. In addition, the 
agreement restricts the arguments parties to the settlement may make 
regarding the reliance of Power Services on reserves attributable to 
Transmission Services and commits BPA to various public processes 
regarding rates and other issues.
    Under the Partial Settlement Agreement the Administrator will 
establish the Montana Intertie (IM) and Eastern Intertie (IE) rates, 
and consider revisions to the Townsend-Garrison Transmission rate, in a 
contested process in this rate case. However, under the agreement, BPA 
staff will propose that the IM and IE rates be no higher than the 
existing rates, and the

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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-to-point 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 low-voltage 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]
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