[Federal Register Volume 60, Number 30 (Tuesday, February 14, 1995)]
[Notices]
[Pages 8505-8511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3535]



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Proposed Transmission Rate Adjustment, Public Hearing, and 
Opportunities for Public Review and Comment

AGENCY: Bonneville Power Administration (BPA), DOE.

ACTION: Notice and Opportunities for Review and Comment.

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SUMMARY: BPA File No: TR-95. BPA requests that all comments and 
documents intended to become part of the Official Record in this 
process contain the file number designation TR-95.
    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, and 
to recover the Federal investment in the Federal Columbia River Power 
System (FCRPS) and other costs incurred by BPA. BPA is proposing to 
revise its transmission rate schedules to be effective October 1, 1995, 
through September 30, 1997, to produce sufficient revenues for BPA to 
meet its costs for Fiscal Year (FY) 1996 and FY 1997.
    Opportunities will be available for interested persons to review 
BPA's rate proposal, to participate in the rate hearing, and to submit 
oral and written comments. During the development of the final rate 
proposal, BPA will evaluate all written and oral comments received in 
the rate proceeding. Consideration of comments and more current data 
may result in the final rate proposal differing from the rates proposed 
in this Notice.

DATES: Persons wishing to become a formal ``party'' to the proceedings 
must notify BPA in writing of their intention to do so in accordance 
with requirements stated in this Notice. Petitions to intervene must be 
received by 9 a.m. February 13, 1995, and should be addressed as 
follows: Hearing Officer, c/o Francis (Jamie) Troy, Hearing Clerk--LQ, 
Bonneville Power Administration, NE. 11th Ave., Box 12999, Portland, 
Oregon 97212.
    In addition, a copy of the petition must be served concurrently on 
BPA's Office of Legal Services: Janet L. Prewitt, Office of Legal 
Services--LQ, Bonneville Power Administration, Box 3621, Portland, 
Oregon 97208.
    Persons who have been denied party status in any past BPA rate 
proceeding shall continue to be denied party status unless they 
establish a significant change of circumstances.
    A prehearing conference will be held before the Hearing Officer at 
9 a.m. on February 13, 1995, in the BPA Rates Hearing Room, 3rd Level, 
2032 Lloyd Center, Portland, Oregon. Registration for the prehearing 
conference will begin at 8:30 a.m. BPA will prefile preliminary 
proposal studies at the prehearing conference. The Hearing Officer will 
act on all intervention petitions and oppositions to intervention 
petitions, rule on any motions, establish additional procedures, 
establish a service list, establish a procedural schedule, and 
consolidate parties with similar interests for purposes of filing 
jointly sponsored testimony and briefs, and for expediting any 
necessary cross-examination. A notice of the dates and times of any 
hearings will be mailed to all parties of record. Objections to orders 
made by the Hearing Officer at the prehearing conference must be made 
in person or through a representative at the prehearing conference. The 
rate hearing schedule will be published in the Federal Register 
immediately following the prehearing conference.
    The following schedule information is provided for informational 
purposes.

On or about February 9, 1995
    Rate Schedules, General Rate Schedule Provisions, and Transmission 
Tariffs mailed to customers and 1993 rate case Parties, and available 
from BPA's Public Information Center; 905 NE. 11th, 1st Floor, 
Portland, Oregon.
February 13, 1995
    Deadline for interventions to be filed with Hearing Clerk at above 
address.
On or about February 13, 1995
    Preliminary proposal studies available at BPA's Rates Hearing Room, 
2032 Lloyd Center, Portland, Oregon and BPA's Public Information 
Center, 905 NE. 11th, 1st Floor, Portland, Oregon.
February 13, 1995
    Prehearing conference to set schedule and act on petitions to 
intervene.
On or about April 5, 1995
    BPA Initial Proposal filed.
October 29, 1995
    Final Record of Decision published.

    BPA also will be conducting public field hearings. A field hearing 
schedule will be announced at the prehearing conference. A notice of 
the dates, times, and locations of the field hearings will be made 
later through mailings and public advertising.
    When BPA holds public field hearings, written transcripts are made 
[[Page 8506]] and included in the official record. A notice of the 
dates and times of the field hearings also will be published in the 
Federal Register.

ADDRESSES: Written comments by participants must be received by May 15, 
1995, to be considered in the Draft Record of Decision (ROD). Written 
comments should be submitted to the Manager; Corporate Communications--
CK; Bonneville Power Administration; 905 NE. 11th; P.O. Box 12999; 
Portland, Oregon 97212.

FOR FURTHER INFORMATION CONTACT: Mr. Michael Hansen, Public Involvement 
and Information Specialist, at the address listed above, (503) 230-4328 
or call toll-free 1-800-622-4519. Information also may be obtained 
from:

Mr. Steve Hickok; Group Vice President, Sales and Customer Service; 
P.O. Box 3621; Portland, OR 97208, (503) 230-5356.
Mr. George Eskridge; Manager, SE Sales and Customer Service District; 
1101 W. River, Suite 250; Boise, ID 83702, (208) 334-9137.
Mr. Ken Hustad; Manager, NE Sales and Customer Service District; 
Crescent Court, Suite 500; 707 Main; Spokane, WA 99201, (509) 353-2518.
Ms. Ruth Bennett; Manager, SW Sales and Customer Service District; 703 
Broadway; Vancouver, WA 98660, (360) 418-8600.
Ms. Marg Nelson; Manager, NW Sales and Customer Service District; Suite 
400, 201 Queen Anne Ave. N.; Seattle, WA 98109-1030, (206) 216-4272.

    Responsible Official: Mr. Geoff Moorman, Manager for Pricing, 
Marginal Cost and Ratemaking, is the official responsible for the 
development of BPA's rates.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Purpose and Scope of Hearing
III. Procedures Governing Rate Adjustments and Public Participation
IV. Major Studies
V. Major Studies
Transmission Rates
Transmission Rate Schedules

I. Introduction

    After the 1993 Rate Case, BPA conducted a series of workshops on 
subjects relevant to BPA's ratemaking. The purpose of the workshops was 
to identify, simplify, and reduce the number of issues that might 
become part of the 1995 rate case and to reduce the amount of discovery 
normally required during the formal rate proceedings. Opportunity was 
provided to address the impacts of reinvention, transmission issues, 
risk mitigation, forecasted revenue requirements, and rate design 
issues. The workshops provided opportunity for informal public comment 
on issues prior to the formal hearing process.
    On December 28, 1994, BPA published in the Federal Register a 
Notice of ``Intent to Revise Transmission Rates to Become Effective 
October 1, 1995,'' 57 FR 66946, in order to satisfy contractual 
provisions between BPA and its customers. Since then, BPA has continued 
to study the adequacy of its current rates and has concluded that 
current rates must be adjusted for the FY 1996 and FY 1997 rate period.
    In order to assess its current rates, BPA first determined the 
amount of revenues required to meet its financial obligations in FY 
1996 and FY 1997. BPA has determined that the revenues it would expect 
to collect from projected sales under its current rates will not 
recover these revenue requirements. Therefore, BPA proposes to revise 
its current transmission rates. At the conclusion of this rate 
proceeding, BPA will file its rates with FERC for confirmation and 
approval.
    The proposed transmission rates were prepared in accordance with 
BPA's statutory authority to develop rates, including the Bonneville 
Project Act of 1937, as amended, 16 U.S.C. 832 (1982); the Flood 
Control Act of 1944, 16 U.S.C. 825s (1982); the Federal Columbia River 
Transmission System Act (Transmission System Act), 16 U.S.C. 838 
(1982); the Pacific Northwest Electric Power Planning and Conservation 
Act, 16 U.S.C. 839 (1982); and the Energy Policy Act of 1992, Pub. L. 
No. 102-486, 106 Stat. 2776 (1992).
    In the Energy Policy Act of 1992, Congress approved amendments to 
the Federal Power Act that allow FERC to order access to transmitting 
utilities' systems. As a result, FERC has developed standards for 
providing comparable access including guidelines for pricing such 
access. This rate proposal includes two new rate schedules (the Network 
Integration and Point-to-Point Firm rates) to be used for FERC-ordered 
transmission access and which are designed to allow comparable access 
to BPA's transmission system. BPA's Energy Transmission rate schedule 
will be used to price comparable service for nonfirm uses of the 
transmission system. In a process concurrent with the 1995 rate case, 
BPA is proposing terms and conditions for these new services for FERC 
approval. For further information about the terms and conditions 
process, please contact Mr. Dennis Metcalf, Transmission Team Lead, 
(503) 230-3410 or Mr. Michael Hansen, Public Involvement and 
Information Specialist, (503) 230-4328.
    BPA proposes that its transmission rate schedules, including the 
adjustments, charges and special rate provisions, and the General Rate 
Schedule Provisions (GRSPs) associated with these rate schedules, 
become effective upon interim approval or upon final confirmation and 
approval by FERC. (BPA's proposal combines the general rate schedule 
provisions for wholesale power rates and transmission rates into one 
document--the GRSPs.) BPA currently anticipates that it will request 
FERC approval effective October 1, 1995, or at the same time as its 
revised power rates. The 1995 transmission rate schedules and the GRSPs 
shall supersede BPA's 1993 rate schedules and General Transmission Rate 
Schedule Provisions (which became effective October 1, 1993) to the 
extent stated in the Availability section of each 1995 rate schedule.
    BPA is proposing extension of the Townsend-Garrison Transmission 
rate and the Use of Facilities rate with no changes. The Market 
Transmission rate is being revised only to the extent that the Reactive 
Power Charge is being included in the rate schedule. Three new rates 
are proposed: the Network Integration Transmission rate; the Point-to-
Point Firm Transmission rate; and the Advance Funding rate. The 
proposed Southern Intertie Annual Costs rate is substantially changed 
to reflect the outcome of contract negotiations. In addition, a 
Reservation Charge for Transmission Capacity and a Reactive Power 
Charge are included in many of the transmission rate schedules. BPA 
also has provided for charging opportunity costs in the firm 
transmission rates for new requests for transmission capacity.
    In developing the proposed transmission rates, BPA considered many 
factors, including revenue requirements, ease of administration, 
revenue stability, rate continuity, comparability, ease of 
comprehension, contract provisions, and BPA's statutory obligations. 
The studies that have been prepared to support the proposed preliminary 
transmission rates will be mailed to all parties in BPA's 1993 rate 
case and will be available for examination on February 13, 1995, at 
BPA's Public Information Center; BPA Headquarters Building; 1st Floor; 
905 NE. 11th; Portland, and will be available at the prehearing 
conference, to the extent they are available. The preliminary studies 
and documents that relate to transmission rates are:

[[Page 8507]] 1. Loads and Resources Study and Documentation
2. Revenue Requirement Study and Documentation
3. Segmentation Study
4. Wholesale Power Rate Development Study and Documentation
5. Transmission Rate Design Study
6. Wholesale Power Rate and Transmission Rate Schedules

BPA's proposed Wholesale Power and Transmission Rate Schedules, General 
Rate Schedule Provisions, and Transmission Tariffs will be published in 
a separate Federal Register Notice on or about February 13, 1995. The 
documents described above will be mailed to BPA's customers, 1993 rate 
case parties, and other interested persons, and will be available from 
BPA's Public Information Center on or about February 9, 1995.
    To request any of the above documents by telephone, call BPA's 
document request line: (503) 230-3478 or call toll-free 1-800-622-4520. 
Please request the document by its above-listed title. Also state 
whether you require the accompanying documentation (these can be quite 
lengthy); otherwise the study alone will be provided. (For example, ask 
for the ``Revenue Requirement Study and Documentation.'')
    Because of the complexity of the issues in this rate case, in part 
occasioned by continuing contract negotiations between BPA and its 
customers as well as BPA's ``reinvention'' and Competitiveness Project, 
BPA anticipates that there will be a need to meet with customers and 
other interested third parties during the rate case on a very frequent, 
and possibly extended, basis. To comport with the rate case procedural 
rule prohibiting ex parte communications, BPA will provide necessary 
notice of meetings involving rate case issues for participation by all 
rate case parties. Parties should be aware, however, that such meetings 
may be held on very short notice and they should be prepared to devote 
the necessary resources to fully participate in every aspect of the 
rate proceeding. Consequently, parties should be prepared to attend 
meetings every day during the course of the rate case.

II. Purpose and Scope of Hearing

    BPA's proposal to revise its rates is needed in order to continue 
to recover all costs and expenses allocated to the power system, 
including amortization of the Federal investment in the FCRPS over a 
reasonable period of time, and to recover costs in a way that achieves 
the goals of BPA's Competitiveness Project.
    BPA began its Competitiveness Project in early 1993 in response to 
market forces and deregulation of the electric utility industry. The 
project, a re-invention of the agency to make it more competitive in 
the new marketplace, included the development of a new business 
concept, a marketing plan, a review of all of BPA's activities leading 
to structural reorganization, strategic action plans for each of BPA`s 
major activities, an internal effort to promote leadership and employee 
empowerment, and proposals to eliminate unnecessary administrative and 
regulatory requirements.
    BPA's Draft Strategic Business Plan and the Draft Business Plan EIS 
were released to the public in June 1994. The Draft Strategic Business 
Plan sets the overall strategic direction for both serving BPA's 
customers and meeting BPA's legislated responsibilities, including new 
statements of BPA's mission, values, and strategic business objectives 
to guide BPA's activities. The Draft Strategic Business Plan also 
describes the conceptual framework for the products BPA is offering. As 
stated in the Draft Strategic Business Plan, BPA's pricing policies are 
designed to meet many objectives, including: (1) providing maximum 
customer choice and encouraging optimal use of the FCRPS; (2) 
contributing to BPA's continued viability in an increasingly 
competitive energy market environment; and (3) allowing BPA to take 
full advantage of its responsibility and authority to manage the FCRPS, 
consistent with all statutory requirements.
    The Draft Strategic Business Plan envisions BPA as having three 
separate and distinct business lines--power, transmission, and energy 
services (conservation)--which will be self-supporting and serve 
customers according to their unique needs. The Draft Strategic Business 
Plan also outlines a number of initiatives to improve BPA's 
competitiveness, including strategies to close the projected gap 
between BPA's costs and revenues, a financial strategy, and proposals 
to change BPA's power rate structures to give customers more choice, to 
more accurately reflect BPA's costs associated with providing the 
discrete components of electric service selected by customers, and 
thereby to encourage investment in cost-effective conservation. BPA 
proposes to close the revenue gap by exerting strict cost management 
and becoming market driven.
    To provide customers with a price signal that encourages efficient 
resource investment decisions, including conservation resources, and 
appropriately shares the benefits of the relatively low-cost Federal 
power and transmission systems, BPA is proposing to tier its power 
rates for requirements service and for the residential exchange. The 
rate for requirements service would be divided into two parts: a Tier 1 
rate, and one or several alternative Tier 2 rates. BPA expects that the 
Tier 1 rate will be available to serve most of the existing customers' 
firm loads. The Tier 1 rate is expected to be a lower rate than Tier 2 
because it will be based primarily on the costs associated with the 
existing Federal system. The Tier 2 rates will be available to serve 
regional firm requirements in excess of Tier 1, including future load 
growth, and will be based on the costs associated with supplying power 
to meet these loads.
    To address the increasingly competitive market for power, 
transmission, and energy services, BPA is proposing to offer a limited 
menu of unbundled products in the 1995 rate case. BPA expects that the 
products offered will be available both under the current power sales 
contracts and under new power sales contracts. BPA expects to offer 
additional unbundled products in future rate cases and to price these 
products to meet market conditions and its cost recovery obligations. 
In some cases, BPA expects the market will require flexible pricing. 
BPA is planning to ``unbundle'' what it offers so customers can choose 
among products and services based on what they need to meet their loads 
and support their own resources, if any.
    BPA owns most of the high-voltage transmission system in the PNW 
and recognizes the need to ensure that BPA's transmission system is not 
an impediment to a fully functioning and competitive bulk power market. 
To assure that the transmission system does not provide BPA with 
anticompetitive market power, BPA is proposing network transmission 
services and prices for such services on a basis comparable to its own 
use of its system. In setting rates, terms, and conditions of service, 
BPA will be consistent with FERC comparability standards applicable to 
other transmitting utilities under sections 210 and 211 of the Federal 
Power Act except where prohibited by statute or regulation.
    BPA is assessing the potential environmental effects of its rate 
proposal as required by the National Environmental Policy Act (NEPA) as 
part of the Business Plan Environmental Impact Statement (EIS). 
Beginning in June 1994, BPA solicited input to the Draft Strategic 
Business Plan and the Draft Business Plan EIS from customers 
[[Page 8508]] throughout the region. From August 3 - August 9, BPA held 
numerous public comment meetings throughout the region. Additionally, 
BPA held a Draft Business Plan EIS workshop where participants were 
invited to design their own alternatives and consider the environmental 
and fiscal results. The draft EIS evaluates BPA's Business Plan 
proposal and a range of alternatives, including the impacts of the 
range of potential rate designs for BPA's power and transmission 
services. It also documents the impact of the current rate proposal for 
purposes of the National Environmental Policy Act. A supplemental Draft 
Business Plan EIS, revised in response to comments received, will be 
available for public comment in February. Comments will be received 
outside the formal rate hearing process, but will be included in the 
rate case record and considered by the Administrator in making a final 
decision establishing BPA's 1995 rates. The Final Strategic Business 
Plan and the Business Plan EIS that elaborates BPA's strategic action 
plans will be released in June 1995.
    Spending levels are developed as a part of the BPA Strategic 
Business Plan, with the benefit of a public comment process. They also 
are determined as a part of the Federal budget process. Consistent with 
the Business Plan, the Administrator formally announced spending levels 
for FYs 1996-2001 to the public on January 12, 1995. BPA will continue 
to refine its strategic business objectives, goals, and spending 
levels, and inform the public accordingly, as part of its Strategic 
Business Plan development process. That process is expected to 
culminate in a Final Strategic Business Plan published in June 1995. 
Therefore, except for the limited exceptions hereafter noted, spending 
level decisions will not be addressed in this rate case. Accordingly, 
pursuant to Sec. 1010.3(f) of the ``Procedures Governing Bonneville 
Power Administration Rate Hearings,'' 51 FR 7611 (March 5, 1986) 
(hereinafter Procedures), the Administrator directs the Hearing Officer 
to exclude from the record any material attempted to be submitted or 
arguments attempted to be made in the hearing which seek to visit in 
any way the appropriateness or reasonableness of BPA's decisions on 
spending levels, as included in BPA's cost evaluation period of FY 1995 
through FY 1997 and its test period revenue requirements for FYs 1996 
and 1997. If, and to the extent, any re-examination of spending levels 
is necessary, that re-examination will occur outside of the rate case. 
The Revenue Requirement Study will incorporate BPA's spending levels 
and reflect BPA's risk mitigation, capital funding, and other financial 
goals in the rates. Excepted from this direction on account of their 
variable nature, dependency on BPA's rate case models, or timing, are: 
(1) Forecasts of residential exchange benefits; (2) forecasts of short-
term purchase power costs; (3) provision in BPA's revenue requirement 
for cash working capital or cash lag needs; (4) repayment matters such 
as interest rate forecasts, scheduled amortization, depreciation, 
replacements, and interest expense; and (5) updates to forecasts by BPA 
which may occur in the Spring of 1995 and for which no other review 
forum has been provided.

III. Procedures Governing Rate Adjustments and Public Participation

    Section 7(i) of the Northwest Power Act, 16 U.S.C. Sec. 839e(i), 
requires that BPA's rates be established according to certain 
procedures. These procedures include, among other things, issuance of a 
Federal Register Notice announcing the proposed rates; one or more 
hearings; the opportunity to submit written views, supporting 
information, questions, and arguments; and a decision by the 
Administrator based on the record. The proceedings for BPA's proposal 
to adjust transmission rates will be combined with the proceedings for 
BPA's proposal to adjust wholesale power rates. This proceeding will be 
governed by BPA's rule for general rate proceedings, Sec. 1010.9 of 
BPA's Procedures. These Procedures implement the statutory section 7(i) 
requirements. Section 1010.7 of the Procedures prohibits ex parte 
communications.
    BPA distinguishes between ``participants in'' and ``parties to'' 
the hearings. Apart from the formal hearing process, BPA will receive 
comments, views, opinions, and information from ``participants,'' who 
are defined in the procedures as any person who may express views, but 
who does not petition successfully to intervene as a party. 
Participants' written comments will be made part of the official record 
of the case and considered by the Administrator. The participant 
category gives the public the opportunity to participate and have its 
views considered without assuming the obligations incumbent upon 
``parties.'' Participants are not entitled to participate in the 
prehearing conference, cross-examine parties' witnesses, seek 
discovery, or serve or be served with documents, and are not subject to 
the same procedural requirements as parties.
    Written comments by participants will be included in the record if 
they are received by May 15, 1995. This date follows the anticipated 
submission of BPA's and all other parties' direct cases. Written views, 
supporting information, questions, and arguments should be submitted to 
BPA's Manager of Corporate Communications at the address listed in 
Section I of this Notice. In addition, BPA will hold several field 
hearings in the Pacific Northwest Region. Participants may appear at 
the field hearings and present oral testimony. The transcripts of these 
hearings will be a part of the record upon which the Administrator 
makes the rate decision.
    The second category of interest is that of a ``party'' as defined 
in Secs. 1010.2 and 1010.4 of BPA's Procedures. Parties may participate 
in any aspect of the hearing process.
    Persons wishing to become a party to BPA's rate proceeding must 
notify the Hearing Officer and BPA in writing of their request. 
Petitions to intervene shall state the name and address of the person 
and the person's interests in the outcome of the hearing. Petitioners 
may designate no more than two representatives upon whom service of 
documents will be made. BPA customers and customer groups whose rates 
are subject to revision in the hearing will be granted intervention 
based on a petition filed in conformance with this section. Other 
petitioners must explain their interests in sufficient detail to permit 
the Hearing Officer to determine whether they have a relevant interest 
in the hearing. Intervention petitions will be available for inspection 
in BPA's Public Information Center, 1st Floor, 905 NE. 11th, Portland, 
Oregon. Any opposition to a petition to intervene must be raised at the 
February 13, 1995, prehearing conference. All timely applications will 
be ruled on by the Hearing Officer. Opposition to an untimely petition 
to intervene shall be filed and served within 2 days after service of 
the petition. Interventions are subject to Sec. 1010.4 of the 
Procedures.
    The record will include, among other things, the transcripts of any 
hearings, any written material submitted by the parties and 
participants, documents developed by BPA staff, BPA's environmental 
analysis and comments accepted on it, and other material accepted into 
the record by the Hearing Officer. The Hearing Officer then will review 
the record, will supplement it if necessary, and will certify the 
record to the Administrator for decision. [[Page 8509]] 
    The Administrator will develop final proposed rates based on the 
entire record, including the record certified by the Hearing Officer, 
comments received from participants, other material and information 
submitted to or developed by the Administrator, and any other comments 
received during the rate development process. The basis for the final 
proposed rates first will be expressed in the Administrator's Draft 
ROD. Parties will have an opportunity to comment on the Draft ROD as 
provided in BPA's hearing procedures. The Administrator will serve 
copies of the Final ROD on all parties and will file the final proposed 
wholesale power and transmission rates together with the record with 
FERC for confirmation and approval.

IV. Major Studies

A. Major Studies

1. Loads and Resources Study
    BPA's forecast of regional loads by customer group are the basis 
from which public utility and direct service industry (DSI) customer 
purchases from BPA (Federal system firm loads) are projected. BPA also 
projects Federal transmission losses, obligations to regional investor-
owned utilities (IOUs) under their power sales contracts, and other 
inter- and intraregional contractual obligations.
    BPA's resource acquisition plans are based on work by BPA and the 
Northwest Power Planning Council staff and reflect extensive input and 
review by the general public and the region's utilities. The specific 
resource acquisitions and associated costs included in this proposal 
are based on BPA's 1994 Draft Strategic Business Plan.
    The load/resource balance determines BPA's obligation to serve firm 
loads during the test years under 1930 water conditions. It also 
contributes to the determination of the supply of surplus firm power in 
the region and on the Federal system. A related hydro regulation study 
incorporates the operation of thermal plants, exports and imports of 
power, projected resource acquisitions, and system constraints such as 
the Columbia River flow augmentation project, ``spill'', and the water 
budget for fish migration. For this proposal, a 50-year hydro study was 
completed which includes assumptions regarding the Columbia River flow 
augmentation. The hydro study starts in August 1995. The 50-year study 
determines nonfirm energy availability for the region.
2. Revenue Requirement Study
    The Bonneville Project Act, the Flood Control Act of 1944, the 
Transmission System Act, and the Northwest Power Act require BPA to set 
rates that are projected to collect revenues sufficient to recover the 
cost of acquiring, conserving, and transmitting the electric power that 
BPA markets, including amortization of the Federal investment in the 
FCRPS over a reasonable period, and to recover BPA's other costs and 
expenses. The Revenue Requirement Study determines whether current 
rates will produce enough revenues to recover all BPA costs and 
expenses, including BPA's repayment obligations to the U.S. Treasury. 
Revenue requirements are the major factor in determining the overall 
level of BPA's proposed power and transmission rates.
    The Transmission System Act and the Northwest Power Act require 
that transmission rates be based on an equitable allocation of the 
costs of the Federal transmission system between Federal and non-
Federal power using the system. In compliance with a FERC order dated 
January 27, 1984, 26 FERC 61,096, the Revenue Requirement Study 
incorporates the results of separate repayment studies for the 
generation and transmission components of the FCRPS. The repayment 
studies for generation and transmission demonstrate the adequacy of the 
projected revenues to recover all of the Federal investment in the 
FCRPS over the allowable repayment period. Separate generation and 
transmission revenue requirements are developed in the Revenue 
Requirement Study. The adequacy of projected revenues to recover test 
period revenue requirements and to meet repayment period recovery of 
the Federal investment is tested and demonstrated separately for the 
generation and transmission functions.
    The Revenue Requirement Study for the 1995 preliminary rate 
proposal is based on revenues and cost estimates for FY 1996 and FY 
1997. BPA's Revenue Requirement Study reflects actual amortization and 
interest payments paid through September 30, 1994. In addition, it 
reflects all FCRPS obligations incurred pursuant to the Northwest Power 
Act, including residential exchange costs.
3. Segmentation Study
    BPA operates and maintains the Federal Columbia River Transmission 
System (FCRTS) to provide transmission services throughout the region. 
Because most services do not require the use of the entire system, the 
FCRTS is divided into nine segments, each providing a distinct type of 
service. The nine segments are: integrated network; Pacific Northwest-
Pacific Southwest (Southern) Intertie; Northern Intertie; Eastern 
Intertie; generation integration; fringe area; and delivery segments 
for public agency, DSI, and IOU customers.
    The Segmentation Study categorizes the facilities of the FCRTS 
according to the types of services they provide. This provides the 
basis for segmenting the projected transmission revenue requirements 
used in BPA's rate proposals. The results of the Study include the 
historical investment and the average of the last 3 years' operations 
and maintenance expenses. In addition, the facilities of the integrated 
network similarly are divided among distinct services. This division of 
the FCRTS into segments provides for equitable allocation of 
transmission costs between Federal and non-Federal customers based on 
their usage of the segments.
4. Wholesale Power Rate Development Study (WPRDS)
    BPA is proposing substantial changes in the method used to develop 
its wholesale power rates. The cost of service analysis (COSA) and rate 
design adjustments are the two central parts of the rate development 
process. The COSA apportions BPA's test year generation and 
transmission revenue requirements to customer classes based on the use 
of specific types of service by each customer class and in accord with 
the rate directives of the Northwest Power Act. Costs are allocated to 
classes of service on the basis of the relative use of services. The 
coincidental peak (CP) allocation of network transmission costs to 
customer classes uses an average of a 12-CP and 3-CP (December, 
January, and February) method to reflect transmission cost causation. 
The transmission costs allocated to the Federal power uses of the 
transmission system form the basis for the power rates' demand charge; 
the transmission costs allocated to non-Federal uses form the basis for 
the transmission, or wheeling, rates that are calculated in the 
Transmission Rate Design Study (discussed below).
    The rate design adjustment portion of the WPRDS modifies the 
allocated costs developed in the COSA to: (1) Reflect BPA's rate design 
objectives; (2) conform with contractual requirements; (3) reflect the 
results of other BPA studies and commitments made in other public 
involvement processes under section 7(i) of the Northwest Power Act; 
and (4) conform with requirements of applicable legislation. BPA's rate 
design [[Page 8510]] objectives include recovery of BPA's revenue 
requirement, rate and revenue stability, practicality, fairness, 
comparability, and efficiency. All of the rate design adjustments are 
functionalized, classified, segmented, and seasonalized where 
appropriate. After all adjustments are made, the final power rates are 
calculated.
5. Transmission Rate Design Study (TRDS)
    In the TRDS, rates for various transmission services are calculated 
using the portion of the transmission revenue requirement allocated to 
non-Federal uses of the transmission system. Wheeling load forecasts 
are developed in the TRDS in order to calculate rates. The design of 
individual rate schedules also is accomplished in the TRDS.

B. Transmission Rates

    In a process concurrent with the 1995 rate case, BPA is proposing 
terms and conditions for new and existing services (network 
integration, point-to-point firm, and nonfirm) that allow comparable 
access to the Federal transmission system. Two new rate schedules (the 
Network Integration Transmission rate and the Point-to-Point Firm 
Transmission rate) are proposed to price the new services. BPA's Energy 
Transmission rate is proposed to price comparable nonfirm transmission 
services. These new services ensure that all parties have access to the 
Federal transmission system under comparable terms, conditions, and 
rates as BPA. Such comparability allows for a competitive marketplace 
for power products.
    BPA also is proposing the Advance Funding rate to allow BPA to 
collect the cost of specified BPA-owned transmission facilities through 
advance payment. In addition to the three new rate schedules, all of 
BPA's traditional transmission rate schedules are proposed to be 
confirmed. A charge is included in the firm transmission rates to allow 
BPA to charge opportunity cost when that is higher than the embedded 
cost charge for new requests for transmission capacity. BPA also 
provides notice in the firm rate schedules that requests for new or 
increased firm transmission service may be subject to incremental cost 
rates that would be developed pursuant to section 7(i) of the Northwest 
Power Act. In applying incremental or opportunity cost rates, BPA would 
be consistent with FERC's ``or'' pricing--the higher of embedded cost 
or incremental cost (or, the higher of embedded cost or opportunity 
cost), but not the sum of the two. Finally, a Reservation Charge for 
Transmission Capacity and a Reactive Power Charge are included in the 
many of the transmission rate schedules.
1. Formula Power Transmission (FPT)
    The FPT-95 rate schedule is available for the firm wheeling of 
power on the network segment of the FCRTS. This rate includes a 
distance or mileage component for transmission lines and various 
transformation and terminal charges. The FPT rate form is designed to 
reflect a wheeling formula that is prescribed by contract provisions.
    In calculating the FPT-95 rate, the first step is to quantify costs 
for the specific types of transmission facilities treated in the rate 
components. Estimates of the use of these facilities are determined 
from a simulation of the power flow of the projected peak load during 
the test period. Unit costs for the FPT rate components are derived by 
dividing facility cost by facility use as determined in a power flow 
study.
2. Integration of Resources (IR)
    The IR service is a flexible transmission service that may be used 
to integrate multiple resources and transmit non-Federal power to 
multiple points of delivery on the FCRTS Integrated Network facilities. 
The IR-95 rate is structured as a postage-stamp (independent of 
distance) rate with a demand and energy charge. The proposed IR-95 rate 
schedule continues to include the Short-Distance Discount, an exception 
to the postage stamp rate design for contractually specified points of 
integration.
    The IR-95 rate is calculated by dividing the revenue requirement 
for the class into two equal parts to reflect a 50-50 classification of 
costs to capacity and energy. The quotient of these costs and the 
appropriate billing determinant (contract demand for capacity-related 
costs; total energy usage for energy) yields the rates.
3. Energy Transmission (ET); Southern Intertie (IS), Northern Intertie 
(IN), and Eastern Intertie (IE) Transmission; and Market Transmission 
(MT)
    The ET-95 rate is designed to approximate the average cost of firm 
wheeling on the network. It is calculated by dividing the costs 
allocated to the FPT/IR class of service by all wheeling under firm 
wheeling contracts. The ET rate applies to use of intra-regional FCRTS 
facilities excluding the Interties and will provide comparable nonfirm 
transmission service.
    The proposed IS-95 rate consists of two parts: a nonfirm energy-
only rate, and a firm rate with separate demand and energy components.
    BPA also is proposing two rates for the IN-95 rate schedule: an 
energy-only rate for nonfirm wheeling, and a rate with demand and 
energy components for firm wheeling. The cost of the Northern Intertie 
is allocated to Federal and non-Federal power; the cost allocated to 
non-Federal power is the basis for the calculation of the rate.
    The IE-95 rate is available for nonfirm transmission on the Eastern 
Intertie. It is calculated as the ratio of the Eastern Intertie segment 
cost to the projected wheeling of energy from the Colstrip plant.
    BPA is continuing its MT-95 rate unchanged, except for the addition 
of the Reactive Power Charge. This rate schedule was developed for use 
among Western Systems Power Pool (WSPP) participants and allows for 
flexible hourly, daily, weekly, and monthly charges.
4. Use of Facilities Transmission (UFT) and Townsend-Garrison 
Transmission (TGT)
    The UFT-95 and TGT-95 rate schedules are formula rates that are 
being proposed unchanged from the current 1993 rates. The UFT rate 
recovers the annual cost of identified facilities over which specific 
wheeling transactions occur. The TGT rate is a contract rate that 
recovers the cost of the Montana (Eastern) Intertie.
5. Southern Intertie Annual Costs (AC)
    BPA is proposing the AC-95 rate to be applied to owners of AC 
Intertie capacity. This rate recovers the Capacity Owner's prorata 
share of actual AC Intertie costs: Operations, maintenance, general 
plant, and other identified expenses, as well as capital costs of 
replacements and reinforcements. The proposed AC-95 rate takes the 
place of the AC-93 rate which was a ``bridge'' rate until Capacity 
Ownership contracts were complete.
6. Network Integration Transmission (NT) and Point-to-Point Firm 
Transmission (PT)
    The proposed NT-95 and PT-95 rates, along with the associated terms 
and conditions of service, are designed to provide customers with 
transmission service that is comparable to what BPA provides itself in 
serving its power customers. Network Integration transmission service 
allows customers to serve their load located in the PNW region. The 
proposed NT-95 rate is based on a load-ratio share concept. The load-
ratio share measures the Network [[Page 8511]] Integration customer's 
contribution to the FCRTS peak.
    The proposed PT rate, along with terms and conditions of service, 
provides transmission service for customer's native load and/or 
transactions with third parties over the FCRTS Integrated Network. The 
PT rate is based on transmission costs allocated to the FPT/IR class of 
service and is structured as a monthly demand charge.
7. Advance Funding (AF)
    The proposed AF rate allows BPA to collect the capital and related 
costs of specified BPA-owned transmission facilities through advance 
payment. Such facilities could include interconnection and resource 
integration facilities, and upgrades or reinforcements to the FCRTS. 
Following commercial operation of the specified facilities, a true-up 
of estimated costs with actual costs would occur.
8. Reservation Charge for Transmission Capacity, and Reactive Power 
Charge
    The proposed Reservation Charge is included in the firm 
transmission rate schedules for application to customers who enter into 
a contract with BPA for new or increased firm transmission service on 
the FCRTS and want to reserve transmission capacity to accommodate such 
service. Payment of the Reservation Charge for Transmission Capacity 
would allow a customer to reserve capacity for up to 3 years, with the 
possibility of two annual extensions granted by BPA on a case-by-case 
basis.
    The proposed Reactive Power Charge is included in BPA's 
transmission rate schedules as well as BPA's power rate schedules, and 
charges customers for their reactive power requirements by point of 
delivery.

V. Transmission Rate Schedules

    The proposed transmission rates are incorporated in the Wholesale 
Power and Transmission Rate Schedules. The rate schedule document 
includes three sections. The first section contains the wholesale power 
and transmission rate schedules. Each schedule is comprised of sections 
stating to whom the rate schedule is available, rates for the products 
offered under the schedule, and billing factors. Each rate schedule 
also lists the adjustments, charges, and special provisions that apply 
to that rate schedule.
    The second section contains detailed descriptions of the 
adjustments, charges, and special provisions that apply to the various 
rate schedules. The third section contains the GRSPs for power and 
transmission rates. The GRSPs include a lengthy list of definitions, 
both of products and services and of rate schedule terms.
    The Wholesale Power and Transmission Rate Schedules and the GRSPs 
will be published in a separate Federal Register Notice as described in 
Section I of this Notice.

    Issued in Portland, Oregon, on February 7, 1995.
J.H. Curtis,
Acting Administrator.
[FR Doc. 95-3535 Filed 2-13-95; 8:45 am]
BILLING CODE 6450-01-P