8496 Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices

DEPARTMENT OF ENERGY

Bonneville Power Administration

Proposed Wholesale Power 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.

SUMMARY: BPA File No: WP–95. BPA

requests that all comments and

documents intended to become part of

the Official Record in this process

contain the file number designation

WP–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 wholesale power rate

schedules to be effective October 1,

1995, so that the wholesale power rates

in total produce revenues that best

enable BPA to meet its costs.

The proposal BPA is making at this

time is preliminary. While BPA was in

the late stages of putting together its

proposal, it determined that the

proposal as prepared could send an

erroneous signal of BPA’s commitment

to rate stability. Competitive forces are

causing fundamental and significant

changes in the Pacific Northwest

wholesale electric power market on a

weekly, and sometimes a daily, basis.

The competition is relentless, and BPA

can not issue a final rate proposal that

does not allow it to meet and beat the

competition. Nothing other than that

will allow BPA to sustain its statutory

responsibilities. As a consequence, BPA

has determined that its initial proposal

should include a stable, 5-year rate for

most, if not all, of its requirements

service. BPA anticipates that the work

necessary to assemble such a proposal

will take until late March or early April

of 1995. Since such a rate would cover

the bulk of BPA’s firm sales, its impact

on BPA’s overall proposal is

fundamental. Thus, the information

BPA is releasing now should be

considered preliminary. Information in

BPA’s preliminary proposal concerning

rate design, product definition and

pricing, revenue requirement, and other

matters should provide parties valuable

information that will enable them to

better assess BPA’s initial proposal

when it is released in late March or

early April. BPA will propose a rate

hearing schedule at the prehearing

conference that will take into account

changes in the markets and allow

review of BPA’s initial proposal that it

intends to make in late March or early

April of 1995. The rate hearing schedule

will be published in the Federal

Register immediately following the

prehearing conference.

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, 905 NE. 11th Ave., P.O.

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, 905

NE. 11th Ave., P.O. 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 9:00 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 crossexamination. 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 following schedule information is

provided for informational purposes. A

final schedule will be established by the

Hearing Officer at the prehearing

conference.

On or about February 9, 1995—Rate

Schedules and General Rate Schedule

Provisions, 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

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: The date for 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; 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 may also be obtained from:

Mr. Steve Hickok; Group Vice President,

Sales and Customer Service; P.O. Box
Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices 8497

3621; Portland, OR 97232 (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; 201

Queen Anne Ave. N., Suite 400;

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. Tiered Rates Methodology

VI. Wholesale Power Rate Schedules

VII. Charges Under the Amended and

Integrated Pacific Northwest

Coordination Agreement

I. Introduction

After the 1993 rate case, BPA

conducted a series of workshops on

subjects relevant to its 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 BPA’s ‘‘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 Wholesale

Power Rates to Become Effective

October 1, 1995,’’ 59 F.R. 66947, 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. BPA also is considering

setting some rates for periods longer

than 2 years.

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

adequately recover these revenue

requirements. Therefore, BPA proposes

to revise its wholesale power rates. At

the conclusion of the rate proceeding,

BPA will file its rates with the Federal

Energy Regulatory Commission (FERC)

for confirmation and approval.

Consistent with the risk mitigation

policy adopted in BPA’s last rate case,

BPA’s preliminary proposal contains an

Interim Rate Adjustment (IRA) that

allows, but does not require, BPA to

increase its rates for the second year of

the rate period to reverse any serious,

unplanned decline in financial reserves

that occurs in the first year of the rate

period. BPA also is including power rate

schedules in this preliminary proposal

that are both new and significantly

different from BPA’s 1993 power rate

schedules, as well as including the

negotiated rates for the Pacific

Northwest Coordination Agreement.

BPA is planning significant changes

in the design of its power rates. BPA is

proposing to divide its priority firm (PF)

and industrial firm power (IP) rates into

two tiers, (Tier 1 and Tier 2) and to

establish separate rates for each tier. The

other services and products that

customers may select to complement

either firm requirements service

provided by BPA, or power acquired

from other sources, will be priced

separately.

The proposed wholesale power 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); and the Pacific

Northwest Electric Power Planning and

Conservation Act, 16 U.S.C. 839 (1982).

The proposed rate schedules reflect

many requirements contained

principally in the Northwest Power

Act’s rate directives (section 7) and the

conditions related to classes of

customers and services contained in the

Northwest Power Act’s power sales

directives (section 5).

BPA proposes that its wholesale

power rate schedules, including the

adjustments, charges, and special rate

provisions, and the General Rate

Schedule Provisions 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 of its revised rates

effective October 1, 1995.

The 1995 wholesale power rate

schedules, and the GRSPs associated

with those rate schedules, supersede

BPA’s 1993 rate schedules (which

became effective October 1, 1993) to the

extent stated in the Availability section

of each 1995 rate schedule. These

schedules and GRSPs shall be

applicable to BPA power sales contracts,

as appropriate, including contracts

executed both prior to and subsequent

to enactment of the Northwest Power

Act. In addition, as stated in the

availability section of each schedule,

certain of the rates and tiered rate

methodology will be effective for

extended periods of time.

In developing the proposed wholesale

power rates, BPA considered many

factors, including revenue requirements,

ease of administration, revenue stability,

rate continuity, ease of comprehension,

and BPA’s statutory obligations. The

studies that have been prepared to

support the proposed preliminary rates

will be mailed to all parties to 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 are:

1. Loads and Resources Study and

Documentation

2. Revenue Requirement Study and

Documentation

3. Segmentation Study

4. Marginal Cost Analysis Study and

Documentation

5. Wholesale Power Rate Development

Study and Documentation

6. Wholesale Power and Transmission

Rate Schedules.

BPA’s proposed Wholesale Power and

Transmission Rate Schedules and

General Rate Schedule Provisions will

be published in a separate Federal

Register Notice on or about February 13,

1995. In addition, 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
8498 Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices

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 it will 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 participate fully 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 wholesale

power rates is needed in order for BPA

to continue to recover all costs and

expenses allocated to the Federal power

system, including amortization of the

Federal investment in the FCRPS over a

reasonable period of time, and to

recover the costs in a way that achieves

the goals of BPA’s Competitiveness

Project. BPA has found that substantial

changes must be made in the ways in

which it sets its rates if it is to remain

competitive. If BPA is not competitive,

it will not recover its costs, and it then

will be unable to satisfy its statutory

responsibilities.

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 its 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 selfsupporting 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 marketdriven.

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 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 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

Business Plan EIS from customers

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 result. BPA

field staff also were available to brief

groups on the Draft Business Plan upon

request. A supplemental Draft EIS,

revised in response to comments

received, will be available for public

comment in February. 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. Comments

on the Business Plan EIS 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 Business Plan and the

Business Plan EIS that elaborates BPA’s

strategic action plans will be released in

late 1995.

BPA’s spending levels are developed

as a part of its Strategic Business Plan,

with the benefit of a public comment

process. They also are determined as a

part of the Federal budget process.
Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices 8499

Consistent with the Draft Strategic

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

section 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 in

any way visit the appropriateness or

reasonableness of BPA’s decisions on

spending levels, as included in BPA’s

cost evaluation period of FY 1995

through FY 2000 and its test period

revenue requirement for FYs 1996

through 2000. If, and to the extent, any

re-examination of spending levels is

necessary, that re-examination will

occur outside of the rate case. BPA’s

Revenue Requirement Study will

incorporate 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. 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 wholesale power

rates will be combined with the

proceedings for BPA’s proposal to adjust

transmission rates. This proceeding will

be governed by BPA’s rules for general

rate proceedings, § 1010.9 of BPA’s

Procedures, due to the importance and

complexity of the issues involved.

These Procedures implement the

statutory section 7(i) requirements.

Section 1010.7 of the Procedures

prohibits ex parte communications.

BPA’s Procedures distinguish

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 is

anticipated to follow the 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 the Summary section

of this Notice, above. 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 §§ 1010.2 and

1010.4 of BPA’s Procedures. Parties may

participate in any aspect of the hearing

process.

Persons wishing to become a formal

‘‘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 § 1010.4 of BPA’s 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 impact statement and

comments accepted on it, and other

material accepted into the record by the

Hearing Officer. The Hearing Officer

then will review the record, supplement

it if necessary, and certify the record to

the Administrator for decision.

The Administrator will develop the

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

Record of Decision (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

rates together with the record with

FERC for confirmation and approval.

IV. Major Studies

1. Loads and Resources Study

BPA’s forecasts 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 develops forecasts of regional

non- and small-generating public utility
8500 Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices

(NSGPU) and generating public utility

(GPU) loads using standard econometric

techniques. Regional NSGPU and GPU

loads are forecasted as a function of

average retail electricity prices, weatherrelated variables, and nonagricultural

employment. The regional load forecasts

then are adjusted to account for factors

such as effects from proposed wholesale

tiered rate implementation and

conservation programs to derive a

projection of NSGPU and GPU

purchases from BPA. The IOU load

forecast was produced by updating the

economic assumptions from the 1991

joint BPA/Northwest Power Planning

Council (NPPC) forecast.

Forecasts of aluminum DSI purchases

from BPA are prepared by analyzing

smelter production costs relative to

aluminum prices, and by considering

other factors affecting smelter loads,

including BPA’s proposed tiered rate

implementation. Forecasted nonaluminum DSI purchases from BPA are

prepared by analyzing historical and

technical plant information and

forecasted market conditions.

Adjustments also are made to

incorporate the effects of BPA’s tiered

rate implementation.

BPA’s resource acquisition plans are

based on work by BPA and the NPPC

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. Besides emphasizing a diverse

resource portfolio, including both

conservation and generating resources,

BPA is committed to moving toward a

blend of acquisition methods, including

BPA-designed, utility-designed, and

developer-initiated programs. This

combination of resource diversity and

acquisition approaches allows BPA to

better deal with varying circumstances

and uncertainties.

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

preliminary 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 includes a demonstration as to

whether current rates will produce

enough revenues to recover all BPA

costs and expenses, including BPA’s

repayment requirements 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 cost and revenue 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 it provides. 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 three 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 the

basis for the equitable allocation of

transmission costs between Federal and

non-Federal customers based on their

usage of the segments.

4. Marginal Cost Analysis

The Marginal Cost Analysis (MCA)

estimates the marginal cost that BPA

incurs to supply energy on a seasonal,

daily, and hourly basis to meet

customers’ loads.

The conditions and terms under

which BPA supplies energy necessitate

that BPA take actions that impose a cost.

The MCA measures the costs that BPA

incurs in taking actions to provide

energy under different terms. BPA

proposes to measure the marginal costs

of actions it takes to (1) guarantee

availability of energy, (2) provide energy

at guaranteed prices, and (3) actually

deliver energy. The results of the MCA

are used to develop wholesale power

rates that promote efficient development

and operation of generation and

conservation resources.

BPA proposes to measure marginal

costs based on the supply and demand

conditions BPA faces in the

interconnected West Coast wholesale

power market. Estimated marginal costs

are based on the results from a model

that was developed to simulate future

wholesale market transactions to aid in

BPA’s long-term power marketing and

resource strategy decisions—the Power

Marketing Decision Analysis Model

(PMDAM). PMDAM projects the

opportunity costs that BPA will face

when taking actions to serve its Pacific

Northwest customers, at the least cost,

under conditions of uncertainty.

PMDAM uses information on the costs

associated with acquiring and operating
Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices 8501

resources to meet load in conjunction

with the costs associated with

purchasing and/or selling power in the

West Coast bulk power market.

The MCA provides estimates of

BPA—s marginal costs of supplying

energy at different times. These

estimates provide the basis for

classifying BPA’s costs. All of BPA’s

generation costs were classified to

hourly energy; no generation costs were

classified to demand. The estimates also

provide the basis for the seasonal and

hourly time-differentiation of rates,

including the identification of timeperiods in which different rates may

apply and appropriate levels for rates in

each time period relative to the others.

These time periods consist of hours of

the week when the marginal cost of

power is high and those when it is

relatively low, as well as seasons of the

year when different marginal costs

prevail. The results of the analysis

suggested more seasonality in BPA

rates, three annual periods instead of

the two previous seasons. The results

also suggested that BPA energy rates be

diurnally differentiated, which was not

a feature of previous rate designs. This

analysis does not include any

quantitative estimate of marginal costs

incurred on the transmission system.

5. Wholesale Power Rate Development

Study (WPRDS)

BPA is proposing substantial changes

in the method used to develop its

wholesale power rates. BPA’s wholesale

power rate develop is a two step

process. First, BPA performs a Cost of

Service Analysis (COSA) and then

adjusts these results to reflect various

rate design objectives and statutory

requirements.

A. Cost of Service Analysis

The Cost of Service Analysis (COSA)

apportions BPA’s test year revenue

requirement 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. BPA’s revenue requirement

is functionalized to transmission and

generation in the Revenue Requirement

Study. Transmission costs are identified

with segments of the transmission

system in BPA’s Segmentation Study.

The results of these studies are used in

the COSA to determine the costs of

providing generation and transmission

services to BPA’s customers.

The COSA further identifies costs of

specific types of service by performing

the following steps:

1. Classification. BPA classified

transmission costs entirely to capacity,

and the transmission costs allocated to

the power uses of the transmission

system form the basis for the power

rates demand charge. As described

above in the Section concerning the

Marginal Cost Analysis, in this rate

proposal BPA proposes to classify

generation costs to two components of

electric power, delivered energy and

rights to energy.

2. Allocation. The final major step in

the COSA is to allocate the

functionalized, segmented, and

classified costs to customer classes.

BPA’s proposed tiered rate design

necessitates a change in cost allocation

approach. BPA is proposing to allocate

costs to reflect the difference in costs

associated with existing loads and

future loads. Costs are allocated to

classes of service on the basis of the

relative use of services, and on the basis

of priorities of service by resource pools

provided in the Northwest Power Act.

The COSA also determines and allocates

the net costs incurred under the

Residential Exchange Program

prescribed in Section 5(c) of the

Northwest Power Act. Costs that cannot

be attributed to a particular resource

pool or customer are allocated on a

uniform basis to all customers.

a. Resource pools: For cost allocation

purposes, BPA is proposing to separate

resources into two categories: FBS

resources and new resources. FBS

resources are defined as (1) the Federal

Columbia River Power System

hydroelectric projects; (2) resources

acquired by the Administrator under

long-term contracts in force on the

effective date of the Pacific Northwest

Power Act; and (3) the resources

acquired by the Administrator in an

amount necessary to replace reductions

in capabilities of resources in (1) and

(2). Since enactment of the Northwest

power Act in 1980, a number of events

have occurred that have reduced FBS

resources capability. BPA has initiated a

consultation process with its customers

in which BPA is considering replacing

a portion of this lost capability with

approximately 450 average megawatts

from ten generating resources that BPA

has acquired or contracted for since

1980. For the preliminary proposal,

these FBS replacement resources are

included in the FBS resource pool.

Remaining resources are included in the

new resource pool.

For the test period, BPA is proposing

to allocate the payments BPA makes

under the residential exchange program.

Under the residential exchange

program, BPA purchases power offered

by an exchanging utility at its ‘‘average

system cost.’’ BPA then sells an

equivalent amount of power back to the

exchanging utility at the applicable PF

rate. The residential exchange

transaction, however, is only a ‘‘paper

transaction’’ and does not result in

actual power deliveries. The program

provides for BPA to pay exchanging

utilities the difference between the cost

of power ‘‘purchased’’ by BPA and the

cost of power ‘‘sold’’ by BPA. These

cash payments by BPA are referred to as

the net cost of the exchange. For the test

period, BPA is proposing to allocate the

net cost of the exchange to all firm loads

except preference customer general

requirement loads.

b. Tier 1 and Tier 2 Loads: Within

each customer class, BPA is proposing

to allocate resource costs separately to

Tier 1 and Tier 2 loads, instead of

allocating costs to the total customer

class load. To accomplish this, the

resources within the FBS resource pool

are separated further into Tier 1

resources and Tier 2 resources. BPA is

proposing to identify a set of FBS

resources whose costs then will be

allocated to Tier 1 loads. All other

resource costs, including future FBS

replacements or new resources, will be

allocated to Tier 2 loads. For the test

period, BPA is proposing to include all

FBS resources, both existing and

replacements, in the specified set of FBS

resource costs allocated to Tier 1 loads.

BPA is proposing to allocate the

majority of its short-term purchase

power costs associated with meeting

operational deficits to Tier 2 loads. In

the months in which short-term

operational purchases are required,

these costs are allocated first to Tier 2

loads, new resources loads, and long

term surplus firm power contract loads.

Any remaining short-term purchase

power costs then are allocated to Tier 1

loads.

B. Adjustments to Allocated Costs

The remaining steps in the rate design

process use the allocated costs

developed in the COSA and modify

them 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 objectives

include recovery of BPA’s revenue

requirement, rate and revenue stability,

practicality, fairness, and efficiency.

Major rate design adjustments to the

allocated COSA costs include the

following:

1. Excess Revenue Adjustment. In the

initial cost allocation, BPA allocates its

entire test period revenue requirement

to firm power loads on the basis of
8502 Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices

resources available under critical water

conditions. However, rates are set

assuming BPA recovers nonfirm sales

revenues equal to the expected value of

revenues under 50 years of streamflows

in the historical record. Since no

generation costs are allocated to NF

service, forecasted NF revenues are

credited against costs allocated to firm

loads. Similarly, revenues from nonfirm

wheeling under the Energy

Transmission (ET) rate schedule are

credited to firm transmission loads.

2. Nonfirm Energy Use Adjustment.

The Nonfirm Energy Use adjustment is

a new adjustment that accounts for the

costs and benefits derived from the use

of nonfirm power to displace planned

power purchases. The adjustment, in

effect, results in loads served by

balancing purchases (i.e., purchases

necessary to balance loads and

resources) ‘‘buying’’ the nonfirm energy

used to displace some of those

purchases, and loads served by the

Federal Base System resources receiving

a credit for this use of the nonfirm

energy produced by those resources.

The cost of purchase power is increased

to reflect the average revenues received

from other sales of nonfirm energy in

the same months when power purchases

are displaced. Loads served by Federal

Base System resources then are credited

by the same amount for this use of

nonfirm energy.

3. Surplus Firm Power Excess

Revenue Adjustment. BPA has sold and

expects to continue to sell surplus

power under long term contracts.

Expected revenues from the sale of such

power are compared to allocated costs.

BPA expects revenues to exceed costs of

this power, resulting in a credit to other

customers.

4. 7(c)(2) Adjustment. The rates

applicable to the DSIs are set at a level

that is equitable in relation to BPA

preference customers’ industrial rates.

The costs allocated to the DSIs are

higher than revenues from the

‘‘equitable’’ rate. The difference is a

revenue deficiency called the ‘‘7(c)(2)

delta,’’ which is allocated to other

customers.

The foregoing list of adjustments

identifies some of the major cost

adjustments and is not intended to be

all-inclusive. All of the above

adjustments are functionalized and

segmented where appropriate. As a final

step in rate design, BPA will develop

seasonal and diurnally differentiated

delivered energy charges based on the

results of the MCA. At this final stage

in the rate development process, annual

energy costs have been allocated in

COSA, and a series of rate design

adjustments have reallocated and

adjusted the costs by class of service. An

average annual energy rate for each class

of service then is developed by dividing

the adjusted allocated costs by the

billing determinants for the class of

service. A set of seasonal and diurnally

differentiated energy rates which

recover an equivalent amount of

adjusted costs then is developed.

5. Unbundled Products

For service under the 1981 and 1995

power sales contracts, BPA is

unbundling the PF, NR, IP, and VI rates

into Tier 1, Tier 2, load shaping and

load regulation. Load shaping allows

BPA to meet customer load variations

from forecast. Load regulation,

sometimes called load following,

follows variations in the customers’

loads on an instantaneous basis. BPA

also will be adding unbundled charges

for changes from preschedules and for

reactive power deliveries. Outside of the

PF, NR, and IP rates, BPA has developed

the Firm Power Products and Services

(FPS) rate schedule, which is the

primary vehicle for BPA’s marketing of

unbundled products described in the

Draft Marketing Plan and Draft Strategic

Business Plan. The FPS rate schedule

will allow BPA to sell firm energy,

capacity, or power using a variety of

sources of supply, and will specify

charges or specifically authorize

negotiated charges for control area

services and other resource support

services. The Control Area Services part

of the FPS rate schedule also will

specify a charge for the generation

control services provided pursuant to

section 13(d) of the 1981 utility power

sales contracts. Firm power products

and services to be marketed by BPA

under the FPS rate schedule are

intended to be flexible so that BPA can

respond to market conditions. Power

products and services also are available

for ancillary services for transmission of

non-Federal resources.

6. Other Rate Design Changes

BPA is proposing other rate design

changes. These include, among others,

changes to demand charges, the

development of a Long-Term Firm

Requirements Service option for some

customers, elimination of the Irrigation

Discount, and development of a charge

for reactive power. BPA also is

proposing to modify the contract rate in

the NF rate schedule.

a. Demand Charges. Only

transmission costs are allocated to

demand. Demand charges are proposed

to be billed based on each customer’s

coincident peak, rather than on peaks at

individual Points of Delivery. Demand

charges are seasonally differentiated

into two seasons, with charges higher in

the months of December through

February. The proposed demand billing

factors have been designed to be take-orpay, relieved to a certain extent by the

purchase of the Load Shaping product.

The Demand Ratchet included in

previous rates has been eliminated.

b. Long-Term Firm Requirements

Service. Long-Term Firm Requirements

Service is a package of services available

to purchasers who sign new (‘‘1995’’)

power sales contracts and make a 6-year

commitment to purchase from BPA. It

includes an adjustment to the

customer’s power bill to reflect the

value to BPA of a long-term

commitment and for customers whose

loads are 25 aMW or less, a composite

rate.

c. Low Density Discount. The

calculation of the proposed Low Density

Discount is revised from previous rate

proposals. The calculation uses a sliding

scale of percentage discounts based on

the utility’s number of customers per

pole mile and the utility’s ratio of total

electric energy requirements to

investment. The two discounts from the

two ratios are added to result in the

utility’s total discount, which is capped

at 7 percent.

d. Irrigation Discount. The irrigation

discount has been eliminated in the

1995 rate proposal.

e. Reactive Power. Instead of charging

a power factor penalty for customers

who take excessive quantities of reactive

power, BPA proposes to bill the

customer directly for measured

quantities of reactive demand and

reactive energy.

f. Unauthorized Increase. The

proposed unauthorized increase charge

reflects a penalty rate without seasonal

differentiation, and includes a demand

component to reflect transmission

system usage. In addition, there is an

unauthorized deviation charge for

partial requirements purchases

purchasing under the new (‘‘1995’’)

power sales contract.

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

Section 7(b)(2) of the Northwest

Power Act directs BPA to assure that the

wholesale power rates effective after

July 1, 1985, to be charged its public

body, cooperative, and Federal agency

customers (the 7(b)(2) customers) for

their general requirements for the rate

test period plus the ensuing four years,

are no higher than the costs of power to

those customers for the same time

period if specified assumptions are

made. The effect of the rate test is to

protect the 7(b)(2) customers’ wholesale

firm power rates from certain costs

resulting from provisions of the
Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices 8503

Northwest Power Act. The rate test can

result in a reallocation of costs from the

7(b)(2) customers to other rate classes.

The section 7(b)(2) Rate Test Study

describes the application and results of

the section 7(b)(2) rate test

implementation methodology.

The rate projections and the actual

rate test itself are performed using

BPA’s Supply Pricing Model (SPM). The

SPM simulates BPA’s rate development

process, using load, resource, and cost

data consistent with that used in this

rate proposal. The assumptions and rate

development processes such as load/

resource balancing, cost allocation, and

rate design also are consistent with this

rate proposal. The SPM calculates two

sets of wholesale power rates for BPA’s

preference customers: (1) a set of rates

for the test period and the ensuing four

years, assuming that section 7(b)(2) is

not in effect (program case rates); and

(2) a set for the same period considering

the five assumptions listed in section

7(b)(2) (7(b)(2) case rates). Certain costs

specified in section 7(g) of the

Northwest Power Act (7(g) costs) are

subtracted from the program case rates.

The SPM then discounts each year’s

rates to the test year of the relevant rate

case, averages each set of discounted

rates, and compares the two resulting

averages rounded to the nearest tenth of

a mill. If the average of the discounted

program case rates, less the 7(g) costs, is

larger than the average discounted

7(b)(2) case rates, the rate test triggers.

If the rate test triggers, the amount of

dollars to be reallocated in the test

period (7(b)(2) amount) is calculated by

multiplying the difference between the

discounted program case and 7(b)(2)

case rates by the general requirements

loads of the preference customers. The

7(b)(2) amount is used as an adjustment

to the allocated costs in the rate case test

period. For the preliminary proposal,

the 7(b)(2) rate test will not be

performed.

V. Tiered Rates Methodology

In this rate period, BPA is proposing

to tier its rates for sales to public bodies,

cooperatives, and Federal agencies

under the Priority Firm Power (PF–95)

rate schedule and for sales to its Direct

Service Industrial (DSI) customers

under the Industrial Firm Power (IP–95)

rate schedule. For utilities participating

in the residential exchange, BPA is also

proposing to tier the PF rate applicable

to such exchanges.

Under the proposed tiered rate design,

firm power purchases will be divided

into two blocks of power. Separate rates

will be developed for each block of

power for each customer class. The size

of the first block of power (Tier 1 power)

is set so that most forecasted purchases

will be at the Tier 1 rate. BPA is

proposing a somewhat higher rate that

would apply to Tier 2 power. The

forecasted sales of Tier 2 power will be

based on the forecasted load above the

Tier 1 amount. The proposed Tier 1 and

Tier 2 rates will be determined as part

of BPA’s Wholesale Power Rates

Development Study.

BPA is proposing to establish the

amounts of Tier 1 power each customer

will be able to purchase, based in large

part on information submitted by the

customers during the course of these

rate proceedings. BPA is proposing a

nomination process where customers

indicate the amount of power they will

purchase at the Tier 1 rate for each

month during the rate period within

boundaries set in this rate proceeding.

Customer input will establish the billing

factors for the Tier 1 rate, by month, for

that purchaser. The boundaries on the

customers’ nominations also will be

established based on information

submitted by the customers. The

deadlines for customer submittals will

be established in BPA’s initial proposal

and after consultation with parties and

customers. BPA encourages all

customers to devote the necessary

resources to provide the information

needed to establish the amounts of

power they will be able to purchase at

a Tier 1 rate. If a customer is unable to

provide the necessary information, BPA

is proposing to establish that customer’s

Tier 1 power amounts using the same

approach proposed in this preliminary

proposal.

1. Utility Customers’ Tier 1 Power:

BPA proposes the following process to

determine each utility customers share

of Tier 1 power. BPA will establish an

aggregate annual amount of Tier 1

power for all preference customers

based on a percentage share of the

Pacific Northwest Loads and Resources

Study FY 1996–97 loads forecast. BPA

will base each preference customer’s

annual share of the total FY 1996–97

load forecast on historical sales during

the period FY 1986 through FY 1993.

Each customer may choose a 12-month

historical period for purposes of

distributing the forecasted FY 1996–97

load between it and the other customers.

This chosen subperiod also will be used

to shape the given customer’s annual

load into monthly amounts. Since

customers will submit their choice of

historical period during the course of

this proceeding, for the preliminary

proposal, BPA has selected a historical

period for each customer for the

historical 12-month period for which

BPA sales to that customer were the

highest. BPA will shape the load based

on sales during the selected historical

period. BPA proposes that each utility’s

Tier 1 amount will be 90% of their

shaped monthly Tier 1 energy amounts

in August through March, and 100% of

their shaped monthly Tier 1 energy

amounts in April through July.

Because BPA proposes to establish

separate rates for Heavy Load Hours

(HLH) and Light Load Hours (LLH), BPA

also will establish a separate Tier 1

amount of power for HLH and LLH.

Customers will be able to choose how to

shape their monthly Tier 1 amount of

power into the HLH and LLH. However,

for the preliminary proposal, BPA split

each customer’s monthly amount of Tier

1 power into HLH and LLH based on

relative percentage of HLH sales and

LLH sales during the selected historical

period.

2. DSI’s Tier 1 Power: BPA proposes

to establish an amount of Tier 1 power

for each individual DSI. For the DSI’s,

however, the aggregate amount of Tier 1

power for the DSI class will be set at

2,450 aMW, in each month. Like

utilities, each DSI will select a

contiguous 12-month period of sales

over the FY1986–93 historical period.

An individual DSI’s monthly share of

the 2,450 aMW will be based on its

percentage of historical load compared

to the total DSI’s historical load. For the

preliminary proposal, BPA selected a

historical period for each DSI based on

the same criteria used to select each

utility’s historical period. Similarly,

BPA will split each DSI’s monthly

amount of Tier 1 power between HLH

and LLH. Although BPA is proposing

that a DSI may elect to shape its

monthly amounts of Tier 1 power so

that its the same in each hour of the

month, for the preliminary proposal

BPA calculated the monthly amount of

Tier 1 power in HLH and LLH based on

relative percentage of HLH sales and

LLH sales during the selected historical

period.

3. Residential Exchange Customers’

Tier 1 power: BPA is proposing to

establish an amount of Tier 1 power for

residential exchange utilities using an

approach similar to the approach for

establishing utility customers’ Tier 1

power. For exchanging utilities,

however, BPA will set an exchanging

utility’s amount of Tier 1 power

proportional to the amount of DSI and

utility customers’ Tier 1 power. The

percentage of DSI and preference

customer Tier 1 load relative to their

total load will be applied to the

forecasted exchange load for all utilities

in the residential exchange, both active

and inactive, to determine the exchange

load amount of Tier 1 power.
8504 Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices

As part of this rate proceeding, BPA

will propose a Long-term Tiered Rate

Methodology that will guide the

implementation of a tiered rate structure

in subsequent rate cases. BPA expects

that this Methodology will resolve some

of the basic questions associated with

developing a tiered rate. The Long-term

Tiered Rate Methodology will be

published in a separate Federal Register

Notice.

VI. Wholesale Power Rate Schedules

The wholesale power rates developed

in the cost of service analysis and rate

design adjustment process 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,

billing factors, and the cost basis of the

rates in the schedule (resource

contribution). 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 General Rate Schedule

Provisions (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. Following is a

description of each wholesale power

rate schedule.

Priority Firm Power Rate, PF–95

The proposed PF–95 rate schedule

would replace the PF–93 rate schedule.

Power is available under the PF–95 rate

schedule to public bodies, cooperatives,

Federal agencies, and utilities

participating in the residential exchange

under section 5(c) of the Northwest

Power Act. Priority Firm power must be

used to meet firm loads within the

Pacific Northwest.

The PF rate schedule is available for

power purchased both under the 1981

power sales contracts and under the

new contracts BPA expects to offer in

1995 (1995 contracts). Rates have been

developed for sales under each contract

and for the various products available:

Tier 1 demand and energy; Standard

Tier 2 demand and energy; Enhanced

Tier 2 demand and energy; and Load

Shaping and Load Regulation. The PF–

95 rate schedule also contains a

‘‘composite’’ rate, for these products for

small full requirement customers (25

aMW) purchasing power under the 1995

contracts. Also available is capacity

without energy for computed

requirements purchasers under ‘‘1981’’

contracts. The PF–95 rate schedule

includes demand charges that are

seasonally and diurnally differentiated.

There is no demand charge for Light

Load Hours in any month of the year.

The energy charges also are seasonally

and diurnally differentiated.

The energy billing factors under the

proposed PF–95 rate schedule for

Computed Requirements customers

purchasing under existing (‘‘1981’’)

contracts have been changed from those

in previous rate proposals (the

Availability Charge). The proposed

billing factors are now based entirely on

contractual entitlements.

New Resource Firm Power Rate, NR–95

The proposed NR–95 rate schedule

would replace the NR–93 rate schedule.

The NR–95 rate schedule is available to

investor-owned utilities under net

requirements contracts for resale to

consumers, and to publicly owned

utilities for New Large Single Loads.

Products available under the NR–95 rate

schedule include New Resource Firm

Power, Load Shaping, and Load

Regulation. Demand and energy charges

are seasonally and diurnally

differentiated.

Industrial Firm Power Rate, IP–95

The proposed IP–95 rate would

replace the IP–93 rate. The IP–95 rate

schedule is available to BPA’s directservice industrial customers for firm

power to be used in their industrial

operations. Products available under the

IP–95 rate include Tier 1 demand and

energy, Standard Tier 2 demand and

energy, Enhanced Tier 2 demand and

energy, Load Shaping, and Load

Regulation. The IP–95 rate schedule

includes a composite rate for DSI

purchasers under 1995 or later power

sales contracts who are qualified and

choose to purchase under the composite

rate. Demand and energy charges are

seasonally and diurnally differentiated.

Variable Industrial Power Rate

The VI–91 rate schedule is available

to DSIs purchasing from BPA under

both the power sales contracts signed

prior to 1995 and the 1986 Variable Rate

Contract. The VI–91 rate schedule

terminates on June 30, 1996, at the

termination of the Variable Rate

Contracts, at which time sales to

purchasers under the VI rate will be

made at the IP–95 rate. The VI–91 rate

schedule is unchanged from prior years

other than to update the rates and rate

parameters based on the rate adjustment

criteria established in 1991. Service

under the VI rate is not tiered (i.e., there

is not Tier 1 and Tier 2 service under

this rate). For the preliminary rate

proposal, BPA assumed no sales under

the VI rate schedule during the rate

period.

Firm Power and Services Rate, FPS–95

The proposed FPS–95 rate schedule is

available for purchase of firm power

products inside and outside the United

States, and control area services, until

its termination date, September 30,

2000. The FPS–95 rate schedule would

supersede both the SP–93 (Surplus Firm

Power Rate) and the CE–93 (Emergency

Capacity) rate schedules, and also

includes products formerly available

under other rate schedules, such as

construction, test and startup, and

station service. Sales under FPS–95 may

be made at fixed rates, as specified in

the rate schedule, or at flexible rates as

established by BPA or mutually agreed

to by BPA and the purchaser. Fixed

demand charges are diurnally but not

seasonally differentiated, and fixed

energy charges do not change diurnally

or seasonally.

Nonfirm Energy Rate, NF–95

The proposed NF–95 rate schedule

replaces the NF–93 rate. The NF–95 rate

schedule is available for purchases of

nonfirm energy inside and outside the

Pacific Northwest for resale to

consumers, direct consumption, and

resale under Western Systems Power

Pool agreements. The form of the NF–

95 rate has not changed from previous

years, with the schedule including a

Standard rate, a Market Expansion rate,

an Incremental rate, a Western Systems

Power Pool rate, an End-User rate, and

a Contract rate. However, the cost basis

for the Contract rate has changed to

reflect the average cost of nonfirm

energy.

The NF Rate Cap, described in the

Adjustments, Charges, and Special Rate

Provisions section of the rate schedule

document, continues to apply to all

sales under NF–95 rate schedule. The

NF Rate Cap defines the maximum

nonfirm energy price for general

application. The level of the NF Rate

Cap is based on a formula tied to BPA’s

system cost and California fuel costs.

Reserve Power Rate, RP–95

The RP–95 rate schedule replaces the

RP–93 rate schedule. The RP rate is

available in cases where a purchaser’s
Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices 8505

power sales contract states that the rate

for Reserve Power shall be applied;

when BPA determines no other rate

schedule is applicable; or to serve a

purchaser’s firm power load when BPA

does not have a power sales contract in

force with such a purchaser, and BPA

determines that this rate should be

applied. The demand and energy

charges are seasonally and diurnally

differentiated, with no demand charge

during light load hours during any

month of the year.

Power Shortage Rate, PS–95

The PS–95 rate schedule is available

for sales under the Share-the-Shortage

agreement or a similar substitute

agreement. BPA is not obligated to make

Shortage Power available or broker

power under the PF–95 rate schedule

unless specified by contract.

VII. Charges Under the Amended and

Integrated Pacific Northwest

Coordination Agreement

The Pacific Northwest Coordination

Agreement (PNCA) is an agreement for

planned operations among the utilities

and other entities that operate the major

electric generating facilities and systems

in the Pacific Northwest. The parties

jointly and cooperatively plan and

coordinate their combined generation

facilities so as to produce the optimum

firm load carrying capability (FLCC) of

the coordinated system. FLCC is the

firm load that could be carried under

coordinated operation with critical

streamflow conditions and with the use

of all reservoir storage.

In order to coordinate operations, and

so that each party can meet its

individual FLCC, the PNCA provides for

exchanges of energy and capacity among

the parties. The agreement sets up

charges for each form of exchange. The

parties are negotiating a successor

agreement to the PNCA, and have

agreed on charges to apply under the

new agreement.

The PNCA Rate Schedules 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. 95–3534 Filed 2–13–95; 8:45 am]

BILLING CODE 6450–01–P

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.

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 crossexamination. 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.