[Federal Register Volume 79, Number 233 (Thursday, December 4, 2014)]
[Notices]
[Pages 71984-71990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28463]


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DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA File No.: BP-16]


Fiscal Year (FY) 2016-2017 Proposed Power and Transmission Rate 
Adjustments Public Hearing and Opportunities for Public Review and 
Comment

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

[[Page 71985]]


ACTIONS: Notice of FY 2016-2017 Proposed Power and Transmission Rate 
Adjustments.

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SUMMARY: BPA is holding a consolidated rate proceeding, Docket No. BP-
16, to establish power and transmission rates for FY 2016-2017.
    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 recover, in accordance with 
sound business principles, the costs associated with the acquisition, 
conservation, and transmission of electric power, including 
amortization of the Federal investment in the Federal Columbia River 
Power System (FCRPS) over a reasonable number of years, and BPA's other 
costs and expenses. The Northwest Power Act also requires that BPA's 
rates be established based on the record of a formal hearing, and for 
transmission rates only, that the costs of the Federal transmission 
system be equitably allocated between Federal and non-Federal power 
utilizing the system. By this notice, BPA announces the commencement of 
a power and transmission rate adjustment proceeding for power, 
transmission, control area services, and ancillary services rates to be 
effective on October 1, 2015.

DATES: Anyone wishing to become a party to the BP-16 proceeding must 
provide written notice, via U.S. Mail or electronic mail, which must be 
received by BPA no later than 3:00 p.m. on December 12, 2014.
    The BP-16 rate adjustment proceeding begins with a prehearing 
conference at 9:00 a.m. on December 10, 2014, in the BPA Rates Hearing 
Room, 1201 NE Lloyd Boulevard, Suite 200, Portland, Oregon 97232.
    Written comments by non-party participants must be received by 
February 26, 2015, to be considered in the Administrator's Record of 
Decision (ROD).

ADDRESSES: 
    1. Petitions to intervene should be directed to: Hearing Clerk--L-
7, Bonneville Power Administration, 905 NE 11th Avenue, Portland, 
Oregon 97232, or may be emailed to <a href="/cdn-cgi/l/email-protection#5c2e3d28393f30392e371c3e2c3d723b332a"><span class="__cf_email__" data-cfemail="2654475243454a43544d6644564708414950">[email protected]</span></a>. In addition, 
copies of the petition must be served concurrently on BPA's General 
Counsel and directed to both Mr. Kurt Casad, LP-7, and Mr. Barry 
Bennett, LT-7, Office of General Counsel, 905 NE 11th Avenue, Portland, 
Oregon 97232, or via email to <a href="/cdn-cgi/l/email-protection#d5bea7b6b4a6b4b195b7a5b4fbb2baa3"><span class="__cf_email__" data-cfemail="1279607173617376527062733c757d64">[email protected]</span></a> and <a href="/cdn-cgi/l/email-protection#fd9f9f989393988989bd9f8d9cd39a928b"><span class="__cf_email__" data-cfemail="214343444f4f445555614351400f464e57">[email protected]</span></a> (see 
section III.A. for more information regarding interventions).
    2. Written comments by participants should be submitted to the 
Public Engagement Office, DKE-7, Bonneville Power Administration, P.O. 
Box 14428, Portland, Oregon 97293. Participants may also submit 
comments by email at: www.bpa.gov/comment. BPA requests that all 
comments and documents intended to be part of the Official Record in 
this rate proceeding contain the designation BP-16 in the subject line.

FOR FURTHER INFORMATION CONTACT: Ms. Michelle Whalen, DKC-7, Public 
Affairs Specialist, Bonneville Power Administration, P.O. Box 3621, 
Portland, Oregon 97208; by phone toll free at 1-800-622-4520; or via 
email to <a href="/cdn-cgi/l/email-protection#4b262e3c232a272e250b293b2a652c243d"><span class="__cf_email__" data-cfemail="81ece4f6e9e0ede4efc1e3f1e0afe6eef7">[email protected]</span></a>. Responsible Officials: Mr. Raymond D. 
Bliven, Power Rates Manager, is the official responsible for the 
development of BPA's power rates, and Ms. Rebecca E. Fredrickson, 
Transmission Rates Manager, is the official responsible for the 
development of BPA's transmission, ancillary, and control area services 
rates.

SUPPLEMENTARY INFORMATION:

Table of Contents

Part I. Introduction and Procedural Background
Part II. Scope of BP-16 Rate Proceeding
Part III. Public Participation in BP-16
Part IV. Summary of Rate Proposals
Part V. Proposed BP-16 Rate Schedules

Part I--Introduction and Procedural Background

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

Prehearing Conference/BPA Initial Proposal--December 10, 2014
Parties File Petitions to Intervene--December 12, 2014
Clarification--December 17-19, 2014
Motions to Strike--January 13, 2015
Data Request Deadline--January 13, 2015
Answers to Motions to Strike--January 21, 2015
Data Response Deadline--January 21, 2015
Parties file Direct Case--February 4, 2015
Clarification--February 11-13, 2015
Motions to Strike--February 17, 2015
Data Request Deadline--February 17, 2015
Answers to Motions to Strike--February 24, 2015
Data Response Deadline--February 24, 2015
Close of Participant Comments--February 26, 2015
Litigants file Rebuttal--March 16, 2015
Clarification--March 19-20, 2015
Motions to Strike--March 24, 2015
Data Request Deadline--March 24, 2015
Answers to Motions to Strike--March 31, 2015
Data Response Deadline--March 31, 2015
Cross-Examination--April 1-3 and 6-7, 2015
Initial Briefs Filed--May 1, 2015
Oral Argument--May 8, 2015
Draft ROD issued--June 12, 2015
Briefs on Exceptions--July 1, 2015
Final ROD--Final Studies--July 24, 2015

    Section 1010.7 of BPA's Procedures prohibits ex parte 
communications. The ex parte rule applies to all BPA and DOE employees 
and contractors. Except as provided below, any outside communications 
with BPA and/or DOE personnel regarding the merits of any issue in 
BPA's rate proceeding by other Executive Branch agencies, Congress, 
existing or potential BPA customers (including tribes), or nonprofit or 
public interest groups are considered outside communications and are 
subject to the ex parte rule. The rule does not apply to communications 
relating to: (1) Matters of procedure only (the status of the rate 
proceeding, for example); (2) exchanges of data in the course of 
business or under the Freedom of Information Act; (3) requests for 
factual information; (4) matters for which BPA is responsible under 
statutes other than the ratemaking provisions; or (5) matters which all 
parties agree may be made on an ex parte basis. The ex parte rule 
remains in effect until the Administrator's Final ROD is issued, which 
is scheduled to occur on or about July 24, 2015.

[[Page 71986]]

Part II--Scope of BP-16 Rate Proceeding

A. Joint Rate Proceeding

    BPA is holding one power and transmission rate proceeding with one 
procedural schedule, one record, and one ROD.

B. 2014 Integrated Program Review

    BPA began its 2014 Integrated Program Review (IPR) process in May 
2014. The IPR process is designed to allow an opportunity to review and 
comment on BPA's expense and capital spending level estimates before 
the estimates are used to set rates. On October 2, 2014, BPA issued the 
Final Close-Out Report for the IPR. In the Final Close-Out Report, BPA 
established the program level cost estimates that are used in the 
Initial Proposal to establish both the power and transmission rates.

C. Scope of the Rate Proceeding

    This section provides guidance to the Hearing Officer as to those 
matters that are within the scope of the rate proceeding and those that 
are outside the scope. In addition to the items listed below, any other 
issue that is not a rates issue is outside the scope of this 
proceeding.
1. Program Cost Estimates
    Some of the decisions that determine program costs and spending 
levels have been made in the IPR public review process outside the rate 
proceeding. See section II.B. BPA's spending levels for investments and 
expenses are not determined or subject to review in rate proceedings.
    Pursuant to section 1010.3(f) of BPA's Procedures, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that challenges the 
appropriateness or reasonableness of the Administrator's decisions on 
cost and spending levels. If any re-examination of spending levels is 
necessary, such re-examination will occur outside of the rate 
proceeding. The above exclusion does not extend to those portions of 
the revenue requirements related to interest rate forecasts, interest 
expense and credit, Treasury repayment schedules, forecasts of 
depreciation and amortization expense, forecasts of system replacements 
used in repayment studies, Residential Exchange Program benefits, 
purchased power expenses, transmission acquisition expense incurred by 
Power Services, generation acquisition expense incurred by Transmission 
Services, minimum required net revenue, use of financial reserves, and 
the costs of risk mitigation actions resulting from the expense and 
revenue uncertainties included in the risk analysis. The Administrator 
also directs the Hearing Officer to exclude argument and evidence 
regarding BPA's debt management practices and policies. See section 
II.C.5.
 2. Tiered Rate Methodology (TRM)
    The TRM restricts BPA and customers with Contract High Water Mark 
(CHWM) contracts from proposing changes to the TRM's ratesetting 
guidelines unless certain procedures have been successfully concluded. 
No proposed changes have been subjected to the required procedures.
    Pursuant to Sec.  1010.3(f) of BPA's Procedures, the Administrator 
hereby directs the Hearing Officer to exclude from the record all 
argument, testimony, or other evidence that seeks in any way to propose 
revisions to the TRM made by BPA, customers with a CHWM contract, or 
their representatives, unless it can be established that the TRM 
procedures for proposing a change to the TRM have been concluded. This 
restriction does not extend to a party or customer that does not have a 
CHWM contract.
3. Service to the Direct Service Industries (DSIs)
    BPA's decisions to serve Alcoa and Port Townsend along with the 
method and level of service to be provided DSIs in the FY 2016-2017 
rate period will not be determined in this proceeding. The decision to 
serve the DSIs was made in the record of decision on the Alcoa and Port 
Townsend contracts. The decision was not challenged in the Ninth 
Circuit Court of Appeals.
    Pursuant to Sec.  1010.3(f) of BPA's Procedures, the Administrator 
directs the Hearing Officer to exclude from the record all argument, 
testimony, or other evidence that seeks in any way to revisit the 
appropriateness or reasonableness of BPA's decisions regarding service 
to the DSIs, including BPA's decision to offer contracts to the DSIs 
and the method or level of service.
4. Generation Inputs
    BPA provides a portion of the available generation from the FCRPS 
to enable Transmission Services to meet its various requirements. 
Transmission Services uses these generation inputs to provide ancillary 
and control area services.
    Pursuant to Sec.  1010.3(f) of BPA's Procedures, the Administrator 
directs the Hearing Officer to exclude from the record all argument, 
testimony, or other evidence that seeks in any way to revisit issues 
regarding reliability of the transmission system, dispatcher standing 
orders, e-Tag requirements and definitions, open access transmission 
tariff (OATT) provisions, and business practices. These non-rates 
issues are generally addressed by BPA in accordance with industry, 
reliability, and other compliance standards and criteria and are not 
matters appropriate for the rate proceeding.
5. Federal and Non-Federal Debt Service and Debt Management
    During the 2014 IPR and in other forums, BPA provided the public 
with background information on BPA's internal Federal and non-Federal 
debt management policies and practices. While these policies and 
practices are not decided in the IPR forum, these discussions were 
intended to inform interested parties about these matters so that they 
would better understand BPA's debt structure. BPA's debt management 
policies and practices remain outside the scope of the rate proceeding.
    Pursuant to Sec.  1010.3(f) of BPA's Procedures, the Administrator 
hereby directs the Hearing Officer to exclude from the record all 
argument, testimony, or other evidence that seeks in any way to address 
the appropriateness or reasonableness of BPA's debt management policies 
and practices. This exclusion does not encompass how debt management 
actions are reflected in ratemaking.
6. Potential Environmental Impacts
    Environmental impacts are addressed in a concurrent National 
Environmental Policy Act (NEPA) process. See section II.D.
    Pursuant to Sec.  1010.3(f) of BPA's Procedures, the Administrator 
directs the Hearing Officer to exclude from the record all argument, 
testimony, or other evidence that seeks in any way to address the 
potential environmental impacts of the rates being developed in this 
rate proceeding.
7. 2008 Average System Cost Methodology (2008 ASCM) and Average System 
Cost Determinations
    Section 5(c) of the Northwest Power Act established the Residential 
Exchange Program, which provides benefits to residential and farm 
consumers of Pacific Northwest utilities based, in part, on a utility's 
``average system cost'' (ASC) of resources. On September 4, 2009, the 
Federal Energy Regulatory Commission (Commission) granted final 
approval of BPA's 2008 ASCM. The 2008 ASCM is not subject to challenge 
or review in a section 7(i) proceeding. Determinations of the ASCs

[[Page 71987]]

of participating utilities are made in separate processes conducted 
pursuant to the ASCM. Those processes began with ASC filings on June 2, 
2014, and are continuing through July 2015. The determinations of ASCs 
are not subject to challenge or review in a section 7(i) proceeding.
    Pursuant to Sec.  1010.3(f) of BPA's Procedures, the Administrator 
hereby directs the Hearing Officer to exclude from the record all 
argument, testimony, or other evidence that seeks in any way to visit 
or revisit the appropriateness or reasonableness of the 2008 ASCM or 
that seeks in any way to visit or revisit the appropriateness or 
reasonableness of any of the ongoing ASC determinations.
8. Rate Period High Water Mark (RHWM) Process
    Under the Tiered Rate Methodology (TRM), BPA has established FY 
2016-2017 RHWMs for Public customers that signed contracts for firm 
requirements power service providing for tiered rates, referred to as 
CHWM contracts. In this RHWM Process, which preceded the BP-16 rate 
proceeding, BPA established the maximum planned amount of power a 
customer is eligible to purchase at Tier 1 rates during the rate 
period, the Above-RHWM Loads for each customer, the System Shaped Load 
for each customer, the Tier 1 System Firm Critical Output, RHWM 
Augmentation, the Rate Period Tier 1 System Capability (RT1SC), and the 
monthly/diurnal shape of RT1SC. The RHWM Process provided customers an 
opportunity to review, comment, and, if necessary, challenge BPA's RHWM 
determinations.
    Pursuant to Sec.  1010.3(f) of BPA's Procedures, the Administrator 
hereby directs the Hearing Officer to exclude from the record all 
argument, testimony, or other evidence that seeks in any way to visit 
or revisit BPA's determination of a customer's FY 2016-2017 RHWM or 
other RHWM Process determinations.
9. 2012 Residential Exchange Program Settlement Agreement (2012 REP 
Settlement)
    On July 26, 2011, the Administrator executed the 2012 REP 
Settlement resolving longstanding litigation over BPA's implementation 
of the Residential Exchange Program (REP) under section 5(c) of the 
Northwest Power Act, 16 U.S.C. 839c(c). The Administrator's findings 
regarding the legal, factual, and policy challenges to the 2012 REP 
Settlement are thoroughly explained in the REP-12 Record of Decision 
(REP-12 ROD). The 2012 REP Settlement and REP-12 ROD were approved by 
U.S. Court of Appeals for the Ninth Circuit in Association of Public 
Agency Customers v. Bonneville Power Administration, 733 F.3d 939 (9th 
Cir. 2013).
    Because the 2012 REP Settlement was part of the REP-12 ROD, and 
approved by the Court, challenges to BPA's decision to adopt the 2012 
REP Settlement and implement its terms in BPA's rate proceedings are 
not within the scope of this proceeding. Pursuant to Sec.  1010.3(f) of 
BPA's Procedures, the Administrator hereby directs the Hearing Officer 
to exclude from the record all argument, testimony, or other evidence 
that seeks in any way to visit or revisit BPA's determination to adopt 
the 2012 REP Settlement or its terms in this rate proceeding.
10. Transfer Service for Southeast Idaho Load Service
    Because of the termination of grandfathered contracts, BPA is 
developing a new transmission service plan for its preference customers 
located in Southeast Idaho. The cost allocation issue related to this 
plan is an appropriate issue in this rate proceeding. However, all 
decisions regarding the development of the new plan of service itself 
are outside the scope of the rate proceeding.
    Pursuant to Sec.  1010.3(f) of BPA's Procedures, the Administrator 
directs the Hearing Officer to exclude from the record all argument, 
testimony, or other evidence that seeks in any way to visit or revisit 
BPA's strategy or acquisition decisions for Southeast Idaho Load 
Service.

D. The National Environmental Policy Act (NEPA)

    BPA is in the process of assessing the potential environmental 
effects of its proposed power and transmission rates, consistent with 
NEPA. The NEPA process is conducted separately from the rate 
proceeding. As discussed in section II.C.6., all evidence and argument 
addressing potential environmental impacts of rates being developed in 
the BP-16 rate proceeding are excluded from the rate proceeding hearing 
record. Instead, comments on environmental effects should be directed 
to the NEPA process.
    Because this proposal involves BPA's ongoing business practices 
related to rates, BPA is reviewing the proposal for consistency with 
BPA's Business Plan Environmental Impact Statement (Business Plan EIS), 
completed in June 1995 (BOE/EIS-0183). This policy-level EIS evaluates 
the environmental impacts of a range of business plan alternatives for 
BPA that could be varied by applying various policy modules, including 
one for rates. Any combination of alternative policy modules should 
allow BPA to balance its costs and revenues. The Business Plan EIS also 
includes response strategies, such as adjustments to rates, that BPA 
could implement if BPA's costs exceed its revenues.
    In August 1995, the BPA Administrator issued a ROD (Business Plan 
ROD) that adopted the Market-Driven Alternative from the Business Plan 
EIS. This alternative was selected because, among other reasons, it 
allows BPA to: (1) Recover costs through rates; (2) competitively 
market BPA's products and services; (3) develop rates that meet 
customer needs for clarity and simplicity; (4) continue to meet BPA's 
legal mandates; and (5) avoid adverse environmental impacts. BPA also 
committed to apply as many response strategies as necessary when BPA's 
costs and revenues do not balance.
    In April 2007, BPA completed and issued a Supplement Analysis to 
the Business Plan EIS. This Supplement Analysis found that the Business 
Plan EIS's relationship-based and policy-level analysis of potential 
environmental impacts from BPA's business practices remains valid, and 
that BPA's current business practices remain consistent with BPA's 
Market-Driven Alternative approach. The Business Plan EIS and ROD thus 
continue to provide a sound basis for making determinations under NEPA 
concerning BPA's policy-level decisions, including rates.
    Because the proposed rates likely would assist BPA in accomplishing 
the goals identified in the Business Plan ROD, the proposal appears 
consistent with these aspects of the Market-Driven Alternative. In 
addition, this rate proposal is similar to the type of rate designs 
evaluated in the Business Plan EIS; thus, implementation of this rate 
proposal would not be expected to result in environmental impacts 
significantly different from those examined in the Business Plan EIS. 
Therefore, BPA expects that this rate proposal will likely fall within 
the scope of the Market-Driven Alternative that was evaluated in the 
Business Plan EIS and adopted in the Business Plan ROD.
    As part of the Administrator's ROD that will be prepared for the 
BP-16 rate proceeding, BPA may tier its decision under NEPA to the 
Business Plan ROD. However, depending upon the ongoing environmental 
review, BPA may instead issue another appropriate NEPA document. 
Comments regarding the potential environmental effects of the proposal 
may be submitted to Katherine Pierce, NEPA Compliance Officer, KEC-

[[Page 71988]]

4, Bonneville Power Administration, 905 NE 11th Avenue, Portland, OR 
97232. Any such comments received by the comment deadline for 
Participant Comments identified in section III.A. below will be 
considered by BPA's NEPA compliance staff in the NEPA process that will 
be conducted for this proposal.

Part III--Public Participation in BP-16

A. Distinguishing Between ``Participants'' and ``Parties''

    BPA distinguishes between ``participants in'' and ``parties to'' 
the hearings. Separate from the formal hearing process, BPA will 
receive written comments, views, opinions, and information from 
participants, who may submit comments without being subject to the 
duties of, or having the privileges of, parties. Participants' written 
comments will be made part of the official record and considered by the 
Administrator. Participants are not entitled to participate in the 
prehearing conference; may not cross-examine parties' witnesses, seek 
discovery, or serve or be served with documents; and are not subject to 
the same procedural requirements as parties. BPA customers whose rates 
are subject to this proceeding, or their affiliated customer groups, 
may not submit participant comments. Members or employees of 
organizations that have intervened in the rate proceeding may submit 
participant comments as private individuals (that is, not speaking for 
their organizations) but may not use the comment procedures to address 
specific issues raised by their intervenor organizations.
    Written comments by participants will be included in the record if 
they are received by February 26, 2015. Written views, supporting 
information, questions, and arguments should be submitted to the 
address listed in the ADDRESSES section of this notice.
    Entities or persons become parties to the proceeding by filing 
petitions to intervene, which must state the name and address of the 
entity or person requesting party status and the entity's or person's 
interest in the hearing. BPA customers and affiliated customer groups 
will be granted intervention based on petitions filed in conformance 
with BPA's Procedures. Other petitioners must explain their interests 
in sufficient detail to permit the Hearing Officer to determine whether 
the petitioners have a relevant interest in the hearing. Pursuant to 
Rule 1010.1(d) of BPA's Procedures, BPA waives the requirement in Rule 
1010.4(d) that an opposition to an intervention petition be filed and 
served 24 hours before the prehearing conference. The time limit for 
opposing a timely intervention will be established at the prehearing 
conference. Any party, including BPA, may oppose a petition for 
intervention. All petitions will be ruled on by the Hearing Officer. 
Late interventions are strongly disfavored. Opposition to an untimely 
petition to intervene must be filed and received by BPA within two days 
after service of the petition.

B. Developing the Record

    The hearing record will include, among other things, the 
transcripts of the hearing, written evidence and argument entered into 
the record by BPA and the parties, written comments from participants, 
and other material accepted into the record by the Hearing Officer. The 
Hearing Officer will review the record and certify the record to the 
Administrator for final decision.
    The Administrator will develop final rates based on the record and 
such other materials and information as may have been submitted to or 
developed by the Administrator. The Administrator will serve copies of 
the Final ROD on all parties. BPA will file its rates with the 
Commission for confirmation and approval after issuance of the Final 
ROD.

Part IV--Summary of Rate Proposals

A. Summary of the Power Rate Proposal

 1. Power Rates
    BPA is proposing four different rates for Federal power sales and 
services. The General Transfer Agreement Service (GTA) rate schedule, 
currently included as a power rate schedule, is being moved to the 
General Rate Schedule Provisions. The proposed GTA charges are expanded 
to recover Western Electricity Coordinating Council (WECC) and Peak 
Reliability (Peak) costs BPA incurs based on transfer customer loads 
outside of the BPA balancing authority area.
    Priority Firm Power Rate (PF-16)--The PF rate schedule applies to 
net requirements power sales to public body, cooperative, and Federal 
agency customers made pursuant to section 5(b) of the Northwest Power 
Act and includes the PF Public rates for the sale of firm requirements 
power under CHWM Contracts and the PF Exchange rates for sales under 
Residential Purchase and Sale Agreements. The PF Public rate applies to 
customers taking load following or Slice/block service. Consistent with 
the TRM, Tier 1 rates include three charges: (1) Customer charges; (2) 
a demand charge; and (3) a load shaping charge. In addition, four Tier 
2 rates, corresponding to contract options, are applied to customers 
that have elected to purchase power from BPA for service to their 
Above-RHWM Load.
    The PF rate is a collection of rates charged on the basis of 
percentage of cost responsibility, marginal changes in demand and 
energy usage, customer purchase elections for BPA service to loads in 
excess of power purchased at Tier 1 rates, product and service choices, 
transfer load delivery and operating reserves, and applicability of 
rate discounts. Very few of BPA's customers have exactly the same mix 
of PF rate components in common. Therefore, BPA has developed a 
quantification of the PF rate that measures the impact on an average 
customer purchasing at Tier 1 rates. This quantification, the Tier 1 
Average Net Cost, is increasing 6.7 percent in this proposal, from 
$31.50/MWh for the PF-14 rate to $33.60/MWh for the PF-16 rate.
    The Base PF Exchange rate and its associated surcharges apply to 
the sale of power to regional utilities that participate in the REP 
established under section 5(c) of the Northwest Power Act. 16 U.S.C. 
839c(c). The Base PF Exchange rate establishes the threshold for 
participation in the REP; only utilities with ASCs above the 
appropriate Base PF Exchange rate may receive REP benefits. If a 
utility meets the threshold, a utility-specific PF Exchange rate will 
be established in this proceeding for each eligible utility. The 
utility-specific PF Exchange rate is used in calculating the REP 
benefits each participant will receive during FY 2016-2017.
    In addition, the proposed PF-16 rate schedule includes rates for 
customers with non-Federal resources that have elected to take Diurnal 
Flattening Service or Secondary Crediting Service, and a melded PF rate 
for any Public customer that elects a power sales contract other than a 
CHWM Contract for firm requirements service.
    New Resource Firm Power Rate (NR-16)--The NR-16 rate applies to net 
requirements power sales to investor-owned utilities (IOUs) made 
pursuant to section 5(b) of the Northwest Power Act for resale to 
ultimate consumers, direct consumption, construction, testing and 
start-up, and station service. The NR-16 rate is also applied to sales 
of firm power to Public customers when this power is used to serve new 
large single loads. In addition, BPA is proposing NR rates for services 
to support Public customers serving new large single loads with non-
Federal resources. In the Initial Proposal BPA is forecasting no

[[Page 71989]]

sales at the NR rate. The average NR-16 rate in the Initial Proposal is 
$76.60/MWh, a decrease of 1.4 percent from the NR-14 rate.
    Industrial Firm Power Rate (IP-16)--The IP rate is applicable to 
firm power sales to DSI customers authorized by section 5(d)(1)(A) of 
the Northwest Power Act. 16 U.S.C. Sec.  839c(d)(1)(A). In the Initial 
Proposal BPA is forecasting annual sales of 316 average megawatts (aMW) 
to DSIs. See section IV.A.2c. The average IP-16 rate in the Initial 
Proposal is $41.53/MWh, an increase of 6.6 percent over the IP-14 rate.
    Firm Power and Surplus Products and Services Rate (FPS-16)--The FPS 
rate schedule is applicable to sales of various surplus power products 
and surplus transmission capacity, for use inside and outside the 
Pacific Northwest. The rates for these products are negotiated between 
BPA and the purchasers. In addition, the FPS-16 rate schedule includes 
rates for customers with non-Federal resources, the Unanticipated Load 
Service rate, rates for other capacity, energy, and scheduling products 
and services, and rates for reserve services for use outside the BPA 
balancing authority area.
2. Ancillary Service and Control Area Service Rates
    Beginning in May 2014, BPA held rate case workshops and solicited 
stakeholder comments concerning generation inputs issues that form the 
foundation of most ancillary service and control area service rates. 
Over the following months, BPA and stakeholders developed a settlement 
agreement that covers most ancillary and control area service rates. 
The settlement agreement rates are at the same level as current rates 
except for a five percent increase for the Operating Reserves rates. 
The settlement agreement also provides for other changes to the rate 
schedules, and specifies the amount of balancing reserve capacity to be 
provided during the rate period as well as an acquisition budget for 
balancing reserve capacity.
    BPA asked all entities that intended to be parties to the BP-16 
rate proceeding to either sign the agreement or declare their intention 
to contest the agreement by September 25, 2014. By that deadline, 29 
parties signed or agreed not to contest the settlement agreement. No 
party declared an intent to contest the agreement.
    BPA will file the BP-16 generation inputs settlement agreement as 
part of the BP-16 Initial Proposal. Parties will be given an 
opportunity to contest the agreement pursuant to a timeline established 
by the Hearing Officer.
3. Risk Mitigation Tools
    The main financial risk mitigation tool BPA relies upon is 
financial liquidity, which consists of cash, other investments in the 
Bonneville Fund at the U.S. Treasury, and a short-term liquidity 
facility with the U.S. Treasury. BPA proposes to include provisions for 
two rate adjustments in the power rate schedules and in certain 
ancillary and control area services rate schedules: The Cost Recovery 
Adjustment Clause (CRAC), which can generate additional cash within the 
rate period, and the Dividend Distribution Clause (DDC), which can 
return cash to customers when BPA's financial reserves attributed to 
power are larger than needed to meet its Treasury Payment Probability 
(TPP) standard. When available liquidity and the CRAC are insufficient 
to meet the TPP standard, BPA includes Planned Net Revenues for Risk 
(PNRR) in its rates.
    In the Initial Proposal, BPA proposes to include no PNRR and to cap 
the maximum revenue recoverable through the CRAC at $300 million per 
year. BPA is proposing some minor changes to the risk mitigation tools 
in the BP-16 Initial Proposal, including a revision to the metric used 
to determine whether a CRAC or DDC triggers. The thresholds for 
triggering the CRAC and DDC remain unchanged from the BP-14 rate case 
(equivalent reserve levels of $0 and $750 million, respectively, in 
financial reserves attributed to Power). BPA also proposes to continue 
the National Marine Fisheries Service FCRPS Biological Opinion 
Adjustment (NFB Adjustment) and the Emergency NFB Surcharge, given that 
litigation regarding the Biological Opinion continues.

B. Summary of the Transmission Rate Proposal

    BPA is proposing an overall 5.6 percent increase in transmission 
rates. BPA is also proposing to develop a WECC and Peak rate.
    BPA is proposing four different rates for the use of its Network 
segment, four different rates for use of intertie segments, and several 
other rates for various purposes.
    The four rates for use of the Network segment are:
    Formula Power Transmission Rate (FPT-16)--The FPT rate is based on 
the cost of using specific types of facilities, including a distance 
component for the use of transmission lines, and is charged on a 
contract demand basis.
    Integration of Resources Rate (IR-16)--The IR rate is a postage 
stamp, contract demand rate for the use of the Network, similar to 
Point-to-Point (PTP) service (see below), and includes Scheduling, 
System Control, and Dispatch Service.
    Network Integration Transmission Rate (NT-16)--The NT rate applies 
to customers taking network integration service under the Open Access 
Transmission Tariff (OATT) and allows customers to flexibly serve their 
retail load.
    Point-to-Point Rate (PTP-16)--The PTP rate is a contract demand 
rate that applies to customers taking Point-to-Point service on BPA's 
network facilities under the OATT. It provides customers with flexible 
service from identified Points of Receipt to identified Points of 
Delivery. There are separate PTP rates for long-term firm service; 
daily firm and non-firm service; and hourly firm and non-firm service.
    BPA is proposing four rates for intertie use:
    The Southern Intertie Rate (IS-16) is a contract demand rate that 
applies to customers taking Point-to-Point service under the OATT on 
the Southern Intertie.
    The Montana Intertie Rate (IM-16) applies to customers taking 
Point-to-Point service on the Eastern Intertie.
    The Townsend-Garrison Transmission Rate (TGT-16) is a rate for firm 
service over BPA's section of the Montana Intertie and is available to 
parties to the Montana Intertie Agreement.
    The Eastern Intertie Rate (IE-16) is a rate for non-firm service on 
the portion of the Eastern Intertie capacity that exceeds BPA's firm 
transmission rights and is available to parties to the Montana Intertie 
Agreement.
    Other proposed transmission rates are:
    The Use-of-Facilities Rate (UFT-16) establishes a formula rate for 
the use of a specific facility based on the annual cost of that 
facility.
    The Advance Funding Rate (AF-16) allows BPA to collect the capital 
and related costs of specific facilities through an advance-funding 
mechanism.
    The Scheduling, System Control, and Dispatch Service Rate and the 
Reactive Supply and Voltage Control from Generation Sources Service 
Rate are for required ancillary services for transmission service on 
the Network, the Southern Intertie, and the Montana Intertie.
    The WECC and Peak rates recover WECC and Peak costs assessed to BPA 
to cover WECC and Peak reliability functions.
    The Oversupply Rate (OS-16) recovers the costs BPA incurs to 
displace generation under the

[[Page 71990]]

oversupply management protocol, Attachment P to BPA's OATT.
    Other charges that may apply include a Delivery Charge for the use 
of low-voltage delivery substations; a Reservation Fee for customers 
that postpone their service commencement dates; incremental rates for 
transmission requests that require new facilities; a penalty charge for 
failure to comply with dispatch, curtailment, redispatch, or load 
shedding orders; and an Unauthorized Increase Charge for customers that 
exceed their contracted amounts. BPA is proposing to eliminate the 
Power Factor Penalty Charge.

Part V--Proposed BP-16 Rate Schedules

    BPA's proposed BP-16 Power Rate Schedules and Transmission Rate 
Schedules are a part of this notice and are available for viewing and 
downloading on BPA's Web site at http://www.bpa.gov/goto/BP16. Copies 
of the proposed rate schedules also are available for viewing in BPA's 
Public Reference Room at the BPA Headquarters, 1st Floor, 905 NE 11th 
Avenue, Portland, OR 97232.

    Issued this 19th day of November, 2014.
Elliot E. Mainzer,
Administrator and Chief Executive Officer.
[FR Doc. 2014-28463 Filed 12-3-14; 8:45 am]
BILLING CODE 6450-01-P


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