Bonneville Power Administration (BPA)
Pacific Northwest Utilities Conference Committee (PNUCC)
Draft Work Plan for
March 11, 1997
Implementing Federal Power Marketing Subscription
(last updated on December 22, 1997)
- Goal Statement
- Two Phases of the Federal Power Subscription Process
- The Approach
- Attachment A: Preliminary List of Federal Power Marketing Subscription Issues
- Attachment B: Timeline for Implementing Regional Review Recommendations
After a full year of intense study in an open public process, the Comprehensive Review Steering Committee achieved consensus recommendations for changes to the Northwest electric power industry. The challenge before us now is how best to move toward implementing these recommendations. This detailed work plan describes the necessary tasks, milestones and approach to implement the recommendations on federal power marketing.
While the primary goal of the subscription process will be to develop business arrangements between Bonneville and its customers, the process will be carried out in a way that allows all interested parties to understand and help shape it. This can be accomplished either directly through participation in Work Group meetings or through participation in a kickoff meeting and through informational materials and periodic updates.
This work plan is designed to implement the federal power marketing recommendations of the Comprehensive Review Final Report. As a first step of the subscription process, and in order to ensure a success, the customers and Bonneville will enter into a collaborative process to resolve issues, understand commercial interests, and develop strong BPA/customer relationships.
BPA will then be able to offer a variety of products and prices to address the customers' needs. This will make the purchase of federal power more attractive to the customers, resulting in reliable and predictable BPA revenues which will provide financial stability over time while ensuring no stranded costs. The sequence of events must be consistent with open access and must provide sufficient time to meet critical planning decisions and for BPA to market unsubscribed power products.
The federal power subscription process naturally divides into two phases. The first is a collaborative phase in which Bonneville and its customers discuss and understand their business interests as they bear on subscriptions. The second is the bilateral negotiations which are the necessary predicate to federal power purchase commitments and executed contracts. Also during the second phase, Bonneville will conduct the necessary National Environmental Policy Act (NEPA) analysis and rate analysis work. Each of these phases is described below.
The initial phase begins with a kickoff meeting to be held on March 11, 997. The kickoff meeting will be an opportunity for the BPA/customer design team to present its proposed work plan. It will also be an opportunity for BPA, its customers and a broad range of regional parties to suggest issues that should be addressed and to comment on the proposed work plan.
In addition, throughout the subscription process, notes from the meetings along with other educational information and process updates will be sent to interested parties. Periodically, the Work Group will schedule update sessions where the progress of the subscription process will be shared in a way that allows for clarification and suggestions from those not participating in the Work Group meetings.
This collaborative phase will begin with Bonneville and its customers discussing and defining their respective business and commercial interests as they relate to subscription. To the extent that such discussions identify business issues which require resolution, Bonneville and its customers will resolve all such issues. These discussions will be open to all interested parties.
The Phase One tasks described below are, by their nature, iterative. Bonneville's and it's customers' respective business interests may evolve through the discussions and identification of issues in Phase One. As such, the collaborative discussions will be flexible enough to permit the Work Group to revisit tasks as necessary. The scheduled completion dates are suggested mileposts that are tied to the accompanying timeline. Our goal is to meet the schedule indicated on the timeline. However, the Phase One tasks need not be a straight-line process.
In order for the subscription process to elicit the maximum load commitment, it is crucial that Bonneville offers products and prices that meet the commercial needs of its customers. This will include identification of the types of products sought by customers which Bonneville is capable of providing. Once a full range of such products is identified, pricing principles for these products will be established. The necessary tasks during this collaborative discussion phase include:
Task 1 - Confirm Goals and Work Plan
The Work Group will review the Goal Statement to establish a common understanding about the goals and overall approach of this effort. The Work Group will also review the work plan and approach as described in this document and revise as necessary, considering the comments received from the kickoff meeting. Ground rules will be established for the collaborative discussions.
- Product: Agreement on the goal statement, work
plan and ground rules.
- Scheduled Completion Date: April 2, 1997
The Work Group will identify the various business interests that pertain to subscription of federal power after 2001. The work done by the Comprehensive Review will act as a starting place for this effort. The Work Group will identify both business relationship interests as well as product and pricing needs. This list will include both Bonneville's and it's customers' interests. This task will also include a preliminary identification of all products and services that are requested to be offered by Bonneville after the year 2001. Examples of business interests might include a desire for long-term cost-based power or short-term service at a known price.
- Product: The full range of business interests are
understood. Also a preliminary set of product and pricing needs
- Scheduled Completion Date: June 30, 1997
[See the June 2, 1997 "Working Draft" list of business interests distributed at the June 4, 1997 Work Group meeting.]
Task 3 - Define Issues that Must be Resolved to Meet Business Interests
The Work Group will identify the issues that must be resolved in order to meet the business interests of Bonneville and its customers. Examples of issues might include: incentives for long-term cost-based contracts, and recovery of costs in a fixed-price contract. A "starter" list of issues is included at Attachment A. The Work Group will also identify the approach to offering the products during the bilateral negotiation phase of this effort.
- Product: Issues that need resolution to meet the
spectrum of business interests are defined.
- Scheduled Completion Date: August 31, 1997
Task 4 - Sequence Issues and Solve by Collaboration and Consensus
The Work Group will develop an appropriate sequence for addressing the issues, and will solve each issue through a collaborative discussion. Early in Task 4, some issues may be designated as being beyond the control of the parties of this collaborative process and may be placed on the Task 5 obstacles list (see following).
- Product: Document the issues and their resolutions.
- Scheduled Completion Date: November 30, 1997
Task 5 - Identify any Barriers to Implementing Solutions
Identify any obstacles to implementing the solution to the issues identified above. These are obstacles that are beyond the control of Bonneville and its customers. An example might include needed legislation. The Work Group may also identify potential solutions to overcoming these barriers.
- Product: Identify any obstacles that need
resolution and potential solutions.
- Scheduled Completion Dates:
Initial List - December 15, 1997
Final List - December, 1998
[These dates have been revised. See note for Task 6 below.]
Task 6 - Develop Proposed Product and Pricing Principles
The Work Group will develop a proposed set of product and pricing principles consistent with meeting the identified business interests and compatible with resolution of issues and obstacles. This will also include the approach by which Bonneville will sequence its product solicitations. It is anticipated that a first step in this task will be to develop a strategy for developing the principles. This strategy will include an order and schedule for addressing the issues.
- Product: Document the proposed set of product and
pricing principles and sequence for offerings.
- Scheduled Completion Date: July 1, 1999
[Note: At the June 18, 1997 Work Group meeting this completion date was "moved up a year, to mid-1998," and the deadlines for "assessing obstacles" (Task 5 above) were "accelerated accordingly."]
July 28, 1997 Note:
At the July 23, 1997 Work Group meeting a "game plan" (with some new milestones) was established for the subscription effort, addressing four topics: product and service definitions; business relationships between BPA and its customers; product and service prices; and implementation of subscription.
As business interests are understood, products and prices identified, and issues resolved, Bonneville will commence soliciting from customers subscriptions for federal power. This phase will be conducted bilaterally, consistent with the outcome of Phase One discussions, and will include preliminary non-binding solicitations of customer subscription levels, bilateral contract negotiations and final contract offers. Depending upon the products and pricing principles established, a rate case may also be necessary. Bonneville will also conduct the necessary NEPA analysis.
In order for the business and product discussions to be truly collaborative, it is important that they be conducted in a manner which encourages candor by both Bonneville and its customers. PNUCC can provide an umbrella under which Bonneville and its customers can engage in collaborative, problem solving discussions. PNUCC will provide coordination for the collaborative stage of the process including scheduling, logistical support and production assistance. PNUCC will not take positions on issues which arise during the process, and the PNUCC Board would not have a decision-making role. Rather, PNUCC will provide Bonneville and the customers assistance in conducting the collaborative process.
Keeping this collaborative stage of the process on track and on schedule is vital. Consistent with the collaborative approach, a Process Subcommittee would be formed. Its role would be to set the schedule, ensure work product is completed in a timely manner, prioritize and schedule topics, and sequence events. It is anticipated that this subcommittee would meet as necessary between meetings of the Work Group.
The majority of the work effort for this project will be done by the Work Group. This group will consist of representatives of Bonneville and its customers. The meetings will be open to all parties, with the understanding that the focus of the group will be as outlined above - commercial business interests. The Work Group will be self-selecting, with no formal membership. It is anticipated that this group would meet for a full day every other week for the first five months. Thereafter it is anticipated that the Work Group would meet once a month.
Relationship to the Governors' Transition Board
The Transition Board will play an active role in ensuring a successful federal power subscription. Major elements of this role are described below.
At the outset and throughout the subscription process, the Transition Board will receive periodic reports on the progress being made. These reports will be made approximately quarterly, and will be in sufficient detail to allow the Transition Board to assess progress being made, and identify any obstacles in need of attention.
The Transition Board will provide liaison with federal officials, including the delegation, to keep them advised regarding progress being made in implementing subscription. They will also serve as an early warning regarding any federal or state initiatives which might imperil successful implementation of subscription.
Lastly, but most importantly, the Transition Board will play an active role in resolving issues outside the subscription process which will have a major impact on its success. Specifically, having resolution of issues in the areas of customer choice, fish costs, and public purposes before customers are asked to make binding contractual commitments to Bonneville is vital. By ensuring timely resolution in these areas, the Transition Board will be
The meeting schedule for 1997 for the Work Group is shown below. The schedule of work in 1998 and beyond will be developed as part of Task 6 which is expected to begin in the fourth quarter of 1997 (see 1998 Schedule for Work Group meetings). Also shown on the schedule are the periodic progress reports to the Transition Board in 1997.
|March 11||Kick-off Meeting||9 a.m.||Jantzen Beach Red Lion|
|March 13||Meet with Transition Board|
|March 19||Work Group Meeting||9 a.m. - 4 p.m.||At: Lloyd Center Red Lion, 1000 NE Multnomah St., Portland, OR in the Mt. St. Helens Room|
|April 2||Work Group Meeting||9 a.m. - 4 p.m.||At: Portland Airport Sheraton, 8235 NE Airport Way, Portland, OR in the Columbian Room|
|April 16||Work Group Meeting||9 a.m. - 4 p.m.||At: Lloyd Center Red Lion, 1000 NE Multnomah St., Portland, OR in the Hawthorne and Sellwood Rooms|
|May 7||Work Group Meeting||9 a.m. - 4 p.m.||At: Portland Airport Sheraton, 8235 NE Airport Way, Portland, OR in the Columbian "C" Room|
|May 21||Work Group Meeting||9 a.m. - 4 p.m.||At: Portland Airport Sheraton, 8235 NE Airport Way, Portland, OR in the Mt. Hood "A" Room|
|June 4||Work Group Meeting||9 a.m. - 4 p.m.||At: BPA Rates Hearing Room (adjacent to BPA Headquarters building), 911 NE 11th, Room 223 (2nd floor), Portland, OR|
|June 5||Meet with Transition Board|
|June 18||Work Group Meeting||9 a.m. - 4 p.m.||At: Portland Airport Sheraton, 8235 NE Airport Way, Portland, OR in the Garden Room|
|July 2||Work Group Meeting||9 a.m. - 4 p.m.||At: BPA Rates Hearing Room (adjacent to BPA Headquarters building), 911 NE 11th, Room 223 (2nd floor), Portland, OR|
|Work Group Meeting||CANCELLED (due to NWPPA Annual Meeting)|
|July 23||Work Group Meeting||9 a.m. - 4 p.m.||At: Portland Airport Sheraton, 8235 NE Airport Way, Portland, OR|
|August 6||Work Group Meeting||9 a.m. - 4 p.m.||At: Portland Airport Sheraton, 8235 NE Airport Way, Portland, OR|
|August 20||Work Group Meeting||9 a.m. - 4 p.m.||At: BPA Rates Hearing Room (adjacent to BPA Headquarters building), 911 NE 11th, Room 223 (2nd floor), Portland, OR|
|September 3||Work Group Meeting||9 a.m. - Noon||At: Northwest Power Planning Council offices, 851 SW Sixth Avenue - Suite 1100, Portland, OR|
|September 9||Progress Report to Transition Board|
|September 17||Work Group Meeting||9 a.m. - 4 p.m.|
(see November 25)
|Possible Public Involvement Meeting|
|October 1||Work Group Meeting||9 a.m. - 4 p.m.|
|October 15||Work Group Meeting||9 a.m. - 4 p.m.|
|November 5||Work Group Meeting||9 a.m. - 4 p.m.|
|November 19||Work Group Meeting||9 a.m. - 4 p.m.|
|November 25||Public Update Meeting||9:30 a.m.||Airport Ramada Inn, Spokane, Washington|
|December 3||Work Group Meeting||9 a.m. - 4 p.m.|
|December 17||Work Group Meeting||9 a.m. - 4 p.m.|
|December||Possible Meeting with Transition Board|
The timeline in Attachment B displays a schedule for implementing all facets of the Comprehensive Review's Recommendations with a particular focus on the federal power marketing subscription process. [Note: This timeline was updated on June 18, 1997 and again on September 9, 1997.] The intent is to graphically convey the relative timing of each topic area and how to tackle the federal power marketing issues and implementation. These are estimates of the timing and length of time for each element. What is important is the relative timing and interrelationship among the elements.
This is a beginning list of issues to be consider in this process. Many of these are identified or raised in the Comprehensive Review's recommendations. One of the early tasks in the proposed work plan is to make additions and refinements to this list.
- Take or pay contracts and relief from this obligation
- Subscriptions to BPA power and retail access
- Resale rights of purchased power
- Payment and amount of option fees in a market environment
- Reconciling the rights and obligations between those who buy power at cost and those who buy at a negotiated price.
- Timing issues (subscriptions, contracts, and rates)
- Right of first refusal for renewal of subscriptions
- Level of subscription right
- What are the products being subscribed to?
- Inducement for long term contracts beyond known rates
- Contingency for potential over subscription
- Relationship to other products BPA offers
- How will aggregators fit into the subscription process?
- Appropriate sharing of costs and risks with the U.S. Treasury
- Bilateral resource acquisition and requirements obligations under NW Power Act
- Exchange customers rights post 2001
- Ability for customers to place load growth on BPA post 2001
- Future obligation of BPA to serve at cost if customers leave or go to market.
- Customer's ability to control future costs
- Need for certainty on fish and wildlife costs post 2001
- Need for certainty on stranded costs
Archive of content originally posted or last updated on: December 22, 1997.
Content originally provided by: Carolyn Whitney, BPA Power Business Line.
Content currently provided by: PBL Requirements Marketing - PS.
Page maintained by: BPA Web Team.