Capital Investment Review
The following comments were submitted in response to the open comment period described below.
Capital Investment Review Draft Asset Strategies
BPA initiated its Capital Investment Review (CIR) process March 8. The CIR will focus on draft asset strategies and potential investments in Federal Columbia River power and transmission assets, as well as other significant investment obligations. A substantial amount of information has been posted for discussion over the next two months.
Because it is important that we understand and focus on the most important issues for our capital planning, we are offering two separate opportunities for comment—a short-term request for information and a long-term request for technical comments.
You are welcome to submit multiple entries within this Capital Investment Review comment period category.
March 8-March 23: Requests for additional meetings and information
To help BPA gauge the level of interest in specific asset strategies, you are invited to submit recommended topics for subsequent meetings or requests for additional information.
Submit your request for meeting topics regardless of requests already submitted by others. All requests for additional information or meetings will be viewable online. If you wish for your name and/or request to remain confidential, please make note of that in your submission.
In response to comments submitted, meetings will be scheduled for the week of April 16. Meeting details will be posted on BPA’s Public Calendar. Responses to requests for additional information will be posted on BPA’s Capital Investment Review. Requestors will be notified via email when the information is posted.
March 8-May 4: Technical Comments on BPA’s draft asset strategies and potential investments
To help inform BPA’s proposal for capital spending in the 2012 Integrated Program Review process, you are invited to review and comment on BPA’s draft asset strategies and potential investments in Federal Columbia River power and transmission assets. BPA developed draft Asset Management Strategies for capital investment programs for a 10-year investment horizon; the plans will be updated every two years. Each asset category also includes a prioritized list of major projects driven by criteria described in section 4.5 of the Initial CIR publication.
BPA is releasing these asset strategies well in advance of this summer’s IPR process based on customer feedback after the 2011 Strategic Capital Discussions.
For More Information:
http://www.bpa.gov/corporate/Finance/IBR/CIR/index.cfm
Comments are numbered consecutively as they are received. Breaks in the number sequence result when comments are deleted because they
were submitted in error or have inappropriate content (such as SPAM). If you do not see your comment two business days after
you submit it, please contact (800) 622-4519.
Close of comment: 5/11/2012
- CIR12 0002 -
Saven/Northwest Requirements Utilitiesview attachment
View Attachment
- CIR12 0003 -
Cahail/PSEView attachment
View Attachment
- CIR12 0004 -
Fisher/M-S-RM-S-R appreciates the opportunity to make suggests/requests regarding the need for and nature of additional meetings to discuss BPA's CIR. M-S-R suggests that the meetings originally envisioned are important and should be rescheduled. The CIR document is significant and many issues are intertwined. M-S-R believes that greater discussion and focus is needed to fully understand what BPA plans to do and why, particularly in these areas: Capital considerations and Debt strategies for supporting the various agency functions; Generation Interconnection Strategies, Asset Strategies for operations, and transmission Prioritization. To give but a few examples of additional information needed, M-S-R would like to receive further detail on the following topics: 1.) examination of the past O&M decisions and the identified strategies moving forward - how much of the needed investment now is a result of deferred maintenance and how much is to keep plant in operation or to expand transmission capablilties? 2.) Do investment decisions consider cost of debt, availability of capital, or impact on rates? 3.) Identify which planned investments are driven by reliability requirements versus those being promoted to advance BPA's business objectives. 4.) What analysis is done to show that a decision to build or repair will have an appreciable benefit on BPA operations - a form of what gives the agency the biggest "bang for the buck" in meeting strategic policy goals and why? (this goes beyond the standard cost- benefit analysis); 5.) what analyses are done to more accurately reflect hydro flexibility and operations and the impact upon operations through investment in such things as RAS and AGC? 6) Are environmental externalities being considered in making capital decisions? In what way are they included? 7.) what happens when the agency faces unexpected or unplanned for priorities such as a requirement to provide balancing reserves at cost to support VERs or a reduction of available AFC or ATC reflecting a change in how these are calculated - are decisions reexamined and the priorities changed to meet new concerns and needs? If not, why not? 8.)What decisions are made in the CIR and IPR proceedings that will become inputs to the rate determinations in the rate case? The customers have been told that unless parties speak up now, the issues cannot be addressed in the rate case. 9.) While BPA has indicated that the Columbia Generating Station is not part of these discussions, it plays a significant role in BPA's marketing strategies and past analyses and should be examined as well. 10.) Many stakeholders have suggested that BPA has not kept up with reliability requirements, upgrades, and improvements based upon NERC requirements both as a BA and as a power marketing agency. A better understanding by its customers of what is required is important to alleviate the idea that "but for wind" these requirements would not occur. M-S-R has been very impressed with the willingness of BPA this year to discuss and describe how it does business. Additional meetings and explanations will advance BPA's desire for consensus and transparency. A better understanding of how BPA makes the decisions it does and why will allow its customers and stakeholders to be "invested" in the decisions made.
- CIR12 0005 -
Cromwell, Jr./Seattle City LightView attachment
View Attachment
- CIR12 0006 -
O'Meara/Public Power CouncilView attachment
View Attachment
- CIR12 0007 -
Hunter/Snohomish County PUD
Snohomish Capital Investment Review Comments/Information Request
Please find below Snohomish PUD's questions and initial comments on BPA's Capital Investment Review (CIR) workshop on March 8, 2012. Snohomish thanks BPA and its staff for its efforts and for incorporating the feedback we've provided in prior processes, and we look forward to the continuing work on the CIR and Integrated Program Review (IPR).
Additional Questions/Process Requests
- Snohomish requests time be scheduled to discuss/develop prioritization of capital investment for Asset Strategies and agency-wide (CIR vs IPR), across BPA.
- How will the CIR and the IPR processes intersect?
- Upon close out of the CIR process, will total costs from the capital budget be incorporated into the IPR?
- How will BPA present/include the cost of debt required to support proposed capital investment in the IPR? What information will be available for customers to see costs that will be added to the FY14/15 rate period?
- Please provide a new table/chart, similar to that provided on page 77 of the March 8 Kickoff PowerPoint, that identifies the capital investment for each functional area for "Sustain" and "Expand". Said another way, please identify the portions of the capital budget for each asset strategy that are "Sustain" vs. "Expand" projects.
Transmission
- Does the long term capital investment for the Transmission Asset Strategy incorporate the current status of PTSAs? To what extent have the PTSAs been included/not included in the 10 year capital plan?
- Has the Transmission Asset Strategy accounted for system reliability and load growth over the ten year term? Please demonstrate.
- Please include a discussion of which capital projects can use third party financing. How does third party financing affects the cost of the projects and subsequent debt service?
Energy Efficiency
- Please provide detail as to the types of cost effective investment BPA has identified in the 10-year Energy Efficiency (EE) Asset Strategy.
- Snohomish requests a discussion on EE investment and amortization.
- Are the figures shown in the Initial Publication for the 10-year EE capital investment accurate? Has the agency made some assumptions about allocations of investment that will be published in the IPR?
Federal Hydro
- Based on BPA's explanation of "Committed Opportunity" assessments identified in the Federal Asset Strategy, how does this investment fit into the overall prioritization within and across Asset Strategies?
- CIR12 0008 -
Yourkowski/Renewable Northwest Projectview attached comment letter
View Attachment
- CIR12 0009 -
Saven/Northwest Requirements Utilitiesview attached comment letter
View Attachment
- CIR12 0010 -
Smith/Klickitat PUDSummary of Comments: If BPA’s borrowing limits are exceeded in 2017, BPA needs to present a plan that stretches expenditures to the required 10 year window. This plan should show prioritized projects across your asset groups and should result in proposed policy changes that move costs to those that drive them. It should not just show options to try and get more funding when prioritizing and scheduling work in an efficient manner has not been completed. • The pre-pay appears to me to be essentially a method to exceed the borrowing cap. • It appears as though BPA is not managing its business with in any limits, they are merely finding ways to spend the $ the various departments put into their budgets. Those budgets appear to vary wildly in successive years, which leads to a conclusion there is no solid basis for the expenditures. • If there is a pre-pay program, there will be less revenues in future years, in addition to more debt. We all know that rates will increase to cover additional borrowing that is not actually authorized. What is the rate impact of an additional $1.7 billion in borrowing and this program? • I applaud BPA for undertaking a review of capital expenditure prioritization. However, I believe that BPA should NOT be embarking on pre-payment or other options to obtain funding when the review of capital spending not been completed. If BPA does proceed, it tells me that there is no real intent to do anything differently, even if you learn something from the process as the funds would have already been acquired. • As a PUD, we generally can spend more money, but given the economic conditions, we are not. We are working with what we have and being more efficient and maintaining equipment. I know we just bought several ex-BPA fleet vehicles which appeared to us to be in very good shape with many years of life remaining. • BPA on the other hand, does not appear to be attempting to manage the business. Each department is its own entity. There does not appear to be any upper level management actually “managing” the organization as a financial whole. BPA appears to just be trying to find a way to get more money to match whatever budgets they receive from their departments. I certainly don’t manage that way and wouldn’t still have my job if I did. • I do not understand the varying transmission expenditures. You cannot staff for these variances and run an efficient construction program like this. Equipment maintenance and replacement should be planning in a manageable, efficient fashion. Efficient, well managed programs are consistent and deliver results over time. • After years of not maintaining systems, BPA appears to be trying to make it up in a short time period. Why? A managed recovery would be much more efficient. • Aging infrastructure does not appear to be the only thing driving the huge increases in capital spending. I believe that much of the system improvements and expansion are being driven by the complexities of obtaining data and managing variable generation and the issue is the existing systems cannot handle that. I think there are costs that should be reallocated to reflect this. • Hydro appears to be doing a good job in prioritizing and levelizing expenditures in a managed fashion. They also can show a return in the form of increased output and their requests for appropriately priced increases in output should be funded. • Interconnection policies should be reviewed and adjusted so that they require cash or securities prior to the construction of any new facilities. The past OATT process demonstrates this when a developer can exit a queue after BPA expenditures have taken place and not pay the full costs incurred. You can’t afford to do this anymore. WE can’t afford to do this anymore. • When we did our wind project, we funded Rock Creek sub. Cash. The only thing shown in the capital plans being funded by BPA should be improvements and expansion from “normal” growth, not specific projects. Your customers operate this way and you should too.
- CIR12 0011 -
Richardson/Springfield Utility Boardview attached comment letter
View Attachment
- CIR12 0012 -
Gerlitz/NW Energy CoalitionView attached comment letter
View Attachment
- CIR12 0013 -
O'Meara/Public Power Councilview attached comment letter
View Attachment
- CIR12 0014 -
Schneider/Flathead Electric Co-opFlathead would like to express our appreciation to BPA staff for taking a harder look at how to best to utilize its existing capital budget. Flathead supports the comments submitted by NRU and PPC, but would like to highlight a couple areas that BPA might focus on. The capital prioritization that the Corps and Bureau uses for the Hydro system seems to be the most well-developed and implements the concepts of applying a timing flexibility to potentially “mandatory” capital investments. It also recognizes, as a starting point, the capital constraint. This seems like an approach that could be more widely utilized. “The Total Cost for the system increases when a funding constraint causes new investments to be pushed out past the cost minima. The present value of investment costs is reduced, but risk increases by a larger amount. The Total Cost difference between various funding availability scenarios and an unconstrained funding alternative yields the increase in system cost.” The economic value approach that incorporates both BPA’s direct cost and the outage-reduction benefit to customers also seems to have merit, but should be applied to the timing of “mandatory” capital investments instead of just being focused on discretionary items. Taking most of the items off the table doesn’t lead to a robust agency-wide prioritization. In general, there seems to be a lack of a “base case” that assumes only existing access to capital (this would be the base case at most consumer-owned utilities), without revenue financing, prepay, and the other tools that are being explored. With the large expansion in BPA’s borrowing authority recently, even this base case should far exceed historical capital spending levels. It is hard to believe that “mandatory” spending at these levels are warranted when regional load growth is relatively flat and most of the need for facility improvements is driven by the need to export variable generation that is not needed to serve load. Those needs should be financing their own expansion. Thank you for the opportunity to comment.
- CIR12 0015 -
Brawley/PNGC Powerview attached comment letter
View Attachment
- CIR12 0016 -
Sanger/ICNUview attached comment letter
View Attachment
- CIR12 0017 -
Neale/WPAGview attached comment
View Attachment
- CIR12 0018 -
Toulson/Snohomish PUDview attached comment letter
View Attachment
- CIR12 0019 -
Bickford/Public Utility District No. 1 of Benton Countyview comments attached
View Attachment
|
|
|
Finance & Rates
