February 10, 1998
BPA Proposal of Bifurcated Rate Case
Prior to rate case, stranded cost methodology will be decided upon.
In 1998 Power Rate Case:
- Determine power revenue requirement
- Determine Segmentation/Functionalization methodology for:
- Generation-Integration/Generator Step Up Transformation
- Other (Conservation; Fish)
- Generator-supplied inputs for Ancillary Services and other reliability services
- Delivery Charge Underrecovery, if any
- Develop Power Rates
Includes forecast of transmission costs for delivered power sales.
- Submit power rate proposal to FERC.
In 2001 Transmission Rate/Terms & Conditions Case:
- Determine Transmission Revenue Requirement based on then-current
budget forecasts for FY 2002-2006.
- Apply functionalization and segmentation methodologies determined
in 1998 power rate case to then-current forecasted costs.
- Decide all other segmentation issues.
- Decide all other issues (allocation; rate design; revenue forecast;
terms and conditions; ancillary services) and develop transmission
- Submit transmission rate proposal and terms and conditions
proposal to FERC.
Concerns re. early (prior to 2001) transmission rate case
- Major Policy Issues
BPA and the region are in the middle of trying to sort out FPA conformance, ISOs, stranded costs, and industry restructuring. Putting a divisive transmission rate case in the middle of these processes will reduce the probability of a favorable result in these fundamental policy issues. There may also be pressure to move these issues into the rate case for resolution.
Given differences between BPA's and FERC's pro forma rates, terms and conditions, it would likely be difficult to get FERC approval if BPA were to propose a limited issue transmission rate case.
- 1996 Rate Case Settlement/Tariff Implementation
The TBL has limited experience operating under the current tariffs, given the year we have spent under bridge agreements and the changes made to the tariffs in December to implement the FERC orders (including agreement to conform scheduling procedures to the pro forma procedures within one year). Also, the sale of facilities process will not be anywhere near complete. These factors make it difficult to forecast for future periods as well as formulate positions on major issues.
- Setting Transmission Budgets/Revenue Requirement for FY 2002-06
- Revenues for risk--the more time between rate case and rate period, the greater the risk that costs/loads will be different than forecast
- Load Uncertainty--major uncertainty after 2001 because most open access transmission contracts expire in 2001, and transition policies ends for 81PSC and IR/FPT customers
- Capital programs--what will be the relationship between planning and contractual obligations? i.e., does BPA continue to do regional planning?
- O&M Expense--although BPA is reducing these expenses (from $107 million in FY 93 to $81 million in FY 97), BPA is unwilling to impair the reliability of the transmission system by setting expense levels now that may be inadequate for the rate period.
- Staffing Concerns
There would be severe TBL staffing problems in putting together a transmission rate proposal in the 1998/99 timeframe. Any significant change in the rate structure will require changes in the Terms and Conditions. BPA needs the same scheduling experts to staff the T&C case that are involved with scheduling procedures, ATC, etc.
- Locking In Rates for Future Period
BPA would have the problem of how to lock the transmission rates in place--do customers, including the PBL, have to sign take-or-pay contracts, and if so what constitutes a take-or-pay contract, given retail wheeling, etc.? Eight years is an eternity in today's transmission environment.
Web page posted on February 25, 1998.
Information provided by: Diane Cherry, BPA Power Business Line, 503-230-5648, email@example.com.