BPA Rates Hearing Room
June 8, 1998 Public Meeting
[Note: Four handouts were distributed at this meeting. Each handout is available in PDF format by clicking on the "Handout" links below. A single PDF file that includes all 4 handouts (file size = 144 KB) is also available.]
About 30 people attended the second public meeting on the Slice of the System Proposal. Angela Wykoff welcomed the participants and stated that the purpose of the meeting was to continue the background and education process for new participants, and to continue to clarify the current Public Generating Pool (PGP) Slice proposal. BPA plans to start an analysis of specific features of the Slice proposal after it is clarified.
BPA has scheduled four additional meetings on the Slice proposal. Times and locations are on the Slice web page.
B. Budget Line Item Detail
David Steele (BPA) reviewed the Revenue and Expense Baseline Data for the Power Business Line (Handout No. 2). An explanation of the budget line items provided the data the PGP needs to determine what costs it is willing to assume if BPA offered and the PGP purchased a Slice of the System. The budget numbers are not loaded with overhead costs. This is information that BPA has discussed with the PGP, but it has 1997 actual numbers added in column one. The numbers on the handout are the same numbers that have been used in the Cost Review. BPA plans to revise these numbers by the end of summer and incorporate Cost Review recommendations for the budget review for Fiscal Year 2000. In response to questions, additional information was discussed for the following line items:
Line Item No. 2 CSRS Pension Expense:
This is a new line item to add money to the federal retirement system as requested by the Administration. This zeroes out in 2006.
Line Item No. 3 Power Marketing:
This includes cultural resource mitigation that reimburses tribes to mitigate for damages caused by dams. It is $3.5 million/year.
Line Item No. 5 Power Scheduling/Storage:
Storage costs are not included. Short and medium load forecasting is included.
Line Item No. 6 ST Purchased Power/S&Exchange Agreement:
Upstream benefits are included.
Line Item No. 8 Generation Oversight:
The amounts drop because contract payments are spread through the rate period. There are some renewables in this line item, about $2-3 million. Some O&M costs are included. The current forecast has them all in one line. It includes estimated costs for the Tenaska Partners. A settlement of $115 million was charged earlier.
Line Item No. 9 Conservation and Consumer Services:
This money is for existing contracts; costs trail off after 2006. The line item assumes Market Transformation continues.
Line Item No. 10 Fish and Wildlife:
There may be an increase post-2001, with the Three Sovereigns process as a possible contributor to the increase. Lost revenues for spill are not included.
Line Item No. 11 Corporate Expenses:
BPA expects that these costs will come down.
Line Item No. 16 Colville Settlement:
These amounts include offsetting "revenues" that are credits from the Justice Fund.
Line Item No. 17 Renewable Projects:
Operation costs for projects with signed contracts begin in 2000. This line item does not include debt service.
Line Item Nos. 18, 19, 20 WNP 1, 2, 3:
Costs for site restoration cause the numbers to increase in some years. Also, there are costs for additional fuel included. Some settlement costs may also be included.
Line Item No. 22 Between Business Line Expense:
This is a new line item created when the business lines separated to meet FERC requirements.
Line Item Nos. 27-33:
These items include debt service for the projects listed above on the handout. BPA refinances debt when it is opportune to do so.
Line Item No. 32 Renewable Projects:
This is rolled up into Line Item No. 33.
Line Item No. 36 Net Residential Exchange:
This line item could change depending on the outcome of the rate case.
Lon Peters (PGP) stated that he would put together the costs that should be included in the proposal and get those costs to BPA by June 19. Wykoff asked the participants to call if anyone has further questions and that the questions would be directed to the right person in BPA for an answer.
C. Comments on the PGP Proposal
BPA revised the Slice proposal worksheet (Handout No. 1) based on discussion at the May 13 meeting and checked the changes made with the participants. A summary of the discussion under each section follows. Most comments in this summary were clarifications from those representing the PGP proposal.
This section describes the general concept of the proposal.
Five years was suggested as a maximum term without more certainty about fish and wildlife and other costs. Some customers are interested in longer-term contracts with more certainty about costs and operations. How "Acts of Congress" and other events might cause a reconsideration of the contract needs to be defined. Some customers are willing to take on the risk of changes in the system for non-power uses. The threshold for how much risk could depend on the term and the range of catastrophic events and stranded costs. The PGP wants to develop a package that works, so all aspects of the proposal need to be understood.
Eligibility to Purchase
The fourth bullet regarding highest 2-year purchases was removed; if Slice was in Subscription the same rules would apply to Slice as to other Subscription purchases. Mapping preference rights would be on an annual forecasted basis.
There remains a question about how the Slice would affect the Residential Exchange, if "in lieu" could be used to reduce costs. There are also some sequencing questions if the system is oversubscribed in the Subscription process. Peters suggested that if there is a pro rata reduction, then the Slice product would be one product that would be reduced. There was a concern expressed that BPA is starting the Subscription process before the Slice product is ready.
The term "4-second signal" was changed to "dynamic signal" to better reflect changing technology. BPA would like a better explanation of "shaping" and "backup" used in the worksheet. Merrill Schultz suggested that shaping is using the control signal to determine the shape of a customer's take. BPA would like to be able to know the operating reserves at all times. Peters suggested taking "shaping" and "backup" out of the worksheet and leaving "reserves" in.
The product would be related to transmission ancillary services and transmission issues need to be discussed.
Storage would not be guaranteed.
The second bullet about a declared resource was removed. An issue was raised whether a Slice product could be turned into fixed numbers and be a scheduled product.
Cost to Purchasers
The fifth bullet was changed to read: "treat stranded costs as per other power purchases." The environmental obligations that would be included need to be defined according to some criteria so they could be used as part of a risk assessment. Obligations at a certain time, with no additions, could be used. Obligations approved by the Administrator could be used. The PGP believes some limits must be set. Others believe that this issue must be resolved in the public interest community. The issue of BPA's "public purpose" in light of deregulation was raised. The PGP will develop a definition of "public purpose." BPA will make the statute that defines its public purpose available also.
D. Analysis: Hourly Shape of Power Take
Bill Doubleday (BPA) presented graphs for two utilities to illustrate what a Slice product might do to BPA's requirements loads (Handout No. 4). The preliminary analysis showed that for the nine months that BPA must purchase balancing power, BPA would have to buy more purchase power with Slice than it would otherwise have had to purchase. Peters thought the shape was as yet unknown, so this conclusion was not valid. Some Slice customers could maximize their revenues, but others have constraints on some resources. Maureen Flynn asked that participants tell BPA what assumptions to use. Flynn also said that 5(B)(1)(a) resources need to be discussed.
E. Transmission Issues
Handout No. 3 has transmission-related issues that would affect a Slice product.
F. Next Steps
The next public meeting is scheduled for June 19, from 9-12:00 a.m. in the Rates Hearing Room.
Archive of content originally posted or last updated on: June 17, 1998.
Content originally provided by: Angela Wykoff, BPA Power Business Line.
Content provided by: Timothy Roberts, Slice Product Manager, 503-230-5450, email@example.com.
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