Risk Mechanisms
During the FY 2022-23 rate period, power and/or transmission rates may be adjusted each fiscal year in accordance with the respective Cost Recovery Adjustment Clause (CRAC), the Reserves Distribution Clause (RDC), and the Financial Reserves Policy (FRP) Surcharge provisions (see Power General Rate Schedule Provisions, sections II.O, II.P, and II.Q and Transmission General Rate Schedule Provisions, sections II.G, II. H, and II.I).
Power and Transmission Reserves Distribution Clause (RDC)
The Transmission RDC triggered based on FY 2022 end-of-year financial results resulting in a Transmission RDC Amount of $63.1 million. Please see the Administrator’s letter (Dec. 15, 2022) regarding the Transmission RDC final decision.
The Power RDC has also triggered based on FY 2022 end-of-year financial results resulting in a Power RDC Amount of $500 million. Please see the Administrator’s letter (Jan. 6, 2023) regarding the Power RDC final decision and BPA's Response to Comments.
Final Transmission RDC and Power RDC information and calculations are provided below.
Transmission RDC
Based on the amount of financial reserves available for risk that were attributed to Transmission Services and BPA at the end of FY 2022, the Transmission RDC “triggered” resulting in a Transmission RDC Amount of $63.1 million. The Administrator has determined that:
1) $16.4 million will be used to hold BP-24 transmission rates at the levels adopted in the BP-22 rate proceeding;
2) $12.9 million will reduce transmission rates through a Transmission Dividend Distribution (DD) which results in a credit that is applied to December 2022 through September 2023 customer bills; and
3) $33.8 million will cover Transmission’s forecast cost increases in FY 2023.
Transmission Dividend Distribution: The FY 2023 Transmission DD credit percentage is 1.46%. This is calculated in accordance with the 2022 Transmission, Ancillary, and Control Area Service Rate Schedules and General Rate Schedule Provisions (GRSP section II.H.1.b) by dividing the Transmission DD Amount by the sum of the December to September revenue forecast for FY 2023.
Revised rates are calculated by subtracting the Transmission DD Credit Percentage from 1.0, and then multiplying by the applicable rates. These revised rates will be used to bill service at the following rates: NT-22, PTP-22, FPT-22.1, IS-22, SCD rate (ACS-22), Utility Delivery rate (GRSP Section II.A.1.b), and IM-22.
Power RDC
Based on the amount of financial reserves available for risk that were attributed to Power Services and BPA at the end of FY 2022, the Power RDC “triggered” resulting in a Power RDC Amount of $500 million, the specified cap. The Administrator has determined the Power RDC Amount will be used for the following purposes:
1) $350 million for a Power Dividend Distribution (a Power rate credit that is applied to December 2022 through September 2023 customer bills);
2) $100 million for debt reduction or revenue financing in FY 2023, with any amount not used to reduce debt or revenue finance left as financial reserves to support Bonneville’s liquidity and/or increase the probability of a 2023 Power RDC Amount; and
3) $50 million to address, on an accelerated, one-time basis, certain non-recurring maintenance needs of existing fish and wildlife mitigation assets that (i) BPA anticipates would otherwise need to be addressed during future rate periods and (ii) will result in avoidance of those costs in future rate periods. For purposes of this section, mitigation assets are those BPA determines that (a) have resulted in tangible and measurable benefits or improvements for fish and wildlife, and (b) are directly related to mitigating for the effects of the construction or ongoing operation of Federal Columbia River Power System (FCRPS) projects.
Power Dividend Distribution: The FY 2023 non-Slice rate credit is $9.60 per megawatt-hour for the last 10 months of the fiscal year (equivalent to an annual reduction of $7.92 per megawatt-hour). This results in a reduction of the average non-Slice rate by 22% compared to the BP-22 Final Proposal. The Power DD credit rate is calculated in accordance with the BP-22 Power Rate Schedules and General Rate Schedule Provisions (GRSP section II.P.2) and is used to bill PF and IP customers. The rate also adjusts the December 2022 – September 2023 PF Tier 1 Equivalent energy rates.
