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Slice of the System

August 7, 1998 Public Meeting

Portland Airport Conference Center

A. Introduction

About 50 people attended the sixth 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, to continue to clarify the current Public Generating Pool (PGP) Slice proposal, and to elicit comments and concerns from participants. BPA also wants to review Slice proposal options and start to refine alternatives.

Wykoff announced two more meetings. August 11 will be a technical meeting. Phil Mesa will review the technical model and assumptions used to define cost shifting impacts from the Slice proposal. Technical meetings are also scheduled for August 17 (this meeting was later canceled due to schedule conflicts) and August 19. The schedule for the draft Subscription Record of Decision has been pushed forward to September 16, so that allows more time for discussion of the Slice proposal.

Handouts available at the meeting:

B. Slice Principles

Kristi Wallis, who is facilitating the remaining Slice meetings, reviewed the Slice development principles on page 2 of Handout No. 1. Some participants have questions about how these principles will be used for the Slice proposal. Maureen Flynn (BPA) stated that originally these principles were thought of as decision criteria. Wykoff said that her team would get more guidance from BPA management about how they want to use these principles. Wallis suggested a sixth principle from the concerns she has heard from customers, that there be equal treatment to all products.

C. PGP Proposal Review

Wallis suggested reviewing the description of the PGP proposal using Handout No. 2 so that all parties could have the same understanding of the proposal. She reviewed the features of the proposal and concerns that she has heard from customers.

The Slice would be a percentage of the system, within non-power limits. There is a question whether it would be a power purchase or a purchase of a resource. This may be a legal concern. The Slice could be a requirements product tied to net load, but would actually depend on system flexibility. Operations are not mapped daily.

The percentage would be held in trust and delivered per the flexibility of the system (min-max). The Slice purchaser would not operate the system, and has no call on any single resource. There are still questions about whether the power would be scheduled or if signaling would be used (4-second signal is suggested). The Slice customer would have storage capability, and there would be a daily accounting of how storage rates had been used.

BPA would supply information from the Corps and Bureau that is public information. Those who want to purchase a Slice would like more information, but not proprietary information. BPA is developing a list of proprietary information. This issue needs further discussion because some feel more information should be made available. There is a need to deal with the possibility of willful misrepresentation of data. This needs to be defined, and dispute resolution needs to be defined.

Payment for the Slice would include BPA's revenue requirement before deducting secondary benefits. The costs on BPA's budget would be included with some exceptions: 1) short-term power purchases for other customers; 2) transmission expenses (Slice purchasers would have to buy their own transmission); and 3) net revenues for risk. Two issues were flagged for further discussion: payments for fish measures and new additions. Slice purchasers would pay implementation costs. The minimum term of a purchase would be 5 years. There would be an annual adjustment of the revenue requirement so that BPA would be adequately compensated for its product.

Wallis raised some technical issues. The availability of a Slice product if it is a requirements product or not is an issue. Is a Slice buyer short when BPA is short? Should capability be defined differently than for other customers? How would risk probability be defined? These issues will be discussed at the technical meeting.

Slice power would be used for Northwest requirements. This product does not work with full requirements customers or load following products. The term may be longer than 5 years. Stranded costs provisions would be the same as other products. There would be no prejudice at the end of the term for other products.

Wallis then asked customers why they think it would be a good product. Dennis Parrish (Seattle) listed these reasons: it would reduce risk to the U.S. Treasury; it would keep the power in the Northwest; and Seattle can manage the output within its own system and do the best job of that. Jeff Nelson (Springfield) said it would diversify buying and decision making in the region and would mitigate the concern about market power for BPA requirements products. Lon Peters (PGP) said it moves risks off the federal system and reduces the risk of cost shifts. Jay Waldron (PGP) stated that it would forge a new partnership relationship between BPA and the region's generators that would be a less stressful way to do business. Merrill Schultz (PGP) said it would be used as a resource to serve load, would be simpler than other BPA products, would guarantee a portion of BPA revenue requirements, and would be at a price to guarantee equity. Phil Mesa (BPA) was concerned about its effect on other resources. Schultz thought it might improve efficiency because there would be less cycling of some resources. Gary Zarker (Seattle) suggested constraints could be put on the product to address this concern.

Wallis identified some technical issues that need to be addressed: mapping to requirements; adequate compensation; legal issues such as power sale vs. resources, how to make it a requirements product or not without taking away entitlements, and ratemaking issues; financing concerns; and fairness and other policy concerns.

D. BPA Slice Proposal

Wykoff reviewed the options BPA has developed for the participants to consider. (See Handout No. 4.) Page 1 shows what BPA thinks it can do now. Option 1 is close to the Slice proposal, but it is not a requirements product. It is a surplus product. It would be scheduled only. A full description is in column 2. Phil Sher (PNGC) suggested that BPA could sell Slice with something other than blocks and combined with requirements products.

Option 2 (Slice of the FELCC) would be at a low and predictable price. It would be a shaped block of power with the amount determined yearly with the coordination plan. (See column 3.) Posted rates would be used for price. Phase 1 Subscription customers would be first in line for this product. Nelson raised a concern about any difference between requirements and preference.

Option 3 would combine unbundled products and services to create a Slice product that fits with Subscription. It has a mix of requirements and surplus products as well as services. It would be sold in the same order as Subscription. It would be a package of products with one contract. Pricing would not be a percentage of revenue requirements. Surplus would be after 5(b), 5(c) and 5(d) requests.

Option 4 is partial service as described in Subscription. There are discussions occurring about pooling. Tom Miller (BPA) will investigate the ongoing discussions.

Page 2 of Handout No. 4 lists the current elements of the Slice proposal that BPA can meet and the elements that BPA has concerns about. Participants argued that most of the concerns listed could be resolved by the annual true-up or a clear mapping definition for the percentage use for the Slice product. Keith Knitter (Grant) suggested that some of the cost language is pejorative and there is a perception that Slice proponents want to take more than they would pay for. Wallis believes the real issue is adequate compensation for BPA. Waldron suggested that requirements and pooling issues be raised in the legal group.

E. Next Steps

The group scheduled the following meetings: August 11, a technical meeting; August 19, a technical meeting; August 26 (later rescheduled to August 27), a public meeting; and August 31, a public meeting. [See Schedule for revised meeting dates and times.]


Archive of content originally posted or last updated on:  September 2, 1998.
Content originally provided by:  Angela Wykoff, BPA Power Business Line.
Content provided by:  Timothy Roberts, Slice Product Manager, 503-230-5450, tcroberts@bpa.gov.
Admin Assistant, Kimberly Brown, 503-230-3639, kabrown@bpa.gov.
Page maintained by:  BPA Web Team.
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