[Federal Register Volume 64, Number 208 (Thursday, October 28, 1999)]
[Notices]
[Pages 58039-58045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28178]



[[Page 58039]]

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DEPARTMENT OF ENERGY

Bonneville Power Administration


Opportunity for Public Comment; Regarding Bonneville Power 
Administration's Subscription Power Sales to Customers and Customer's 
Sales of Firm Resources

AGENCY: Bonneville Power Administration (BPA), DOE.

ACTION: Notice of revised draft policy proposal.

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SUMMARY: BPA is publishing a revised draft policy proposal regarding 
the amount of Federal power a customer may purchase under BPA 
subscription power sales contracts under sections 5(b) and 9(c) of the 
Northwest Electric Power Planning and Conservation Act, (the Northwest 
Power Act), P.L. 96-501, and section 3(d) of the Act of August 31, 
1964, (the Northwest Preference Act), P.L. 88-552. This revised draft 
policy would modify BPA's 1994 Non-Federal Participation Capacity 
Ownership Contracts and Section 9(c) Policy. See Modifications to 1994 
Non-Federal Participation Capacity Ownership Contracts and Section 9(c) 
Policy.

DATES: Comments must be received by Tuesday, November 30, 1999.

ADDRESSES: Comments on the revised policy proposal regarding the amount 
of Federal power a customer may purchase under BPA subscription power 
sales contracts, may be sent to: Bonneville Power Administration, P.O. 
Box 12999, Portland, OR 97212; or faxed to (503) 230-4019. Comments may 
be sent electronically to: [email protected].

FOR FURTHER INFORMATION CONTACT: Mr. Michael Hansen, Public Involvement 
and Information Specialist, Bonneville Power Administration, P.O. Box 
3621, Portland, Oregon 97208-3621, telephone (503) 230-4328 or 1-800-
622-4519.
    Information can also be obtained from your BPA Account Executive or 
from:

--Mr. Allen Burns, Vice President, Power Marketing, 905 N.E. 11th, P.O. 
Box 3621, Portland, OR 97208, telephone (503) 230-7640
--Mr. Rick Itami, Manager, Eastern Power Business Area, 707 W. Main 
Street, Suite 500, Spokane, WA 99201, telephone (509) 358-7409
--Mr. John Elizalde, Acting Manager, Western Power Business Area, 905 
N.E. 11th, P.O. Box 3621, Portland, OR 97232, telephone (503) 230-7597
--Mr. Steve Oliver, Manager, Bulk Power Business Area, 905 N.E. 11th, 
P.O. Box 3621, Portland OR 97208, telephone (503) 230-3295

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Relevant Statutory Provisions
II. Scope of the Proposed Policy
III. Policy on Determining Net Requirements
    A. Determination of the Amount of Federal Power For Sale Under 
Section 5(b)(1)
    B. Statutory Discontinuance For A Customer's Generating and 
Contractual Resource
    C. Use of New Renewable Resources to Serve Retail Firm Power 
Loads
    D. Changes in the Amount of Federal Power Purchased During the 
Term of a Contract
IV. Scope of the Section 9(c) Policy
    A. Modification to BPA's Non-Federal Participation Section 9(c) 
Policy
    B. Section 9(c) Policy
    C. Scope of the Section 9(c) Policy
    D. Subscription 9(c) Study
V. Section-by-Section Review of Changes in Revised Draft Policy from 
the Original Draft Proposal issued April 26, 1999
    On December 21, 1998, BPA published its Power Subscription Strategy 
and accompanying Record of Decision for selling Federal power under new 
contracts with its publicly and cooperatively owned utility, investor-
owned utility and direct service industrial customers. The Power 
Subscription Strategy stated overall policies for determining the 
amount of Federal power to be offered to Pacific Northwest public 
utility and investor-owned utility customers under section 5(b)(1) of 
the Northwest Power Act.
    On May 6, 1999, BPA published a Federal Register Notice with a 
draft proposed policy for determining the net requirements of publicly 
and cooperatively owned utility and investor-owned utility customers. 
(64 Fed. Reg. 24376) BPA sought public comment on its proposed polices 
for determining utility customer net requirements under section 5(b)(1) 
of the Northwest Power Act. Adoption of a final policy is important to 
a successful implementation of BPA's post-2001 power sales contracts 
under BPA's Power Subscription Strategy.
    BPA is issuing this revised draft policy proposal based upon 
comments and requests to provide additional comment on BPA's draft 
policy. This policy would provide guidance on implementation of the 
Power Subscription Strategy under applicable statutes and describe how 
certain factual determinations will be made regarding the amount of 
Federal power publicly and cooperatively owned utilities, or investor-
owned utilities may purchase from BPA under section 5(b)(1) of the 
Northwest Power Act. BPA's determination of this amount, as described 
in this revised policy, is affected by a customer's export of 
hydroelectric resources and non-hydroelectric resources out of the 
Pacific Northwest in accordance with section 9(c) of the Northwest 
Power and section 3(d) of the Northwest Preference Act. BPA will review 
a customer's export of power or output from resources under its 1994 
Policy as modified herein.

I. Relevant Statutory Provisions

    The Northwest Power Act provisions are:

    5(b)(1) Whenever requested, the Administrator shall offer to 
sell to each requesting public body and cooperative entitled to 
preference and priority under the Bonneville Project Act of 1937 [16 
U.S.C. 832 et seq.] and to each requesting investor-owned utility 
electric power to meet the firm power load of such public body, 
cooperative or investor-owned utility in the region to the extent 
that such firm power load exceeds--
    (A). The capability of such entity's firm peaking and energy 
resources used in the year prior to December 5, 1980, to serve its 
firm load in the region, and
    (B). Such other resources as such entity determines, pursuant to 
contracts under this chapter, will be used to serve its firm load in 
the region.
    5(b)(1) In determining the resources which are used to serve a 
firm load, for purposes of subparagraphs (A) and (B), any resources 
used to serve a firm load under such subparagraphs shall be treated 
as continuing to be so used, unless such use is discontinued with 
the consent of the Administrator, or unless such use is discontinued 
because of obsolescence, retirement, loss of resource, or loss of 
contract rights. 16 U.S.C. 839c(b)(1)
    9(c) Any contract of the Administrator for the sale or exchange 
of electric power for use outside the Pacific Northwest shall be 
subject to limitations and conditions corresponding to those 
provided in sections 2 and 3 of the Act of August 23, 1964 (16 U.S.C 
837a and 837b) for any contract for the sale, delivery, or exchange 
of hydroelectric energy or peaking capacity generated within the 
Pacific Northwest for use outside the Pacific Northwest. In applying 
such sections for the purposes of this subsection, the term 
``surplus energy'' shall mean electric energy for which there is no 
market in the Pacific Northwest at any rate established for the 
disposition of such energy, and the term ``surplus peaking 
capacity'' shall mean electric peaking capacity for which there is 
no demand in the Pacific Northwest at the rate established for the 
disposition of such capacity. The authority granted, and duties 
imposed upon, the Secretary by sections 5 and 7 of such Act (16 
U.S.C. 837d and 837f) [16 U.S.C. 837d and 837f] shall also apply to 
the Administrator in connection with resources acquired by the 
Administrator pursuant to this chapter. The Administrator shall, in 
making any determination, under any contract executed pursuant to 
section 839c of this title, of the electric power requirements of 
any Pacific Northwest customer, which is a non-Federal entity having 
its own generation, exclude, in addition to hydroelectric generated 
energy excluded from such requirements pursuant to

[[Page 58040]]

section 3(d) of such Act (16 U.S.C. 837b(d)), any amount of energy 
included in the resources of such customer for service to firm loads 
in the region if (1) such amount was disposed of by such customer 
outside the region, and (2) as a result of such disposition, the 
firm energy requirements of such customer other customers of the 
Administrator are increased. Such amount of energy shall not be 
excluded, if the Administrator determines that through reasonable 
measures such amount of energy could not be conserved or otherwise 
retained for service to regional loads. The Administrator may sell 
as replacement for any amount of energy so excluded only energy that 
would otherwise be surplus. 16 U.S.C. 839f(c) (emphasis supplied).
    The Northwest Preference Act provision is:

    3(d) The Secretary, in making any determination of the energy 
requirements of any Pacific Northwest customer which is a non-
Federal utility having hydroelectric generating facilities, shall 
exclude any amounts of hydroelectric energy generated in the Pacific 
Northwest and disposed of outside the Pacific Northwest by the 
utility which, through reasonable measures, could have been 
conserved or otherwise kept available for the utility's own needs in 
the Pacific Northwest. The Secretary may sell the utility as a 
replacement therefor only what would otherwise be surplus energy. 16 
U.S.C. 837b(d).

II. Scope of the Proposed Policy

    The Policy on Determining Net Requirements addresses the amount of 
Federal power that BPA is obligated to offer to customers requesting 
contracts to serve firm power loads under section 5(b)(1) of the 
Northwest Power Act. Purchasers eligible to request a contract under 
section 5(b)(1) include public body, cooperative, or investor-owned 
utilities in the region.\1\ BPA has a corresponding statutory duty when 
determining the net requirements of a requesting purchaser to apply the 
provisions of section 9(c) of the Northwest Power Act and section 3(d) 
of the Regional Preference Act. Such provisions direct the 
Administrator to determine whether an export or proposed export of a 
requesting purchaser's non-hydroelectric or hydroelectric resource 
would result in an increase in the firm energy requirements of any of 
BPA's customers. Findings by BPA that the export of such resources are 
likely to increase BPA's firm obligations, and that the resource could 
have been conserved, or otherwise retained to serve regional loads, 
will result in a reduction (decrement) \2\ of the amount of Federal 
power and energy available for purchase under section 5(b)(1) equal to 
the amount of power and energy, and for the duration, of the export.
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    \1\ The Policy also addresses any sales of Federal power BPA 
makes under section 5(b) in settlement of a customer's right to 
service under the residential exchange program created under section 
5(c) of the Northwest Power Act. While recognizing that this is a 
settlement, it does not affect the application of, or change, the 
policy regarding the net requirements of any customer.
    \2\ The 1994 Section 9(c) Policy BPA published uses the term 
``decrement'' to mean a decrease or reduction in BPA's obligations 
to sell power to a customer under its section 5 power sales contract 
with BPA. When used in this Policy and modification of that Policy 
the terms ``decrement,'' ``decrease,'' ``reduce'' or ``reduction'' 
have the same meaning.
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III. Policy on Determining Net Requirements

A. Determination of the Amount of Federal Power for Sale Under Section 
5(b)(1)

    1. BPA will determine the amount of Federal power for sale under 
section 5(b)(1) in the manner described below. In making this 
determination BPA will reduce the amount of Federal power a customer 
may purchase in accordance with section 9(c) of the Northwest Power Act 
and section 3(d) of the Northwest Preference Act.
    (a) BPA will offer an amount of Federal power for sale to a 
purchaser under section 5(b)(1) based upon such customer's actual 
retail firm power loads in the region. To establish the purchaser's 
actual retail firm power loads in the region, BPA may use either the 
actual measured load of the customer, or the customer's own actual load 
forecast if BPA determines such forecast is reasonable. (Any actual or 
forecast loads of the customer shall exclude any wholesale loads served 
by the customer. Wholesale loads means power sales made by the customer 
using its own resources to serve its own wholesale customers who are 
purchasing to resell the power at wholesale or retail.)
    (b) For purposes of determining the amount of Federal power BPA 
will offer to existing customers in the post-2001 period, BPA will 
require an existing customer to continue to use all generating and 
contractual resources included in the Firm Resource Exhibit (FRE) of 
such customer's current 1981 or 1996 power sales contracts for the 
1998-1999 operating year. BPA will not, however, require customers to 
continue the use of resources identified in their 1998-99 FREs for any 
one of the following reasons: (1) The customer's contractual 
resource(s) expires prior to October 1, 2001; (2) the customer's 
generating resource(s) is determined by BPA to be lost due to 
obsolescence, retirement, or loss of resource in accordance with 
section III.B.1 (loss of generating resources); or (3) the customer's 
contractual resource(s) is determined to be lost in accordance with 
section III.B.2 (loss of contractual resources). In addition, customers 
who were given express written consent by the Administrator to 
permanently remove a resource from use in serving regional firm power 
loads are not required to return such resources to use.
    (c) BPA's requirement that the customer continue using the 
customer's resources listed in its FRE for the 1998-1999 operating year 
is based upon a decision made in BPA's Power Subscription Strategy. The 
decision was to establish a baseline for determining the customer's 
resources expected to continue serving regional firm power loads in the 
post-2001 period. In addition, BPA will require that all Federal 
surplus firm power contracts or excess Federal power contracts with 
terms which extend further than one year beyond 2001 be applied as firm 
resources used to serve the customer's retail firm power load in the 
region.
    (d) Customers may elect to use additional generating resources or 
contractual resources for their consumer load service under their 
section 5(b)(1) contract. Under the contract customers can also agree 
to contractually commit power purchases from the market to serve any 
remaining amounts of their retail firm power load in the region which 
is not served by (1) generating resources or contractual resources that 
a customer must use to serve load under section III.A.2, above; and (2) 
additional generating resources or contractual resources that a 
customer elects to use under this section. Customers may elect to apply 
short term power purchases from the market to their loads in amounts 
agreed to under the terms of a BPA 5(b)(1) contract. Customers using 
market purchases to serve their loads will be required to use such 
market purchases for the entire 5 year rate period for which BPA 
establishes rates of general application. All additional generating 
resources or contractual resources shall be used for the term of the 
contract except for resources added pursuant to section III.C 
(renewable resources).
    (e) BPA will apply the Declaration Parameters included in the Power 
Products Catalog under Actual Partial Service for the Subscription 
Strategy to establish the amount of power available from the customer's 
generating and contractual resources under the Subscription contract. 
Because the Declaration Parameters are subject to revision, BPA will 
use the Declaration Parameters in effect at the time of BPA's contract 
offer to determine the amount

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of Federal power offered. The customer may declare a reduction in the 
amount of power that would otherwise be available from its own 
generating and contractual resources by the amount of power the 
customer uses from such resources to serve its wholesale loads, defined 
above; which were served prior to December 5, 1980, and which continue 
to be served by such resources.
    2. In addition to subsections (a) through (e) above, BPA will 
reduce the amount of Federal power BPA will offer to a customer under 
section 5(b)(1), consistent with the application of BPA's Section 9(c) 
Policy as modified, and resultant findings made under section 9(c) of 
the Northwest Power Act and section 3(d) of the Northwest Preference 
Act.

B. Statutory Discontinuance for a Customer's Generating and Contractual 
Resource

    1. A customer's non-Federal generating resource is considered no 
longer used to serve regional retail firm power load under a section 
5(b)(1) contract if the resource's use is permanently discontinued due 
to obsolescence, retirement, or loss.
    (a) Obsolescence must result from the inability to continue to 
operate a resource due to lack of available replacement parts or 
sources of fuel supply regardless of price.
    (b) Retirement must result from a demonstration by the customer 
that the cost of replacements, improvements, or additions to continue 
to operate the resource, combined with the resource's variable 
operating costs, exceed the reasonable economic return over the 
remaining life of the resource. The reasonable economic return will be 
determined by requiring the customer to measure the cost to the 
customer of replacing its operating resource with market purchases plus 
the cost to shut down the plant against the cost of operating the 
resource.
    (c) Loss of a resource must result from factors beyond the 
reasonable control of the customer and which the best efforts of the 
customer are unable to remedy including complete destruction of the 
resource, complete loss of the Federal or State license to own or 
operate the resource, or complete and/or partial reduction of the 
capability of a resource to the extent of the loss resulting from 
orders of a State or Federal agency affecting the operation of the 
resource.
    2. A customer's contractual resource is considered no longer used 
to serve regional firm power load if the customer experiences a 
permanent loss of contract right. Loss of contract right must result 
from expiration of the term of the contract, after any extensions of 
the contract term unilaterally available to the customer, or factors 
beyond the reasonable control of the customer and which the best 
efforts of the customer are unable to remedy. Loss of contract right 
does not include the following: (a) a customer's failure to exercise a 
right to renew a contract; (b) a customer's failure to exercise a right 
of first refusal on termination of the contract; (c) a change in price 
under the contract; and (d) any other action or inaction by a customer 
which results in the contract being unavailable to the customer.

C. Use of New Renewable Resources To Serve Retail Firm Power Loads

    1. A customer may elect to use a new renewable resource to serve 
its regional retail firm power load for a specified period which is 
less than the term of its section 5(b)(1) contract; provided, however, 
that such new renewable resource is part of the first 200 aMW of all 
new renewable resources requested by all BPA customers under this 
section to serve regional retail firm power load each year. Customers 
may choose to elect to use new renewable resources at the time of 
contract execution and during an annual review of their net load 
requirements under their section 5(b)(1) contract.
    2. Only new renewable resources that meet the standards established 
to qualify for BPA's conservation and renewable resource discount may 
be used under this section.
    3. Application of a new renewable resource under section III.C.1 
shall reduce the customer's net requirements load.

D. Changes in the Amount of Federal Power Purchased During the Term of 
a Contract

    1. Under section 5(b)(1) contracts, BPA will require a customer to 
submit annual reports that track and forecast the customer's retail 
firm power loads in the region. The purpose for the annual report is to 
provide information that shows any increase or reduction in the amount 
of the customer's retail firm power loads in the region from the amount 
served when the contract was executed. Based on such load information 
BPA shall make an annual determination of the net firm requirement load 
of the customer under a section 5(b)(1) contract as follows.\3\ First, 
BPA will account for:
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    \3\ Such reports may be in addition to other load or resource 
information the customer is required to provide BPA on its loads or 
resources for contract administration and planning purposes. Such 
determinations may be in addition to other determinations of net 
firm power requirements loads made more frequently under the terms 
of the customer's contract.
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    (a) The generating and contractual resources a customer is required 
to use to serve firm power load in the region under section III.A.1.(b) 
(FRE firm resources);
    (b) Additional resources a customer has elected to use under 
section III.A.1.(d) (additional generating and contractual resources); 
and
    (c) Power purchases from the market that a customer has 
contractually committed to purchase in amounts specified in their 
5(b)(1) contract, consistent with section III.A.1.(d) (market 
purchases).
    Second, BPA will make adjustments for:
    (d) Changes in a customer's new renewable resources used to serve 
retail firm power load in the region under section III.C.1 (renewable 
resources);
    (e) Changes in the customer resources serving its load pursuant to 
III.A.1.(b) and III.A.1.(d) due to BPA's determination of a statutory 
discontinuance of the customer's generating resource(s) or contract 
resource(s) under section III.B (statutory discontinuance); and,
    (f) Any reductions in the amount of power a customer may purchase 
under a section 5(b)(1) contract due to the annual review under section 
III.D.3.
    2. If BPA's annual determination of a customer's net firm 
requirement load results in a finding that the amount of Federal power 
a customer can purchase is less than the contracted amount of power to 
be purchased for the next contract year, then the customer shall first 
remove from use for its regional firm load, for a period of one year, 
any market purchases the customer has agreed to use under its BPA 
contract. Such removal shall be in an amount and shape equal to the 
difference between the amount of Federal power a customer can purchase 
for the next year and the amount and shape of Federal power a customer 
has contracted to purchase for the next contract year.
    If the amount of Federal power a customer can purchase after the 
removal of the market purchases is still less than the amount of power 
the customer has contracted to purchase for the next contract year, 
then BPA will implement the mitigation measure for load loss specified 
in the customer's section 5(b)(1) contract and reduce the amount of 
Federal power a customer is obligated to purchase. Alternatively, BPA 
may consent to the customer's removal of a generating resource or 
contractual resource from use for its regional firm load, for a period 
of one year. The

[[Page 58042]]

portion of a customer's generating resource or contractual resource 
removed shall be equal to the difference between the amount and shape 
of Federal power a customer can purchase and the amount and shape of 
Federal power the customer has contracted to purchase for the next 
contract year. Any customer's resources, other than market purchases, 
which are removed from use for regional firm load service under this 
section, are subject to BPA's determinations made under sections 9(c) 
of the Northwest Power Act and 3(d) of the Northwest Preference Act. If 
the customer's use of that resource results in a reduction or decrease 
in BPA's obligation to provide power under section III.D.3, then BPA 
will recalculate the amount of power a customer may purchase for the 
upcoming year as provided under this section (III.D.2).
    3. On an annual basis as provided under a section 5(b)(1) contract 
BPA will review the export of power from a customer's regional non-
Federal generating and contractual resources and, if necessary, will 
reduce the amount of Federal power a customer may purchase in 
accordance with section IV of this policy.
    4. BPA shall make available additional amounts of power to a 
customer under a section 5(b)(1) contract to serve its regional loads 
which were formerly served by a customer's generating resources or 
contractual resources but are no longer required to be used to serve 
the customer's retail firm power loads in the region, in accordance 
with section III.B (statutory discontinuance), and BPA will make 
available Federal power to serve new loads acquired by a customer due 
to purchase or condemnation of additional distribution for its system. 
Such service shall be on 6 months notice that such an event has 
occurred or as mutually agreed.

IV. Scope of the Section 9(c) Policy

A. Modification to BPA's Non-Federal Participation Section 9(c) Policy

    BPA's modification to its 1994 Non-Federal Participation Section 
9(c) Policy (1994 NFP Policy) is set out below. Deletions, changes and 
additions are included in an interlined version which is available from 
BPA on request or at BPA's Web site at http://www.bpa.gov/Power/
subscription. BPA's 1994 NFP, as modified will be retitled: BPA's 
Section 9(c) Policy.
    BPA reaffirms the application of its 1994 section 9(c) policy and 
legal interpretation published in July of 1994. The context for some of 
the determinations made in the 1994 policy was, in part, prior exports 
and new exports of firm power from customer resources out of the region 
by participation in the new, Third AC Intertie. The interpretation has 
been of general application since 1994 to customer exports. BPA is now 
modifying the policy to address certain issues which were not 
previously addressed. Prior determinations made under the 1994 NFP 
Policy remain in effect for the duration of the export sale.
    In the 1994 NFP Policy, BPA did not address the export of firm 
power from Investor-Owned Utility (IOU) resources because the IOUs were 
not placing any firm power loads on BPA under their section 5(b)(1) 
power sales contracts with BPA. See footnote 3, page B-10, BPA's 1994 
NFP Policy. Since the IOUs were not taking any power service from BPA, 
reductions pursuant to a section 9(c) determination in their service 
under those section 5(b)(1) contracts would not have affected their BPA 
service. Presently, BPA is preparing new section 5(b)(1) power sales 
contracts for the post-2001 period to be offered to customers eligible 
to purchase Federal power. BPA anticipates that IOUs will take firm 
power service from BPA under new 5(b)(1) contracts. BPA will require 
that the export of firm power from resources of IOUs be accounted for, 
in setting BPA's net firm load obligations under those contracts. 
Additionally, the 1994 NFP Policy would be modified to update the 
technical provisions to accommodate recent changes. Therefore, the 1994 
NFP Policy would be modified as follows:

B. Section 9(c) Policy

Section 1. Northwest Power Act Section 9(c) Determinations
    As required by the Northwest Power Act, BPA shall make its Section 
9(c) determinations for the exports of its customers.
Section 2. Finding Required
    In examining the export of Pacific Northwest resources, BPA shall 
make its finding based on the following requirements of Section 9(c):
    (a) BPA shall analyze whether the customer's exports would result 
in an increase in the electric power requirements of any of its 
customers in the region. BPA shall do this by examining its load/
resource forecasting and planning documents to determine the impact the 
exports will have on BPA's and its customers' ability to meet Pacific 
Northwest load presently and in the future. BPA shall also analyze the 
information available from other sources including least-cost plans and 
load/resource information of Pacific Northwest utilities which do not 
currently place any load on BPA.
    (b) BPA shall review the specific resources and categories of 
resources being exported to determine if such exports will result in an 
increase in the firm energy requirements of its customers and if so, 
determine whether the resource could be conserved or otherwise retained 
for service to regional loads by using reasonable means. To do this BPA 
shall compare the resource a customer is proposing to export with those 
resources which BPA finds in its analysis can be exported without 
having to decrement the customer's Section 5(b) utility power sales 
contract.
Section 3. Scope of Section 9(c) Policy
    This Section 9(c) Policy addresses a customer's exports of power 
from the Pacific Northwest resources out of the region. BPA shall make 
its Section 9(c) determinations based on a factual determination using 
information about the specific resource the customer intends to export.
Section 4. Data on Specific Resources
    BPA shall base its Section 9(c) determination on specific 
information BPA has obtained from the customer on the resources it 
intends to export. This includes, but is not limited to, the following 
information:
    (a) Name of the resource to be exported;
    (b) Location of the resource;
    (c) type of resource;
    (d) Whether the resource is currently in any Pacific Northwest 
utility's firm resource exhibit;
    (e) Whether the resource is planned or existing; and
    (f) Type of transaction or sale, and if it is a seasonal exchange, 
the terms of the exchange.
    BPA will also consider any prior history of the resource including 
prior efforts to market it to BPA or other Pacific Northwest utilities.
Section 5. Prior Case-by-Case Section 9(c) Interpretations
    BPA does not propose to modify its existing determinations on 
Pacific Northwest utility exports including its 1994 NFP Policy 
determinations and will apply its prior case-by-case interpretations of 
Section 9(c), and Section 3(d) of the Regional Preference Act to such 
decisions without modification. Therefore, BPA incorporates by 
reference in this Policy these prior interpretations of Sections 9(c) 
and 3(d) and the determinations

[[Page 58043]]

made thereunder for the duration of the export sale.
Section 6. Categories of Resources
    (a) Exports That Will Not be Decremented by BPA: Under this Section 
9(c) Policy determination, BPA will determine whether the export of 
certain resources will not result in an increase in the electric power 
requirements of any of its customers. If the export of a resource does 
not increase the firm energy requirements of BPA's customers, the 
resource may be exported without a reduction in BPA's firm load 
obligation under the customer's Section 5(b) utility power sales 
contract.
    (b) Exports That Will be Decremented by BPA: BPA has determined 
based on its prior policy interpretations of Northwest Power Act 
Section 9(c) that the following categories of resources are conservable 
and if they are exported BPA shall decrement the customer's Section 
5(b) power sales contract:
    (1) All Pacific Northwest hydroelectric resources owned or 
purchased by a Pacific Northwest utility, whether or not dedicated in 
any Pacific Northwest utility's firm resource exhibit; and
    (2) All Section 5(b)(1)(A) and 5(b)(1)(B) thermal resources that 
are currently dedicated by a utility in any customer's firm resource 
exhibit.
Section 7. System Sales
    BPA shall utilize a case-by-case approach to system sales. BPA 
shall require the exporting utility to submit an operating plan for the 
duration of the export, identifying these specific resources or 
categories of resources supporting the system sale. If the export is a 
system sale made up solely of a customer's resources that individually 
would not result in a decrement if each resource were exported standing 
alone, then BPA would not decrement a customer's firm power purchase 
under section 5(b) for such a system sale. BPA shall decrement the 
customer's Section 5(b) utility power sales contract if the system sale 
involves the export of hydro to support a power sale (whether or not in 
a firm resource exhibit); a thermal resource that is in a firm resource 
exhibit; or any sale that is a prohibited resale of Federal power.
    Any customer that was previously a Contracted Requirements customer 
of BPA, and which is currently purchasing power and energy from BPA 
under its power sales contract, shall have BPA's firm power obligation 
under its section 5(b)(1) contract reduced by a system sale in the 
amount of the power and for the duration of the export sale. If the 
customer was not placing load on BPA under its section 5(b) utility 
power sales contract at the time of the export sale, then at such time 
as the customer requests to place a firm load obligation on BPA, BPA 
shall make an appropriate determination and may reduce its energy sales 
to such customer in the amount of the export sale and for any remaining 
duration of the export sale.
Section 8. Seasonal Exchange
    Any seasonal exchange between a customer and an out of region 
entity which results in no net regional energy deficit during any 
Operating Year shall not result in a decrement by BPA of the customer's 
Section 5(b) utility power sales contract.
Section 9. Recall
    Any customer that does not want its Northwest Power Act, Section 
5(b) power sales contract decremented by BPA may agree to include terms 
for the recall of its export sale upon notice from BPA that the energy 
from such customer's resource is needed to meet BPA or other customers 
firm power load in the Pacific Northwest.
Section 10. Resource Offer
    This Section 9(c) Policy gives a customer an option to offer a 
resource to BPA or to all other Pacific Northwest customers. If offered 
for sale to BPA, the resource shall be treated as an unsolicited 
proposal. If BPA proposes to acquire the resource, and if it is greater 
than 50 aMW or offered for longer than 5 years, it will be subject to 
the Northwest Power Act Section 6(c) process, which can take more than 
12 months. If neither BPA, nor any Pacific Northwest customer, 
purchases the offered resource (offered at the customer's cost 
including a reasonable rate of return), the resource may then be 
exported without a decrement of the customer's Northwest Power Act 
Section 5(b) power sales contract.
Section 11. Consumer-Owned and Independent Power Producer-Owned 
Resources
    If a customer contracts to purchase and then export any consumer-
owned resource or any resource developed by an independent power 
producer, BPA shall decrement the customer's Section 5(b) power sales 
contract if the resource being exported is a hydroelectric resource or 
if the resource is dedicated to any Pacific Northwest utility load in 
any utility's firm resource exhibit.
Section 12. BPA Notification
    BPA shall notify in writing any customer which has exported a 
resource or proposes to export a resource of the outcome of BPA's 
Section 9(c) determination. The BPA notification shall be made within 
30 working days from the date the customer notifies BPA that it will be 
exporting a regional resource or BPA receives the information it 
requests about a specific resource.

C. Scope of the Section 9(c) Policy

    BPA's Section 9(c) Policy (9(c) Policy) addresses the effect of 
exports of resources by any public body, cooperative, or investor-owned 
utility purchasing power under a section 5(b) contract for service 
after October 1, 2001. The findings and interpretations of the 9(c) 
Policy shall be applied to all exports occurring after publication of 
this 9(c) Policy. Customers that have exported resources prior to 
publication of the 9(c) Policy may face a reduction in the amount of 
Federal power that BPA will offer at the time they request a contract 
under section 5(b)(1) for service after September 30, 2001. A reduction 
in BPA's obligation to provide firm power requirements to a customer 
under its section 5(b)(1) contract will be based on a case by case 
factual determination regarding the export of a resource by a BPA 
customer, and may be based on the regional load resource balance at the 
time of the export and other factors. BPA shall address the effect of 
exports of resources by a customer purchasing power under a contract 
pursuant to section 5(c), section 5(d)(1), or section 5(f) of the 
Northwest Power Act on a case by case basis.

D. Subscription 9(c) Study

    BPA will perform a Subscription 9(c) Study to be issued with the 
final Policy on Determining Net Requirements. The study will provide 
part of the factual basis for determining whether an export of a 
resource during the period from October 1, 2001, through September 30, 
2006, is likely to result in an increase in the firm energy 
requirements of BPA customers, and if so, whether the resource could be 
conserved, or otherwise retained to serve regional loads.

V. Section-by-Section Review of Changes in Revised Draft Policy 
From the Original Draft Proposal Issued April 26, 1999

    This section provides section-by-section review of the changes in 
the revised draft policy from the initial draft policy proposal 
published in the Federal Register on May 6, 1999. The revised draft 
policy is reorganized as follows: new section III replaces former 
sections I and II; and new section IV

[[Page 58044]]

replaces former section III.A, III.B, III.C, III.D, III.E, and III.F. 
An interlined version showing the proposed changes is available at 
BPA's Web site at http://www.bpa.gov/Power/subscription.

III. Policy on Determining Net Requirements

A. Determination of the Amount of Federal Power For Sale Under Section 
5(b)(1)

    New section III.A includes the provisions included in the former 
section I. New section III.A.1.(a) is intended to clarify the customer 
loads BPA will use as the basis of the initial contract offer described 
in former section I.A.
    New section III.A.1.(b) is intended to clarify the resources a 
customer is required to continue to use to serve load described in 
former sections I.B, I.C, and I.D. The revised draft policy contains no 
references to the rate at which BPA would sell power to the customer. 
Such rate will be established in BPA rate cases. New section 
III.A.1(b). eliminates the requirement for the customer to notify BPA 
in writing of lost resources or lost contracts prior to execution of a 
customer's Subscription contract.
    New section III.A.1.(d) is intended to clarify that customers may 
elect to use additional resources to serve their regional firm power 
loads in addition to the customer resources required to be used under 
section III.A.1.(b). Under new section III.A.1.(d) customers can 
contractually commit to purchase power from the market to serve any 
consumer load not served by customer resources or purchases from BPA. 
New section III.A.1.(d) also specifies requirements for the period of 
use of resources under a section 5(b) contract.
    New section III.A.1.(e) is intended to clarify which Declaration 
Parameters BPA will use to establish the capability of customer 
resources described in former section I.E. New section III.A.1.(e) also 
includes a right for a customer to reduce the capability of the 
resources that are used to serve any wholesale loads that the customer 
served on December 5, 1980, and continues to serve, from the customer's 
resources.
    New section III.A.2 is intended to clarify the reduction in Federal 
power purchases due to the export of non-Federal resources described in 
former section I.F.

B. Statutory Discontinuance for A Customer's Generating and Contractual 
Resource

    New section III.B replaces former sections II.D and II.E. New 
section III.B is intended to clarify the application of BPA's existing 
standards to lost generation and contractual resources and loss of 
contract rights. The initial draft inadvertently omitted application of 
the description of a loss of contract right from section II.E. Section 
III.B was moved in the policy to reflect the determination of resources 
that are permanently discontinued from use to serve the customer's 
regional firm load between 1998 and the time of contract offer.
    New section III.B.1 establishes a physical test of when a resource 
is obsolescent under the statute and an economic test to be applied 
when a resource may be retired in its use to serve firm load in the 
region. New section III.B.1 is also intended to clarify the conditions 
under which a customer resource is lost, including the partial loss of 
a resource due to orders of a State or Federal agency.
    New section III.B.2 is intended to clarify a customer's loss of a 
contract right.

C. Use of New Renewable Resources To Serve Retail Firm Power Loads

    New section III.C replaces former section II.C. New section III.C 
is intended to clarify that a customer may elect to use a new renewable 
resource in its initial contract and during the term of the contract.

D. Changes in the Amount of Power Purchased During the Term of a 
Contract

    New section III.D replaces former sections II.A, II.B, and II.F. 
New section III.D.1 describes the annual review of the customer's loads 
under a section 5(b)(1) contract and is intended to clarify that any 
changes in the amount of power purchased under a section 5(b)(1) 
contract will be based on forecasts of the expected load changes for 
the next contract year and how such changes, and other annual changes, 
in the customer's load and resources will be used to determine a 
customer's annual net firm requirement load amount under a section 5(b) 
contract.
    New section III.D.2 describes how BPA will compare the amount of 
Federal power a customer can purchase against the contracted amount of 
power for the next contract year. Section III.D.2 describes how BPA 
will implement mitigation measures under its section 5(b) contracts 
when a customer's right to purchase is less than its contracted amount 
and provides BPA's consent to a customer's election not to use its non-
Federal resource to serve its retail firm power load in the region for 
the next contract year. Resources that a customer elects not to use to 
serve its retail firm power load are subject to a BPA determination 
under BPA's Section 9(c) Policy.
    New section III.D.3 is intended to clarify how BPA will annually 
review the export of energy from a customer's non-Federal resources.
    New section III.D.4 describes when customers may purchase 
additional amounts of Federal power they did not contract to purchase 
in their initial contract.

IV. Scope of the Section 9(c) Policy

Section IV.A--Modification to BPA's Non-Federal Participation Section 
9(c) Policy

    Section IV.A modifies BPA's 1994 Non-Federal Participation Section 
9(c) Policy and renames it BPA's Section 9(c) Policy.

Section IV.B--Scope of the Section 9(c) Policy

    Section IV.B describes the application of the Section 9(c) Policy. 
The Section 9(c) Policy will be applied to all purchases under a 
section 5(b) contract for service after October 1, 2001. The findings 
and interpretations of the Policy shall be applied to all customer 
exports of power from non-Federal resources or sales of resources 
occurring after publication of the policy. Customers that have exported 
power from resources or sold resources prior to publication of the 
policy may face a reduction of the amount of Federal power they can 
purchase at the time they request a contract for service after 
September 30, 2001, based on a case by case factual determination.

Section IV.C--Subscription 9(c) Study

    Section IV.C describes a factual study that BPA will provide with 
its final policy stating a basis for determining what exports of 
resources during the period from October 1, 2001 until September 30, 
2006, may [or may not] result in an increase in the firm energy 
requirements of BPA's customers. The Subscription 9(c) Study will be 
based on the principles stated in the Section 9(c) Policy regarding 
resources that can be conserved to serve a regional load and the 
resources that may otherwise be retained to serve regional load.
    Responsible Official: Mr. Sydney Berwager, Subscription Policy 
Manager is the official responsible for the development of the revised 
draft policy proposal for addressing issues under section 5(b) of the 
Northwest Power Act regarding the amount of Federal power a customer 
may purchase under BPA subscription power sales contracts, and

[[Page 58045]]

the Section 9(c) Policy which modifies the 1994 NFP.

    Issued in Portland, Oregon, on October 19, 1999.
Judith A. Johansen,
Administrator and Chief Executive Officer.
[FR Doc. 99-28178 Filed 10-27-99; 8:45 am]
BILLING CODE 6450-01-P