[Federal Register Volume 65, Number 52 (Thursday, March 16, 2000)]
[Notices]
[Pages 14259-14265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6505]


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DEPARTMENT OF ENERGY

Bonneville Power Administration


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 final policy.

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SUMMARY: BPA is publishing a final policy regarding the amount of 
Federal power a customer may purchase under a BPA subscription power 
sales contract 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 final policy modifies BPA's 1994 
Non-Federal Participation Capacity Ownership Contracts and Section 9(c) 
Policy. See Section IV.B, Modifications to 1994 Non-Federal 
Participation Capacity Ownership Contracts and Section 9(c) Policy.

EFFECTIVE DATE: This policy is effective upon publication in the 
Federal Register.

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, Requirements 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) 358-7410
 Mr. John Elizalde, Manager, Western Power Business Area, 905 
N.E. 11th, P.O. Box 3621, Portland, OR 97232, telephone (503) 230-5371
 Mr. Steve Oliver, Vice President, Bulk Marketing and 
Transmission Services,

[[Page 14260]]

905 N.E. 11th, P.O. Box 3621, Portland, OR 97208, telephone (503) 230-
3295

SUPPLEMENTARY INFORMATION: 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 (64 FR 
24376) with a draft proposed policy for determining the net 
requirements of publicly and cooperatively owned utility and investor-
owned utility customers. 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.
    On October 28, 1999, BPA published a Federal Register Notice (64 FR 
58099) with a revised draft policy proposal based upon comments 
received on the earlier proposal and requested additional comment on 
this revised draft policy. After having reviewed and considered the 
additional comment, the Administrator has decided to adopt this final 
policy. Review and analysis of public comment will be published in the 
Administrator's Record of Decision (ROD) that is related to this final 
policy. This ROD is expected to be available in March.
    This final policy provides guidance on implementation of the Power 
Subscription Strategy under applicable statutes and describes 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 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 BPA's Section 9(c) Policy as set 
forth in Section IV.B.
    Environmental Compliance: This final policy is consistent with 
BPA's Business Plan Final Environmental Impact Statement (DOE/EIS-0183, 
June 1995), the Business Plan Record of Decision (ROD), signed August 
15, 1995, and the subsequent tiered Power Subscription Strategy ROD, 
signed December 21, 1998.

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 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 Policy

    The Policy on Determining Net Requirements as described in section 
III 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. 
BPA's modification to its 1994 Non-Federal Participation Section 9(c) 
Policy (1994 NFP Policy) is contained in section IV. Such provisions 
direct the Administrator to determine whether an export or proposed 
export of a

[[Page 14261]]

requesting purchaser's non-hydroelectric or hydroelectric resource(s) 
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. 
Determinations under the policy will be made by BPA based on 
demonstrations made by the customer and other available information.
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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,'' ``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 
customer under section 5(b)(1) based upon such customer's actual retail 
firm power loads in the region. To establish the customer's actual 
retail firm power loads in the region, BPA shall use either the actual 
measured load of the customer, or the customer's own actual load 
forecast. However, if BPA finds the customer's forecast unreasonable, 
or the customer has not produced such a forecast, BPA will substitute 
its own forecast. (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.\3\ BPA will not, however, require customers 
to continue the use of resources identified in their 1998-99 FREs under 
any one of the following conditions: (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.
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    \3\ 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-2000 period.
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    (c) BPA will require that all Federal surplus firm power contracts 
or excess Federal power contracts with terms which specify that such 
power be used to serve the customer's retail firm power load in the 
region be so applied.
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    \3\ 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 per period.
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    (d) Under a section 5(b)(1) contract customers may elect to 
dedicate other generating resources or contractual resources, in 
addition to generating resources or contractual resources customers 
must use to serve load under section III.A.1.(b), to serve their 
consumer load. Customers can also agree to contractually commit power 
purchases from the market (market purchases) 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.1.(b); and (2) 
additional generating resources or contractual resources that a 
customer elects to use under this section. Application of additional 
generating resources, contractual resources, or market purchases by a 
customer under a section 5(b)(1) contract shall be as follows:
    (i) All additional generating resources or contractual resources 
shall be used for their remaining useful life except for (1) the 
customer's generating or contractual resources added pursuant to 
section III.C (renewable resources), (2) the customer's generating 
resources determined by BPA to be lost during the term of the contract 
due to obsolescence, retirement, or loss of resource in accordance with 
section III.B.1 (loss of generating resources), (3) the customer's 
contractual resources determined by BPA to be lost during the term of 
the contract in accordance with section III.B.2 (loss of contractual 
resources), or (4) the customer's generating or contractual resources 
where BPA has provided express written consent to permanently remove 
the resource. The remaining useful life of new contractual resources 
shall not be less than the term of the customer's section 5(b)(1) 
contract.
    (ii) Market purchases used to serve retail firm power load in the 
region shall be used for the entire 5 year rate period for which BPA 
establishes rates of general application, except as provided in section 
III.D.2.
    (iii) Consistent with the customer's section 5(b)(1) contract and 
the customer's product selection, a customer who elects to use market 
purchases to serve load that does not match the customer's existing 
resources and delivery of Federal power from time to time shall make 
such market purchases to serve that portion of load that does not match 
such customer's existing resources and delivery of Federal power under 
all such circumstances.
    (e) BPA will apply the Declaration Parameters included in the Power 
Products Catalog 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 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 III.A.1.(a) through (e), BPA shall 
reduce the amount of Federal power offered to a customer under section 
5(b)(1) when such reductions are 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.

[[Page 14262]]

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 is a permanent discontinuance of a generating 
resource resulting from the inability to continue to operate such 
resource at the end of its useful life due to lack of available 
replacement parts, deterioration of the physical facility, or lack of 
sources of fuel supply.
    (b) Retirement is a permanent discontinuance of a generating 
resource for which the customer can demonstrate that the cost of 
replacements, improvements, or additions necessary 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 customer will demonstrate the reasonable economic 
return of the resource by comparing the costs to the customer of 
replacing the resource with market purchases plus the cost to 
permanently shut down the resource to the cost of continuing to operate 
the resource.
    (c) Loss of a resource is a permanent discontinuance caused by 
factors beyond the reasonable control of the customer and which the 
best efforts of the customer are unable to remedy. Such factors 
include, but are not limited to, 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 requested operations 
or orders of a cognizant State or Federal agency directly or indirectly 
affecting the operation of the resource and changing its planned 
capability.
    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 rights. Loss of contract rights must result 
from expiration of the term of the contract, after any extensions of 
the contract unilaterally available to the customer, or from factors 
beyond the reasonable control of the customer and which the best effort 
of the customer are unable to remedy. The Administrator may grant 
consent to a customer's permanent discontinuance of a contract resource 
upon expiration of such contract notwithstanding a customer's right to 
renew or extend such contract if the customer demonstrates that 
substantial and material changes in the terms of a successor contract, 
such as price, will deny the basic benefit of the bargain to the 
customer which effectively results in the loss of existing contract 
rights.

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 or, once 
that 200 aMW limit has been reached, a new renewable resource that BPA 
has agreed in writing can be so used without regard to the 200 aMW 
limit. A customer may choose to elect to use a new renewable resource 
at the time of contract execution and during an annual review of such 
customer's net load requirements under its 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 a section 5(b)(1) contract BPA will require a customer to 
submit annual reports that track and forecast the customer's retail 
firm power loads in the region, except for customers who purchase the 
full service product and for whom BPA meters their total retail load. 
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, or BPA's forecast of the 
customer's load if BPA finds the customer's load forecast is 
unreasonable, BPA shall make an annual determination of the net firm 
requirement load of the customer under a section 5(b)(1) contract as 
follows.\4\ First, BPA will account for:
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    \4\ 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) 
(1998-99 FRE firm resources);
    (b) Additional resources a customer has elected to use under 
section III.A.1.(d) (additional generating and contractual dedicated 
resources); and
    (c) Power purchases from the market that a customer has 
contractually committed to purchase 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, as provided for in 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) based on BPA's determination of a statutory 
discontinuance under section III.B.
    (f) Any reductions in the amount of power a customer may purchase 
under a section 5(b)(1) contract due to the annual export review under 
section III.D.3; and,
    (g) Changes in the customer's hydroelectric resource capability 
declarations due to changes in coordinated planning allowed under 
section III.A.1(e).
    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 
will

[[Page 14263]]

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 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 resources, other than 
market purchases, which are removed from use in serving the customer's 
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 required, will 
reduce the amount of Federal power a customer may purchase in 
accordance with section IV of this policy. BPA shall reduce the amount 
of power a customer may purchase for the longer of the remainder of the 
year or the duration of the export during the period between annual 
reviews based on a determination by BPA in accordance with section IV.
    4. BPA shall make available additional amounts of power to a 
customer under a section 5(b)(1) contract to serve the customer's 
regional loads which were formerly available 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). 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 forth in section B. BPA's 1994 
NFP, as modified, is 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 NFP 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 is modified to update the technical 
provisions as discussed in section B.

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. Export for 
purposes of this policy means the sale of the firm power output of a 
generating or contractual resource in a manner that such output is not 
planned to be used solely to serve firm consumer load in the Region as 
the term ``Region'' is defined in section 3(14) of the Northwest Power 
Act.
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 being exported on an 
annual basis unless the customer requests review for a longer period to 
determine if the resources being exported are hydroelectric resources 
and if not, whether they are conservable. BPA shall review categories 
of resources eligible for export for a period selected by BPA. If the 
resources are not hydroelectric resources and BPA determines the 
resource is not conservable (see section 6.(b) for a description of 
those resources BPA has determined are conservable), BPA shall 
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 otherwise retained for service to regional loads by using 
reasonable means. If BPA finds in its analysis that the fully allocated 
nominal cost of the resource a customer is proposing to export exceeds 
the fully allocated nominal cost of the region's marginal resource, BPA 
will conclude that such resource 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 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. The customer shall provide this information when it 
notifies BPA that it intends to export a resource or when BPA requests 
information regarding a possible 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;

[[Page 14264]]

    (e) Whether the resource is planned or existing;
    (f) Type of transaction or sale, and if it is a seasonal exchange, 
the terms of the exchange, and
    (g) The cost of the resource (including reasonable rate of return) 
included in the customer's retail rates and a forecast of such costs 
for each year of the proposed export.
    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 will not 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 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 based on the finding in 
section 2 of this policy 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 or could not otherwise be 
retained for service to regional loads, 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 in the amount and 
to the extent the system sale involves the export of the planned 
capability of hydroelectric resources to support a power sale (whether 
or not in a firm resource exhibit); the planned capability of a non-
hydroelectric resource that is in a firm resource exhibit, or if not, 
that could otherwise be retained to serve regional load; or any portion 
of the 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 in the amount and to the 
extent a system sale involves the resources described above 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 and to the extent the export sale involves the resources 
described above and for any remaining duration of the export sale.
    If the exporting utility does not provide an operating plan 
identifying the resources supporting the system sale, BPA will treat 
the system sale as made up of resources that would result in a 
decrement of the customer's section 5(b) utility power sales contract.
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. Resource Offer
    A customer may offer a resource to BPA or to all other Pacific 
Northwest customers. 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. 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.
Section 10. 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, such resource shall be subject to this Policy as a generating 
or contract resource of the purchasing customer as appropriate.
Section 11. 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 BPA receives the information specified in 
Section 4 about a specific resource.

C. Scope of the Section 9(c) Policy

    BPA's Section 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 this Section 9(c) 
Policy shall be applied to all exports occurring after publication of 
this Section 9(c) Policy. Customers that have exported resources prior 
to publication of the Section 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

[[Page 14265]]

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. 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 
otherwise retained to serve regional loads.
    Responsible Official: Mr. Sydney Berwager, Subscription Policy 
Manager, is the official responsible for the development of the final 
policy 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 the Section 9(c) Policy 
which modifies the 1994 NFP Section 9(c) Policy.

    Issued in Portland, Oregon, on February 22, 2000.
Judith A. Johansen,
Administrator and Chief Executive Officer.
[FR Doc. 00-6505 Filed 3-15-00; 8:45 am]
BILLING CODE 6450-01-U