[Federal Register Volume 67, Number 14 (Tuesday, January 22, 2002)]
[Notices]
[Pages 2869-2871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1468]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA File No: PNCA-02]


Proposed Adjustment to the Rate for Interchange Energy Imbalances 
Under the Pacific Northwest Coordination Agreement, Public Hearing, and 
Opportunity for Public Review and Comment

AGENCY: Bonneville Power Administration (BPA), Department of Energy 
(DOE).

ACTION: Notice of proposed adjustment.

-----------------------------------------------------------------------

SUMMARY: The Pacific Northwest Electric Power Planning and Conservation 
Act (Northwest Power Act) provides that BPA must establish and 
periodically review its rates so that they are adequate to recover, in 
accordance with sound business principles, the costs associated with 
the acquisition, conservation, and transmission of electric power, and 
to recover the Federal investment in the Federal Columbia River Power 
System (FCRPS) and other costs incurred by BPA.
    By this notice, BPA announces its proposed adjustment to the rate 
for Interchange Energy (IE) imbalances under the Pacific Northwest 
Coordination Agreement (PNCA). Each party to the PNCA makes excess 
energy available to the other party to meet its firm loads; this excess 
energy is known as interchange. The existing rate, which was 
established in 1995, is 22.55 mills per kilowatt-hour. Since 1995 the 
energy industry has undergone dramatic change. It has experienced a 
sharply increased degree of volatility as well as unprecedentedly high 
prices. Therefore, BPA is proposing to link the interchange energy 
price to the market price for energy, thus ensuring that BPA recovers 
its costs when it provides interchange energy to another PNCA party.

DATES: Proposed hearing dates are supplied in Supplementary 
Information, Section I.B. Close of public comments is March 22, 2002. 
The prehearing conference will be held on January 29, 2002.

ADDRESSES: Written comments should be submitted to: Dulcy Mahar, 
Communications Manager, Bonneville Power Administration, P.O. Box 
12999, Portland, Oregon 97212. Documents will be available for public 
viewing after January 29, 2002, at BPA's Public Information Center, BPA 
Headquarters Building, 1st Floor, 905 NE. 11th Avenue, Portland, 
Oregon, and will be provided to parties at the prehearing conference to 
be held on January 29, 2002, from 9 a.m. to 12 p.m., Room 223, 911 NE. 
11th Avenue, Portland, Oregon. The documents will also be available on 
BPA's website at www.bpa.gov/power/ratecase. Mr. Byron G. Keep, Power 
Products, Pricing, and Rates Manager, is the official responsible for 
the development of BPA's rates.

FOR FURTHER INFORMATION CONTACT: Interested persons may also call (503) 
230-4413 or call toll-free 1-800-622-4519. Mr. Keep may be contacted at 
the address indicated above in the ADDRESSES section.

SUPPLEMENTARY INFORMATION:

Table of Contents

Part I: Introduction and Procedural Background
    A. Relevant Statutory Provisions Governing This Rate Proceeding
    B. Proposed Schedule Concerning This Rate Proceeding
Part II: Purpose and Scope of Hearing
    A. The Circumstances Necessitating Adjustment
    B. Scope
    C. NEPA Evaluation
Part III: Public Participation
    A. Distinguishing Between ``Participants'' and ``Parties''
    B. Petitions for Intervention
    C. Developing the Record
Part IV: Summary of the Proposal

Part I--Introduction and Procedural Background

A. Relevant Statutory Provisions Governing This Rate Proceeding

    Section 7 of the Northwest Power Act, 16 U.S.C. 839e, contains a 
number of general directives that the BPA Administrator must consider 
in establishing rates for the sale of electric energy and capacity. In 
particular,

[[Page 2870]]

section 7(a)(1), 16 U.S.C. 839e(a)(1), provides in part that:

    [S]uch rates shall be established and, as appropriate, revised 
to recover, in accordance with sound business principles, the costs 
associated with the acquisition, conservation, and transmission of 
electric power, including the amortization of the Federal investment 
in the Federal Columbia River Power System (including irrigation 
costs required to be repaid out of power revenues) over a reasonable 
period of years and the other costs and expenses incurred by the 
Administrator pursuant to this Act and other provisions of law.

    Rates established by BPA are effective on an interim or final basis 
when approved by the Federal Energy Regulatory Commission (FERC). 16 
U.S.C. 839e(a)(2). In addition to the Northwest Power Act, BPA 
ratemaking is governed by the Bonneville Project Act, 16 U.S.C. 832 et 
seq., the Federal Columbia River Transmission System Act, 16 U.S.C. 838 
et seq., and the Flood Control Act of 1944, 16 U.S.C. 825 et seq.
    Section 7(i) of the Northwest Power Act, 16 U.S.C. 839e(i), 
requires that BPA's rates be set according to certain procedures. These 
procedures include issuance of a Federal Register Notice announcing the 
proposed rates; one or more hearings; the opportunity to submit written 
views, supporting information, questions, or arguments; and a decision 
by the Administrator based on the record developed during the hearing 
process. This proceeding will be governed by BPA's ``Procedures 
Governing Bonneville Power Administration Rate Hearings,'' 51 FR 7611 
(March 5, 1986), which implement and, in most instances, expand these 
statutory requirements. Pursuant to Rule 1010.3(c) of the Procedures 
Governing Bonneville Power Administration Rate Hearings (BPA 
Procedures), this hearing will be conducted under Rule 1010.10, which 
governs Expedited Rate Proceedings. The expedited procedures will be 
used rather than the procedures for General Rate Proceedings conducted 
under Rule 1010.9. The procedures for General Rate Proceedings are 
intended for use when the Administrator proposes to revise all, or 
substantially all, of BPA's wholesale power and transmission rates.
    The proposed change in the interchange energy rate will apply only 
to the parties to the PNCA. In addition, the rate applies only to the 
imbalances of interchange energy between each pair of PNCA parties. For 
example, if two PNCA parties deliver equal amounts of interchange 
energy to each other, they have no imbalance between them and no rate 
is charged. Finally, the effect of interchange energy on BPA's revenues 
is negligible. For these reasons, the issues in this rate proceeding 
will be fewer and of more limited scope than the issues in a proceeding 
to adjust all BPA rates. BPA believes that the 90-day Expedited Rate 
Proceeding will be adequate to develop a full and complete record and 
to receive public comment and argument related to the proposed 
adjustment. If more time is required, the Hearing Officer may request 
under Rule 1010.10(b) of the BPA Procedures that the BPA Administrator 
grant an extension.

B. Proposed Schedule Concerning This Rate Proceeding

    BPA will release its proposed rate for interchange energy on 
January 29, 2002, and expects to publish a final Record of Decision on 
April 30, 2002. The following proposed schedule is provided for 
informational purposes. A final schedule will be established by the 
Hearing Officer at the prehearing conference.

------------------------------------------------------------------------
                Date                                Action
------------------------------------------------------------------------
Jan 28..............................  Deadline for Petitions to
                                       Intervene.
Jan 29..............................  Prehearing Conference.
Feb 12..............................  Data Requests on BPA's Direct
                                       Case.
Feb 19..............................  Data Responses Due.
Feb 26..............................  Parties' Direct Cases.
Mar 8...............................  Data Requests on Parties' Direct
                                       Cases.
Mar 15..............................  Data Responses Due.
Mar 22..............................  Parties' Rebuttal.
Mar 28..............................  Cross-Examination.
April 4.............................  Initial Briefs.
April 12............................  Draft Record of Decision.
April 19............................  Briefs on Exceptions.
April 30............................  Final Record of Decision.
------------------------------------------------------------------------

    The procedural schedule established for Docket No. PNCA-02 will 
provide an opportunity for interested persons to review BPA's proposed 
rates, to participate in the rate hearing, and to submit oral and 
written comments. During the development of the final rate proposal, 
BPA will evaluate all written and oral comments received in the rate 
proceeding. Consideration of comments and more current data may result 
in the final rate proposal differing from the rates proposed in this 
Notice.

Part II--Purpose and Scope of Hearing

    The purpose and scope of the hearing is to revise the charge for 
interchange energy under the PNCA. BPA proposes to link the charge to a 
market index to reflect wholesale power market price volatility. This 
revision will ensure that the charge accurately reflects the cost of 
providing interchange energy.

A. The Circumstances Necessitating Adjustment

    Since the rate for interchange energy was established in 1995, the 
energy industry has undergone dramatic change. It has become far more 
competitive, and prices for energy have become much more volatile. 
During this past year, prices of energy have reached unprecedentedly 
high levels. The existing rate for interchange was intended to cover 
the PNCA parties' cost of providing the interchange. Because it is 
currently a fixed rate, it will not recover costs if prices remain high 
and continue to fluctuate. BPA is proposing this revision in the rate 
to ensure that the rate reflects BPA's costs.

B. Scope

    Pursuant to Rule 1010.3(f) of BPA's Procedures, the Administrator 
limits the scope of this hearing to issues respecting the rate for 
interchange energy imbalances described in Section II hereof.

C. NEPA Evaluation

    BPA has assessed the potential environmental effects of its rate 
proposal, as required by the National Environmental Policy Act (NEPA), 
as part of BPA's Business Plan Environmental Impact Statement (EIS). 
The analysis includes an evaluation of the environmental impacts of a 
range of rate design alternatives for BPA's power services and an 
analysis of the environmental impacts of the rate levels resulting from 
the rates for such services under the business structure alternatives. 
BPA's proposal to revise the rate for interchange energy under the PNCA 
falls within the range of alternatives evaluated in the Final Business 
Plan EIS. The Business Plan EIS was completed in June 1995.

Part III--Public Participation

A. Distinguishing Between ``Participants'' and ``Parties''

    BPA distinguishes between ``participants in'' and ``parties to'' 
the hearings. Apart from the formal hearing process, BPA will receive 
comments, views, opinions, and information from ``participants,'' who 
are defined in the BPA Procedures as persons who may submit comments 
without being subject to the duties of, or having the privileges of, 
parties. Participants' written and oral comments will be made part of 
the official record and considered by the Administrator. Participants 
are not entitled to participate in the prehearing conference; may not 
cross examine parties' witnesses, seek discovery, or serve or be served 
with documents; and

[[Page 2871]]

are not subject to the same procedural requirements as parties.
    Written comments by participants will be included in the record if 
they are submitted on or before March 22, 2002. Participants' written 
views, supporting information, questions, and arguments should be 
submitted to the address noted above. The second category of interest 
is that of a ``party'' as defined in Rules 1010.2 and 1010.4 of the BPA 
Procedures. 51 FR 7611 (1986). Parties may participate in any aspect of 
the hearing process.

B. Petitions for Intervention

    Persons wishing to become a party to BPA's rate proceeding must 
notify BPA in writing of their interest. Petitioners may designate no 
more than two representatives upon whom service of documents will be 
made. Petitions to intervene shall state the name and address of the 
person requesting party status and the person's interest in the 
hearing.
    Petitions to intervene as parties in the rate proceeding are due to 
the Hearing Officer by January 28, 2002. The petitions should be 
directed to: Ms. Judy Cornish Bonneville Power Administration 905 NE. 
11th Avenue P.O. Box 12999 Portland, Oregon 97232
    Petitioners must explain their interests in sufficient detail to 
permit the Hearing Officer to determine whether they have a relevant 
interest in the hearing. Pursuant to Rule 1010.1(d) of BPA's 
Procedures, BPA waives the requirement in Rule 1010.4(d) that an 
opposition to an intervention petition be filed and served 24 hours 
before the prehearing conference. Any opposition to an intervention 
petition may instead be made at the prehearing conference. Any party, 
including BPA, may oppose a petition for intervention. Persons who have 
been denied party status in any past BPA rate proceeding shall continue 
to be denied party status unless they establish a significant change of 
circumstances. All timely applications will be ruled on by the Hearing 
Officer. Late interventions are strongly disfavored. Opposition to an 
untimely petition to intervene shall be filed and received by BPA 
within two days after service of the petition.

C. Developing the Record

    Cross-examination will be scheduled by the Hearing Officer as 
necessary following completion of the filing of all parties' and BPA's 
direct cases, rebuttal testimony, and discovery. Parties will have the 
opportunity to file initial briefs at the close of any cross-
examination. After the close of the hearings, and following submission 
of initial briefs, BPA will issue a Draft Record of Decision (ROD) that 
states the Administrator's tentative decision(s). Parties may file 
briefs on exceptions, or when all parties have previously agreed, oral 
argument may be substituted for briefs on exceptions. When oral 
argument has been scheduled in lieu of briefs on exceptions, the 
argument will be transcribed and made part of the record. The record 
will include, among other things, the transcripts of any hearings, 
written material submitted by the participants, and evidence accepted 
into the record by the Hearing Officer. The Hearing Officer then will 
review the record, supplement it if necessary, and certify the record 
to the Administrator for decision.
    The Administrator will develop the final rate for interchange 
energy based on the entire record. The basis for the final adjustment 
will be expressed in the Administrator's Final ROD. The Administrator 
will serve copies of the ROD on all parties and will file the final 
proposed rate adjustment, together with the record, with FERC for 
confirmation and approval. See generally, 18 CFR part 300.

Part IV--Summary of the Proposal

    BPA proposes to revise the rate for interchange energy imbalances 
by linking the rate to a market index. The rate will apply to all 
parties to the PNCA who take interchange energy from BPA. The revision 
will ensure that the rate accurately reflects the costs of providing 
interchange energy. Below is the proposed rate for interchange energy 
imbalances.
    All terms contained herein have the meaning accorded them in the 
PNCA. This rate schedule is to be effective upon approval by the 
Federal Energy Regulatory Commission (interim or final) and will remain 
in effect until a revised rate is approved and becomes effective.

A. Interchange Energy (IE) Imbalances For Other Than Loaned IE

1. Initial Deliveries of IE
    This charge applies to IE delivered from BPA to another PNCA party. 
The calculation is as follows:

Formula 1

C=(IDON * ION) + (IDOFF * 
IOFF)
Where for each day:

C= Daily charge for the Initial Deliveries of IE in dollars.
IDON = The Initial Delivery of IE made during the day during 
On Peak hours.
ION = The Dow Jones Mid-Columbia Firm index price for On 
Peak hours in dollars per megawatt hour.
IDOFF = The Initial Delivery of IE made during the day 
during Off Peak hours in megawatt hours.
IOFF = The Dow Jones Mid-Columbia Firm index price for Off 
Peak hours in dollars per megawatt hour.

    Note: Initial Deliveries of IE on Sunday or a NERC [or its 
successor organization(s)] recognized holiday are priced at the Off 
Peak rate.

2. Return of IE
    This charge applies to the return of IE that was initially 
delivered to BPA from another PNCA party. The charge is based on a 
calculated average price, unique to each PNCA party that had previously 
supplied BPA with IE. The calculation is as follows:

Formula 2

CPARTY = IERPARTY * RPARTY
Where for each (PNCA) Party for a given day:

CPARTY = Daily charge for the return of such PNCA party's IE 
in dollars.
IERPARTY = The quantity of Interchange Energy returned to a 
PNCA party on a day in megawatt hours.
RPARTY = The applicable IE return rate for the PNCA party 
for the given day as calculated in Formula 3 below in dollars per 
megawatt hour.

Formula 3
RPARTY = CPARTY  
IERPARTY

Where for each (PNCA) PARTY for a given day:
RPARTY = the IE return rate calculated for the PNCA party as 
of the given day in dollars per megawatt hours.
PNCA party and all payments received by BPA from such PNCA party from 
the date of the last cash out of IE Imbalances to the date BPA returns 
the IE, in dollars.
 IERPARTY = the net of all IE BPA has received from 
such PNCA party and the IE returned by BPA to such PNCA party from the 
date of the last cash out of IE Imbalances to the date BPA returns the 
IE, in megawatt hours.

    Issued in Portland, Oregon, on January 14, 2002.
Steven G. Hickok,
Chief Operating Officer.
[FR Doc. 02-1468 Filed 1-18-02; 8:45 am]
BILLING CODE 6450-01-P