[Federal Register Volume 67, Number 74 (Wednesday, April 17, 2002)]
[Notices]
[Pages 18871-18875]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9274]


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DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA File No. GI-02]


Proposed Adjustment to the ACS-02 Generation Imbalance Service 
Rate

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

[[Page 18872]]


ACTION: Notice of Proposed Adjustment to the Rate for Generation 
Imbalance Service, Schedule ACS-02.

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SUMMARY: By this notice, BPA's Transmission Business Line (TBL) 
announces its proposal to revise the ACS-02 Generation Imbalance 
Service rate (rate) found in its 2002 Transmission and Ancillary 
Service Rate Schedules. BPA proposes to eliminate the 100 mills per 
kilowatthour minimum rate for wind resources for imbalances that exceed 
the Generation Imbalance Deviation Band and where energy delivered in a 
schedule hour is less than the energy scheduled. The revision will 
remove an impediment to continued development of wind resources in the 
BPA Control Area.

DATES: A proposed schedule for the proceeding is supplied in 
Supplementary Information, Section I.B. Petitions to Intervene must be 
received by BPA at the address below no later than 12:00 noon on April 
22, 2002. All references to timelines are Pacific prevailing time. At 
10:00 a.m. on April 24, 2002, a scheduling conference will be held in 
the BPA Rate Hearing Room to discuss the proposed schedule. The rate 
adjustment proceeding will begin with a pre-hearing conference at 9:00 
a.m. on April 25, 2002. Persons intending to intervene in the 
proceeding as a party must appear in person at the pre-hearing 
conference. Written comments by non-party participants must be received 
by BPA no later than 4:30 p.m. May 28, 2002, at the address below.

ADDRESSES: BPA File No. GI-02. BPA requests that all comments and 
documents intended to become a part of the Official Record in this 
proceeding refer to this file number.
    Persons wishing to become a party to the proceeding must notify BPA 
in writing of their intention to do so. Petitions to Intervene as a 
party in the proceeding must be submitted to Judy Cornish, Hearing 
Clerk--L-7, Bonneville Power Administration, P.O. Box 3621, 905 NE 11th 
Ave., Portland, OR, 97208-3621. In addition, petitioners must 
concurrently serve a copy of their Petition to Intervene on BPA's 
Office of General Counsel, directed to Eric H. Carter, Bonneville Power 
Administration, Office of General Counsel--LT-7, P.O. Box 3621, 905 
N.E. 11th Ave., Portland, OR, 97208-3621.
    Written comments must be submitted to BPA Communications--KC-7, 
Comments, Bonneville Power Administration, P.O. Box 12999, Portland, 
Oregon 97212. Comments may also be sent by facsimile to (503) 230-3285, 
or by e-mail to [email protected].
    The pre-hearing conference on April 25, 2002, will be held in the 
BPA Rate Hearing Room, 2nd Floor, Room 223, 911 NE 11th Ave., Portland, 
Oregon. The Hearing Officer will establish a final schedule at the pre-
hearing conference. During or after the pre-hearing conference the 
Hearing Officer will also issue orders addressing special rules of 
practice to govern the proceedings, document handling, and discovery.
    BPA's Initial Proposal to revise the rate will be provided at the 
April 24th scheduling conference and at the April 25th pre-hearing 
conference and will be available for public viewing after that date at 
BPA's Public Information Center, BPA Headquarters Building, 1st Floor, 
905 NE 11th Avenue, Portland, Oregon. The documents will also be 
available on BPA's Web site at www.transmission.bpa.gov/giratecase.

FOR FURTHER INFORMATION CONTACT: Information related to this proceeding 
may also be obtained by telephone at (503) 230-4413 or toll free at 1-
800-622-4519. Ms. Mary A. Dalton, Transmission Rates Manager, is the 
official responsible for this rate case. Ms. Dalton may be contacted at 
P.O. Box 491, 5411 NE Hwy 99, Vancouver, WA 98663.

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

    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. Section 7(i) of the 
Northwest Power Act requires that BPA's rates be established based on 
the record in a formal hearing (proceeding).
    By this notice, BPA's Transmission Business Line (TBL) announces 
its proposal to revise the ACS-02 Generation Imbalance Service rate 
(rate) found in its 2002 Transmission and Ancillary Service Rate 
Schedules. Generation Imbalance Service is taken when there is a 
difference between scheduled and actual energy delivered from a 
generation resource in the BPA Control Area during a schedule hour. The 
existing Generation Imbalance Service rate was established in BPA's 
2002 Transmission and Ancillary Service rate proceeding and 
subsequently was approved by the Federal Energy Regulatory Commission 
(FERC) for use during the October 1, 2001 to September 30, 2003 rate 
period.\1\ For imbalances outside the Generation Imbalance Deviation 
Band, the current rate charges the greater of: (i) BPA's incremental 
cost for energy, plus 10 percent, or (ii) 100 mills per kilowatthour 
when the actual energy delivered from a resource in a schedule hour is 
less than the energy scheduled for that hour. The 100 mills per 
kilowatthour minimum rate is designed to encourage accurate scheduling 
by generators. TBL proposes to eliminate the 100 mills per kilowatthour 
minimum rate when applying the rate to wind generation resources 
because wind generators are not currently able to accurately schedule 
their output during each delivery hour. This proposed change will 
result in the Generation Imbalance Service rate for wind resource 
imbalances outside the Deviation Band being BPA's incremental cost for 
energy plus 10 percent when delivered energy in an hour is less than 
scheduled energy. All other aspects of the existing Generation 
Imbalance Service rate are unchanged.
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    \1\ FERC later approved BPA's request to accelerate the 
effective date to July 1, 2001.
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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 transmission 
capacity. In particular, section 7(a)(1), 16 U.S.C. 839e(a)(1), 
provides in part that:

    Such 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

[[Page 18873]]

(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 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. The Federal Power Act, 16 U.S.C. 
212(i)(1)(B)(ii), provides additional guidance regarding BPA's 
ratemaking.
    Section 7(i) of the Northwest Power Act, 16 U.S.C. 839e(i), 
requires that BPA's rates be established 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 is governed by the Procedures Governing Bonneville 
Power Administration Rate Hearings (BPA's Procedures), 51 FR 7611 
(March 5, 1986), which implement and expand upon these statutory 
requirements.
    Pursuant to Rule 1010.3(c) of BPA's Procedures, this hearing will 
be conducted as a 90-day Expedited Rate Proceeding under section 
1010.10 of BPA's Procedures. The expedited procedures will be used 
rather than the procedures for General Rate Proceedings (Rule 1010.9), 
which are intended for use when the Administrator proposes to revise 
all, or substantially all, of BPA's wholesale power and transmission 
rates.
    The Administrator has elected to do an expedited rate procedure 
because this proceeding is limited in scope, involves the revision of a 
single rate, and the rate revision adopted as a result of this 
proceeding, if any, will be in effect for one year, the remainder of 
the current rate period for BPA's 2002 Transmission and Ancillary 
Services Rate Schedules. A 90-day rate proceeding will be adequate to 
develop a full and complete record, and receive public comment and 
argument related to the proposed rate, upon which the Administrator 
will establish the final rate.

B. Proposed Schedule Concerning This Rate Proceeding

    BPA expects to issue a final Record of Decision related to this 
rate revision on July 15, 2002. The following proposed schedule is 
provided for informational purposes. The Hearing Officer will establish 
a final schedule at the pre-hearing conference.

------------------------------------------------------------------------
                   Date                                Action
------------------------------------------------------------------------
April 22..................................  Deadline for Petitions to
                                             Intervene (Noon).
April 24..................................  Scheduling Conference.
April 25..................................  Pre-hearing Conference and
                                             Filing of BPA's Direct
                                             Case.
May 10....................................  Parties File Direct Cases.
May 28....................................  Close of Participant
                                             Comments.
May 31....................................  Litigants File Rebuttal
                                             Testimony.
June 13...................................  Cross-Examination.
June 18...................................  Initial Briefs Filed.
June 28...................................  BPA Files Draft Record of
                                             Decision.*
July 8....................................  Parties File Briefs on
                                             Exceptions, if applicable.
July 15...................................  Administrator Issues Final
                                             Record of Decision.
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* Pursuant to 1010.10(c) of BPA's Procedures, oral argument will not be
  heard in expedited rate proceedings unleess all parties agree to
  subtitute Oral Arugment for a brief on exceptions.

    The procedural schedule established for Docket No. GI-02 will 
provide an opportunity for interested persons to review BPA's proposed 
rate adjustment, to participate in the rate hearing, and to submit oral 
and written comments.

Part II--Purpose and Scope of Hearing

    The purpose of the hearing is to revise the ACS-02 Generation 
Imbalance Service charge under BPA's 2002 Transmission and Ancillary 
Service Rate Schedules. BPA proposes to eliminate the 100 mills per 
kilowatthour minimum rate for wind resources for imbalances that exceed 
the Generation Imbalance Deviation Band and where energy delivered in a 
schedule hour is less than the energy scheduled.

A. The Circumstances Necessitating Adjustment

    TBL's ACS-02 Ancillary Services and Control Area Services Rate 
Schedule includes a Control Area Service Rate for Generation Imbalance 
Service (see ACS-02, Section III.B). The current ACS-02 Generation 
Imbalance Service rate schedule charges the greater of BPA's 
incremental cost plus 10 percent or 100 mills per kilowatthour for 
imbalances outside the Deviation Band when the actual energy delivered 
from a resource in a schedule hour is less than the energy scheduled 
for that hour. The 100 mills per kilowatthour minimum charge is 
designed to encourage generators to operate their resources so that the 
difference between scheduled and actual energy delivered is within the 
Deviation Band. Wind resource developers and operators assert that they 
are not able to operate their resources to schedule with sufficient 
accuracy to avoid incurring substantial Generation Imbalance Service 
charges, and thus, wind resources cannot respond to this rate design. 
TBL's proposal to eliminate the 100 mills per kilowatthour minimum rate 
for wind resources in the ACS-02 Generation Imbalance Service rate 
would result in the rate for these imbalances being BPA's incremental 
cost plus 10 percent.

B. Scope

    This section provides guidance to the Hearing Officer as to those 
matters that are within the scope of this transmission rate proceeding 
and those that are outside the scope of this proceeding.
    Pursuant to Rule 1010.3(f) of BPA's Procedures, the Administrator 
directs the Hearing Officer to limit the scope of this hearing to the 
rate adjustment proposed herein. No other issues will be considered in 
this proceeding, including without limitation: (1) Issues related to 
any other rates adopted in BPA's 2002 Transmission and Ancillary 
Service rates proceeding; (2) other rates within the ACS-02 rate 
schedule; (3) aspects of the existing Generation Imbalance Service rate 
other than those relating to the rate adjustment proposed herein; (4) 
the General Rate Schedule Provisions; (5) revenue requirements; (6) 
rate design issues; (7) segmentation studies; and (8) transmission rate 
studies or other rate issues. Further, no issues relating to BPA's Open 
Access Transmission Tariff will be considered in this proceeding. The 
Hearing Officer will interpret the scope of this proceeding in the 
narrowest possible manner.

C. NEPA Evaluation

    BPA has assessed the potential environmental effects of its rate 
proposal, as required by the National Environmental Policy Act (NEPA). 
In the Business Plan Environmental Impact Statement (Business Plan EIS) 
BPA evaluated the environmental impacts of a range of business 
structure alternatives that included, among other things, various 
combinations of rate designs and resulting rate levels for BPA's 
transmission services. In August 1995, the BPA Administrator issued a 
Record of Decision (Business Plan ROD) that adopted the Market-Driven 
Alternative from the Business Plan Final EIS completed in June 1995. In 
the Business Plan ROD, the Administrator committed to avoid the 
environmental impacts from new generation resources by not discouraging 
renewable resources. This rate proposal would reduce the

[[Page 18874]]

additional environmental impacts associated with non-renewable 
resources, and it would remove the unintended burden BPA's current 
Generation Imbalance Service rate structure imposes on wind resources. 
The impacts from these actions were examined in the Business Plan EIS. 
Therefore, BPA expects the proposal to revise the ACS-02 rate for 
Generation Imbalance Service under BPA's 2002 Transmission and 
Ancillary Service Rate Schedules will fall within the scope of the 
Market-Driven Alternative that was evaluated in the Final Business Plan 
EIS and adopted in the Business Plan ROD.

Part III--Public Participation

A. Distinguishing Between Participants and Parties

    BPA distinguishes between ``participants in'' and ``parties to'' 
its ratemaking 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 comments will be made 
part of the official record and considered by the Administrator. 
Participants are not entitled to participate in the pre-hearing 
conference, may not cross examine parties' witnesses, seek discovery, 
or serve or be served with documents, and are not subject to the same 
procedural requirements as parties.
    Written comments by participants will be included in the record if 
they are received by BPA on or before May 28, 2002. Participants' 
written views, supporting information, questions, and arguments should 
be submitted to the Hearing Clerk at the address listed in the 
ADDRESSES section of this Notice.
    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 after 
intervening in the proceeding as provided below.

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. Petitioners must also explain their interest in the outcome of 
the hearing in sufficient detail to permit the Hearing Officer to 
determine whether they have a relevant interest in the hearing to be a 
party. Finally, petitioners must state whether they intend to file a 
brief on exceptions.
    Petitions to Intervene as a party in the rate proceeding are due to 
the Hearing Officer by 12 noon on April 22, 2002. Petitions to 
Intervene should be directed to the Hearing Clerk at the address 
specified in the ADDRESSES section of this Notice. A copy of the 
petition shall be served upon BPA's Office of General Counsel at the 
address specified in the ADDRESSES section of this Notice.
    Pursuant to Rule 1010.1(d) of the BPA Procedures, BPA waives the 
requirement in Rule 1010.4(d) that an opposition to a Petition to 
Intervene be filed and served 24 hours before the pre-hearing 
conference. Any opposition to a Petition to Intervene may instead be 
made orally at the pre-hearing conference. Any party, including BPA, 
may oppose a Petition to Intervene. 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. The Hearing Officer will rule on all timely Petitions to 
Intervene at the pre-hearing conference. Late interventions are 
strongly disfavored. Oppositions to an untimely Petition to Intervene 
shall be filed and served on BPA within two days after service of the 
untimely petition.

C. Developing the Record

    The hearing record will include, among other things, the 
transcripts of the hearing, written materials entered into the record 
by BPA and the parties, written comments from participants and other 
materials accepted into the record by the Hearing Officer. The Hearing 
Officer will then review, supplement (if necessary) and certify the 
record to the BPA Administrator for decision.
    The Hearing Officer, at his discretion, may schedule reasonable 
opportunity for cross-examination following completion of the filing of 
all parties and BPA's direct cases, and rebuttal testimony. Parties 
will have the opportunity to file initial briefs at the close of the 
evidentiary portion of the hearing. Parties may file briefs on 
exceptions, or if all parties have previously agreed, oral argument may 
be substituted for briefs on exceptions. If oral argument is scheduled 
in lieu of briefs on exceptions, the argument will be transcribed and 
made part of the record. After the close of the hearing, and following 
submission of initial briefs, BPA will issue a Draft Record of Decision 
(ROD).
    The Administrator will develop the final rate for Generation 
Imbalance Service based on the entire record, documents prepared 
pursuant to the National Environmental Policy Act and other statutes 
and such other material or information as may have been submitted to or 
developed by the Administrator. The basis for the final adjustment will 
be expressed in the Administrator's Final ROD, which shall be issued 
July 15, 2002. The Administrator will serve copies of the Final ROD on 
all parties and will file the final proposed rate adjustment, together 
with the record, with the Federal Energy Regulatory Commission for 
confirmation and approval.
    BPA must continue to meet with customers in the ordinary course of 
business during the rate proceeding. To comport with section 1010.7 of 
BPA's Procedural Rules on ex parte communications, BPA will provide 
notice of meetings involving rate proceeding issues to provide an 
opportunity for participation by all parties to the proceeding. Such 
meetings may be held on short notice and parties should be prepared to 
devote necessary resources to fully participate in every aspect of the 
rate proceeding.

Part IV--Summary of the Proposal

    BPA proposes to revise the rate for Generation Imbalance Service by 
eliminating the 100 mills per kilowatthour floor rate when actual 
energy is less than scheduled energy for wind generation resources. The 
revision will remove an impediment to continued development of wind 
resources in the BPA Control Area.
    Below is the proposed adjustment to the Generation Imbalance 
Service rate. The proposed revision to the rate is the addition of the 
second sentence in the first paragraph of section III.B.1.b.(i), below 
(in italics). All capitalized terms have the meaning accorded them in 
TBL's Open Access Transmission Tariff and 2002 Transmission and 
Ancillary Service Rate Schedules. TBL intends to seek FERC approval of 
the revised rate beginning October 1, 2002 and intends the revised rate 
to remain in effect until September 30, 2003, the expiration date of 
BPA's 2002 Transmission and Ancillary Service Rate Schedules.

Schedule ACS-02 Ancillary Services and Control Area Services Rate

Section III. Control Area Service Rates

B. Generation Imbalance Service

    The rates below apply to generation resources in the BPA Control 
Area if

[[Page 18875]]

Generation Imbalance Service is provided for in an interconnection 
agreement or other arrangement. Generation Imbalance Service is taken 
when there is a difference between scheduled and actual energy 
delivered from generation resources in the BPA Control Area during a 
schedule hour. The rates for this service differ depending upon whether 
the Generation Imbalance occurs within the Generation Imbalance 
Deviation Band or outside the Generation Imbalance Deviation Band. The 
Generation Imbalance Deviation Band is + or -1.5% of the scheduled 
amount of energy, or 2 MW, whichever is larger (absolute value).

1. Rates

a. For Imbalance Within the Generation Imbalance Deviation Band
    BPA-TBL will maintain a deviation account showing the net 
Generation Imbalance (the sum of positive and negative deviations from 
schedule for each hour). Return energy must be scheduled to bring the 
deviation account balance to zero each month. BPA-TBL will designate 
the hours and amounts of return energy for each hour that will be 
scheduled. The customer shall make the arrangements and submit the 
schedule for the balancing transaction.
b. For Imbalance Outside the Generation Imbalance Deviation Band
    i. When energy delivered in a schedule hour by the generation 
resource, not including wind generation resources, is less than the 
energy scheduled, the charge will be the greater of: (I) BPA's 
incremental cost plus 10%, or (ii) 100 mills per kilowatthour. When 
energy delivered in a schedule hour by a wind generation resource is 
less than the energy scheduled, the charge will be BPA's incremental 
cost plus 10%.
    BPA's incremental cost will be based on an hourly energy index in 
the PNW, if one exists. If one does not exist, an alternative index 
will be based on: The Dow-Jones Mid-Columbia, California PX, or NYMEX 
Mid-Columbia index prices. On September 30 each year, BPA-TBL will post 
on the OASIS the index to be used for the ensuing fiscal year.
    ii. When energy delivered by the generation resource is greater 
than the scheduled amount, a credit equal to 90% of BPA's decremental 
cost may be given for deviations.

2. Billing Factors

    For each hour a Generation Imbalance occurs, the Billing Factor for 
the rates specified in section 1.b. for Imbalance Outside the 
Generation Imbalance Deviation Band, is:
    a. The amount of energy that the customer delivers, in 
kilowatthours, less than the lower limit of the Generation Imbalance 
Deviation Band, or
    b. The amount of energy the customer delivers, in kilowatthours, in 
excess of the upper limit of the Generation Imbalance Deviation Band. 
No credit will be given for an energy difference if: (a) The imbalance 
was an Intentional Deviation (as determined by BPA-TBL); or (b) the 
Federal System was in a Spill Condition at any time during the month.

    Issued in Portland, Oregon, this 3rd day of April, 2002.
Stephen J. Wright,
Administrator and Chief Executive Officer, Bonneville Power 
Administration.
[FR Doc. 02-9274 Filed 4-16-02; 8:45 am]
BILLING CODE 6450-01-P