[Federal Register Volume 72, Number 23 (Monday, February 5, 2007)]
[Notices]
[Pages 5283-5288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-1773]


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DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA Docket No. TR-08]


2008 Transmission Rate Case; Public Hearing and Opportunities for 
Public Review and Comment

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

ACTION: Notice of 2008 Transmission Rate Case.

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SUMMARY: BPA requests that all motions, petitions, comments and 
documents intended to become part of the Official Record of the 2008 
Transmission Rate Case proceeding include the designation TR-08.
    BPA's existing transmission and ancillary services rates expire 
September 30, 2007. BPA will establish transmission and ancillary 
service rates in the 2008 Transmission Rate proceeding for the period 
from October 2007 through September 2009, fiscal years (``FY'') 2008 
and 2009 (``2008-2009 Rate Period'').
    BPA's Transmission Services organization held several rate case 
workshops with BPA's transmission customers from July through October 
2006 to discuss transmission costs, revenues, and rate design issues 
for the 2008-2009 Rate Period. The customers had expressed interest in 
meeting to discuss the possibility of a settlement of the rate 
proposal. Settlement discussions were publicly noticed and held during 
October and November 2006 and resulted in BPA's offer of a settlement 
agreement (``Settlement Agreement'') on November 30, 2006. By January 
5, 2007, most of BPA's customers had signed the Settlement Agreement or 
indicated that they would not object to Transmission Services's initial 
rate proposal (``Initial Proposal''). Transmission Services executed 
the Settlement Agreement on January 12, 2007. The Initial Proposal 
reflects the terms of the Settlement Agreement.

DATES: Persons wishing to become parties to the 2008 Transmission Rate 
Case proceeding must file a petition to intervene which shall be 
received by BPA no later than 4:30 p.m., Pacific Time, on February 12, 
2007. For further information on petitions to intervene please see the 
``ADDRESSES'' and ``SUPPLEMENTARY INFORMATION,'' Part III sections of 
this notice.
    The hearing on BPA's 2008 Transmission Rate Case will begin with a 
pre-hearing conference at 9 a.m., Pacific Time, on February 14, 2007, 
in Portland, Oregon, at the address specified below. Because of 
increased building security, attendees should allow additional time for 
entry into the building. Attendees must present a photo ID and must 
sign in at the security desk. Compact discs (``CD'') containing the 
Initial Proposal documents, in PDF format, will be provided to parties 
at the pre-hearing conference. The Initial Proposal, studies and 
documentation, and the Settlement Agreement also will be available on 
BPA's Web site at: http://www.transmission.bpa.gov/Business/Rates%5Fand%5FTariff/, and may be viewed at BPA's Public Reference 
Room, 1st floor, 905 NE 11th Ave., Portland, Oregon, on or after 
February 14, 2007.
    Written comments by non-party participants must be received by BPA 
no later than March 16, 2007, to be considered in the Record of 
Decision (``ROD'').
    The Administrator will issue a Final Record of Decision in this 
proceeding on approximately April 30, 2007.

ADDRESSES: 1. Petitions to intervene should include the designation TR-
08 and be directed to Transmission Hearing Clerk--LT-7, Bonneville 
Power Administration, 905 NE 11th Ave., Portland, Oregon 97232. In 
addition, a copy of the petition must be served concurrently on BPA's 
Office of General Counsel, directed to Susan Millar--LT-7, Office of 
General Counsel, 905 NE 11th Ave., Portland, Oregon 97232 (see Part 
III, A, for more information).
    2. Written comments on the Initial Proposal may be submitted by 
non-party participants, and should include the designation TR-08 and be 
submitted to Transmission Rate Case, Bonneville Power Administration, 
Public Affairs--DKC-7, P.O. Box 14428, Portland, OR 97293-4428. You 
also may e-mail your comments to: [email protected] (see Part III.A., 
below, for more information).
    3. The pre-hearing conference will be held in the BPA Rates Hearing 
Room,

[[Page 5284]]

2nd floor, 911 NE 11th Ave., Portland, Oregon, at 9 a.m., Pacific Time, 
on February 14, 2007.

FOR FURTHER INFORMATION CONTACT: Information also may be obtained from 
Public Affairs--DKC-7, P.O. Box 14428, Portland, OR 97293-4428; by toll 
free phone at (800) 622-4519; or via e-mail to: [email protected].
    Responsible Official: Ms. Nancy Parker, Transmission Rate Case 
Manager, is the official responsible for the development of BPA's 
transmission and ancillary service rates.

SUPPLEMENTARY INFORMATION:

Table of Contents

Part I--Introduction and Procedural Background
Part II--Purpose and Scope of Hearing
Part III--Public Participation
Part IV--Major Studies and Summary of Transmission Rate Proposal
Part V--2008 Transmission and Ancillary Service Rate Schedules

Part I--Introduction and Procedural Background

    Section 7(i) of the Northwest Power Act, 16 U.S.C. Section 839e(i), 
requires that BPA's rates be established and revised according to 
certain procedures. These procedures include, among other things, 
publication of notice of the proposed rates in the Federal Register; 
one or more hearings conducted as expeditiously as practicable by a 
Hearing Officer to develop a full and complete record and to receive 
public comment in the form of written and oral presentation of views, 
data, questions, and arguments related to the proposed rates; and a 
final decision by the Administrator establishing or revising rates 
based on the record. BPA's rate proceedings are governed by the Rules 
of Procedures Governing Bonneville Power Administration Rate Hearings, 
51 FR 7611 (1986) (``Procedures''). These Procedures implement the 
statutory Section 7(i) requirements. The 2008 Transmission Rate Case 
proceeding will be governed by Section 1010.9 of the Procedures, 
providing for a general rate proceeding, as the Procedures may be 
modified by the Hearing Officer at the pre-hearing conference. BPA will 
not convene separate field hearings to provide for oral comments by 
non-party participants. However, written comments received from non-
party participants no later than March 16, 2007 will be considered. 
Section 1010.7 of the Procedures prohibits ex parte communications. 
Limits on ex parte communications to the Administrator or BPA's 
employees regarding any matter pending in the hearing begin as of 
February 5, 2007.
    The Flood Control Act of 1944, 16 U.S.C. Section 825s; the Federal 
Columbia River Transmission System Act, 16 U.S.C. Sections 838g and 
838h; the Northwest Power Act, 16 U.S.C. Section 839e; and the Federal 
Power Act, 16 U.S.C 824k(i)(1) provide guidance regarding BPA's 
ratemaking. With regard to transmission rates, the Northwest Power Act 
requires BPA to set rates that are sufficient to recover, in accordance 
with sound business principles, the cost of transmitting electric 
power, including amortization of the Federal investment over a 
reasonable period of years, and the other costs and expenses incurred 
by the Administrator. The Federal Columbia Transmission System Act 
requires among other things, that the costs of the Federal Columbia 
River Transmission System be equitably allocated between Federal and 
non-Federal power utilizing the system. In addition, the Federal Power 
Act provides that rates for Commission-ordered transmission service 
shall be at rates and charges governed only by otherwise applicable 
laws, except that no rate shall be unjust, unreasonable, or unduly 
discriminatory or preferential.
    A proposed schedule for the formal hearing is stated below. A final 
schedule will be established by the Hearing Officer at the pre-hearing 
conference.

February 12, 2007: Petitions to Intervene
February 14, 2007: Pre-hearing Conference and Filing of BPA Initial 
Proposal
February 21, 2007: Party Objections to Initial Proposal/Debt 
Optimization Program Demonstration and Identification of issues to be 
preserved for hearing
February 26, 2007: Scheduling Conference (if necessary)
March 16, 2007: Participant Comments Due
April 30, 2007: Final Record of Decision (date approximate)

Part II--Purpose and Scope of Hearing

A. Key Components

1. Overview
    BPA is committed to marketing its power and transmission services 
separately in a manner that is modeled after the regulatory initiatives 
to promote competition in wholesale power markets that were adopted by 
the Commission in 1996. The Commission's initiatives in Orders 888 \1\ 
and 889 \2\ directed public utilities to separate their power merchant 
functions from their transmission functions; unbundle transmission and 
ancillary services from wholesale power services; and set separate 
rates for wholesale generation, transmission, and ancillary services. 
Although BPA is not required to follow the Commission's regulatory 
directives applicable to public utilities under the Federal Power Act, 
BPA has elected to separate its power and transmission functions and 
unbundle its power and transmission rates in a manner consistent with 
the directives concerning non-discriminatory open access transmission 
service. Accordingly, in 1997 BPA established separate business lines: 
BPA's Power Services organization, which performs BPA's wholesale 
merchant functions; and Transmission Services, which performs BPA's 
transmission system operations and reliability functions. BPA develops 
its transmission rates and its power rates in separate proceedings.
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    \1\Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Pubic Utilities; Recovery of 
Stranded Costs by Public Utilities and Transmitting Utilities, Reg-
Preamble, FERC Stats & Regs 1991-96, ]31,036 (1996).
    \2\ Open Access Same-Time Information System (formerly Real-Time 
Information Networks) and Standards of Conduct, Reg-Preamble, FERC 
Stats & Regs 1991-96, ]31,035 (1996).
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2. Power Services as a Party to the 2008 Transmission Rate Case
    Because BPA separated its power and transmission functions and sets 
its power and transmission rates in separate proceedings, and Power 
Services is a transmission customer, it is appropriate that Power 
Services be a party to the transmission rate proceeding. Accordingly, 
subject to a petition to intervene, Power Services will be considered a 
party to the 2008 Transmission Rate Case for all purposes under the BPA 
Procedures. Power Services may file testimony and briefs as a party and 
will be entitled to all other procedural rights of a party. In 
particular, Power Services will be considered a party for purposes of 
limitations on ex parte communications
3. Two-Year Transmission Rate Period
    The rates proposed in the 2008 Transmission Rate Case are for a 
two-year period: The 2008-2009 Rate Period. A two-year rate period 
balances the need for a short rate period to limit revenue and cost 
risks with the significant resource and time requirements needed to 
plan and carry out a rate case.

[[Page 5285]]

4. Settlement Agreement
    Transmission Services and most of its customers are parties to the 
Settlement Agreement, which provides for an Initial Proposal that 
incorporates the agreement's provisions. The Settlement Agreement may 
be viewed at: http://www.transmission.bpa.gov/Business/Rates_and_Tariff/ratesdocs/_Settlement_Agreement_2008.pdf. The Settlement 
Agreement identifies proposed changes to the rate schedule terms and 
conditions and specifies proposed rate levels for BPA's transmission 
and ancillary service rates during the 2008-2009 Rate Period, as 
summarized in Attachment 1 to the Settlement Agreement and as reflected 
in the proposed Rate Schedules in Part V of this Notice. The rate 
levels proposed in the Settlement Agreement result in a zero percent 
average rate increase compared to FY 2006-2007 rates. Although the 
transmission rate charges are higher than current rates, BPA forecasts 
that the Reactive Supply and Voltage Control from Generation Sources 
Services (GSR) formula rate will be zero, resulting in no change in 
customers' total bills for transmission and ancillary services. In 
addition, the Settlement Agreement provides that the Initial Proposal 
will reflect, in the calculation and presentation of the transmission 
revenue requirement, $15 million recorded as transmission reserves in 
each year of the 2008-2009 Rate Period (for a total of $30 million) as 
a funding source for transmission capital programs.
    Consistent with the Settlement Agreement, the Initial Proposal 
revenue requirement includes $4.5 million per year for payments for 
redispatch of generation provided under Attachment K of BPA's Open 
Access Transmission Tariff (OATT) and under any other reliability 
redispatch program(s). The Settlement Agreement provides further that 
Transmission Services will pay Power Services on a per-event basis for 
redispatch based on submitted bids. Currently, Transmission Services 
pays Power Services $1.5 million per year for redispatch.
    The Settlement Agreement also includes a proposed revised 
Attachment K to the OATT, which Transmission Services will submit to 
the Commission. The revised Attachment K sets forth the procedures 
under which Transmission Services will request redispatch of Federal 
resources from Power Services during the 2008-2009 Rate Period in order 
to preserve transmission system reliability. The proposed revision 
clarifies that there are three types of redispatch that Power Services 
may provide under Attachment K: Emergency Redispatch; Network 
Transmission Service Firm Redispatch; and Discretionary Redispatch. It 
establishes the circumstances under which Transmission Services may 
request each type of redispatch and the criteria that apply to the 
Power Services response to the request.
    The Settlement Agreement provides for the demonstration that 
transmission rates are no higher with BPA's Debt Optimization Program 
(DOP) than they would have been in the absence of the DOP, including 
Debt Service Reassignment, and describes the DOP-related costs for 
which transmission rates are being set. Finally, the Settlement 
Agreement states that Transmission Services does not intend to 
compensate Power Services or third parties for generation-supplied 
reactive power during the 2008-2009 Rate Period.
    The Settlement Agreement provides notice that during the 2008-2009 
Rate Period, BPA may conduct a separate rate proceeding to establish a 
rate for generation regulation service and generation following 
service.
    Any party to the 2008 Transmission Rate Case that did not sign the 
Settlement Agreement may object to the Initial Proposal. A party that 
objects to the Initial Proposal or to the DOP demonstration (BPA Slice 
customers that are parties to the rate case and the Northwest 
Requirements Utilities may object to the DOP demonstration) must 
identify the issues it wishes to preserve for hearing.

B. Overview of the Public Process

1. Program Level Funding Workshops--Programs in Review
    Beginning in May 2006 and continuing through the summer of 2006, 
BPA provided an opportunity for public participation and input on 
transmission programs and program cost levels through the Programs In 
Review (``PIR'') process. PIR began with a notification by mail to 
transmission customers, tribes, regional stakeholders and other 
interested parties. Transmission Services also published notices on its 
external Web site. During May and June 2006, BPA held five public 
meetings around the region and gave a separate briefing to the 
Affiliated Tribes of the Northwest Indians to present proposed capital 
and expense levels along with business and policy considerations. At 
these public meetings, BPA transmission and corporate staff discussed 
issues concerning future capital investments in the transmission system 
and proposed expense levels for transmission system development, 
operation, maintenance, and reliability for the 2008-2009 Rate Period. 
A technical workshop was held in July 2006. Transmission Services also 
provided informational materials through direct mailings, written 
responses to customer letters, e-mailings, and publication of all BPA 
and customer-generated materials on Transmission Services' external Web 
site, and through making staff available to answer questions.
    In the PIR workshops, BPA and its customers examined program 
spending levels for the 2008-2009 Rate Period for both capital projects 
and expense programs. BPA also discussed its vision for planned future 
direction in transmission and its plans to manage the many challenges 
the organization faces through FY 2009. BPA explored customer and 
interested parties' views on: (1) Priorities for transmission 
investment; (2) sources of capital for transmission infrastructure; (3) 
the effect on expenses of a change in capitalization policies; (4) new 
regulatory requirements; (5) delays in non-electric plant maintenance 
because of budget constraints; (6) efforts to manage a constrained 
transmission system; (7) maintenance of a skilled and trained 
workforce; and (8) right-of-way management. BPA accepted written and 
oral comments on its proposed transmission programs, including expense 
and capital spending levels, through September 7, 2006. BPA shared 
revised program levels with customers and allowed an additional two-
week comment period. After considering customer comments, BPA concludes 
the PIR process by issuing the Administrator's close-out letter on 
transmission spending levels for the 2008-2009 Rate Period.
    In summary, BPA remains committed to managing its costs and 
continuing to seek efficiencies in the way it conducts its transmission 
business. The three reasons for changes in costs from the 2006-2007 
rate period include: (1) Mandated or non-discretionary costs, (2) 
transmission program changes, and (3) needed system and efficiency 
initiatives. The Initial Proposal reflects the Administrator's close-
out letter on transmission program spending levels for the 2008-2009 
Rate Period.
2. Transmission Rate Case Customer Workshops
    In preparation for the 2008 Transmission Rate Case, Transmission 
Services held an initial public workshop on July 27, 2006, for 
customers and other interested parties. Two additional public workshops 
and meetings were

[[Page 5286]]

held on August 16, 2006, and October 3, 2006, during which Transmission 
Services presented information about costs, revenue forecasts, 
transmission products, pricing, and rate design issues. See http://www.transmission.bpa.gov/Business/Rates_and_Tariff/archive.cfm.
3. Transmission Rate Debt Optimization Program Demonstration
    At the first annual Debt Optimization Program (DOP) and Debt 
Service Reassignment (DSR) meeting held on January 23, 2007, BPA 
presented a demonstration that transmission rates are no higher with 
the DOP than they would have been in the absence of the DOP, including 
DSR. The January meeting was held pursuant to an agreement among BPA, 
BPA Slice customers, and the Northwest Requirements Utilities. The 
transmission DOP demonstration is included in the Initial Proposal. The 
demonstration compares results from a base transmission repayment study 
that includes all debt management activities completed as of September 
30, 2006, with a transmission repayment study that includes new DOP and 
DSR projections for FY 2007 and subsequent fiscal years.

C. Scope of the Transmission Rate Proceeding

    Many of the decisions that determine Transmission Services's costs 
have been made or will be made in public review processes other than 
the transmission rate proceeding. This section provides guidance to the 
Hearing Officer as to those matters that are within the scope of the 
transmission rate proceeding and those that are outside the scope.
1. Spending Levels
    As described above, Programs In Review workshops were held 
throughout the region to clarify, discuss, and provide the public the 
opportunity to comment orally and in writing on BPA's proposed capital 
expenditures and expenses for transmission. After considering all 
comments, the Administrator concludes the public process by issuing a 
close-out letter on spending levels for the 2008-2009 Rate Period. 
Those spending levels serve as the basis for the transmission capital 
and expense levels that are reflected in the Initial Proposal. Pursuant 
to section 1010.3(f) of BPA's Procedures, the Administrator directs the 
Hearing Officer to exclude from the record any evidence or arguments 
that seek in any way to challenge the appropriateness or reasonableness 
of the Administrator's decisions on transmission spending levels and 
sources of capital, including capital and expense levels reviewed in 
the Programs in Review public process. If any re-examination of sources 
of capital and spending levels is necessary, that re-examination will 
occur outside of the rate proceeding.
    However, the foregoing direction to the Hearing Officer does not 
apply to the following matters: Customer advance capital funding, 
revenue financing, reserve financing, modeling of financing methods in 
rate case studies, interest rate forecasts, scheduled amortization, 
forecast depreciation, forecasts of system replacements for repayment 
studies, interest expense, expense and revenue uncertainties, and risks 
included in the risk analysis.
2. Issues Decided in Power Rate Proceeding
    A number of issues that affect transmission and ancillary service 
rates have been addressed in BPA's 2007 Power Rate Case. On July 17, 
2006, the Administrator established wholesale power rates for the 
period October 1, 2006, through September 30, 2009. On September 21, 
2006, the Commission approved the proposed rates on an interim basis, 
pending full review for final approval. See 116 FERC ] 61,264. In the 
2007 Power Rate Case, the Administrator made decisions regarding: the 
costs for generation inputs for ancillary services, including operating 
reserves, regulating reserves, and energy and generation imbalance; the 
generation costs of station service and remedial action schemes 
allocated to transmission; and the allocation to the power revenue 
requirement of the transmission costs of generation integration and 
generator step-up transformers associated with Federal system 
resources. The Administrator also decided that BPA's 2007 power rates 
would not include $20.4 million for each year in FY 2008 and 2009, as 
revenue from Transmission Services for generation supplied reactive 
power (GSR). Transmission Services will continue to pay Power Services 
$4.464 million each year in FY 2008 and 2009 for synchronous 
condensers. The Administrator also decided that Transmission Services 
will compensate Power Services for operating reserves at a unit price 
of $5.63/kW per month.
    The Initial Proposal is consistent with the results of the 
Administrator's decisions on these and all other issues decided in the 
Power Rate Case, and will be reflected in all final decisions made in 
the 2008 Transmission Rate Case proceeding. The Administrator directs 
the Hearing Officer to exclude from the record all evidence and 
argument that seek in any way to address or revisit final decisions 
that were made in the 2007 Power Rate Case.
3. The National Environmental Policy Act
    BPA is in the process of assessing the potential environmental 
effects of its Initial Proposal, as required by the National 
Environmental Policy Act (``NEPA''). The Administrator directs the 
Hearing Officer to exclude from the record all evidence and argument 
that seek in any way to address the potential environmental impacts of 
the rates being developed in the 2008 Transmission Rate Case. BPA's 
Business Plan Environmental Impact Statement (``Business Plan EIS''), 
completed in June 1995, evaluated the environmental impacts of a range 
of business plan alternatives that could be varied by applying various 
policy modules, including one for rates. Any combination of alternative 
policy modules should allow BPA to balance its costs and revenues. 
However, the EIS also addressed response strategies BPA could pursue if 
BPA's costs exceeded its revenues.
    In August 1995, the BPA Administrator issued a Record of Decision 
(``Business Plan ROD'') that adopted the Market-Driven Alternative from 
the Business Plan EIS. This alternative was selected because, among 
other reasons, it allows BPA to: (1) Recover costs through rates; (2) 
competitively market BPA's products and services; (3) develop rates 
that meet customer needs for clarity and simplicity; (4) continue to 
meet BPA's legal mandates; and (5) avoid adverse environmental impacts. 
BPA also committed to apply as many response strategies as necessary 
when BPA's costs and revenues do not balance.
    Because the Initial Proposal is likely to assist BPA in 
accomplishing these goals, the proposal appears consistent with these 
aspects of the Market-Driven Alternative. In addition, this rate 
proposal is similar to the type of rate designs and resulting rate 
levels evaluated in the Business Plan EIS; thus, implementation of this 
rate proposal is not expected to result in significantly different 
environmental impacts from those examined in the Business Plan EIS. 
Therefore, BPA expects that this rate proposal will fall within the 
scope of the Market-Driven Alternative that was evaluated in the 
Business Plan EIS and adopted in the Business Plan ROD. As part of the 
Administrator's Record of Decision that will be prepared regarding this 
2008 Transmission Rate Case, BPA may tier

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its decision under NEPA to the Business Plan ROD. However, depending 
upon the ongoing environmental review, BPA may, instead, issue another 
appropriate NEPA document.

Part III--Public Participation

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

    BPA distinguishes between ``participants in'' and ``parties to'' 
the rate case. Apart from the formal hearing process, BPA will receive 
written 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 will be 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 March 16, 2007. Written views, supporting 
information, questions, and arguments should include the designation 
TR-08 for the 2008 Transmission Rate Case and be submitted to BPA at 
the address listed in the ADDRESSES section of this notice.
    Persons wishing to become parties to the proceedings included in 
this notice must file a petition to intervene. Petitioners may 
designate no more than two (2) representatives upon whom service of 
documents will be made. Petitions are due to the Transmission Hearing 
Clerk by 4:30 p.m., Pacific Time, on February 12, 2007. The petition 
should be submitted to BPA as described in the ADDRESSES section of 
this notice.
    Petitions to intervene must include the designation TR-08 for the 
2008 Transmission Rate Case and state the name and address of the 
person requesting party status and the person's interest in the 
proceeding. 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 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 at the pre-hearing conference. 
Transmission Services or any party 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. All timely 
applications will be ruled on by the Hearing Officer. Late 
interventions are strongly disfavored. Opposition to a petition to 
intervene filed after the pre-hearing conference must be filed and 
received by BPA within two (2) days after service of the petition.

B. Developing the Record

    The hearing record will include the transcripts of the hearing, 
written material entered into the record by Transmission Services and 
the parties, written comments from participants, and other material 
accepted into the record by the Hearing Officer. The Hearing Officer 
will review the record and will certify the record to the Administrator 
for decision.
    The Administrator will develop a final rate proposal based on the 
record, information from the PIR, documents prepared pursuant to the 
National Environmental Policy Act and other environmental statutes, and 
such other material or information as may have been submitted to or 
developed by the Administrator. The Administrator will serve copies of 
the Final Record of Decision on all parties. After issuance of the 
Final Record of Decision, BPA will file its final rate proposal with 
the Commission for confirmation and approval.
    During the rate proceeding, Transmission Services must continue to 
meet with customers in the ordinary course of business. To comport with 
the rate case procedural rule prohibiting ex parte communications, 
Transmission Services will provide notice of meetings involving rate 
case issues to provide an opportunity for participation by all rate 
case parties. Parties should be aware, however, that such meetings may 
be held on very short notice.

Part IV--Major Studies and Summary of Transmission Rate Proposal

A. Major Studies

    1. Revenue Requirement Study and Documentation--This Study and 
Documentation include the calculation of transmission revenue 
requirements for the 2008-2009 Rate Period and demonstration of cost 
recovery for the transmission function. The Study includes an analysis 
of financial risks and a demonstration that transmission rates are no 
higher with the Debt Optimization Program than without it.
    2. Revenue Forecast--The revenue forecasts at current and proposed 
transmission and ancillary service rates are based on forecasted sales 
and revenues for the 2008-2009 Rate Period. The revenue forecast is 
included in the Documentation.

B. Summary of Proposal

1. Transmission rates
    Transmission Services is proposing five rate schedules for the use 
of its Integrated Network segment:
     Formula Power Transmission (FPT-08.1 and FPT-08.3) rates--
The two FPT rates are based on the cost of specific types of 
facilities, including a distance component for the use of transmission 
lines, and are charged on a contract-demand basis. Included in the FPT 
rates are the costs of the two required ancillary services: Scheduling, 
System Control and Dispatch Service and Reactive Supply and Voltage 
Control from Generation Sources Service. The FPT-08.1 rate is proposed 
for contracts that allow annual rate adjustments, while the FPT-08.3 
rate is proposed for contracts that allow a rate change only once every 
three years. In this Initial Proposal, the two FPT rates are set at the 
same level. The FPT-08.1 rate and the FPT-08.3 rate are proposed to be 
formula rates that are adjusted quarterly to reflect the quarterly 
change in the Reactive Supply and Voltage Control from Generation 
Sources Service rate, a small component of the cost basis of the FPT 
rate. Although Transmission Services has not offered new FPT wheeling 
contracts since the OATT was adopted, a number of FPT contracts will 
remain in effect during the 2008-2009 Rate Period.
     Integration of Resources (IR-08) rate--The IR rate is a 
postage-stamp, contract-demand rate for the use of the Integrated 
Network. Charges for the two required ancillary services are embedded 
in the IR rate. The proposed IR-08 rate is a formula rate that is 
adjusted quarterly to reflect the quarterly change in the Reactive 
Supply and Voltage Control from Generation Sources Service rate, a 
small component of the cost basis of the IR rate. A Short Distance 
Discount is available when resources are 75 miles or less from load. 
Although Transmission Services is not offering new IR contracts, some 
IR contracts will remain in effect during the rate period.
     Network Integration Transmission (NT-08) rate--The NT rate 
applies to customers taking Network Integration Transmission Service 
under the OATT. The NT rate schedule includes a Load Shaping Charge 
applied to the

[[Page 5288]]

customer's total load on the hour of the Monthly Transmission Peak Load 
and a Base Charge applied to the customer's total load less Customer-
Served Load (CSL), if any. CSL is the amount of load that the customer 
agrees to serve without using its NT service. CSL is limited to the 
annual megawatt amount and resources specified in NT service agreements 
as of October 2005. Transmission Services intends to eliminate CSL as 
of October 1, 2011.
     Point-to-Point (PTP-08) rate--The PTP rate is a contract-
demand rate that applies to customers taking PTP Transmission Service 
on BPA's Integrated Network under the OATT. There are separate PTP 
rates for long-term firm service; short-term firm and non-firm service; 
and hourly firm and non-firm service. The rate for long-term firm 
service includes a Short Distance Discount. All short-term and hourly 
PTP rates are downwardly flexible. In cases in which transmission 
service is curtailed or interrupted because of conditions on the FCRTS, 
the billing factor for Hourly Nonfirm Service, which otherwise is 
Reserved Capacity, will be (i) Reserved Capacity minus the curtailed 
capacity, when the interruption occurs before the close of the 
scheduling hour; and (ii) scheduled energy, when the interruption 
occurs after the close of the scheduling hour. In addition, the 
availability section of the PTP-08 rate schedule has been revised to 
add Conditional Firm Transmission Service, as applicable when such 
service is offered.
    In addition to the five rates for network use, other proposed 
transmission rates include:
     The Southern Intertie (IS-08) and Montana Intertie (IM-08) 
rates are contract-demand rates that apply to customers taking PTP 
Transmission Service under the OATT on the Southern Intertie and 
Montana Intertie, respectively. These rates are structured in the same 
way as the PTP rate, except that no Short Distance Discount is 
available. Transmission Services is proposing similar revisions for 
these rates.
     The Townsend-Garrison Transmission (TGT-08) rate and the 
Eastern Intertie rate (IE-08) are developed pursuant to the Montana 
Intertie agreement.
     The Use-of-Facilities (UFT-08) rate establishes a formula 
for charging for the use of a specific facility based on the annual 
cost of that facility.
     The Advance Funding (AF-08) rate allows Transmission 
Services to collect the capital and related costs of specific 
facilities through an advance-funding mechanism.
2. Ancillary Services Rates
    In addition to the rate level changes specified in the Settlement 
Agreement, other aspects of the Ancillary Services and Control Area 
Services rates are being revised in accordance with the Settlement 
Agreement as follows:
     The billing factors for Scheduling, System Control, and 
Dispatch Service and Reactive Supply and Voltage Control from 
Generation Sources Service rates are being revised to clarify that, 
when there is an unauthorized increase, they are increased by the 
amount of the Unauthorized Increase Charge. The rate that is applied to 
the billing factors, however, remains the same.
     The Reactive Supply and Voltage Control from Generation 
Sources Service rate is a formula rate that is determined quarterly 
beginning October 1, 2007, and is being revised to recover only the 
cost, if any, of paying reactive rates to non-federal generators and of 
adjustments for self-supply of reactive power.
     The rate for Regulation and Frequency Response Service is 
fixed for the Rate Period.
     The rates for Operating Reserves--Spinning and 
Supplemental are fixed for the Rate Period. In addition to the rate for 
customers who elect to purchase Operating Reserves from BPA 
Transmission Services for the rate period, the rate schedule is being 
revised to include a charge applicable to customers who elect to self-
supply or acquire Operating Reserves from third-party suppliers for the 
Rate Period but then default on their self-supply or third-party supply 
obligations.
3. Other Rates and Charges
    Other charges that may apply to a customer's transmission service 
include a Delivery Charge for the use of low-voltage delivery 
substations, a Power Factor Penalty Charge, Incremental Cost Rates for 
transmission requests that require the construction of new facilities, 
a Failure to Comply Charge for failure to comply with a curtailment, 
redispatch, or load shedding order, and an Unauthorized Increase Charge 
for customers who exceed their contracted capacity amounts. The 
Reservation Fee is being revised to eliminate the application of the 
rate to deferred service. The Reservation Fee will apply only for 
extensions of the service commencement date of a long-term firm PTP 
transmission service reservation.

Part V--2008 Transmission and Ancillary Service Rate Schedules

    BPA's proposed 2008 Transmission and Ancillary Service Rate 
Schedules are available for viewing and downloading on Transmission 
Service's Web site at: http://www.transmission.bpa.gov/Business/Rates%5Fand%5FTariff/. A copy of the proposed rate schedules also is 
available for viewing in BPA's Public Reference Room at the BPA 
Headquarters, 1st floor, 905 NE 11th Ave., Portland, Oregon.

    Issued in Portland, Oregon, on January 25, 2007.
Stephen J. Wright,
Administrator and Chief Executive Officer.
[FR Doc. E7-1773 Filed 2-2-07; 8:45 am]
BILLING CODE 6450-01-P