[Federal Register Volume 73, Number 26 (Thursday, February 7, 2008)]
[Notices]
[Pages 7279-7282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2253]


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DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA Docket No. WI-09]


Proposed Wind Integration--Within-Hour Balancing Service Rate for 
Public Hearing, and Opportunity for Public Review and Comment

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

ACTION: Notice of Wind Integration--Within-Hour Balancing Service Rate 
(Notice), BPA Docket No. WI-09.

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SUMMARY: The purpose of the hearing is to adopt a rate for Wind 
Integration--Within-Hour Balancing Service. As increasing amounts of 
wind generation have integrated into BPA's Balancing Authority, the 
variability and uncertainty of wind generation have led to increased 
costs through the need for additional reserve capacity, the shift of 
energy generation from heavy load hours to light load hours, and 
reduced system efficiency. The Wind Integration--Within-Hour Balancing 
Service rate will ensure that these costs are borne by the parties 
causing the costs.

DATES: Persons wishing to intervene and become parties in the rate case 
must file a petition to intervene by 5 p.m., Pacific Standard Time, on 
February 13, 2008. The petition must state the name and address of the 
intervenor and the intervenor's interest in the outcome of the 
proceeding. Written comments by non-party participants must be received 
by BPA no later than April 15, 2008, to be considered in the Record of 
Decision (``ROD''). The Administrator will issue a Final Record of 
Decision in these proceedings by July 28, 2008.

ADDRESSES: Petitions to intervene should be directed to Brandon 
Hignite, Hearing Clerk--2009 Wind Integration Rate Case, L-7, 
Bonneville Power Administration, 905 NE 11th Avenue, Portland, OR 97232 
or by e-mail to: [email protected], and must be received no later than 5 
p.m., Pacific Standard Time, on February 13, 2008. In addition, a copy 
of the petition must be served concurrently on BPA's General Counsel 
and directed to Barry Bennett, LC-7, Office of General Counsel, 
Bonneville Power Administration, 905 NE 11th Avenue, Portland, OR 97232 
or by e-mail to: [email protected]. Written comments may be made online 
at BPA's website: www.bpa.gov/comment, or by mail to: BPA Public 
Affairs, DKE-7, P.O. Box 14428, Portland, OR, 97293-4428. Please label 
your submission ``2009 Wind Integration Rate Case.''

FOR FURTHER INFORMATION CONTACT: Mr. Elliot E. Mainzer, Transmission 
Policy and Strategy Manager, at (360) 619-6252.

SUPPLEMENTARY INFORMATION: 

Part I--Introduction and Procedural Background

A. Statutory Provisions Governing This Rate Proceeding

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

[[Page 7280]]

Administrator pursuant to this Act and other provisions of law.''
    Rates established by BPA are effective on an interim or final basis 
as approved by 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 
(FCRTS) 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, 
including issuance of a Federal Register notice announcing the proposed 
rates; one or more hearings conducted as expeditiously as practicable 
by a hearing officer; public opportunity to provide oral and written 
views related to the proposed rates; opportunity to offer refutation or 
rebuttal of submitted material; and a decision by the Administrator 
based on the record. This proceeding will be governed by the Procedures 
Governing Bonneville Power Administration Rate Hearings, 51 FR 7611 
(March 5, 1986), which implement and, in most instances, expand these 
statutory requirements.

B. Proposed Schedule Concerning This Rate Proceeding

    The hearing will be conducted under the rule for general rate 
proceedings, section 1010.9 of the Procedures Governing Bonneville 
Power Administration Rate Hearings. The following proposed schedule is 
provided for informational purposes. A final schedule will be 
established by the Hearing Officer at the prehearing conference.

14 February 2008--Prehearing/BPA Direct Case
20-21 February 2008--Clarification of BPA Direct Case
22 February 2008--Motions to Strike
22 February 2008--Data Request Deadline
29 February 2008--Answers to Motions to Strike
29 February 2008--Data Response Deadline
4 March 2008--Public Hearing (Portland)
14 March 2008--Parties file Direct Case
17-18 March 2008--Clarification of Parties' Direct Cases
20 March 2008--Motions to Strike
20 March 2008--Data Request Deadline
27 March 2008--Answers to Motions to Strike
27 March 2008--Data Response Deadline
15 April 2008--Parties file Rebuttal
15 April 2008--Close of Participant Comment Period
16-17 April 2008--Clarification of Rebuttal
18 April 2008--Motions to Strike
18 April 2008--Data Request Deadline
25 April 2008--Answers to Motions to Strike
25 April 2008--Data Response Deadline
1-2 May 2008--Cross Examination
9 May 2008--Initial Briefs Filed
19May 2008--Oral Argument
30 May 2008--Draft ROD issued
16 June 2008--Briefs on Exceptions
By 28 July 2008--Final ROD--Final Proposal

C. Ex Parte Communications Prohibited

    Section 1010.7 of the BPA Hearing Procedures prohibits ex parte 
communications. The ex parte rule applies to all BPA and DOE employees 
and contractors. Except as provided below, any outside communications 
with BPA and/or DOE personnel regarding BPA's rate case by other 
Executive Branch agencies, Congress, existing or potential BPA 
customers (including tribes), and nonprofit or public interest groups 
are considered outside communications and are subject to the ex parte 
rule. The general rule does not apply to communications relating to: 
(1) Matters of procedure only (the status of the rate case, for 
example); (2) exchanges of data in the course of business or under the 
Freedom of Information Act; (3) requests for factual information; (4) 
matters for which BPA is responsible under statutes other than the 
ratemaking provisions; or (5) matters which all parties agree may be 
made on an ex parte basis. The ex parte rule remains in effect until 
the Administrator's Final ROD is issued, which is scheduled to occur by 
July 28, 2008.

Part II--Purpose and Scope of Hearing

A. Purpose of the Hearing

    The purpose of the hearing is to adopt a rate for Wind 
Integration--Within-Hour Balancing Service. As increasing amounts of 
wind generation have integrated into BPA's transmission system, the 
variability and uncertainty of wind generation have led to increased 
costs through the need for additional reserve capacity, the shift of 
energy generation from heavy load hours to light load hours, and 
reduced system efficiency. The Wind Integration--Within-Hour Balancing 
Service Rate is intended to ensure that these costs are borne by the 
parties causing the costs.

B. Scope

    Pursuant to Rule 1010.3(f) of BPA's Procedures, the Administrator 
limits the scope of this hearing to issues concerning the rate for Wind 
Integration--Within-Hour Balancing Service described in Part IV hereof. 
In particular, the following issues are not part of the scope of the 
case, and the Hearing Officer is directed to strike all testimony 
contesting these issues: how BPA operates the FCRPS to provide control 
area services and ancillary services; how or from which entities BPA's 
transmission business obtains capacity to provide any such services; 
program levels and program level forecasts for any BPA program; and 
rates previously established or to be established in any other rate 
case, including BPA's WP-07 Supplemental Wholesale Power Rate Case.

C. National Environmental Policy Act Evaluation

    BPA is in the process of assessing the potential environmental 
effects of the Wind Integration Within-Hour Balancing Service rate, 
consistent with the National Environmental Policy Act (``NEPA''). The 
NEPA process is conducted separately from BPA's formal rate 
proceedings. Therefore, 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 2009 Wind Integration--Within-Hour Balancing Service 
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. The Business Plan EIS also addressed response strategies, 
including adjusting rates that 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

[[Page 7281]]

environmental impacts. BPA also committed to apply as many response 
strategies as necessary when BPA's costs and revenues do not balance.
    In April 2007, BPA completed and issued a Supplement Analysis to 
the Business Plan EIS. The Supplement Analysis found that the Business 
Plan EIS's relationship-based and policy-level analysis of potential 
environmental impacts from BPA's business practices remains valid, and 
that BPA's current business practices remain consistent with BPA's 
Market-Driven approach. The Business Plan EIS and ROD thus continue to 
provide a sound basis for making determinations under NEPA concerning 
BPA's policy-level decisions, including rates.
    Because the Wind Integration rate proposal likely would assist BPA 
in accomplishing the goals identified in the Business Plan ROD, 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 would not be 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 the Wind Integration--Within-Hour Balancing Service 
rate, BPA may tier its decision under NEPA to the Business Plan ROD. 
However, depending upon the ongoing environmental review, BPA may, 
instead, issue another appropriate NEPA document. Persons may submit 
comments regarding the potential environmental effects of the proposal 
to Katherine Pierce, NEPA Compliance Officer, KEC-4, Bonneville Power 
Administration, 905 NE. 11th Avenue, Portland, OR 97232. Any such 
comments received by the comment deadline in Part III.A above will be 
considered by BPA's NEPA compliance staff in the NEPA process that will 
be conducted for this proposal.

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 accept 
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 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 are not subject to the same 
procedural requirements as parties.
    Participants' written and oral comments will be made part of the 
official record and considered by the Administrator, if they are 
submitted on or before April 15, 2008. Participants' written views, 
supporting information, questions, and arguments should be submitted to 
the address noted in the ADDRESSES section of this Notice or at the 
public hearing.
    The second category of interest is that of a party as defined in 
Rules 1010.2 and 1010.4 of the BPA Procedures. 51 Fed. Reg. 7611 
(1986). Parties may participate in any aspect of the hearing process.

B. Petitions To Intervene

    Persons wishing to become parties to BPA's rate proceeding must 
notify BPA in writing of their interest by submitting a petition to 
intervene. Petitions to intervene are due to the Hearing Officer by 
February 13, 2008, and should be directed to Brandon Hignite, Hearing 
Clerk, L-7, Bonneville Power Administration, 905 NE. 11th Avenue, 
Portland, OR 97232 or by e-mail to: [email protected], and must be 
received no later than 5 p.m., Pacific Standard Time, on February 13, 
2008. In addition, a copy of the petition must be served concurrently 
on BPA's General Counsel and directed to Barry Bennett, LC-7, Office of 
General Counsel, Bonneville Power Administration, 905 NE. 11th Avenue, 
Portland, OR 97232 or by e-mail to: [email protected].
    Petitions shall state the name and address of the person requesting 
party status and the person's interest in the hearing. 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. 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

    The record will include, among other things, the testimony and 
evidence submitted by the parties, the transcripts of any hearings and 
cross-examination, written material submitted by the participants, and 
evidence accepted into the record by the Hearing Officer. The Hearing 
Officer will review the record and certify the record to the 
Administrator for decision. Parties will have the opportunity to file 
initial briefs at the close of cross-examination. After the close of 
the hearings, and following submission of initial briefs, BPA will 
issue a draft ROD that states the Administrator's preliminary 
decision(s). Parties may file briefs on exceptions, after that the 
Administrator will issue the final ROD establishing the rate.
    The Administrator will develop the final rate for Wind 
Integration--Within-Hour Balancing Service based on the entire record. 
The Administrator will serve copies of the final Record of Decision on 
all parties and will file the final proposed rate, together with the 
record, with FERC for confirmation and approval.

Part IV--Summary of the Proposal

    In 2006 BPA and the Northwest Power and Conservation Council 
convened a regional forum to discuss the operational and economic 
issues raised by the expected integration of significant amounts of 
wind generation into the Pacific Northwest power system. In March 2007 
the group, which included investor-owned utilities, public power 
organizations, environmental groups, and others, produced the Northwest 
Wind Integration Action Plan. The Action Plan recognized that the 
emergence of wind energy as a significant resource on the Northwest 
transmission grid--which has 17 separate Balancing Authorities--raised 
new cost recovery and cost allocation issues.
    Historically, most of the variability and uncertainty in a 
Balancing Authority's operations has been caused by loads. As a result, 
most Northwest transmission providers do not have rate schedules that 
charge generators for the variability they add to the system. However, 
the output of wind generators is significantly more variable and 
uncertain than the output of traditional generation sources. The 
variability and uncertainty associated with wind generation increases 
the demand for reserves required to maintain Balancing Authority 
reliability.

[[Page 7282]]

    Under current rate schedules, BPA power customers pay most of the 
costs of these additional reserves. For BPA, wind integration cost 
recovery is a particularly important issue because the majority of the 
1,425 MW of wind generation in the BPA Balancing Authority is exported 
to other Balancing Authorities to serve the loads of other regional 
utilities. Therefore, BPA power customers are paying the costs of 
providing balancing services for wind generation used to serve other 
loads. This pattern of large-scale exports of wind generation is 
expected to continue through the end of 2009, at which point BPA 
expects that 2,880 MW of wind will be interconnected to the BPA system.
    To better align cost causation and cost allocation, BPA is 
proposing a Wind Integration--Within-Hour Balancing Service rate under 
which wind generators will be charged for the costs of the additional 
reserve capacity that is needed to support their operations, as well as 
other incremental costs caused by the variability of wind generation. 
Additional costs are caused by the need to shift energy generation from 
heavy load hours to light load hours to preserve the ability to change 
generation levels to compensate as wind output changes and by reduced 
efficiency because demands on the system become less predictable as 
wind generation increases. The new rate is intended to ensure that BPA 
recovers the costs that wind generation places on the system, and that 
the costs are allocated to the parties that cause the costs.
    BPA currently estimates that, during FY 2009, it will need an 
average of 203 MW of capacity to provide these balancing services for 
wind generation. Therefore, BPA is proposing a wind integration rate to 
recover the embedded costs of 203 MW of Federal system resources plus 
the other costs, noted above, that wind generation places on the 
system.
    BPA projects the cost of providing this service is $22.9 million. 
To recover this cost, BPA is proposing a rate not to exceed $0.81 per 
installed kW of wind capacity per month.
    The proposed rate schedule is attached at the end of this Notice.

    Issued this 30th day of January, 2008.
Stephen J. Wright,
Administrator and Chief Executive Officer.

ACS-09

ANCILLARY SERVICES AND CONTROL AREA SERVICES RATE

SECTION I. AVAILABILITY
    * * *
    Control Area Service rates available under this rate schedule are:
    * * *
    5. Wind Integration---Within-Hour Balancing Service
    * * *
SECTION III. CONTROL AREA SERVICE RATES
    E. WIND INTEGRATION--WITHIN-HOUR BALANCING SERVICE
    The rate below applies to all wind plants in the BPA Control Area. 
Within-Hour Balancing Service provides the generation capability to 
follow within-hour variations of wind resources in the BPA Control Area 
and to maintain the power system frequency at 60 Hz in conformance with 
NERC and WECC reliability standards.
    1. RATE
    The rate shall not exceed $0.81 per kilowatt per month.
    2. BILLING FACTOR
    The Billing Factor is as follows:
    i. For each wind plant, or phase of a wind plant, that has 
completed installation of all units no later than the 15th day of the 
month prior to the billing month, the billing factor will be the 
nameplate of the plant in kW. A unit has completed installation when it 
has generated and delivered power to the BPA system.
    ii. For each wind plant, or phase of a wind plant, for which some 
but not all units have been installed by the 15th day of the month 
prior to the billing month, the billing factor will be the maximum 
measured hourly output of the plant through the 15th day of the prior 
month in kW.

 [FR Doc. E8-2253 Filed 2-6-08; 8:45 am]
BILLING CODE 6450-01-P