[Federal Register Volume 77, Number 217 (Thursday, November 8, 2012)]
[Notices]
[Pages 66963-66966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27306]


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DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA File No. OS-14]


Public Hearing and Opportunities for Public Review and Comment

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

ACTION: Notice of Proposed 2014 Oversupply Rates.

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SUMMARY: On March 6, 2012, BPA filed its Oversupply Management Protocol 
with the Federal Energy Regulatory Commission (Docket No. EL11-44) as 
an amendment to BPA's Open Access Transmission Tariff. The protocol 
authorizes BPA to displace generation in its balancing authority area 
with Federal hydropower and provide compensation to generators for 
certain costs related to the displacement. BPA is holding the OS-14 
rate proceeding to establish a rate to recover the costs incurred under 
the protocol.

DATES: Persons wishing to intervene and become parties to the 
proceeding must file a petition to intervene, via U.S. Mail or 
electronic mail, no later than 5:00 p.m. on November 15, 2012. A 
prehearing conference will be held at 9:00 a.m. on November 14, 2012. 
Written comments by non-party participants must be received by February 
15, 2013, to be considered in the Administrator's Record of Decision.

ADDRESSES:
    1. Petitions to intervene should be directed to Hearing Clerk--L-7, 
Bonneville Power Administration, 905 NE 11th Ave., Portland, Oregon 
97232, or may be emailed to [email protected]. In addition, copies of 
the petition must be served concurrently on BPA's General Counsel 
directed to Mr. Allen Chan, LT-7, Office of General Counsel, 905 NE 
11th Ave., Portland, Oregon 97232, or via email to [email protected] (see 
section III.A. for more information regarding interventions).
    2. Written comments by participants should be submitted to the 
Public Engagement Office--DKE-7, Bonneville Power Administration, P.O. 
Box 14428, Portland, Oregon 97293. You may also email your comments to 
www.bpa.gov/comment. BPA requests that all comments and documents 
intended to be part of the Official Record in this rate proceeding 
contain the designation OS-14 in the subject line of the email.
    3. The prehearing conference will be held in the BPA Rates Hearing 
Room, 2nd floor, 911 NE 11th Ave., Portland, Oregon 97232.

FOR FURTHER INFORMATION CONTACT:

Heidi Helwig--DKE-7, Public Affairs Specialist, Bonneville Power 
Administration, P.O. Box 3621, Portland, Oregon 97208-3621; by phone at 
503-230-3458 or toll free at 1-800-622-4519; or via email to 
[email protected].
Responsible Officials: Mr. Raymond D. Bliven, Power Rates Manager, and 
Ms. Rebecca E. Fredrickson, Transmission Rates Manager.
BPA Attorney Advisor: Mr. Allen Chan is the principal BPA attorney in 
this matter. Mr. Chan may be contacted by U.S. Mail at: Mr. Allen Chan, 
Office of General Counsel, LT-7, Bonneville Power Administration, P.O. 
Box 3621, Portland, OR 97208-3621 or via email at: [email protected].

SUPPLEMENTARY INFORMATION:

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 and revise its rates so that they recover, in accordance with 
sound business principles, the costs associated with the acquisition, 
conservation, and transmission of electric power, including 
amortization of the Federal investment in the Federal Columbia River 
Power System (FCRPS) over a reasonable number of years and BPA's other 
costs and expenses. The Northwest Power Act also requires that BPA's 
rates be established based on the record of a formal hearing, and for 
transmission rates only, that the costs of the Federal transmission 
system be equitably allocated between Federal and non-Federal power 
utilizing the system.
    This proceeding is being conducted under the rule for general rate 
proceedings, section 1010.9 of BPA's Procedures. A proposed schedule 
for the proceeding is provided below. A final schedule will be 
established by the Hearing Officer at the prehearing conference.

BPA Direct Case November 14, 2012
Prehearing Conference November 14, 2012
Parties File Petition to Intervene November 15, 2012
Motions to Strike December 7, 2012
Data Request Deadline December 7, 2012
Answers to Motions to Strike December 14, 2012
Data Response Deadline December 14, 2012
Parties file Direct Case January 18, 2013
Clarification January 29-February 1, 2013
Motions to Strike February 6, 2013
Data Request Deadline February 6, 2013
Answers to Motions to Strike February 13, 2013
Data Response Deadline February 13, 2013
Close of Participant Comments February 15, 2013
Litigants file Rebuttal March 5, 2013
Clarification March 7-8, 2013
Motions to Strike March 13, 2013
Data Request Deadline March 13, 2013
Answers to Motions to Strike March 20, 2013
Data Response Deadline March 20, 2013
Cross-Examination March 25-29, 2013
Initial Briefs Filed April 29, 2013
Oral Argument May 9, 2013

[[Page 66964]]

Draft ROD issued June 11, 2013
Briefs on Exceptions June 28, 2013
Final ROD--Final Studies July 22, 2013

    Section 1010.7 of BPA's 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 the merits of any issue in 
BPA's rate proceeding 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 proceeding, 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 on or about July 22, 2013.

Part II--Description of the Rate Proceeding

A. Purpose of the Hearing

    During periods of high water flows on the Columbia River, primarily 
during the spring and early summer, BPA, the Army Corps of Engineers 
(Corps), and the Bureau of Reclamation (Bureau) must take all 
reasonable actions to avoid excess spill in order to protect endangered 
fish and other aquatic species in accordance with the Clean Water Act, 
Endangered Species Act, and court orders. At times, spilling water over 
the dams, rather than running water through the turbines to generate 
electricity, increases the levels of nitrogen, oxygen, and other gases 
in the water, beyond state water quality standards. To meet applicable 
environmental responsibilities, during periods of high flows BPA, the 
Corps, and the Bureau attempt to moderate spill and avoid total 
dissolved gases (TDG) beyond state water quality standards by running 
more water through the turbines.
    To avoid spilling water beyond approved TDG levels, other 
generation serving load is reduced or shut down and an equal amount of 
additional hydroelectric generation is delivered to that load. In May 
2011, the BPA Administrator issued a Final Record of Decision adopting 
an Interim Environmental Redispatch policy, under which BPA could 
displace generation within its balancing authority area with free 
Federal hydropower. On June 13, 2011, a group of wind customers filed a 
complaint with the Commission, requesting, among other things, that the 
Commission use its authority under section 211A of the Federal Power 
Act to order BPA to cease its environmental redispatch policy because 
it failed to provide transmission service on terms and conditions that 
are comparable to those under which BPA provides service to itself and 
that are not unduly discriminatory or preferential.
    On December 7, 2011, the Commission issued an order finding that 
BPA's environmental redispatch policy failed to provide comparable 
transmission service and ordered BPA to file revisions to its Open 
Access Transmission Tariff to comply with the order. On March 6, 2012, 
BPA filed the Oversupply Management Protocol with the Commission, under 
which generators can elect to be compensated for certain costs related 
to displacement. Such costs are limited to (1) Production tax credits; 
(2) renewable energy credits unbundled from the sale of energy; and (3) 
for contracts executed prior to March 6, 2012, costs related to bundled 
sales of renewable energy credits and energy. The Oversupply Management 
Protocol is set to expire on March 30, 2013.
    This OS-14 rate proceeding will establish rates to recover the 
costs already incurred under the Oversupply Management Protocol, and 
any future costs incurred up to September 30, 2015, in the event the 
Oversupply Management Protocol is renewed after it expires on March 30, 
2013. The extension of the effective period of the rates is contingent 
on further guidance from the Commission. BPA will revise its proposal 
as necessary to conform to such guidance. BPA is proposing to adopt a 
power rate to collect 50 percent of the costs from power customers and 
a new control area services rate to collect the other 50 percent of the 
costs from those generators that elect to be compensated for 
displacement.

B. The National Environmental Policy Act

    BPA is in the process of assessing the potential for environmental 
effects resulting from implementation of the proposed OS-14 rates, 
consistent with the National Environmental Policy Act (NEPA). BPA has 
previously prepared an Environmental Clearance Memorandum, dated March 
23, 2012, for the Oversupply Management Protocol, which considered 
environmental implications of the protocol and documented the 
categorical exclusion of the protocol from further NEPA review. BPA 
will evaluate whether the OS-14 rate proposal is covered within the 
scope of this previous NEPA documentation or whether additional NEPA 
documentation is necessary for any aspects of the OS-14 rate proposal. 
If additional NEPA documentation is necessary, a preliminary review of 
the OS-14 rate proposal indicates that it involves primarily 
administrative and financial matters that appear to fall within a class 
of actions that are also categorically excluded from further NEPA 
review pursuant to applicable NEPA regulations. Persons may submit 
comments regarding 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 for Participant Comments 
identified in section III.A. below will be considered by BPA's NEPA 
compliance staff in its environmental evaluation of the OS-14 rate 
proposal.

C. Oversupply Workshops

    In preparation for the OS-14 rate proceeding, BPA staff held three 
public workshops with customers and interested parties from March 2012 
through May 2012. BPA published notices for all workshops, which were 
well attended. During the workshops, BPA staff presented and discussed 
information about the potential costs arising from oversupply 
conditions, the functionalization of oversupply costs between power and 
transmission, and the allocation of the functionalized costs among 
customers. BPA also shared drafts of rate schedule language for the 
oversupply rates and potential procedural schedules. Staff has used the 
comments received at the workshops to assist in constructing the 
Initial Proposal.

Part III--Public Participation

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

    BPA distinguishes between ``participants in'' and ``parties to'' 
the hearing. Apart from the formal hearing process, BPA will receive 
written comments, views, opinions, and information from 
``participants,'' who are defined in BPA's 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

[[Page 66965]]

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 are not subject to the same 
procedural requirements as parties. BPA customers whose rates are 
subject to this proceeding, or their affiliated customer groups, may 
not submit participant comments. Persons who are members or employees 
of organizations that have intervened in the rate proceeding may submit 
general comments as participants but may not use the comment procedures 
to address specific issues raised by their intervenor organization.
    Written comments by participants will be included in the record if 
they are received by February 15, 2013, and should be submitted to the 
address listed in the ADDRESSES section of this notice.
    Entities or persons become parties to the proceeding by filing 
petitions to intervene, which must state the name and address of the 
entity or person requesting party status and their interest in the 
hearing. BPA customers and affiliated customer groups will be granted 
intervention based on a petition filed in conformance with BPA's 
Procedures. Other petitioners must explain their interests in 
sufficient detail to permit the Hearing Officer to determine whether 
such petitioners 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 must instead be made at the prehearing 
conference. Any party, including BPA, may oppose a petition for 
intervention. All timely petitions will be ruled on by the Hearing 
Officer. Late interventions are strongly disfavored. Opposition to an 
untimely petition to intervene must be filed and received by BPA within 
two days after service of the petition.
    BPA is holding the OS-14 rate proceeding at the same time as the 
BP-14 rate proceeding for power, transmission, and ancillary and 
control area service rates. However, these proceedings are separate. As 
a result, entities or persons wishing to intervene in both dockets must 
file separate petitions to intervene, and all filings must be made in 
the rate proceeding to which the filing pertains.

B. Developing the Record

    The record will include, among other things, the transcripts of the 
hearing; testimony, evidence, and argument entered into the record by 
BPA and the parties; written comments from participants; and other 
material accepted into the record by the Hearing Officer. The Hearing 
Officer then will review the record and certify the record to the 
Administrator for final decision.
    Parties will have the opportunity to file initial briefs after the 
close of cross-examination. BPA then will issue a Draft Record of 
Decision that will include the Administrator's preliminary decisions. 
Parties may file briefs on exceptions, after which the Administrator 
will issue the Final Record of Decision establishing the rate.
    The Administrator will develop a final rate based on the entire 
record. The Administrator will serve copies of the Final Record of 
Decision on all parties and will file its rates with the Commission for 
confirmation and approval.

Part IV--Oversupply OS-14

A. Scope of the Oversupply Rate Proceeding

    Pursuant to Rule 1010.3(f) of BPA's Procedures, the Administrator 
limits the scope of this proceeding to issues concerning the rates for 
recovering the costs of the Oversupply Management Protocol described in 
Part II.A of this notice. In particular, the following issues are not 
part of the scope of the case, and the Hearing Officer is directed to 
strike all testimony concerning these issues: the terms of the 
Oversupply Management Protocol; whether the Oversupply Management 
Protocol complies with the Commission's Order issued on December 7, 
2011; whether BPA took all actions to avoid using the Oversupply 
Management Protocol, including the payment of negative prices to 
generators outside of BPA's balancing authority area; the scope of 
BPA's environmental obligations; program levels and program level 
forecasts for any BPA program; and rates previously established or to 
be established in any other rate case. In addition, potential 
environmental impacts are not an issue in this proceeding. 
Environmental impacts are addressed in a concurrent NEPA process. See 
section II.B. Pursuant to Sec.  1010.3(f) of BPA's Procedures, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
address the potential environmental impacts of the rate being developed 
in this OS-14 rate proceeding.

B. Summary of the 2014 Oversupply Rate Proposal

    The proposed OS-14 rates are formula rates designed to recover 
BPA's oversupply costs. See Part II.A for a description of oversupply, 
the Oversupply Management Protocol, and BPA's incurrence of costs to 
mitigate oversupply conditions.
    The rates will recover the following costs incurred between March 
31, 2012, and September 30, 2015 (again, costs will be recovered for 
periods after March 30, 2013, if the protocol is renewed and pending 
Commission guidance): (1) Costs of an independent evaluator; and (2) 
payments to generators for (a) production tax credits, (b) renewable 
energy credits, and (3) losses with respect to certain power sales 
contracts. Under the proposed formula rates, BPA would recover actual 
costs rather than forecast costs, therefore avoiding the need to 
perform a later true-up between forecast costs and actual costs.
    The OS-14 rate proposal consists of two parts: (1) A power rate 
that applies as a separate charge to the Priority Firm Power (PF-14) 
rate, the Industrial Firm Power (IP-14) rate, and the New Resource Firm 
Power (NR-14) rate; and (2) a new control area service rate. The 
oversupply costs to be recovered would be allocated equally between the 
power rate and the control area services rate--one-half of the costs to 
the power Oversupply rate and the other half to the control area 
service Oversupply rate. The costs would then be charged to the 
customers that are subject to the two rates.
    The power Oversupply rate would be charged to customers subject to 
PF-14, IP-14, and NR-14 rates. The Oversupply charge would be 50 
percent of the costs incurred under the Oversupply Management Protocol 
multiplied by the customer's load, divided by the sum of all power 
customers' load. For PF customers' loads, BPA proposes to use the 
lesser of each customer's Rate Period High Water Mark (RHWM) and the 
customer's net requirement. For IP customers' loads, BPA proposes to 
use each customer's contract energy load. Currently, there are no 
customers being served at the NR rate and BPA does not expect any such 
customers during the effective period of the OS-14 rates.
    The control area service Oversupply rate would be charged to each 
generator that elects compensation pursuant to the Oversupply 
Management Protocol, based on the facility nameplate capacity

[[Page 66966]]

in kilowatts. The control area service charge would be 50 percent of 
the costs incurred under the Oversupply Management Protocol multiplied 
by the nameplate capacity of each participating generator, divided by 
the sum of all generating facility nameplate capacities of all 
participating generators.
    BPA proposes to bill for costs incurred prior to the effective date 
of the OS-14 rate after the effective date of the OS-14 rate. BPA would 
include charges for costs incurred after the effective date on the bill 
for the month those costs were incurred, subject to a rate cap as 
discussed below. BPA proposes to make the OS-14 rates effective until 
all costs have been billed and such bills have been fully paid.
    BPA is proposing to cap the total amount that would be billed under 
each Oversupply rate at $4,000,000 in any one month. The rate cap would 
allow the billing to be spread over several months to ease the cash 
flow effect on customers. Any oversupply costs in excess of the cap 
will carry over to subsequent months' bills until the balance is 
completely billed.

Part V--Proposed Oversupply Rate Schedules

    BPA's proposed 2014 control area service Oversupply Rate Schedule 
and power General Rate Schedule Provision Oversupply Rate are a part of 
this notice and are available for viewing and downloading on BPA's Web 
site at www.bpa.gov/goto/OS14Schedule Copies of the proposed rate 
schedules also are available for viewing in BPA's Public Reference Room 
at the BPA Headquarters, 1st Floor, 905 NE 11th Avenue, Portland, OR 
97232.

    Issued this 29th day of October, 2012.
Stephen J. Wright,
Administrator and Chief Executive Officer.
[FR Doc. 2012-27306 Filed 11-7-12; 8:45 am]
BILLING CODE 6450-01-P