2006 Transmission Rate Case; Public Hearing and Opportunities for Public Review and Comment, 5423-5428 [05-1890]

Agencies

• Bonneville Power Administration
• DEPARTMENT OF ENERGY

[Federal Register Volume 70, Number 21 (Wednesday, February 2, 2005)]
[Notices]
[Pages 5423-5428]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-1890]


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DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA File No. TR-06]


2006 Transmission Rate Case; Public Hearing and Opportunities for 
Public Review and Comment

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

ACTIONS: Notice of 2006 Transmission Rate Case.

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SUMMARY: BPA File No. TR-06. BPA requests that all comments and 
documents intended to become part of the Official Records in this 
proceeding contain the file number designation TR-06.
    BPA's existing transmission and ancillary services rates expire 
September 30, 2005. BPA will establish transmission and ancillary 
service rates in this proceeding for the period from October 2005 
through September 2007, fiscal years (``FY'') 2006 and 2007 (``2006-
2007 Rate Period'').
    BPA's Transmission Business Line (``TBL'') held several public 
meetings with customers over the period July through September 2004 to 
discuss transmission costs, revenues, and rate design issues for the 
2006-2007 Rate Period. The customers expressed interest in meeting with 
TBL to develop a settlement for the 2006-2007 Rate Period. Continued 
meetings between October and early December resulted in a Settlement 
Agreement. TBL's initial rate proposal (``Initial Proposal'') reflects 
the terms of the Settlement Agreement.

DATES: Persons wishing to become formal parties to the proceeding must 
notify BPA in writing of their intention to do so by the requirements 
stated in this Notice. Petitions to intervene must be received by BPA 
no later than 4:30 p.m., Pacific Time, on February 14, 2005.
    The rate adjustment proceeding will begin with a pre-hearing 
conference at 9 a.m., Pacific Time, on February 16, 2005, in Portland, 
Oregon, at the address stated below. Due to increased security, 
attendees should allow additional time for entry into the building. 
Attendees will need a photo ID and will need to sign in at the security 
desk.
    Written comments by non-party participants must be received by 
March 16, 2005, to be considered in the Record of Decision (``ROD'').

ADDRESSES:
    1. Petitions to intervene should be directed to Jonathan Shardlow, 
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 General Counsel and directed to Charles H. 
Combs--LT-7, Office of General Counsel, 905 NE 11th Ave., Portland, 
Oregon 97232 (see Part III, A for more information).
    2. Written comments by non-party participants should be submitted 
to Rate Case, TBL Communications--T-Ditt2, Bonneville Power 
Administration, PO Box 491, Vancouver, WA 98666. You also may e-mail 
your comments to: tblfeedback@bpa.gov.
    3. The pre-hearing conference will be held in the BPA Rates Hearing 
Room, 2nd floor, 911 NE 11th Ave., Portland, Oregon, at 9 a.m., Pacific 
Time, on February 16, 2005. Compact discs (``CD'') containing the 
Initial Proposal documents, in PDF format, will be provided to parties 
at the pre-hearing conference. The Settlement Agreement, studies and 
documentation also will be available on BPA's Web site at https://
www.transmission.bpa.gov/Business/Rates_and_Tariff/2006RateCase.cfm, 
and may be viewed at BPA's Public Reference Room, 1st floor, 905 NE 
11th Ave., Portland, Oregon.

FOR FURTHER INFORMATION CONTACT: Information also may be obtained from 
Debbie Stout, TBL Communications--T-Ditt2, Bonneville Power 
Administration, PO Box 491, Vancouver, WA 98666; by phone at (360) 418-
8995 or toll free at 1-888-276-7790; or via e-mail to dastout@bpa.gov.
    Responsible Official: Mr. Dennis Metcalf, 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--2006 Transmission and Ancillary Service Rate Schedules

Part I--Introduction and Procedural Background

    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, 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; opportunity for both oral presentation and written submission 
of views, data, questions, and arguments related to the proposed rates; 
and a decision by the Administrator based on the record. BPA's rate 
proceedings are governed by BPA's Procedures Governing Bonneville Power 
Administration Rate Hearings, 51 FR 7611 (1986) (``Procedures''). These 
Procedures implement the statutory Section 7(i) requirements. This rate 
proceeding will be governed by Section 1010.9 of the Procedures 
providing for a general rate proceeding, as modified by the Hearing 
Officer at the pre-hearing conference. However, BPA will not hold any 
field hearings to provide for non-party participant oral comments. 
Section 1010.7 of the Procedures prohibits ex parte communications. BPA 
imposed ex parte limitations beginning January 17, 2005.
    The Bonneville Project Act, 16 U.S.C. 832; the Flood Control Act of 
1944, 16 U.S.C. 825s; the Federal Columbia River Transmission System 
Act, 16 U.S.C. 838; the Northwest Power Act, 16 U.S.C. 839; and the 
Federal Power Act, 16 U.S.C. 824k(i)(1)(B)(ii) 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 that the costs of the Federal Columbia 
River Transmission System be equitably allocated between Federal and 
non-Federal power utilizing the system. In addition, rates for Federal 
Energy Regulatory Commission (``FERC'' or ``Commission'')-ordered 
transmission service shall be at rates and charges that permit the 
recovery of all costs incurred in connection with the transmission 
service and necessary associated services.
    A proposed schedule for the formal hearing is stated below. A final 
schedule

[[Page 5424]]

will be established by the Hearing Officer at the pre-hearing 
conference.

February 14, 2005, Petitions to Intervene
February 16, 2005, Pre-hearing Conference and Filing of BPA Direct Case
February 22, 2005, Clarification
February 24, 2005, Objections to Initial Proposal
February 28, 2005, Scheduling Conference
March 16, 2005, Participant Comments Due
June 20, 2005, Final ROD--Final Studies

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 regulated under the Federal Power 
Act to separate their power merchant functions from their transmission 
reliability 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 by statute to follow the Commission's regulatory directives 
promoting competition and open access transmission service, BPA has 
elected to separate its power and transmission operations and unbundle 
its rates in a manner consistent with the directives concerning open 
access transmission service. Accordingly, in 1996 BPA established 
separate business lines: BPA's Power Business Line (``PBL'') which 
performs BPA's wholesale merchant functions, and BPA's TBL which 
performs BPA's transmission system operations and reliability 
functions. BPA develops its transmission rates in separate proceedings 
from its power rates.
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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, para. 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, para. 31,035 (1996).
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2. PBL as a Party to the Rate Case
    Because BPA has separated its power and transmission functions, 
sets its power and transmission rates in separate proceedings, and PBL 
is a TBL transmission customer, it is appropriate that the PBL be a 
party to the transmission rate proceeding. Accordingly, PBL will be 
considered a party to the Transmission Rate Case for all purposes under 
the BPA Procedures. The PBL may file testimony and briefs as a party 
and will be entitled to all other procedural rights of a party. In 
particular, the PBL shall be considered a party for purposes of ex 
parte communications.
3. Two-Year Transmission Rate Period
    The rate period for the rates proposed in this transmission rate 
adjustment proceeding is two years, the 2006-2007 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.
4. Settlement Agreement
    TBL and most of its customers are parties to a Settlement Agreement 
that provides for TBL to submit an initial transmission rate proposal 
that incorporates the provisions of the Settlement Agreement. The 
Settlement Agreement specifies rate levels for BPA's transmission and 
ancillary service rates during the 2006-2007 Rate Period, as provided 
in Attachment 1 to the Agreement and reflected in the proposed Rate 
Schedules. Other major provisions of the Settlement Agreement include:
    a. Payment by TBL to PBL of $1.5 million per year for redispatch 
services described in a revised Attachment K to BPA's Open Access 
Transmission Tariff (``OATT''). The Settlement Agreement provides that 
TBL agrees to file with the Commission, and the signatories to the 
Settlement Agreement agree not to challenge, the revised Attachment K. 
BPA will file the revised Attachment K as a proposed amendment to BPA's 
OATT to be effective as of October 1, 2005. Such filing will not be 
part of this rate proceeding;
    b. Network Integration rate schedule language limiting the amount 
of Customer-Served Load (``CSL''), and a TBL commitment to work with 
customers prior to October 2011, the date on which TBL intends to 
eliminate CSL, to determine whether a transition mechanism is 
appropriate for NT customers with CSL;
    c. TBL commitment, effective on the date TBL signs the Settlement 
Agreement, to apply the methodologies in FERC Order 2003-A for 
determining, funding, and allocating the costs of facilities associated 
with generator interconnections, and revisions to the Advance Funding 
(``AF'') rate;
    d. PBL agreement to charge federal power customers that are served 
over non-federal facilities (``General Transfer Agreement'' or ``GTA'' 
service), which PBL pays for, the same low-voltage delivery charge 
applicable to customers served over federal Delivery facilities during 
the 2006-2007 Rate Period. For the period beginning in FY 2008, the GTA 
delivery charge will be determined in the power rate case. PBL also 
agrees to hold a rates workshop or other public forum in advance of the 
power rate case;
    e. TBL commitment to work with customers in the Business Practice 
Forum to develop a business practice for self-supply of Generation 
Supplied Reactive from qualifying non-federal generators;
    f. Failure to Comply Penalty Charge revisions, which include a 
requirement to curtail actual use;
    g. TBL's expected use of $15 million in each year of the 2006-2007 
Rate Period of TBL's financial reserves as a funding source for 
transmission capital programs, and the reflection of such use in the 
calculation and presentation of the transmission revenue requirement;
    h. Rate schedule revisions that would bill hourly non-firm 
transmission service based on reservations instead of on schedules, 
when TBL has systems in place to do so;
    i. TBL commitment to work to develop a conditional firm 
transmission product, and to conduct an expedited rate case and make 
filings if necessary to implement the product;
    j. Formula rates to adjust for (1) FY 2007 PBL generation inputs 
for Regulation and Frequency Response, Operating Reserves, and 
Generation-Supplied Reactive ancillary services, as determined in the 
next BPA power rate case; (2) TBL payments for non-federal generation-
supplied reactive made under FERC-approved rates; and (3) self-supply 
of generation-supplied reactive. The ASC-06 Regulation and Frequency 
Response Service rate and the Operating Reserve--Spinning Reserve 
Service and Operating Reserve--Supplemental Reserve Service rates would 
be adjusted one time, on October 1, 2006. The ASC-06 Reactive Supply 
and Voltage Control from Generation Sources Service rate, FPT-06.1 
Formula Power Transmission rate, and IR-06 Integration of Resources 
rate would be calculated on a quarterly basis beginning October 2005; 
and
    k. A provision to be added to the Point-to-Point (``PTP''), 
Southern Intertie (``IS''), and Montana Intertie (``IM'') rate 
schedules limiting

[[Page 5425]]

additional charges for redirecting Long-Term service to Short-Term 
service.
    The Settlement Agreement recognizes the possibility that parties to 
the 2006 Transmission Rate Case that have not signed the Settlement 
Agreement may object to the TBL's Initial Proposal. If any party 
objects to the Initial Proposal, TBL may continue to defend the Initial 
Proposal or submit a revised proposal. If TBL submits a revised 
proposal, signatories to the Settlement Agreement may contest any 
aspect of the revised proposal. If TBL does not revise its Initial 
Proposal, and the Administrator establishes transmission rates 
consistent with the Initial Proposal, the signatories have agreed not 
to challenge approval of the rates by FERC or in any judicial forum.

B. Cost Increases and Revenue Reductions

    For nearly a decade, BPA has been increasing its focus on the 
reliability and availability of the federal transmission system. In 
1996, two major transmission outages affected the western United 
States. Over the past few years, industry deregulation, drought in 
California and the Northwest, changes in use of the transmission 
system, constraints in the federal transmission system, and the 
blackout in the Northeastern United States in 2003, all have 
contributed to an intensified regional focus on transmission system 
reliability and availability and their effect on energy costs. In order 
to maintain transmission system reliability and availability, BPA 
developed an infrastructure plan with objectives to reinforce the 
transmission system to continue compliance with national reliability 
standards; maintain and improve the availability of the transmission 
system, and remove or manage constraints on the system. In addition, 
BPA also adopted new tools for evaluating how the main grid 
transmission system is used.
    During the current rate period, TBL has completed and put into 
service three major components of its infrastructure program, the 500 
kV Kangley-Echo Lake line; 500 kV Bell-Grand Coulee line; and 
modernization of the Celilo Direct Current Terminal. In early FY 2006, 
a fourth major component, the 500 kV Schultz-Wautoma line, is scheduled 
to enter service.
    Since the 2004 Transmission Rate Case, transmission revenues 
declined significantly compared to the forecasts. In response, TBL 
increased efforts to find efficiencies in its programs, deferred some 
transmission improvements, reduced operating expenditures, and further 
cut program costs in an attempt to stay within actual revenues. The 
drop in revenues for FY 2004 and FY 2005 and the resulting deferred 
operations and maintenance work, together with an increase in costs due 
to completion of high-priority capital projects, created tension 
between reliability and cost recovery.
    TBL is projecting sales during the 2006-2007 Rate Period similar to 
the reduced level of sales encountered in the current rate period. The 
increased costs due to infrastructure projects, and the reduced sales 
experienced during the current rate period which are forecast to 
continue in the 2006-2007 Rate Period, are the major contributors to 
the need for increased rates.

C. Overview of the Public Process

1. Program Level Funding Workshops--Programs in Review
    During the spring and summer of 2004, TBL provided an opportunity 
for public participation and input on TBL program cost levels through 
the Programs In Review (``PIR'') process. PIR opened on May 3, 2004, 
with a notification by mail to TBL customers and interested parties. 
Notices also were published on TBL's external website. Seven public 
meetings were held around the region during June and July 2004. At 
these public meetings, TBL discussed issues concerning future capital 
investments in the transmission system and proposed expense levels for 
transmission system development, operation, maintenance, and 
reliability for FY 2006--2007. A total of 147 entities attended the 
regional meetings. In response to a request from customers for 
additional information and discussion of specific program level issues, 
technical meetings were held on August 5 and August 25, 2004. TBL also 
provided informational materials through direct mailings, written 
responses to customer letters, e-mailings, and publication of all BPA 
and customer-generated materials on TBL's external website and through 
making staff available to answer questions.
    The PIR workshops and technical meetings explored customers' and 
interested parties' views on: (1) Operating and maintaining an aging 
transmission system;
    (2) building and maintaining a business framework in a changing 
energy industry; (3) building a transmission infrastructure to meet 
load growth, provide stability for existing contracts, ensure 
transmission system reliability, and integrate new resources; (4) 
maintaining a skilled and trained workforce; (5) TBL's access to 
capital; (6) TBL and corporate staffing and related corporate costs; 
and (7) operating expenses increasing faster than the rate of 
inflation. TBL accepted written and oral comments on proposed 
transmission programs, including expense and capital spending levels, 
through September 15, 2004. A one-week extension was given for comment 
on the maintenance program for transmission facilities 115 kV and 
below, until September 24, 2004.
    After consideration of the customer comments, BPA closed out the 
PIR public process by issuing a decision from the Administrator on 
transmission spending levels for the proposed rate period. The Initial 
Proposal is consistent with the results of the Administrator's decision 
on transmission program spending levels.
2. Transmission Rate Case Customer Workshops
    In preparation for the formal 2006 Transmission Rate Case, TBL held 
an initial public workshop on July 15, 2004, for customers and other 
interested parties. Three additional public workshops and meetings were 
held in August and September, 2004, for customers and interested 
parties during which TBL presented information about costs, revenue 
forecasts, transmission products, pricing, and rate design issues. See 
https://www.transmission.bpa.gov/Business/Rates_and_Tariff/
2006RateCase.cfm.
3. Settlement Discussions
    During the rate case workshop meetings, the customers approached 
BPA about settlement of the rate case. The customers and other 
interested parties met with BPA during October, November, and early 
December to discuss settlement. The discussions resulted in the 
Settlement Agreement, which was offered by TBL on December 6, 2004, 
signed by customers through January 7, 2005, and signed by TBL on 
January 11, 2005.

D. Scope of the Transmission Rate Proceeding

    Many of the decisions that determine TBL's costs have been 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

[[Page 5426]]

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 closed out the public process by issuing a 
decision on spending levels for FY 2006-2007. That decision serves as 
the basis for the transmission capital and expense levels that are 
reflected in the transmission rate 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 decision 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, the proper 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 2002 Power Rate Case. On June 20, 
2001, the Administrator established wholesale power rates for the 
period October 1, 2001, through September 30, 2006. The Commission 
granted final approval of the rates on July 21, 2003. In the Power Rate 
Case, the Administrator made decisions regarding the following: A 
methodology for functionalizing generation and transmission costs, 
including a methodology for functionalizing corporate overhead costs to 
the business lines; costs for generation inputs for ancillary services, 
including operating reserves, regulating reserve, and reactive power 
and voltage control from generation resources; the generation costs of 
station service and remedial action schemes; and the allocation of the 
costs of generation integration and generator step-up transformers to 
the business lines.
    The Initial Proposal for transmission rates in FY 2006 is 
consistent with the results of the Administrator's decision on these 
and all other issues decided in the Power Rate Case and will be 
reflected in all final decisions made in the transmission rate 
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 2002 Power 
Rate Case. In addition, the Administrator directs the Hearing Officer 
to exclude from the record all evidence and testimony that seek in any 
way to address the same issues for the rates for FY 2007, since those 
issues will be covered in the next power rate case. However, this 
direction to the Hearing Officer does not apply to the design of 
formula rates to recover those costs in FY 2007, nor does it apply to 
generation costs of station service and remedial action schemes, nor to 
generation integration costs that are forecasted in the 2006 
Transmission Rate Case.
3. Revised Attachment K
    The Administrator directs the Hearing Officer to exclude from the 
record all evidence and argument that seek in any way to address 
revised Attachment K to BPA's OATT. BPA is not required by law to, and 
does not, amend its OATT in this rate proceeding. BPA will be 
submitting a revised Attachment K to the Commission for approval. A 
party may raise challenges to revised Attachment K to the Commission at 
that time, unless the party has signed the Settlement Agreement and TBL 
does not revise its Initial Proposal.
4. 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 2006 Transmission Rate Case. BPA's 
Business Plan Environmental Impact Statement (``Business Plan EIS''), 
completed June 1995, evaluated the environmental impacts of a range of 
business plan alternatives that could be varied by applying 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 likely would 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 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 
this 2006 Transmission Rate Case, 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.

Part III--Public Participation

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

    BPA distinguishes between ``participants in'' and ``parties to'' 
the hearings. Apart from the formal hearing process, BPA will receive 
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 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.

[[Page 5427]]

    Written comments by participants will be included in the record if 
they are received by March 16, 2005. Written views, supporting 
information, questions, and arguments should be submitted to Rate Case, 
TBL Communications, at the address listed in the ADDRESSES section of 
this Notice, or may be e-mailed to tblfeedback@bpa.gov.
    Persons wishing to become a party to this transmission rate 
adjustment proceeding must notify BPA in writing. Petitioners may 
designate no more than two (2) representatives upon whom service of 
documents will be made. Petitions to intervene shall state the name and 
address of the person requesting party status, and the person's 
interest in the hearing.
    Petitions to intervene as parties in the rate proceeding are due to 
the Hearing Officer by 4:30 p.m., Pacific Time, on February 14, 2005. 
The petition should be directed to: Jonathan Shardlow, Hearing Clerk--
LT-7, Bonneville Power Administration, 905 NE 11th Avenue, Portland, 
ORregon 97232.
    A copy of the petition should be served on BPA's General Counsel 
and directed to Charles H. Combs--LT-7, Office of General Counsel, 905 
NE 11th Ave., Portland, Oregon 97232.
    Petitioners must explain their interests in sufficient detail to 
permit the Hearing Officer to determine whether they have a relevant 
interest in the hearing. Pursuant to Rule 1010.1(d) of BPA's 
Procedures, BPA waives the requirement in Rule 1010.4(d) that an 
opposition to an intervention petition be filed and served 24 hours 
before the pre-hearing conference. Any opposition to an intervention 
petition may instead be made at the pre-hearing conference. Any party, 
including BPA, may oppose a petition for intervention. Persons who have 
been denied party status in any past BPA rate proceeding shall continue 
to be denied party status unless they establish a significant change of 
circumstances. All timely applications will be ruled on by the Hearing 
Officer. Late interventions are strongly disfavored. Opposition to a 
petition to intervene filed after the pre-hearing conference shall be 
filed, and must be received by BPA, within two (2) days after service 
of the petition.

B. Developing the Record

    The hearing record will include, among other things, the 
transcripts of the hearing, written material entered into the record by 
TBL 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 will certify the record to the 
Administrator for decision.
    The Administrator will develop final proposed rates 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. BPA will file its rates 
with the Commission for confirmation and approval after issuance of the 
Final Record of Decision.
    During the rate proceeding, TBL must continue to meet with 
customers in the ordinary course of business. To comport with the rate 
case procedural rule prohibiting ex parte communications, TBL will 
provide necessary notice of meetings involving rate proceeding issues 
to provide an opportunity for participation by all rate proceeding 
parties. Parties should be aware, however, that such meetings may be 
held on very short notice and should be prepared to devote the 
necessary resources to participate fully in every aspect of the rate 
proceeding.

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

A. Major Studies

    1. Revenue Requirement Study--This Study includes the calculation 
of transmission revenue requirements for the 2006-2007 Rate Period and 
demonstration of cost recovery for the transmission function. The 
Revenue Requirement Study also includes an analysis of financial risks.
    2. Revenue Forecast Testimony--This testimony includes the FY 2006 
and 2007 revenue forecast at current 2004 transmission and ancillary 
service rates and at proposed 2006 rate levels based on forecasted 
loads and sales during the period.

B. Summary of Proposal

    1. Transmission rates--TBL is proposing five rate schedules for the 
use of its Integrated Network segment:
     Formula Power Transmission (FPT-06.1 and FPT-06.3) 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-06.1 rate is proposed for 
contracts that allow annual rate adjustments. The FPT-06.1 rate is a 
formula rate that is calculated 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. The FPT-06.3 rate is proposed for contracts that allow a rate 
change only once every three years. The FPT-06.3 rate is fixed for the 
rate period at the level of the FPT-04.3 rate for FY 2005. Although TBL 
has not offered new FPT wheeling contracts since the OATT was adopted, 
a number of FPT contracts continue in place during the rate period.
     Integration of Resources (IR-06) rate--The IR rate is a 
postage stamp, contract demand rate for the use of the Integrated 
Network, similar to the PTP service. Charges for the two required 
ancillary services: Scheduling, System Control and Dispatch Service, 
and Reactive Supply and Voltage Control from Generation Sources 
Service, are embedded in the IR rate. The proposed IR-06 rate is a 
formula rate that is calculated 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 TBL is not offering new IR contracts, 
some IR contracts remain in place during the rate period.
     Network Integration Transmission (NT-06) 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 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 CSL, if any. CSL is the amount of load that the 
customer agrees to serve without using its NT service. Beginning 
October 2005, CSL is being limited to the annual amount and resources 
specified in NT service agreements at that time. TBL intends to 
eliminate CSL October 1, 2011.
     Point-to-Point (PTP-06) rate--The PTP rate is a contract 
demand rate that applies to customers taking PTP Transmission Service 
on BPA's Integrated Network facilities 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 contains a Short Distance discount. All short-term 
and hourly PTP rates are downwardly flexible. The billing factor for 
Hourly Nonfirm Service will change from

[[Page 5428]]

scheduled amounts to Reserved Capacity on 60 day notice when changes to 
TBL systems and business practices have been made that will accommodate 
the Reserved Capacity billing factor. In addition, the rate schedule is 
revised to reflect the Settlement Agreement provision to limit 
additional charges for redirecting long-term service to short-term 
service.
    In addition to the four rates for network use, other proposed 
transmission rates include:
     The Southern Intertie (IS-06) and Montana Intertie (IM-06) 
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 similarly, 
and are revised similarly, to the PTP rate for service on network 
facilities.
     The Townsend-Garrison Transmission (TGT-06) rate and the 
Eastern Intertie rate (IE-06) are developed pursuant to the Montana 
Intertie agreement.
     The Use-of-Facilities (UFT-06) 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-06) rate allows TBL to collect the 
capital and related costs of specific facilities through an advance-
funding mechanism. Revisions are proposed to the rate schedule to 
clarify its availability to implement FERC Order 2003-A.\3\
---------------------------------------------------------------------------

    \3\ Standardization of Generator Interconnection Agreements and 
Procedures, Reg-Preamble, FERC Stats & Regs para. 31,160 (2004).
---------------------------------------------------------------------------

    2. Ancillary Services rates. In addition to the rate level changes 
specified in Attachment 1 to the Settlement Agreement, TBL proposes to 
revise other aspects of its Ancillary Services and Control Area 
Services rates as follows:
     The rates for Scheduling, System Control, and Dispatch 
Service and Reactive Supply and Voltage Control from Generation Sources 
Service reflect the eventual change in the Hourly Nonfirm billing 
factor to Reserved Capacity.
     The Reactive Supply and Voltage Control from Generation 
Sources Service rate is a formula rate that is determined quarterly 
beginning October 1, 2005, to reflect the cost of non-federal reactive 
rates and self-supply, and to reflect the reactive cost of federal 
system resources for FY 2007 determined in a BPA power rate case.
     The rates for Regulation and Frequency Response Service 
and Operating Reserves--Spinning and Supplemental are formula rates 
that adjust once on October 1, 2006, to reflect the generation input 
costs associated with federal system resources for FY 2007 determined 
in a BPA power rate case.
    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, a 
Reservation Fee for customers who delay commencement of long-term firm 
service, Incremental Cost Rates for transmission requests that require 
new facilities, and an Unauthorized Increase Charge for customers who 
exceed their contracted amounts.
    The proposed Failure to Comply Penalty Charge for failure to comply 
with TBL's curtailment, redispatch or load shedding orders is revised 
to clarify that a customer must curtail, or redispatch actual use of 
the transmission system. Finally, the rate proposal includes the GTA 
Delivery Charge, set at the same level as the Delivery Charge for 
federal facilities, for low-voltage delivery service of federal power 
provided under GTAs and other non-federal transmission service 
agreements.

Part V--2006 Transmission and Ancillary Service Rate Schedules

    BPA's proposed 2006 Transmission Rate Schedules are available for 
viewing and downloading on TBL's website at https://
www.transmission.bpa.gov/Business/Rates_and_Tariff/2006RateCase.cfm. 
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 Avenue, Portland, Oregon.

    Issued in Portland, Oregon, on January 24, 2005.
Stephen J. Wright,
Administrator and Chief Executive Officer.
[FR Doc. 05-1890 Filed 2-1-05; 8:45 am]
BILLING CODE 6450-01-P