Fiscal Year (FY) 2020-2021 Proposed Power and Transmission Rate Adjustments Public Hearing and Opportunities for Public Review and Comment, 62849-62855 [2018-26422]

Agencies

• Bonneville Power Administration
• DEPARTMENT OF ENERGY

[Federal Register Volume 83, Number 234 (Thursday, December 6, 2018)]
[Notices]
[Pages 62849-62855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-26422]


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DEPARTMENT OF ENERGY

Bonneville Power Administration

[BPA File No.: BP-20]


Fiscal Year (FY) 2020-2021 Proposed Power and Transmission Rate 
Adjustments Public Hearing and Opportunities for Public Review and 
Comment

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

ACTION: Notice of FY 2020-2021 proposed power and transmission rate 
adjustments.

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SUMMARY: Bonneville is holding a proceeding pursuant to Section 7(i) of 
the Pacific Northwest Electric Power Planning and Conservation Act 
(Northwest Power Act) to establish power and transmission rates for FY 
2020-2021. Bonneville has designated this proceeding Docket No. BP-20. 
The Northwest Power Act provides that Bonneville must establish, and 
periodically review and revise, its power and transmission 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 Bonneville's other costs and expenses. For 
transmission rates only, the Northwest Power Act requires that the 
costs of the Federal transmission system be equitably allocated between 
Federal and non-Federal power utilizing the system. The Northwest Power 
Act requires that Bonneville's rates be established based on the record 
of a formal hearing. By this notice, Bonneville announces the 
commencement of a power and transmission rate adjustment proceeding for 
power, transmission, and ancillary and control area services rates to 
be effective on October 1, 2019.

DATES:  Prehearing Conference: The BP-20 proceeding begins with a 
prehearing conference at 9:00 a.m. on Friday, December 7, 2018, in the 
Bonneville Rates Hearing Room, 1201 NE Lloyd Boulevard, Suite 200, 
Portland, Oregon 97232.
    Intervention: Anyone intending to become a party to the BP-20 
proceeding must file a petition to intervene on Bonneville's secure 
website no later than 4:30 p.m. on Tuesday, December 11, 2018. See Part 
III in SUPPLEMENTARY INFORMATION for details on requesting access to 
the secure website and filing a petition to intervene.

ADDRESSES: Participant Comments: Written comments by non-party 
participants must be received by March 1, 2019, to be considered in the 
Administrator's Record of Decision (ROD). See Part III in SUPPLEMENTARY 
INFORMATION for details on submitting participant comments.

FOR FURTHER INFORMATION CONTACT: Ms. Heidi Helwig, DKE-7, BPA 
Communications, Bonneville Power Administration, P.O. Box 3621, 
Portland, Oregon 97208; by phone toll-free at 1-800-622-4519; or by 
email to [email protected].
    The Hearing Clerk for this proceeding can be reached via email at 
[email protected] or via telephone at (503) 243-2200.
    Please direct questions regarding Bonneville's secure website to 
the BP-20 Rate Hearing Coordinator via email at [email protected] or, if the question is time-sensitive, 
via telephone at (503) 230-3102.
    Responsible Officials: Mr. Daniel H. Fisher, Power Rates Manager, 
is the official responsible for the development of Bonneville's power 
rates, and Ms. Rebecca E. Fredrickson, Transmission Rates Manager, is 
the official responsible for the development of Bonneville's 
transmission, ancillary, and control area services rates.

SUPPLEMENTARY INFORMATION: 

Table of Contents

Part I. Introduction and Procedural Matters
Part II. Scope of BP-20 Rate Proceeding
Part III. Public Participation in BP-20
Part IV. Summary of Rate Proposals
Part V. Proposed BP-20 Rate Schedules and BP-20 Partial Rates 
Settlement

Part I--Introduction and Procedural Matters

A. Introduction and Procedural Matters

    Section 7(i) of the Northwest Power Act requires that Bonneville's 
rates be established according to certain procedures, including 
publication in the Federal Register of a notice of the proposed rates; 
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.
    Bonneville has revised the Rules of Procedure that govern its rate 
proceedings. In a public process that concluded earlier this year, 
Bonneville updated and revised the version of the rules that had 
applied in Bonneville proceedings since 1986. The revised rules, which 
took effect September 12, 2018, will apply in the BP-20 proceeding. 
Bonneville has published the revised Rules of Procedure in the Federal 
Register, 83 FR 39993 (Aug. 13, 2018), and posted the rules on its 
website at https://www.bpa.gov/Finance/RateCases/RulesProcedure/Pages/.aspx.

B. Proposed Settlement of Rates for Transmission, Ancillary, and 
Control Area Services

    Since early October, Bonneville has engaged customers with long-
term transmission service to attempt to reach agreement on the 
transmission rates, including ancillary and control area services 
rates, for the FY 2020-2021 rate period. These discussions have 
resulted in the BP-20 Partial Rates Settlement Agreement that 
Bonneville is proposing to adopt in the BP-20 proceeding. This Partial 
Rates Settlement, which includes transmission, ancillary, and control 
area services rate schedules, is provided in Part V of this notice. The 
settlement does not address power rates or risk mitigation adjustment 
mechanisms.
    Bonneville's agreement to the BP-20 Partial Rates Settlement is 
subject to certain contingencies. First, the partial settlement is 
contingent on customers with long-term transmission service entering 
into a separate settlement agreement with Bonneville regarding the 
terms and conditions of transmission service. That settlement agreement 
will be addressed in a separate proceeding that Bonneville will conduct 
under section 212(i)(2)(A) of the Federal Power Act (``TC-20 
Proceeding''). If the settlement of the TC-20 proceeding does not move 
forward, the BP-20 Partial Rates Settlement will be void.
    Second, the BP-20 Partial Rates Settlement calls for Bonneville to 
file a motion with the BP-20 Hearing Officer to establish a deadline 
for parties to either object to the proposed settlement or waive the 
right to contest the settlement. Bonneville intends to file its motion 
soon after the BP-20 prehearing conference. If the settlement of the 
TC-20 proceeding continues to move forward, and no party objects to the 
BP-20 Partial Rates Settlement, Bonneville staff will recommend that 
the Administrator adopt the Partial Rates Settlement. Under those 
circumstances, Bonneville anticipates that the

[[Page 62850]]

Administrator would adopt the BP-20 Partial Rates Settlement in either 
the record of decision issued at the end of the BP-20 proceeding or a 
separate record of decision issued before that time.
    If Bonneville and long-term transmission service customers cannot 
move forward with settlement of the TC-20 proceeding, then the BP-20 
Partial Rates Settlement will be void, and Bonneville will notify all 
parties and publish alternative transmission, ancillary and control 
area services, and power rate schedules that reflect proposed rates 
without settlement. If the settlement of the TC-20 proceeding goes 
forward, but a party in the BP-20 proceeding objects to the BP-20 
Partial Rates Settlement, Bonneville will notify all parties and decide 
how to proceed with respect to rates proposed in the initial proposal.

C. Proposed Procedural Schedule

    A proposed schedule for the BP-20 proceeding is provided below. A 
final schedule will be established by the Hearing Officer and may be 
amended by the Hearing Officer as needed during the proceeding.
    The deadline to intervene in BP-20 applies to all potential parties 
regardless of the proposed settlement under the BP-20 Partial Rates 
Settlement. If Bonneville and parties move forward with the BP-20 
Partial Rates Settlement, the events in the procedural schedule after 
the deadline to intervene will apply only to issues that have not 
settled.

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Prehearing Conference..............  December 7, 2018.
Deadline for Petitions to Intervene  December 11, 2018.
BPA Files Initial Proposal.........  January 14, 2019.
Clarification......................  January 18 & 22, 2019.
Motions to Strike Due..............  January 31, 2019.
Data Request Deadline..............  January 31, 2019.
Answers to Motions to Strike Due...  February 7, 2019.
Data Response Deadline.............  February 7, 2019.
Parties File Direct Cases..........  February 21, 2019.
Clarification......................  February 28 and March 1, 2019.
Close of Participant Comments......  March 1, 2019.
Motions to Strike Due..............  March 8, 2019.
Data Request Deadline..............  March 8, 2019.
Answers to Motions to Strike Due...  March 15, 2019.
Data Response Deadline.............  March 15, 2019.
Litigants File Rebuttal Cases......  March 28, 2019.
Clarification......................  April 4, 2019.
Motions to Strike Due..............  April 8, 2019.
Data Request Deadline..............  April 8, 2019.
Answers to Motions to Strike Due...  April 15, 2019.
Data Response Deadline.............  April 15, 2019.
Parties Give Notice of Intent to     April 18, 2019.
 Cross-Examine.
Cross-Examination..................  April 22-23, 2019.
Initial Briefs Filed...............  May 6, 2019.
Oral Argument......................  May 13, 2019.
Draft ROD Issued...................  June 13, 2019.
Briefs on Exceptions Filed.........  June 28, 2019.
Final ROD and Final Studies Issued.  July 25, 2019.
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D. Ex Parte Communications

    Section 1010.5 of the Rules of Procedure prohibits ex parte 
communications. Ex parte communications include any oral or written 
communication (1) relevant to the merits of any issue in the 
proceeding; (2) that is not on the record; and (3) with respect to 
which reasonable prior notice has not been given. The ex parte rule 
applies to communications with all Bonneville and DOE employees and 
contractors, the Hearing Officer, and the Hearing Clerk during the 
proceeding. Except as provided, any communications with persons covered 
by the rule regarding the merits of any issue in the proceeding by 
other executive branch agencies, Congress, existing or potential 
Bonneville customers, nonprofit or public interest groups, or any other 
non-DOE parties are prohibited. The rule explicitly excludes and does 
not prohibit communications (1) relating to matters of procedure; (2) 
otherwise authorized by law or the Rules of Procedure; (3) from or to 
the Federal Energy Regulatory Commission (Commission); (4) that all 
litigants agree may be made on an ex parte basis; (5) in the ordinary 
course of business, about information required to be exchanged under 
contracts, or in information responding to a Freedom of Information Act 
request; (6) between the Hearing Officer and Hearing Clerk; (7) in 
meetings for which prior notice has been given; or (8) as otherwise 
specified in Section 1010.5(b). The ex parte rule remains in effect 
until the Administrator's Final ROD is issued, which is scheduled to 
occur on or about July 25, 2019.

Part II--Scope of BP-20 Rate Proceeding

A. Joint Rate Proceeding

    The BP-20 proceeding is a joint proceeding for the adoption of both 
power and transmission rates for FY 2020-2021. The proposal for 
Bonneville's power and transmission rates is provided in Part IV of 
this notice.

B. 2018 Integrated Program Review

    Bonneville began its 2018 Integrated Program Review (IPR) process 
in June 2018. The IPR process is designed to allow the public an 
opportunity to review and comment on Bonneville's proposed expense and 
capital spending level estimates before the spending levels are used to 
set rates. On October 11, 2018, Bonneville issued the Final Close-Out 
Report for the IPR process, which establishes the expense and capital 
program level cost estimates that are used in the BP-20 Initial 
Proposal. At the discretion of the Administrator, Bonneville may hold 
additional processes to review these estimates outside of this rate 
proceeding.

[[Page 62851]]

C. Scope of the BP-20 Proceeding

    This section provides guidance to the Hearing Officer regarding the 
scope of the rate proceeding and identifies specific issues that are 
outside the scope. In addition to the issues specifically listed below, 
any other issue that is not a ratemaking issue is outside the scope of 
this proceeding.
    Bonneville may revise the scope of the proceeding to include new 
issues that arise as a result of circumstances or events occurring 
outside the proceeding that are substantially related to the rates 
under consideration in the proceeding. See Rules of Procedure, Section 
1010.4(b)(8)(iii), (iv). If Bonneville revises the scope of the 
proceeding to include new issues, Bonneville will provide public notice 
on its website, present testimony or other information regarding such 
issues, and provide a reasonable opportunity to intervene and respond 
to Bonneville's testimony or other information. Id.
1. Program Cost Estimates
    Bonneville's projections of its program costs and spending levels 
are not determined in rate proceedings. These projections are 
determined by Bonneville in other forums, such as the IPR public review 
process, with input from stakeholders. See Part II.B. of this notice. 
In addition, Bonneville allocates the capital spending on the Federal 
power and transmission system over the service life of the system, 
based on a depreciation study calculated consistent with industry 
standards. The depreciation study and resulting depreciation rates are 
not determined in rate proceedings.
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that challenges the 
appropriateness or reasonableness of the Administrator's decisions on 
cost and spending levels, including decisions on the depreciation rates 
that are used to calculate depreciation expense. If any re-examination 
of spending levels is necessary, such re-examination will occur outside 
of the rate proceeding. Except for any portions of the revenue 
requirement that are settled in the BP-20 proceeding, the above 
exclusion does not extend to those portions of the revenue requirement 
related to the following: (1) Interest rate forecasts, (2) interest 
expense and credit, (3) Treasury repayment schedules, (4) calculation 
of depreciation and amortization expense, (5) forecasts of system 
replacements used in repayment studies, (6) purchased power expenses, 
(7) transmission cost incurred by Power Services, (8) generation cost 
incurred by Transmission Services, (9) minimum required net revenue, 
and (10) the costs of risk mitigation actions resulting from the 
expense and revenue uncertainties included in the risk analysis.
2. Federal and Non-Federal Debt Service and Debt Management
    During the 2018 IPR process and in other forums, Bonneville 
provided the public with background information on Bonneville's 
internal Federal and non-Federal debt management policies and 
practices. While these policies and practices are not decided in the 
IPR forum, these discussions were intended to inform interested parties 
about these matters so the parties would better understand Bonneville's 
debt structure. Bonneville's debt management policies and practices 
remain outside the scope of the rate proceeding.
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, 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 appropriateness or reasonableness of Bonneville's debt 
management policies and practices. This exclusion does not encompass 
how debt management actions are reflected in ratemaking.
3. Financial Reserves Policy and Financial Reserves Policy Phase-In
    In the Final ROD in the BP-18 proceeding (BP-18 ROD), Bonneville 
adopted a financial policy that established lower and upper thresholds 
for agency and business line financial reserves (Financial Reserves 
Policy). Challenges to Bonneville's decision to adopt the Financial 
Reserves Policy are not within the scope of this proceeding.
    In the BP-18 ROD, the Administrator committed to hold a follow-on 
public process to determine and phase in for Power Services the 
parameters for the rate action to be taken when financial reserves fall 
below a business line's lower threshold. The Administrator decided the 
parameters for this rate action in the Financial Reserves Policy Phase-
In Implementation Record of Decision, issued in September 2018 (FRP 
Phase-In ROD). Bonneville's decisions in the FRP Phase-In ROD are not 
within the scope of this proceeding.
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
visit or revisit Bonneville's determinations in the BP-18 ROD regarding 
the Financial Reserves Policy or the FRP Phase-In ROD in this rate 
proceeding.
4. Leverage Policy
    In August 2018, Bonneville completed a public process to develop a 
new financial policy (Leverage Policy) that provides guidance on 
managing the agency's and business lines' debt-to-asset ratios. The 
Leverage Policy provides near-term, mid-term, and long-term targets for 
agency and business line leverage. On September 25, 2018, the 
Administrator issued a record of decision adopting the Leverage Policy 
(Leverage Policy ROD).
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
visit or revisit Bonneville's determinations in the Leverage Policy or 
Leverage Policy ROD.
5. Tiered Rate Methodology (TRM)
    The TRM restricts Bonneville and its customers with Contract High 
Water Mark (CHWM) contracts from proposing changes to the TRM's 
ratemaking guidelines unless certain procedures have been successfully 
concluded. No proposed changes have been subjected to the required 
procedures.
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
propose revisions to the TRM made by Bonneville, customers with CHWM 
contracts, or their representatives. This exclusion does not extend to 
a party or customer that does not have a CHWM contract.
6. Rate Period High Water Mark (RHWM) Process
    The RHWM Process preceded the start of the BP-20 proceeding. In 
that process, as directed by the TRM, Bonneville established FY 2020-
2021 RHWMs for Public customers that signed contracts for firm 
requirements power service providing for tiered rates, referred to as 
CHWM contracts. Bonneville established the maximum planned amount of 
power a customer is eligible to purchase at Tier 1 rates during the 
rate period, the Above-RHWM Loads for each customer, the System Shaped 
Load for each customer, the Tier 1 System Firm Critical Output, RHWM 
Augmentation, the Rate Period Tier 1 System Capability (RT1SC), and the 
monthly/diurnal shape of RT1SC. The RHWM Process provided customers an 
opportunity to review, comment on,

[[Page 62852]]

and challenge Bonneville's RHWM determinations.
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
visit or revisit Bonneville's determination of a customer's FY 2020-
2021 RHWM or other RHWM Process determinations.
7. 2008 Average System Cost Methodology (2008 ASCM) and Average System 
Cost Determinations
    Section 5(c) of the Northwest Power Act established the Residential 
Exchange Program, which provides benefits to residential and farm 
consumers of Pacific Northwest utilities based, in part, on a utility's 
``average system cost'' (ASC) of resources. The 2008 ASCM is not 
subject to challenge or review in a Section 7(i) proceeding. 
Determinations of the ASCs of participating utilities are made in 
separate processes conducted pursuant to the ASCM. Those processes 
began with ASC filings on June 4, 2018, and are continuing through July 
2019.
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
visit or revisit the appropriateness or reasonableness of the 2008 ASCM 
or of any of the ongoing ASC determinations.
8. 2012 Residential Exchange Program Settlement Agreement (2012 REP 
Settlement)
    On July 26, 2011, the Administrator executed the 2012 REP 
Settlement, which resolved longstanding litigation over Bonneville's 
implementation of the Residential Exchange Program (REP) under Section 
5(c) of the Northwest Power Act, 16 U.S.C. 839c(c). The Administrator's 
findings regarding the legal, factual, and policy challenges to the 
2012 REP Settlement are explained in the REP-12 Record of Decision 
(REP-12 ROD). The Administrator's decisions regarding the 2012 REP 
Settlement and REP-12 ROD were upheld by the U.S. Court of Appeals for 
the Ninth Circuit in Association of Public Agency Customers v. 
Bonneville Power Administration, 733 F.3d 939 (9th Cir. 2013). 
Challenges to Bonneville's decision to adopt the 2012 REP Settlement 
and implement its terms in Bonneville's rate proceedings are not within 
the scope of this proceeding.
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
visit or revisit in this rate proceeding Bonneville's determination to 
adopt the 2012 REP Settlement or its terms.
9. Service to the Direct Service Industries (DSIs)
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
revisit the appropriateness or reasonableness of Bonneville's decisions 
regarding service to the DSIs, including Bonneville's decision to offer 
contracts to the DSIs and the method, level of service, or other terms 
embodied in the existing DSI contracts.
10. Operation and Maintenance of the Power and Transmission Systems
    Bonneville, in coordination with other Federal entities, operates 
and maintains the Federal Columbia River power and transmission systems 
in accordance with good utility practice and with applicable 
reliability standards and operating requirements. Bonneville's power 
and transmission systems operation and maintenance practices and 
protocols, such as dispatcher standing orders, operating instructions, 
reliability of the system, compliance programs, and other operating 
requirements, are non-rate matters. Pursuant to Section 1010.4(b)(8) of 
the Rules of Procedure, the Administrator directs the Hearing Officer 
to exclude from the record all argument, testimony, or other evidence 
that seeks in any way to address issues regarding operation and 
maintenance practices and protocols.
11. Terms and Conditions of Transmission Service
    Bonneville offers and provides transmission services, including 
interconnection service, and ancillary and control area services in 
accordance with terms and conditions specified in its open access 
transmission tariff (OATT), business practices, and applicable 
contracts. In addition to and concurrent with this rate proceeding, 
Bonneville may initiate the TC-20 proceeding to adopt generally 
applicable terms and conditions of transmission service. The terms and 
conditions of transmission and ancillary and control area services are 
non-rate matters that Bonneville will establish and otherwise address 
in a separate proceeding or other forums.
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony, or other evidence that seeks in any way to 
address issues regarding terms and conditions of transmission service, 
including interconnection service, and ancillary and control area 
services. This includes, but is not limited to, argument, testimony, or 
other evidence regarding Bonneville's decisions whether to offer 
particular transmission services, including hourly service, the 
procedures and standards for modifications to Bonneville's OATT, terms 
and conditions of existing and future transmission service agreements, 
and whether to include certain terms and conditions in the OATT or in 
business practices. This exclusion does not apply to the BP-20 Partial 
Rates Settlement or testimony supporting the settlement.
12. Oversupply Management Protocol
    The proposed OS-20 Oversupply rate is a formula rate designed to 
recover Bonneville's oversupply costs. Bonneville incurs oversupply 
costs pursuant to the Oversupply Management Protocol, Attachment P of 
Bonneville's OATT. Under the proposed formula rate, Bonneville would 
recover actual costs incurred during the BP-20 rate period rather than 
forecast costs. Pursuant to Section 1010.4(b)(8) of the Rules of 
Procedure, 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 terms of the Oversupply Management Protocol; 
whether the Oversupply Management Protocol complies with orders of the 
Commission; and whether Bonneville took all actions to avoid using the 
Oversupply Management Protocol, including the payment of negative 
prices to generators outside of Bonneville's balancing authority area. 
This exclusion does not extend to issues concerning the rates for 
recovering the costs of the Oversupply Management Protocol.
13. Potential Environmental Impacts, Biological Constraints, and 
Related Operations
    Environmental impacts are addressed in a National Environmental 
Policy Act (NEPA) process Bonneville conducts concurrently with the 
rate proceeding. See Part II.D. of this notice. In addition, biological 
constraints on hydropower operations are determined outside of the rate 
case through interagency consultation under the Endangered Species Act, 
16 U.S.C. 1536(a)(2).
    Pursuant to Section 1010.4(b)(8) of the Rules of Procedure, the 
Administrator directs the Hearing Officer to exclude from the record 
all argument, testimony,

[[Page 62853]]

or other evidence that seeks in any way to address the potential 
environmental impacts of the rates being developed in this rate 
proceeding, potential biological effects of operations modeled in the 
proceeding, or appropriate hydroelectric system operations in response 
to the constraints defined in these environmental compliance processes.

D. The National Environmental Policy Act

    Bonneville is in the process of assessing the potential 
environmental effects of its proposed power and transmission rate 
adjustments, consistent with NEPA. The NEPA process is conducted 
separately from the rate proceeding. As discussed in Part II.C.13, all 
evidence and argument addressing potential environmental impacts of the 
rate adjustments being developed in the BP-20 proceeding are excluded 
from the rate proceeding record. Instead, comments on environmental 
effects should be directed to the NEPA process.
    Based on its most current assessment of the proposed power and 
transmission rate adjustments, Bonneville believes this proposal may be 
the type of action typically excluded from further NEPA review pursuant 
to U.S. Department of Energy NEPA regulations, which apply to 
Bonneville. More specifically, the proposal appears to solely involve 
changes to Bonneville's rates and other cost recovery and management 
mechanisms to ensure that there are sufficient revenues to meet 
Bonneville's financial obligations and other costs and expenses, while 
using existing generation sources operating within normal limits. As 
such, it appears this rate proposal falls within Categorical Exclusion 
B4.3, found at 10 CFR part 1021, subpart D, app. B4.3 (2015), which 
provides for the categorical exclusion from further NEPA review of 
``[r]ate changes for electric power, power transmission, and other 
products or services provided by a Power Marketing Administration that 
are based on a change in revenue requirements if the operations of 
generation projects would remain within normal operating limits.''
    Nonetheless, Bonneville is still assessing the proposal, and, 
depending upon the ongoing environmental review, Bonneville may instead 
issue another appropriate NEPA document. Comments regarding the 
potential environmental effects of the proposal may be submitted to 
Stacy Mason, NEPA Compliance Officer, ECP-4, Bonneville Power 
Administration, 905 NE 11th Avenue, Portland, Oregon 97232. Any such 
comments received by the comment deadline for Participant Comments 
identified in Part III.A will be considered by Bonneville's NEPA 
compliance staff in the NEPA process that is being conducted for this 
proposal.

Part III--Public Participation in BP-20

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

    Bonneville distinguishes between ``participants in'' and ``parties 
to'' the hearings. Separate from the formal hearing process, Bonneville 
will receive written comments, views, opinions, and information from 
participants 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. Bonneville customers whose rates are subject to this 
proceeding, or their affiliated customer groups, may not submit 
participant comments. Members or employees of organizations that have 
intervened in the proceeding may submit participant comments as private 
individuals (that is, not speaking for their organizations) but may not 
use the comment procedures to address specific issues raised by their 
intervenor organizations.
    Written comments by participants will be included in the record and 
considered by the Administrator if they are received by March 1, 2019. 
Participants should submit comments through Bonneville's website at 
www.bpa.gov/comment or by hard copy to: BPA Public Involvement, DKE-7, 
Bonneville Power Administration, P.O. Box 3621, Portland, Oregon 97208. 
All comments should contain the designation ``BP-20'' in the subject 
line.

B. Interventions

    Any entity or person intending to become a party in the BP-20 
proceeding must file a petition to intervene through Bonneville's 
secure website (https://www.bpa.gov/secure/Ratecase/). A first-time 
user of Bonneville's secure website must create a user account to 
submit an intervention. Returning users may request access to the BP-20 
proceeding through their existing accounts, and may submit 
interventions once their permissions have been updated. The secure 
website contains a link to the user guide, which provides step-by-step 
instructions for creating user accounts, generating filing numbers, 
submitting filings, and uploading interventions. Please contact the 
Rate Hearing Coordinator via email at [email protected] (or via telephone at (503) 230-3102) 
with any questions regarding the submission process. Interventions must 
conform to the format and content requirements set forth in 
Bonneville's Rules of Procedure Sections 1010.6 and 1010.11. 
Interventions must be uploaded to the BP-20 proceeding secure website 
by the deadline established in the procedural schedule.
    A petition to intervene must state the name and address of the 
entity or person requesting party status and the entity's or person's 
interest in the hearing. Bonneville customers and affiliated customer 
groups will be granted intervention based on petitions filed in 
conformance with the Rules of Procedure. Other petitioners must explain 
their interests in sufficient detail to permit the Hearing Officer to 
determine whether the petitioners have a relevant interest in the 
hearing. The deadline for opposing a timely intervention is two 
business days after the deadline for filing petitions to intervene. 
Bonneville or any party may oppose a petition for intervention. All 
petitions will be ruled on by the Hearing Officer. Late interventions 
are strongly disfavored. Opposition to an untimely petition to 
intervene must be filed within two business days after service of the 
petition.

C. Developing the Record

    The hearing record will include, among other things, the 
transcripts of the hearing, written evidence and argument entered into 
the record by Bonneville 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 certify 
the record to the Administrator for final decision.
    The Administrator will develop final rates based on the record and 
such other materials and information as may have been submitted to or 
developed by the Administrator. The Final ROD will be made available to 
all parties. Bonneville will file its rates with the Commission for 
confirmation and approval after issuance of the Final ROD.

Part IV--Summary of Rate Proposals

A. Summary of the Power Rate Proposal

    Bonneville is proposing four primary rates for Federal power sales 
and services, along with general rate schedule provisions to implement 
such rates. The rates described in this section assume the BP-20 
Partial Rates Settlement goes forward. In the event

[[Page 62854]]

this settlement does not go forward, Bonneville will produce revised 
power rates at the time it publishes its Initial Proposal.
1. Priority Firm Power Rate (PF-20)
    The PF rate schedule applies to sales of firm power to public body, 
cooperative, and Federal agency customers to meet their requirements 
pursuant to Section 5(b) of the Northwest Power Act. The PF Public rate 
applies to the sale of Firm Requirements Power under CHWM contracts 
with customers taking Load Following, Block, or Slice/Block service. 
Consistent with the TRM, Tier 1 rates include three charges: (1) 
Customer charges, (2) a demand charge, and (3) a load shaping charge. 
In addition, a Tier 2 Short-Term rate, corresponding to a contract 
option, is applied to customers that have elected to purchase power 
from Bonneville for service to their Above-RHWM Load. Bonneville is 
proposing to revise the Tier 2 Short-Term rate methodology.
    Because very few of Bonneville's customers are subject to exactly 
the same mix of PF rate components, Bonneville has developed a PF rate 
measure for an average customer purchasing at PF Tier 1 rates. This 
quantification, the Tier 1 Average Net Cost, is increasing to $36.78/
MWh for the PF-20 rate, which is an increase of 2.9 percent for the 
two-year rate period, or 1.4 percent on an average annual basis. The 
PF-20 rate increase assumes that the proposed financial reserves policy 
surcharge will be needed and will collect an additional $30 million per 
year. See Part IV.C. of this notice for information on the financial 
reserves policy surcharge.
    The Base PF Exchange rate and its associated surcharges apply to 
sales pursuant to Residential Purchase and Sale Agreements and 
Residential Exchange Program Settlement Implementation Agreements with 
regional utilities that participate in the REP established under 
Section 5(c) of the Northwest Power Act, 16 U.S.C. 839c(c). The Base PF 
Exchange rate establishes the threshold for participation in the REP; 
only utilities with ASCs above the appropriate Base PF Exchange rate 
may receive REP benefits. If a utility meets the threshold, a utility-
specific PF Exchange rate will be established in this proceeding for 
each eligible utility. The utility-specific PF Exchange rate is used in 
calculating the REP benefits each REP participant will receive during 
FY 2020-2021.
    The proposed PF-20 rate schedule also includes resource support 
services rates for customers with non-Federal resources, and a melded 
PF rate for Public customers that have elected power sales contracts 
other than CHWM contracts for firm requirements service.
2. New Resource Firm Power Rate (NR-20)
    The NR-20 rate applies to firm power sales to investor-owned 
utilities (IOUs) to meet their net requirements pursuant to Section 
5(b) of the Northwest Power Act. The NR-20 rate is also applied to 
sales of firm power to Public customers when this power is used to 
serve new large single loads. In addition, the NR rate schedule 
includes rates for services to support Public customers serving new 
large single loads with non-Federal resources. In the BP-20 Initial 
Proposal, Bonneville is forecasting no sales at the NR rate. The 
average NR-20 rate in the Initial Proposal is $79.69/MWh, an increase 
of 0.8 percent from the NR-20 rate. The NR-20 rate increase assumes 
that the proposed financial reserves policy surcharge will be needed 
and will collect an additional $30 million per year. See Part IV.C. of 
this notice for information on the financial reserve policy surcharge.
3. Industrial Firm Power Rate (IP-20)
    The IP rate is applicable to firm power sales to DSI customers 
authorized by Section 5(d)(1)(A) of the Northwest Power Act, 16 U.S.C. 
839c(d)(1)(A). The average IP-20 rate in the Initial Proposal is 
$41.84/MWh, a decrease of 4.2 percent compared to the IP-18 rate. The 
IP-20 rate decrease assumes that the proposed financial reserves policy 
surcharge will be needed and will collect an additional $30 million per 
year. See Part IV.C. of this notice for information on the financial 
reserve policy surcharge.
4. Firm Power and Surplus Products and Services Rate (FPS-20)
    The FPS rate schedule is applicable to sales of various surplus 
power products and surplus transmission capacity for use inside and 
outside the Pacific Northwest. The rates for these products are 
negotiated between Bonneville and the purchasers. The FPS-20 rate 
schedule also includes rates for customers with non-Federal resources; 
the Unanticipated Load Service rate; rates for other capacity, energy, 
and scheduling products and services; and rates for reserve services 
for use outside the Bonneville balancing authority area.
5. Power General Rate Schedule Provisions (GRSPs)
    The Power GRSPs include general rate schedule terms and conditions 
applicable to Bonneville's power rates. In addition, the Power GRSPs 
contain special rate adjustments, charges, credits, and pass-through 
mechanisms for specific events and customer circumstances. Among other 
matters covered by the Power GRSPs are provisions related to 
calculating rates, resource support services, charges associated with 
transfer service, risk adjustments, Slice True-up, the Residential 
Exchange Program, conservation, payment options, and other charges. 
Bonneville is proposing the following changes to the GRSPs:
    Customers served by transfer are currently charged for delivery, 
operating reserves, and regional compliance assessments. Bonneville is 
proposing a new transfer service charge for regulation and frequency 
response to replace the billing for this service that is currently done 
under the FPS rate schedule.
    Bonneville is proposing a new Financial Reserves Policy Surcharge 
(see Part IV.C. of this notice) and a rate for an additional 
Transmission Scheduling Service option.
    Bonneville is proposing to remove the NFB (National Marine 
Fisheries Service Federal Columbia River Power System Biological 
Opinion) Mechanisms.
    Bonneville is also proposing to eliminate three appendices from the 
rate schedules and GRSPs: the Residential Exchange Program refunds that 
end in FY 2019, the Product Conversion Charge, and the Spill Surcharge.

B. Summary of the Proposed BP-20 Partial Rates Settlement

    Bonneville is proposing transmission rates, including all ancillary 
and control area services rates, consistent with the BP-20 Partial 
Rates Settlement described above. The transmission rates under the 
settlement include a weighted average increase of approximately 3.6 
percent for the two-year rate period, or 1.8 percent on an average 
annual basis. In the event the proposed settlement does not go forward, 
Bonneville will produce revised transmission rates at the time it 
publishes its Initial Proposal.
    The BP-20 Partial Rates Settlement specifically excludes the 
proposed Transmission Cost Recovery Adjustment Clause, the Transmission 
Reserves Distribution Clause, and a new Financial Reserves Policy 
Surcharge (see Part IV.C.). Bonneville is proposing those rate 
adjustment mechanisms independent of the BP-20 Partial Rates 
Settlement, and those proposals can be contested in the BP-20 
proceeding.
    Bonneville divides its transmission system into ``segments'' for 
ratemaking purposes and has separate rates for the segments. The rates 
for the network and

[[Page 62855]]

intertie segments are described below, along with other proposed 
transmission rates and GRSPs under the settlement.
1. Network Rates
    Network Integration Transmission Rate (NT-20)--The NT rate applies 
to customers taking network integration service and allows customers to 
flexibly serve their retail load.
    Point-to-Point Rate (PTP-20)--The PTP-20 rate is a contract demand 
rate that applies to customers taking Point-to-Point service on 
Bonneville's network. Point-to-Point service provides customers with 
service from identified points of receipt to identified points of 
delivery. There are separate rates for long-term firm service, and 
various increments of firm and non-firm short-term service.
    Formula Power Transmission Rate (FPT-20)--The FPT rate is based on 
the cost of using specific types of facilities, including a distance 
component for the use of transmission lines, and is charged on a 
contract demand basis.
2. Intertie Rates
    The Southern Intertie Rate (IS-20) is a contract demand rate that 
applies to customers taking Point-to-Point service on the Southern 
Intertie.
    The Montana Intertie Rate (IM-20) applies to customers taking 
Point-to-Point service on the Eastern Intertie that are not parties to 
the Montana Intertie Agreement.
    The Townsend-Garrison Transmission Rate (TGT-20) is a rate for firm 
service over Bonneville's section of the Montana Intertie and is 
available to parties to the Montana Intertie Agreement.
    The Eastern Intertie Rate (IE-20) is a rate for non-firm service on 
the portion of the Eastern Intertie capacity that exceeds Bonneville's 
firm transmission rights and is available to parties to the Montana 
Intertie Agreement.
3. Other Transmission Rates and Transmission General Rate Schedule 
Provisions
    In addition to the rates for use of the network and interties, the 
BP-20 Partial Rates Settlement includes Bonneville's other transmission 
rates, including ancillary and control area services rates:
    The Use-of-Facilities Rate (UFT-20), which establishes a formula 
rate for the use of a specific facility based on the annual cost of 
that facility.
    The Advance Funding Rate (AF-20), which allows Bonneville to 
collect the capital and related costs of specific facilities through an 
advance-funding mechanism.
    The Regional Compliance Enforcement and Regional Coordinator rate 
(RC-20), which recovers costs assessed to Bonneville for regional 
reliability compliance monitoring and enforcement and reliability 
coordination services.
    The Oversupply Rate (OS-20) recovers the costs Bonneville incurs to 
displace generation under the Oversupply Management Protocol, 
Attachment P to Bonneville's OATT.
    Other proposed rates and charges include: A Delivery Charge for the 
use of low-voltage delivery substations; a Reservation Fee for 
customers that postpone their service commencement dates; incremental 
rates for transmission requests that require new facilities; a penalty 
charge for failure to comply with dispatch, curtailment, redispatch, or 
load shedding orders; and an Unauthorized Increase Charge for customers 
whose use exceeds their contracted amounts.
    The BP-20 Partial Rates Settlement also includes rates for the six 
Ancillary Services and six Control Area Services including rates for 
balancing services.

C. Risk Mitigation Tools

    Bonneville uses risk mitigation tools to buffer against poor 
financial performance over the rate period to protect the agency's 
solvency and strong credit rating. The main financial risk mitigation 
tool Bonneville relies upon is financial liquidity, which consists of 
financial reserves and a short-term liquidity facility with the U.S. 
Treasury. In the BP-18 ROD, the Administrator adopted the Financial 
Reserves Policy, which establishes lower and upper thresholds for 
agency and business line financial reserves. In the FRP Phase-In 
Implementation ROD, the Administrator determined the parameters for the 
rate action to be taken when financial reserves fall below a business 
line's lower threshold, including a phase-in for Power Services.
    Bonneville proposes to include three rate adjustment mechanisms in 
the power and transmission rate schedules that may adjust rates in the 
event the business line's financial reserves fall below or exceed 
certain thresholds. For each of the three adjustment mechanisms, 
financial reserves attributed to a business line are measured over the 
rate period in terms of accumulated net revenue (ANR).
    First, the Cost Recovery Adjustment Clause (CRAC) will adjust rates 
upward to generate additional cash within the rate period if business 
line ANR fall below a defined lower threshold. When available 
liquidity, the CRAC, and the Financial Reserves Policy Surcharge are 
insufficient to meet the Treasury Payment Probability (TPP) standard of 
at least 95 percent, Bonneville may include Planned Net Revenues for 
Risk (PNRR) in rates. The TPP is the probability of Bonneville making 
all its Treasury payments on time and in full over the two-year rate 
period. In the Initial Proposal, Bonneville proposes to include no PNRR 
in power and transmission rates and to cap the maximum revenue 
recoverable through the Power CRAC at $300 million per year, and 
through the Transmission CRAC at $100 million per year.
    Second, Bonneville is proposing a new Financial Reserves Policy 
Surcharge for both power and transmission rates to adjust rates upward 
if business line ANR is below its lower threshold (set at the ANR 
equivalent of 60 days cash on hand). Bonneville does not forecast this 
surcharge triggering for Transmission Services during the BP-20 rate 
period. Bonneville is forecasting that the proposed surcharge will 
trigger for Power Services at $30 million for each year of the BP-20 
rate period. The proposed surcharge would be calculated annually and, 
if it triggers, would result in a rate adjustment over 10 months 
(December through September) of each fiscal year of the rate period.
    Finally, Bonneville is proposing a Reserves Distribution Clause 
(RDC), which will trigger if ANR exceeds a business line upper 
threshold (set at the ANR equivalent of 120 days cash on hand) and the 
agency upper threshold (set at the ANR equivalent of 90 days cash on 
hand). Bonneville will consider those financial reserves for investment 
in high-value business line-specific purposes such as debt retirement 
or for rate reduction.

Part V--Proposed BP-20 Rate Schedules and BP-20 Partial Rates 
Settlement

    Bonneville's proposed BP-20 Power Rate Schedules and BP-20 Partial 
Rates Settlement, which includes Transmission, Ancillary, and Control 
Area Services Rate Schedules, are a part of this notice and are 
available for viewing and downloading on Bonneville's website at https://www.bpa.gov/goto/BP20.

    Signed on the 21st day of November, 2018.
Elliot E. Mainzer,
Administrator and Chief Executive Officer.
[FR Doc. 2018-26422 Filed 12-4-18; 8:45 am]
 BILLING CODE 6450-01-P