[Federal Register Volume 64, Number 208 (Thursday, October 28, 1999)]
[Notices]
[Pages 58039-58045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28178]
[[Page 58039]]
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DEPARTMENT OF ENERGY
Bonneville Power Administration
Opportunity for Public Comment; Regarding Bonneville Power
Administration's Subscription Power Sales to Customers and Customer's
Sales of Firm Resources
AGENCY: Bonneville Power Administration (BPA), DOE.
ACTION: Notice of revised draft policy proposal.
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SUMMARY: BPA is publishing a revised draft policy proposal regarding
the amount of Federal power a customer may purchase under BPA
subscription power sales contracts under sections 5(b) and 9(c) of the
Northwest Electric Power Planning and Conservation Act, (the Northwest
Power Act), P.L. 96-501, and section 3(d) of the Act of August 31,
1964, (the Northwest Preference Act), P.L. 88-552. This revised draft
policy would modify BPA's 1994 Non-Federal Participation Capacity
Ownership Contracts and Section 9(c) Policy. See Modifications to 1994
Non-Federal Participation Capacity Ownership Contracts and Section 9(c)
Policy.
DATES: Comments must be received by Tuesday, November 30, 1999.
ADDRESSES: Comments on the revised policy proposal regarding the amount
of Federal power a customer may purchase under BPA subscription power
sales contracts, may be sent to: Bonneville Power Administration, P.O.
Box 12999, Portland, OR 97212; or faxed to (503) 230-4019. Comments may
be sent electronically to: [email protected].
FOR FURTHER INFORMATION CONTACT: Mr. Michael Hansen, Public Involvement
and Information Specialist, Bonneville Power Administration, P.O. Box
3621, Portland, Oregon 97208-3621, telephone (503) 230-4328 or 1-800-
622-4519.
Information can also be obtained from your BPA Account Executive or
from:
--Mr. Allen Burns, Vice President, Power Marketing, 905 N.E. 11th, P.O.
Box 3621, Portland, OR 97208, telephone (503) 230-7640
--Mr. Rick Itami, Manager, Eastern Power Business Area, 707 W. Main
Street, Suite 500, Spokane, WA 99201, telephone (509) 358-7409
--Mr. John Elizalde, Acting Manager, Western Power Business Area, 905
N.E. 11th, P.O. Box 3621, Portland, OR 97232, telephone (503) 230-7597
--Mr. Steve Oliver, Manager, Bulk Power Business Area, 905 N.E. 11th,
P.O. Box 3621, Portland OR 97208, telephone (503) 230-3295
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Relevant Statutory Provisions
II. Scope of the Proposed Policy
III. Policy on Determining Net Requirements
A. Determination of the Amount of Federal Power For Sale Under
Section 5(b)(1)
B. Statutory Discontinuance For A Customer's Generating and
Contractual Resource
C. Use of New Renewable Resources to Serve Retail Firm Power
Loads
D. Changes in the Amount of Federal Power Purchased During the
Term of a Contract
IV. Scope of the Section 9(c) Policy
A. Modification to BPA's Non-Federal Participation Section 9(c)
Policy
B. Section 9(c) Policy
C. Scope of the Section 9(c) Policy
D. Subscription 9(c) Study
V. Section-by-Section Review of Changes in Revised Draft Policy from
the Original Draft Proposal issued April 26, 1999
On December 21, 1998, BPA published its Power Subscription Strategy
and accompanying Record of Decision for selling Federal power under new
contracts with its publicly and cooperatively owned utility, investor-
owned utility and direct service industrial customers. The Power
Subscription Strategy stated overall policies for determining the
amount of Federal power to be offered to Pacific Northwest public
utility and investor-owned utility customers under section 5(b)(1) of
the Northwest Power Act.
On May 6, 1999, BPA published a Federal Register Notice with a
draft proposed policy for determining the net requirements of publicly
and cooperatively owned utility and investor-owned utility customers.
(64 Fed. Reg. 24376) BPA sought public comment on its proposed polices
for determining utility customer net requirements under section 5(b)(1)
of the Northwest Power Act. Adoption of a final policy is important to
a successful implementation of BPA's post-2001 power sales contracts
under BPA's Power Subscription Strategy.
BPA is issuing this revised draft policy proposal based upon
comments and requests to provide additional comment on BPA's draft
policy. This policy would provide guidance on implementation of the
Power Subscription Strategy under applicable statutes and describe how
certain factual determinations will be made regarding the amount of
Federal power publicly and cooperatively owned utilities, or investor-
owned utilities may purchase from BPA under section 5(b)(1) of the
Northwest Power Act. BPA's determination of this amount, as described
in this revised policy, is affected by a customer's export of
hydroelectric resources and non-hydroelectric resources out of the
Pacific Northwest in accordance with section 9(c) of the Northwest
Power and section 3(d) of the Northwest Preference Act. BPA will review
a customer's export of power or output from resources under its 1994
Policy as modified herein.
I. Relevant Statutory Provisions
The Northwest Power Act provisions are:
5(b)(1) Whenever requested, the Administrator shall offer to
sell to each requesting public body and cooperative entitled to
preference and priority under the Bonneville Project Act of 1937 [16
U.S.C. 832 et seq.] and to each requesting investor-owned utility
electric power to meet the firm power load of such public body,
cooperative or investor-owned utility in the region to the extent
that such firm power load exceeds--
(A). The capability of such entity's firm peaking and energy
resources used in the year prior to December 5, 1980, to serve its
firm load in the region, and
(B). Such other resources as such entity determines, pursuant to
contracts under this chapter, will be used to serve its firm load in
the region.
5(b)(1) In determining the resources which are used to serve a
firm load, for purposes of subparagraphs (A) and (B), any resources
used to serve a firm load under such subparagraphs shall be treated
as continuing to be so used, unless such use is discontinued with
the consent of the Administrator, or unless such use is discontinued
because of obsolescence, retirement, loss of resource, or loss of
contract rights. 16 U.S.C. 839c(b)(1)
9(c) Any contract of the Administrator for the sale or exchange
of electric power for use outside the Pacific Northwest shall be
subject to limitations and conditions corresponding to those
provided in sections 2 and 3 of the Act of August 23, 1964 (16 U.S.C
837a and 837b) for any contract for the sale, delivery, or exchange
of hydroelectric energy or peaking capacity generated within the
Pacific Northwest for use outside the Pacific Northwest. In applying
such sections for the purposes of this subsection, the term
``surplus energy'' shall mean electric energy for which there is no
market in the Pacific Northwest at any rate established for the
disposition of such energy, and the term ``surplus peaking
capacity'' shall mean electric peaking capacity for which there is
no demand in the Pacific Northwest at the rate established for the
disposition of such capacity. The authority granted, and duties
imposed upon, the Secretary by sections 5 and 7 of such Act (16
U.S.C. 837d and 837f) [16 U.S.C. 837d and 837f] shall also apply to
the Administrator in connection with resources acquired by the
Administrator pursuant to this chapter. The Administrator shall, in
making any determination, under any contract executed pursuant to
section 839c of this title, of the electric power requirements of
any Pacific Northwest customer, which is a non-Federal entity having
its own generation, exclude, in addition to hydroelectric generated
energy excluded from such requirements pursuant to
[[Page 58040]]
section 3(d) of such Act (16 U.S.C. 837b(d)), any amount of energy
included in the resources of such customer for service to firm loads
in the region if (1) such amount was disposed of by such customer
outside the region, and (2) as a result of such disposition, the
firm energy requirements of such customer other customers of the
Administrator are increased. Such amount of energy shall not be
excluded, if the Administrator determines that through reasonable
measures such amount of energy could not be conserved or otherwise
retained for service to regional loads. The Administrator may sell
as replacement for any amount of energy so excluded only energy that
would otherwise be surplus. 16 U.S.C. 839f(c) (emphasis supplied).
The Northwest Preference Act provision is:
3(d) The Secretary, in making any determination of the energy
requirements of any Pacific Northwest customer which is a non-
Federal utility having hydroelectric generating facilities, shall
exclude any amounts of hydroelectric energy generated in the Pacific
Northwest and disposed of outside the Pacific Northwest by the
utility which, through reasonable measures, could have been
conserved or otherwise kept available for the utility's own needs in
the Pacific Northwest. The Secretary may sell the utility as a
replacement therefor only what would otherwise be surplus energy. 16
U.S.C. 837b(d).
II. Scope of the Proposed Policy
The Policy on Determining Net Requirements addresses the amount of
Federal power that BPA is obligated to offer to customers requesting
contracts to serve firm power loads under section 5(b)(1) of the
Northwest Power Act. Purchasers eligible to request a contract under
section 5(b)(1) include public body, cooperative, or investor-owned
utilities in the region.\1\ BPA has a corresponding statutory duty when
determining the net requirements of a requesting purchaser to apply the
provisions of section 9(c) of the Northwest Power Act and section 3(d)
of the Regional Preference Act. Such provisions direct the
Administrator to determine whether an export or proposed export of a
requesting purchaser's non-hydroelectric or hydroelectric resource
would result in an increase in the firm energy requirements of any of
BPA's customers. Findings by BPA that the export of such resources are
likely to increase BPA's firm obligations, and that the resource could
have been conserved, or otherwise retained to serve regional loads,
will result in a reduction (decrement) \2\ of the amount of Federal
power and energy available for purchase under section 5(b)(1) equal to
the amount of power and energy, and for the duration, of the export.
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\1\ The Policy also addresses any sales of Federal power BPA
makes under section 5(b) in settlement of a customer's right to
service under the residential exchange program created under section
5(c) of the Northwest Power Act. While recognizing that this is a
settlement, it does not affect the application of, or change, the
policy regarding the net requirements of any customer.
\2\ The 1994 Section 9(c) Policy BPA published uses the term
``decrement'' to mean a decrease or reduction in BPA's obligations
to sell power to a customer under its section 5 power sales contract
with BPA. When used in this Policy and modification of that Policy
the terms ``decrement,'' ``decrease,'' ``reduce'' or ``reduction''
have the same meaning.
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III. Policy on Determining Net Requirements
A. Determination of the Amount of Federal Power for Sale Under Section
5(b)(1)
1. BPA will determine the amount of Federal power for sale under
section 5(b)(1) in the manner described below. In making this
determination BPA will reduce the amount of Federal power a customer
may purchase in accordance with section 9(c) of the Northwest Power Act
and section 3(d) of the Northwest Preference Act.
(a) BPA will offer an amount of Federal power for sale to a
purchaser under section 5(b)(1) based upon such customer's actual
retail firm power loads in the region. To establish the purchaser's
actual retail firm power loads in the region, BPA may use either the
actual measured load of the customer, or the customer's own actual load
forecast if BPA determines such forecast is reasonable. (Any actual or
forecast loads of the customer shall exclude any wholesale loads served
by the customer. Wholesale loads means power sales made by the customer
using its own resources to serve its own wholesale customers who are
purchasing to resell the power at wholesale or retail.)
(b) For purposes of determining the amount of Federal power BPA
will offer to existing customers in the post-2001 period, BPA will
require an existing customer to continue to use all generating and
contractual resources included in the Firm Resource Exhibit (FRE) of
such customer's current 1981 or 1996 power sales contracts for the
1998-1999 operating year. BPA will not, however, require customers to
continue the use of resources identified in their 1998-99 FREs for any
one of the following reasons: (1) The customer's contractual
resource(s) expires prior to October 1, 2001; (2) the customer's
generating resource(s) is determined by BPA to be lost due to
obsolescence, retirement, or loss of resource in accordance with
section III.B.1 (loss of generating resources); or (3) the customer's
contractual resource(s) is determined to be lost in accordance with
section III.B.2 (loss of contractual resources). In addition, customers
who were given express written consent by the Administrator to
permanently remove a resource from use in serving regional firm power
loads are not required to return such resources to use.
(c) BPA's requirement that the customer continue using the
customer's resources listed in its FRE for the 1998-1999 operating year
is based upon a decision made in BPA's Power Subscription Strategy. The
decision was to establish a baseline for determining the customer's
resources expected to continue serving regional firm power loads in the
post-2001 period. In addition, BPA will require that all Federal
surplus firm power contracts or excess Federal power contracts with
terms which extend further than one year beyond 2001 be applied as firm
resources used to serve the customer's retail firm power load in the
region.
(d) Customers may elect to use additional generating resources or
contractual resources for their consumer load service under their
section 5(b)(1) contract. Under the contract customers can also agree
to contractually commit power purchases from the market to serve any
remaining amounts of their retail firm power load in the region which
is not served by (1) generating resources or contractual resources that
a customer must use to serve load under section III.A.2, above; and (2)
additional generating resources or contractual resources that a
customer elects to use under this section. Customers may elect to apply
short term power purchases from the market to their loads in amounts
agreed to under the terms of a BPA 5(b)(1) contract. Customers using
market purchases to serve their loads will be required to use such
market purchases for the entire 5 year rate period for which BPA
establishes rates of general application. All additional generating
resources or contractual resources shall be used for the term of the
contract except for resources added pursuant to section III.C
(renewable resources).
(e) BPA will apply the Declaration Parameters included in the Power
Products Catalog under Actual Partial Service for the Subscription
Strategy to establish the amount of power available from the customer's
generating and contractual resources under the Subscription contract.
Because the Declaration Parameters are subject to revision, BPA will
use the Declaration Parameters in effect at the time of BPA's contract
offer to determine the amount
[[Page 58041]]
of Federal power offered. The customer may declare a reduction in the
amount of power that would otherwise be available from its own
generating and contractual resources by the amount of power the
customer uses from such resources to serve its wholesale loads, defined
above; which were served prior to December 5, 1980, and which continue
to be served by such resources.
2. In addition to subsections (a) through (e) above, BPA will
reduce the amount of Federal power BPA will offer to a customer under
section 5(b)(1), consistent with the application of BPA's Section 9(c)
Policy as modified, and resultant findings made under section 9(c) of
the Northwest Power Act and section 3(d) of the Northwest Preference
Act.
B. Statutory Discontinuance for a Customer's Generating and Contractual
Resource
1. A customer's non-Federal generating resource is considered no
longer used to serve regional retail firm power load under a section
5(b)(1) contract if the resource's use is permanently discontinued due
to obsolescence, retirement, or loss.
(a) Obsolescence must result from the inability to continue to
operate a resource due to lack of available replacement parts or
sources of fuel supply regardless of price.
(b) Retirement must result from a demonstration by the customer
that the cost of replacements, improvements, or additions to continue
to operate the resource, combined with the resource's variable
operating costs, exceed the reasonable economic return over the
remaining life of the resource. The reasonable economic return will be
determined by requiring the customer to measure the cost to the
customer of replacing its operating resource with market purchases plus
the cost to shut down the plant against the cost of operating the
resource.
(c) Loss of a resource must result from factors beyond the
reasonable control of the customer and which the best efforts of the
customer are unable to remedy including complete destruction of the
resource, complete loss of the Federal or State license to own or
operate the resource, or complete and/or partial reduction of the
capability of a resource to the extent of the loss resulting from
orders of a State or Federal agency affecting the operation of the
resource.
2. A customer's contractual resource is considered no longer used
to serve regional firm power load if the customer experiences a
permanent loss of contract right. Loss of contract right must result
from expiration of the term of the contract, after any extensions of
the contract term unilaterally available to the customer, or factors
beyond the reasonable control of the customer and which the best
efforts of the customer are unable to remedy. Loss of contract right
does not include the following: (a) a customer's failure to exercise a
right to renew a contract; (b) a customer's failure to exercise a right
of first refusal on termination of the contract; (c) a change in price
under the contract; and (d) any other action or inaction by a customer
which results in the contract being unavailable to the customer.
C. Use of New Renewable Resources To Serve Retail Firm Power Loads
1. A customer may elect to use a new renewable resource to serve
its regional retail firm power load for a specified period which is
less than the term of its section 5(b)(1) contract; provided, however,
that such new renewable resource is part of the first 200 aMW of all
new renewable resources requested by all BPA customers under this
section to serve regional retail firm power load each year. Customers
may choose to elect to use new renewable resources at the time of
contract execution and during an annual review of their net load
requirements under their section 5(b)(1) contract.
2. Only new renewable resources that meet the standards established
to qualify for BPA's conservation and renewable resource discount may
be used under this section.
3. Application of a new renewable resource under section III.C.1
shall reduce the customer's net requirements load.
D. Changes in the Amount of Federal Power Purchased During the Term of
a Contract
1. Under section 5(b)(1) contracts, BPA will require a customer to
submit annual reports that track and forecast the customer's retail
firm power loads in the region. The purpose for the annual report is to
provide information that shows any increase or reduction in the amount
of the customer's retail firm power loads in the region from the amount
served when the contract was executed. Based on such load information
BPA shall make an annual determination of the net firm requirement load
of the customer under a section 5(b)(1) contract as follows.\3\ First,
BPA will account for:
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\3\ Such reports may be in addition to other load or resource
information the customer is required to provide BPA on its loads or
resources for contract administration and planning purposes. Such
determinations may be in addition to other determinations of net
firm power requirements loads made more frequently under the terms
of the customer's contract.
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(a) The generating and contractual resources a customer is required
to use to serve firm power load in the region under section III.A.1.(b)
(FRE firm resources);
(b) Additional resources a customer has elected to use under
section III.A.1.(d) (additional generating and contractual resources);
and
(c) Power purchases from the market that a customer has
contractually committed to purchase in amounts specified in their
5(b)(1) contract, consistent with section III.A.1.(d) (market
purchases).
Second, BPA will make adjustments for:
(d) Changes in a customer's new renewable resources used to serve
retail firm power load in the region under section III.C.1 (renewable
resources);
(e) Changes in the customer resources serving its load pursuant to
III.A.1.(b) and III.A.1.(d) due to BPA's determination of a statutory
discontinuance of the customer's generating resource(s) or contract
resource(s) under section III.B (statutory discontinuance); and,
(f) Any reductions in the amount of power a customer may purchase
under a section 5(b)(1) contract due to the annual review under section
III.D.3.
2. If BPA's annual determination of a customer's net firm
requirement load results in a finding that the amount of Federal power
a customer can purchase is less than the contracted amount of power to
be purchased for the next contract year, then the customer shall first
remove from use for its regional firm load, for a period of one year,
any market purchases the customer has agreed to use under its BPA
contract. Such removal shall be in an amount and shape equal to the
difference between the amount of Federal power a customer can purchase
for the next year and the amount and shape of Federal power a customer
has contracted to purchase for the next contract year.
If the amount of Federal power a customer can purchase after the
removal of the market purchases is still less than the amount of power
the customer has contracted to purchase for the next contract year,
then BPA will implement the mitigation measure for load loss specified
in the customer's section 5(b)(1) contract and reduce the amount of
Federal power a customer is obligated to purchase. Alternatively, BPA
may consent to the customer's removal of a generating resource or
contractual resource from use for its regional firm load, for a period
of one year. The
[[Page 58042]]
portion of a customer's generating resource or contractual resource
removed shall be equal to the difference between the amount and shape
of Federal power a customer can purchase and the amount and shape of
Federal power the customer has contracted to purchase for the next
contract year. Any customer's resources, other than market purchases,
which are removed from use for regional firm load service under this
section, are subject to BPA's determinations made under sections 9(c)
of the Northwest Power Act and 3(d) of the Northwest Preference Act. If
the customer's use of that resource results in a reduction or decrease
in BPA's obligation to provide power under section III.D.3, then BPA
will recalculate the amount of power a customer may purchase for the
upcoming year as provided under this section (III.D.2).
3. On an annual basis as provided under a section 5(b)(1) contract
BPA will review the export of power from a customer's regional non-
Federal generating and contractual resources and, if necessary, will
reduce the amount of Federal power a customer may purchase in
accordance with section IV of this policy.
4. BPA shall make available additional amounts of power to a
customer under a section 5(b)(1) contract to serve its regional loads
which were formerly served by a customer's generating resources or
contractual resources but are no longer required to be used to serve
the customer's retail firm power loads in the region, in accordance
with section III.B (statutory discontinuance), and BPA will make
available Federal power to serve new loads acquired by a customer due
to purchase or condemnation of additional distribution for its system.
Such service shall be on 6 months notice that such an event has
occurred or as mutually agreed.
IV. Scope of the Section 9(c) Policy
A. Modification to BPA's Non-Federal Participation Section 9(c) Policy
BPA's modification to its 1994 Non-Federal Participation Section
9(c) Policy (1994 NFP Policy) is set out below. Deletions, changes and
additions are included in an interlined version which is available from
BPA on request or at BPA's Web site at http://www.bpa.gov/Power/
subscription. BPA's 1994 NFP, as modified will be retitled: BPA's
Section 9(c) Policy.
BPA reaffirms the application of its 1994 section 9(c) policy and
legal interpretation published in July of 1994. The context for some of
the determinations made in the 1994 policy was, in part, prior exports
and new exports of firm power from customer resources out of the region
by participation in the new, Third AC Intertie. The interpretation has
been of general application since 1994 to customer exports. BPA is now
modifying the policy to address certain issues which were not
previously addressed. Prior determinations made under the 1994 NFP
Policy remain in effect for the duration of the export sale.
In the 1994 NFP Policy, BPA did not address the export of firm
power from Investor-Owned Utility (IOU) resources because the IOUs were
not placing any firm power loads on BPA under their section 5(b)(1)
power sales contracts with BPA. See footnote 3, page B-10, BPA's 1994
NFP Policy. Since the IOUs were not taking any power service from BPA,
reductions pursuant to a section 9(c) determination in their service
under those section 5(b)(1) contracts would not have affected their BPA
service. Presently, BPA is preparing new section 5(b)(1) power sales
contracts for the post-2001 period to be offered to customers eligible
to purchase Federal power. BPA anticipates that IOUs will take firm
power service from BPA under new 5(b)(1) contracts. BPA will require
that the export of firm power from resources of IOUs be accounted for,
in setting BPA's net firm load obligations under those contracts.
Additionally, the 1994 NFP Policy would be modified to update the
technical provisions to accommodate recent changes. Therefore, the 1994
NFP Policy would be modified as follows:
B. Section 9(c) Policy
Section 1. Northwest Power Act Section 9(c) Determinations
As required by the Northwest Power Act, BPA shall make its Section
9(c) determinations for the exports of its customers.
Section 2. Finding Required
In examining the export of Pacific Northwest resources, BPA shall
make its finding based on the following requirements of Section 9(c):
(a) BPA shall analyze whether the customer's exports would result
in an increase in the electric power requirements of any of its
customers in the region. BPA shall do this by examining its load/
resource forecasting and planning documents to determine the impact the
exports will have on BPA's and its customers' ability to meet Pacific
Northwest load presently and in the future. BPA shall also analyze the
information available from other sources including least-cost plans and
load/resource information of Pacific Northwest utilities which do not
currently place any load on BPA.
(b) BPA shall review the specific resources and categories of
resources being exported to determine if such exports will result in an
increase in the firm energy requirements of its customers and if so,
determine whether the resource could be conserved or otherwise retained
for service to regional loads by using reasonable means. To do this BPA
shall compare the resource a customer is proposing to export with those
resources which BPA finds in its analysis can be exported without
having to decrement the customer's Section 5(b) utility power sales
contract.
Section 3. Scope of Section 9(c) Policy
This Section 9(c) Policy addresses a customer's exports of power
from the Pacific Northwest resources out of the region. BPA shall make
its Section 9(c) determinations based on a factual determination using
information about the specific resource the customer intends to export.
Section 4. Data on Specific Resources
BPA shall base its Section 9(c) determination on specific
information BPA has obtained from the customer on the resources it
intends to export. This includes, but is not limited to, the following
information:
(a) Name of the resource to be exported;
(b) Location of the resource;
(c) type of resource;
(d) Whether the resource is currently in any Pacific Northwest
utility's firm resource exhibit;
(e) Whether the resource is planned or existing; and
(f) Type of transaction or sale, and if it is a seasonal exchange,
the terms of the exchange.
BPA will also consider any prior history of the resource including
prior efforts to market it to BPA or other Pacific Northwest utilities.
Section 5. Prior Case-by-Case Section 9(c) Interpretations
BPA does not propose to modify its existing determinations on
Pacific Northwest utility exports including its 1994 NFP Policy
determinations and will apply its prior case-by-case interpretations of
Section 9(c), and Section 3(d) of the Regional Preference Act to such
decisions without modification. Therefore, BPA incorporates by
reference in this Policy these prior interpretations of Sections 9(c)
and 3(d) and the determinations
[[Page 58043]]
made thereunder for the duration of the export sale.
Section 6. Categories of Resources
(a) Exports That Will Not be Decremented by BPA: Under this Section
9(c) Policy determination, BPA will determine whether the export of
certain resources will not result in an increase in the electric power
requirements of any of its customers. If the export of a resource does
not increase the firm energy requirements of BPA's customers, the
resource may be exported without a reduction in BPA's firm load
obligation under the customer's Section 5(b) utility power sales
contract.
(b) Exports That Will be Decremented by BPA: BPA has determined
based on its prior policy interpretations of Northwest Power Act
Section 9(c) that the following categories of resources are conservable
and if they are exported BPA shall decrement the customer's Section
5(b) power sales contract:
(1) All Pacific Northwest hydroelectric resources owned or
purchased by a Pacific Northwest utility, whether or not dedicated in
any Pacific Northwest utility's firm resource exhibit; and
(2) All Section 5(b)(1)(A) and 5(b)(1)(B) thermal resources that
are currently dedicated by a utility in any customer's firm resource
exhibit.
Section 7. System Sales
BPA shall utilize a case-by-case approach to system sales. BPA
shall require the exporting utility to submit an operating plan for the
duration of the export, identifying these specific resources or
categories of resources supporting the system sale. If the export is a
system sale made up solely of a customer's resources that individually
would not result in a decrement if each resource were exported standing
alone, then BPA would not decrement a customer's firm power purchase
under section 5(b) for such a system sale. BPA shall decrement the
customer's Section 5(b) utility power sales contract if the system sale
involves the export of hydro to support a power sale (whether or not in
a firm resource exhibit); a thermal resource that is in a firm resource
exhibit; or any sale that is a prohibited resale of Federal power.
Any customer that was previously a Contracted Requirements customer
of BPA, and which is currently purchasing power and energy from BPA
under its power sales contract, shall have BPA's firm power obligation
under its section 5(b)(1) contract reduced by a system sale in the
amount of the power and for the duration of the export sale. If the
customer was not placing load on BPA under its section 5(b) utility
power sales contract at the time of the export sale, then at such time
as the customer requests to place a firm load obligation on BPA, BPA
shall make an appropriate determination and may reduce its energy sales
to such customer in the amount of the export sale and for any remaining
duration of the export sale.
Section 8. Seasonal Exchange
Any seasonal exchange between a customer and an out of region
entity which results in no net regional energy deficit during any
Operating Year shall not result in a decrement by BPA of the customer's
Section 5(b) utility power sales contract.
Section 9. Recall
Any customer that does not want its Northwest Power Act, Section
5(b) power sales contract decremented by BPA may agree to include terms
for the recall of its export sale upon notice from BPA that the energy
from such customer's resource is needed to meet BPA or other customers
firm power load in the Pacific Northwest.
Section 10. Resource Offer
This Section 9(c) Policy gives a customer an option to offer a
resource to BPA or to all other Pacific Northwest customers. If offered
for sale to BPA, the resource shall be treated as an unsolicited
proposal. If BPA proposes to acquire the resource, and if it is greater
than 50 aMW or offered for longer than 5 years, it will be subject to
the Northwest Power Act Section 6(c) process, which can take more than
12 months. If neither BPA, nor any Pacific Northwest customer,
purchases the offered resource (offered at the customer's cost
including a reasonable rate of return), the resource may then be
exported without a decrement of the customer's Northwest Power Act
Section 5(b) power sales contract.
Section 11. Consumer-Owned and Independent Power Producer-Owned
Resources
If a customer contracts to purchase and then export any consumer-
owned resource or any resource developed by an independent power
producer, BPA shall decrement the customer's Section 5(b) power sales
contract if the resource being exported is a hydroelectric resource or
if the resource is dedicated to any Pacific Northwest utility load in
any utility's firm resource exhibit.
Section 12. BPA Notification
BPA shall notify in writing any customer which has exported a
resource or proposes to export a resource of the outcome of BPA's
Section 9(c) determination. The BPA notification shall be made within
30 working days from the date the customer notifies BPA that it will be
exporting a regional resource or BPA receives the information it
requests about a specific resource.
C. Scope of the Section 9(c) Policy
BPA's Section 9(c) Policy (9(c) Policy) addresses the effect of
exports of resources by any public body, cooperative, or investor-owned
utility purchasing power under a section 5(b) contract for service
after October 1, 2001. The findings and interpretations of the 9(c)
Policy shall be applied to all exports occurring after publication of
this 9(c) Policy. Customers that have exported resources prior to
publication of the 9(c) Policy may face a reduction in the amount of
Federal power that BPA will offer at the time they request a contract
under section 5(b)(1) for service after September 30, 2001. A reduction
in BPA's obligation to provide firm power requirements to a customer
under its section 5(b)(1) contract will be based on a case by case
factual determination regarding the export of a resource by a BPA
customer, and may be based on the regional load resource balance at the
time of the export and other factors. BPA shall address the effect of
exports of resources by a customer purchasing power under a contract
pursuant to section 5(c), section 5(d)(1), or section 5(f) of the
Northwest Power Act on a case by case basis.
D. Subscription 9(c) Study
BPA will perform a Subscription 9(c) Study to be issued with the
final Policy on Determining Net Requirements. The study will provide
part of the factual basis for determining whether an export of a
resource during the period from October 1, 2001, through September 30,
2006, is likely to result in an increase in the firm energy
requirements of BPA customers, and if so, whether the resource could be
conserved, or otherwise retained to serve regional loads.
V. Section-by-Section Review of Changes in Revised Draft Policy
From the Original Draft Proposal Issued April 26, 1999
This section provides section-by-section review of the changes in
the revised draft policy from the initial draft policy proposal
published in the Federal Register on May 6, 1999. The revised draft
policy is reorganized as follows: new section III replaces former
sections I and II; and new section IV
[[Page 58044]]
replaces former section III.A, III.B, III.C, III.D, III.E, and III.F.
An interlined version showing the proposed changes is available at
BPA's Web site at http://www.bpa.gov/Power/subscription.
III. Policy on Determining Net Requirements
A. Determination of the Amount of Federal Power For Sale Under Section
5(b)(1)
New section III.A includes the provisions included in the former
section I. New section III.A.1.(a) is intended to clarify the customer
loads BPA will use as the basis of the initial contract offer described
in former section I.A.
New section III.A.1.(b) is intended to clarify the resources a
customer is required to continue to use to serve load described in
former sections I.B, I.C, and I.D. The revised draft policy contains no
references to the rate at which BPA would sell power to the customer.
Such rate will be established in BPA rate cases. New section
III.A.1(b). eliminates the requirement for the customer to notify BPA
in writing of lost resources or lost contracts prior to execution of a
customer's Subscription contract.
New section III.A.1.(d) is intended to clarify that customers may
elect to use additional resources to serve their regional firm power
loads in addition to the customer resources required to be used under
section III.A.1.(b). Under new section III.A.1.(d) customers can
contractually commit to purchase power from the market to serve any
consumer load not served by customer resources or purchases from BPA.
New section III.A.1.(d) also specifies requirements for the period of
use of resources under a section 5(b) contract.
New section III.A.1.(e) is intended to clarify which Declaration
Parameters BPA will use to establish the capability of customer
resources described in former section I.E. New section III.A.1.(e) also
includes a right for a customer to reduce the capability of the
resources that are used to serve any wholesale loads that the customer
served on December 5, 1980, and continues to serve, from the customer's
resources.
New section III.A.2 is intended to clarify the reduction in Federal
power purchases due to the export of non-Federal resources described in
former section I.F.
B. Statutory Discontinuance for A Customer's Generating and Contractual
Resource
New section III.B replaces former sections II.D and II.E. New
section III.B is intended to clarify the application of BPA's existing
standards to lost generation and contractual resources and loss of
contract rights. The initial draft inadvertently omitted application of
the description of a loss of contract right from section II.E. Section
III.B was moved in the policy to reflect the determination of resources
that are permanently discontinued from use to serve the customer's
regional firm load between 1998 and the time of contract offer.
New section III.B.1 establishes a physical test of when a resource
is obsolescent under the statute and an economic test to be applied
when a resource may be retired in its use to serve firm load in the
region. New section III.B.1 is also intended to clarify the conditions
under which a customer resource is lost, including the partial loss of
a resource due to orders of a State or Federal agency.
New section III.B.2 is intended to clarify a customer's loss of a
contract right.
C. Use of New Renewable Resources To Serve Retail Firm Power Loads
New section III.C replaces former section II.C. New section III.C
is intended to clarify that a customer may elect to use a new renewable
resource in its initial contract and during the term of the contract.
D. Changes in the Amount of Power Purchased During the Term of a
Contract
New section III.D replaces former sections II.A, II.B, and II.F.
New section III.D.1 describes the annual review of the customer's loads
under a section 5(b)(1) contract and is intended to clarify that any
changes in the amount of power purchased under a section 5(b)(1)
contract will be based on forecasts of the expected load changes for
the next contract year and how such changes, and other annual changes,
in the customer's load and resources will be used to determine a
customer's annual net firm requirement load amount under a section 5(b)
contract.
New section III.D.2 describes how BPA will compare the amount of
Federal power a customer can purchase against the contracted amount of
power for the next contract year. Section III.D.2 describes how BPA
will implement mitigation measures under its section 5(b) contracts
when a customer's right to purchase is less than its contracted amount
and provides BPA's consent to a customer's election not to use its non-
Federal resource to serve its retail firm power load in the region for
the next contract year. Resources that a customer elects not to use to
serve its retail firm power load are subject to a BPA determination
under BPA's Section 9(c) Policy.
New section III.D.3 is intended to clarify how BPA will annually
review the export of energy from a customer's non-Federal resources.
New section III.D.4 describes when customers may purchase
additional amounts of Federal power they did not contract to purchase
in their initial contract.
IV. Scope of the Section 9(c) Policy
Section IV.A--Modification to BPA's Non-Federal Participation Section
9(c) Policy
Section IV.A modifies BPA's 1994 Non-Federal Participation Section
9(c) Policy and renames it BPA's Section 9(c) Policy.
Section IV.B--Scope of the Section 9(c) Policy
Section IV.B describes the application of the Section 9(c) Policy.
The Section 9(c) Policy will be applied to all purchases under a
section 5(b) contract for service after October 1, 2001. The findings
and interpretations of the Policy shall be applied to all customer
exports of power from non-Federal resources or sales of resources
occurring after publication of the policy. Customers that have exported
power from resources or sold resources prior to publication of the
policy may face a reduction of the amount of Federal power they can
purchase at the time they request a contract for service after
September 30, 2001, based on a case by case factual determination.
Section IV.C--Subscription 9(c) Study
Section IV.C describes a factual study that BPA will provide with
its final policy stating a basis for determining what exports of
resources during the period from October 1, 2001 until September 30,
2006, may [or may not] result in an increase in the firm energy
requirements of BPA's customers. The Subscription 9(c) Study will be
based on the principles stated in the Section 9(c) Policy regarding
resources that can be conserved to serve a regional load and the
resources that may otherwise be retained to serve regional load.
Responsible Official: Mr. Sydney Berwager, Subscription Policy
Manager is the official responsible for the development of the revised
draft policy proposal for addressing issues under section 5(b) of the
Northwest Power Act regarding the amount of Federal power a customer
may purchase under BPA subscription power sales contracts, and
[[Page 58045]]
the Section 9(c) Policy which modifies the 1994 NFP.
Issued in Portland, Oregon, on October 19, 1999.
Judith A. Johansen,
Administrator and Chief Executive Officer.
[FR Doc. 99-28178 Filed 10-27-99; 8:45 am]
BILLING CODE 6450-01-P