For more information: 
Dick Watson
Power Division Director 
800-452-5161

Regarding transmission, the Transition Board developed 11 recommendations, including:

• FERC's authority over Bonneville should be based on Parts II (wholesale interstate commerce) and III (procedure and administration) of the Federal Power Act.
• Section 201 of the Federal Power Act should be amended to make it clear that FERC's authority under the Act is limited to Bonneville's transmission. Except to the extent that FERC may be given authority over Bonneville's stranded cost recovery (see below), there should be no expansion of FERC authority over Bonneville's power costs.
• Total recovery of Bonneville's transmission costs should not be compromised.
  
  Regarding contingent cost recovery, the Transition Board revised its earlier proposal. The Board now proposes four steps of progressively more aggressive actions, triggered by projected reserve levels.
  
  1. In the first stage, Bonneville would rely on its cash reserves and any credits available under Section 4(h)(10)(c) of the Northwest Power Act.
  2. If these prove insufficient, Bonneville would identify possible cost reductions, take public comment, and implement those that are appropriate. 3. In the third stage, Bonneville would initiate a rate adjustment. The rate adjustment would be the lower of a predetermined market cap or an amount that would assure cash reserves are rebuilt to a level sufficient to ensure that Bonneville is able to make its annual payment to the U.S. Treasury.
  4. If it still appears likely that the Treasury payment would have to be deferred, then the fourth stage would be implemented, this time by the Federal Energy Regulatory Commission (FERC). The Transition Board recommends that the FERC adopt and implement a mechanism that would be limited to $100 million in any year, up to a cumulative total of $600 million. The Board recommends that FERC be directed in legislation to design and adopt such a mechanism and allocation methodology so that it would be ready if needed.

The Transition Board's recommendations on FERC regulation of the transmission system and stranded cost recovery are available at the Council's website or by calling the Council at 800-452-5161 and requesting Document TB98-15, which includes both sets of recommendations.

The Board is seeking comments only on the stranded cost recovery recommendations. The four-member Transition Board works on behalf of the governors of Idaho, Montana, Oregon and Washington. The governors created the board 1997 to carry forward the recommendations of the year-long Comprehensive Review of the Northwest Energy System, in 1996. The Comprehensive Review, initiated by the governors, was an effort to address increasing competition within the deregulated electricity industry and determine how to take advantage of that competition while also preserving the benefits of the region's unique hydroelectric system, which include low-cost energy, fish and wildlife enhancement, energy conservation, renewable energy development and low-income energy assistance.

The Review was carried out by a committee of more than 20 persons representing a broad range of interests in the region's electric power system. The Review committee made several recommendations regarding the future of the Bonneville Power Administration, the federal agency that supplies about 40 percent of the region's electricity from a system of 29 federal dams and one nuclear plant in the Columbia River Basin. For example, the committee recommended that Bonneville institute a subscription process for its power in the future and that a mechanism be devised to address stranded costs at Bonneville, if they arise (competition raises the possibility of stranded costs - previously incurred fixed costs that cannot be recovered at market prices).

The Comprehensive Review also recommended that Bonneville's grid of high-voltage transmission lines be subject to regulation equivalent to FERC regulation of investor-owned utilities.