Next Meeting: January 13 in Seattle.

· TRANSMISSION, SUBSCRIPTION, AND THREE SOVEREIGNS UPDATES -- Consultant Al Wright reported the Transmission Work Group would "carry on with FERC-equivalency activities" in the new year and hold a workshop on transmission. He said the Subscription Work Group is "continuing to make progress" and that July 1998 is a "benchmark" date for the group’s activities. Roy Hemmingway reported progress was made on the draft Memorandum of Agreement being prepared by three sovereigns staff. The draft sets up a process where issues affecting the Columbia River can be discussed in order to get all the sovereigns to make a unified decision "so that we don’t have conflicting plans," he said.

· PEOPLE COME FROM AFAR BEARING TRANSITION COST PROPOSALS -- Staffer Dick Watson explained that a matrix, which attempts to capture key features of the various transition cost proposals, had been prepared. He asked proponents of the proposals to describe their ideas.

Public Power’s Five Principles. Maureen Carr of the Public Power Council said public power’s proposal is one piece of an integrated package, which also addresses Federal Energy Regulatory Commission (FERC) regulation of BPA’s transmission. She laid out five principles for transition cost recovery, and said under the proposal, BPA would be limited to collecting no more than $50 million annually, and $400 million over a 10-year period.

Bumpers/Gorton Placeholder. Staffer Ken Corum explained that the transition cost proposal in the legislation authored by Senators Dale Bumpers and Slade Gorton is general. It turns the decision over to FERC once BPA initiates the process, he said.

NWEC: A Pair of Pachyderms. Angus Duncan of the Columbia/Pacific Institute described the Northwest Energy Coalition’s (NWEC) proposal. He suggested it could be thought of as "a little elephant in the living room" and "a big elephant in the living room." The "little elephant" is the set of problems BPA could have due to market fluctuations or water variations, and shortfalls would be dealt with by a stranded cost recovery mechanism triggered by a drop in BPA’s reserves of a certain level, Duncan said. The "big elephant" would involve the region deciding to make a major reconfiguration in the hydro system and to increase substantially the amount of money being spent on fish, he stated. For this, NWEC proposes a "prospective trigger" for stranded cost recovery, calculated on the probability of BPA Treasury repayment dropping below a specified level, he said. The proposal includes a cap on how much money could be passed on to customers as a stranded cost in any given year, Duncan added.

IOUs: A "Clean Handoff" to FERC. Consultant Jim Litchfield presented an IOU proposal that calls for FERC to deal with the stranded cost issue. We think FERC ought to deal with BPA in a way that is consistent with how it deals with everyone else, avoiding the risk of "putting a spotlight on BPA," he said. We have proposed legislative language that would enable "a clean handoff" to FERC, Litchfield stated.

Stay Tuned for Inter-Tribe. Ken Johnston of the Columbia River Inter-Tribal Fish Commission (Inter-Tribe) said Inter-Tribe’s proposal is a staff proposal. He did not make a presentation, but he said Inter-Tribe would like to meet with the Transition Board to talk about the issue. The tribes are interested in stranded costs and all deregulation questions, Johnston stated.

The "Cost or Market Choice" Proposal. Attorney Melinda Horgan presented the "cost or market choice" proposal, which she said has the support of the IOUs and DSIs. It calls for each customer to choose whether to commit to a cost-based power purchase arrangement with BPA or whether to rely on the market, she explained. Any power not subscribed in the region would be sold at market prices, Horgan said. The DSIs take the view that BPA does not have a stranded cost problem, added attorney Paul Murphy.

· A STAB AT PUTTING IT ALL TOGETHER -- Wright suggested the group try to determine "where the boundaries are" with respect to the different proposals. Several aspects of the proposals were discussed, and one person suggested that it would be better to identify differences, not commonalities. The group did agree that determining the size of the transition cost problem is not as important as defining the problem.

· IS THERE AN ASPIRIN IN THE HOUSE? -- "Who’s got some Tylenol?" quipped Transition Board chairman John Etchart at the end of the discussion. Do we have a work plan that we just talked through? he asked. Wright said staff would send out a draft summarizing the issues. The board decided to continue the transition cost talks at its January 13 meeting. Mike Kreidler expressed "grave doubts" about selling to Congress the concept of not having a specific mechanism for stranded costs, as some had suggested at the meeting. The Transition Board is under pressure to bring this matter to some conclusion, and I’d like to share that pressure with you, Todd Maddock told the group. There’s no position in Northwest legislation that would more surely engender opposition than not having a stranded cost mechanism, stated Hemmingway.
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Please Note: This summary is based on detailed reports of the meetings of the Northwest Energy Review Transition Board. The reports are prepared by Resource Writers Inc. and distributed by the Northwest Power Planning Council. The Pacific Northwest Utilities Conference Committee (PNUCC) contributes financial support for these reports. To request a copy, please call the Council at 1-800-452-5161 and ask for Public Affairs.