October 20, 1997
REVISED 10/21/1997
Section 1. Findings and Purposes
Congress finds that--
• The electricity industry is in the midst of significant restructuring to promote a competitive electricity generation market.
• Bonneville's transmission function should be separate and independent from its power sales function to promote competitive practices and avoid problems of self-dealing between BPA’s power marketing and transmission functions.
• Bonneville's surplus power sales, where Bonneville has market power, should be subjected to FERC regulation that is "equivalent" to FERC regulation of IOUs.
• Bonneville's transmission should be regulated by FERC as if Bonneville were a public utility in order to ensure fair competition and transmission rates, terms and conditions for Bonneville transmission of Federal and non-Federal power that are subject to the same just, reasonable and not unduly discriminatory or preferential criteria applicable to a public utility.
• Statutory impediments to BPA's becoming a full participant in a FERC approved and regulated regional Independent Grid Operator (IGO) should be removed.
The activities of the Bonneville Power Administration regarding transmission of electric power shall be separated, in accordance with regulations of the Commission, from the activities of the Bonneville Power Administration regarding the sale or disposition of electric power. The Commission shall adopt regulations to implement this section. Such regulations may allocate the authorities, duties and functions of the Administrator among positions within Bonneville. Such positions may include new positions, within the Office of the Administrator, to be filled by appointment by the Secretary of Energy.
The provisions of this Act and regulations of the Commission under this Act with respect to Bonneville transmission shall apply to any sale, assignment or other provision of transmission service by or on behalf of Bonneville, whether or not such transmission service is provided in connection with the sale or disposition of electric power on behalf of Bonneville.
(a) Bonneville transmission of Federal or non-Federal electric power shall be subject to (i) the provisions Parts II and III of the Federal Power Act (except sections 207, 209, 212(i), 303, and 305), and the jurisdiction of the Commission and the courts provided thereunder. Bonneville's regulated surplus power sales shall be subject to the provisions Parts II and III of the Federal Power Act (except sections 207, 209, 212(i), 303, and 305), and the jurisdiction of the Commission and the courts provided thereunder. Notwithstanding section 201(b)(1) of the Federal Power Act, the Commission shall have jurisdiction under this Act over any facilities owned by Bonneville that are facilities used in local distribution. The Commission shall apply to the Administrator, and the Administrator shall comply with, the foregoing sections of the Federal Power Act and with the rules, regulations and policies of the Commission thereunder to the same extent as may be required in the case of a public utility; provided, that this section --
(i) shall apply to the rates (but not the terms and conditions) for the transmission of electric power by Bonneville under each existing adjustable transmission rate contract so that the rates (but not the terms and conditions) of each existing adjustable rate transmission contract shall be subject to revision pursuant to section 205 or 206 of the Federal Power Act;
(ii) shall not apply to any existing transmission contract other than each existing adjustable rate transmission contract; and
(iii) shall not apply to any existing power sales contract.
(b) As used in this Act,
(i) "regulated surplus power sales" means any sale or disposition of electric power by the Administrator that is not made pursuant to subsections (b), (c) or (d) of Section 5 of the Northwest Power Act;
(ii) "existing power sales contract" means any contract in existence on October 1, 1997, which contains a provision for the sale or disposition of electric power by Bonneville (but does not mean any renewal or extension entered into after such date of any such contract);
(iii) "existing transmission contract" means any contract in existence on October 1, 1997, which contains a provision for the transmission of electric power by Bonneville (but does not mean any renewal or extension of any such contract entered into after October 1, 1997); and
(iv) "existing adjustable rate transmission contract" means any existing transmission contract in existence on October, 1, 1997, that by its express terms states that the rates for the transmission of electric power thereunder are subject to revision by the Administrator to become effective upon confirmation and approval by the Secretary of Energy or the Federal Energy Regulatory Commission (or the predecessors thereof).
The costs and revenues of the generation, sale, or transmission of electric power by the Administrator shall be accounted for in the same manner as required under sections 301 and 302 of the Federal Power Act (but without regard to section 303 thereof) and the regulations of the Commission pursuant thereto. The costs and revenues of the generation, sale, or transmission of electric power by the Administrator shall be functionalized to generation or transmission in accordance with generally accepted rate-making principles for public utilities, as determined by the Commission.
No provision of existing law shall authorize or require the Administrator to include in rates for transmission of Federal or non-Federal electric power by the Administrator any costs not properly includable in the Administrator's transmission rates under generally accepted rate-making principles for public utilities, as determined by the Commission.
For purposes of determining any rates for the transmission of power by the Administrator, any borrowing from the Transmission Account, as established in Section 9 of this Act, shall be deemed to have been repaid, with interest, prior to the period for which the rates are being determined.
If the Commission determines that the initial application of this Act in the development of any rates of the Administrator for Bonneville’s transmission services would result in what the Commission determines would be an excessive increase in any rate (existing as of the effective date of this Act) of the Administrator for transmission service, the Commission may phase in the effect of the application of this Act to such rate over a reasonable period of time to the same extent it would ordinarily do so for public utility rates.
Except as FERC may otherwise provide by regulation and except as Congress may otherwise provide, the Administrator shall not make any transmission plant investment that is significant (as defined by FERC regulation) without the Commission's prior approval as to the need for such investment, taking into account possible alternate investments, project participants or transmission providers, the reasonableness of the cost estimate and the prudence of the investment.
Prior to submitting to the Commission any rates, terms or conditions of general applicability subject to the Commission's jurisdiction under this Act, the Administrator shall consult and attempt to reach consensus with the Administrator's customers as to the rates, terms and conditions to be submitted to the Commission.
In any proceeding (or part of a proceeding) that the Commission sets for hearing, with respect to the rates, terms or conditions for transmission of electric power by the Administrator, all hearings shall be conducted within the Pacific Northwest, as defined in 16 USC 839a(14);
In proceedings before the Commission under this Act, the ex parte rules of the Commission with respect to public utilities shall apply to the officers and employees of Bonneville.
The courts shall accord the Commission deference to be given an administrative agency in the construction and interpretation of this Act and the Federal Power Act and the application of such acts to Bonneville. Bonneville’s organic statutes shall be construed in a manner consistent with this Act.
(e) Northwest Power Act Section 9(e)
Section 9(e) of the Northwest Power Act shall not apply to judicial review of actions under this Act.
The Administrator shall not deny transmission service or condition transmission service on (i) any new commitment or change in commitment for the purchase or exchange of Federal power or (ii) any condition or requirement that is not part of the transmission rates, terms or conditions of the Administration on file with and permitted by the Commission.
The entities eligible to purchase transmission service from the Administrator, under the Federal Power Act or by contract existing as of October 1, 1997, may purchase transmission services from the Administrator.
The Administrator shall offer for sale, under such terms and conditions as established by the Commission through regulation or order, all the following facilities owned by Bonneville: (i) facilities segmented to delivery by Bonneville as of January 1, 1995, (ii) facilities used solely for delivery to a single customer, and (iii) facilities used soley for delivery to a group of customers all of whom are willing to purchase such facilities jointly. Such customers may in any event elect that Bonneville shall retain such existing local distribution facilities, in which event Bonneville's cost of such facilities shall not be included in Bonneville's transmission rates. In the case of any Bonneville facility used in local distribution used solely to serve any customer entitled to purchase power directly from Bonneville under section 5(d) of the Northwest Power Act, such customer shall have priority in the purchase of such facility. The Administrator shall not construct after September 30, 1999 facilities designed to operate at electric voltages below 35 kilovolts.
No provision of law shall be construed to prevent the Administrator from participating in a FERC approved and regulated Independent System Operator (ISO) that operates in the Pacific Northwest.
Except as provided for in section 5(d) of the Northwest Power Act (16 USC 839c(d)), the Administrator shall not market, sell or dispose of electric power to any end use or retail customers that did not have a contract for the purchase of electric power with the Administrator for services to specific facilities as of October 1, 1997.
(a) There are hereby established in the Bonneville Power Administration fund in the Treasury of the United States two accounts, the Transmission Account and the Power Sales Account. All amounts in the fund from time to time (and all deposits into and withdrawals from the fund) attributable to or resulting from the Administrator's transmission of electric power, as determined by the Commission, shall be to the account of the Transmission Account, and all amounts in the fund from time to time (and all deposits into and withdrawals from the fund) attributable to or resulting from the Administrator's sale or disposition of electric power, as determined by the Commission, shall be to the account of the Power Sales Account.
(b) If at any time there is a surplus dollar amount in one account and a deficit in the other account, after exhaustion of any available authority to borrow from the Treasury, the function that is deficit may borrow any surplus amount in the account of the other function; provided, that such borrowing from the other function shall be repaid with interest at terms, conditions and interest rates as determined by the Commission.. For purposes of this section, (i) the surplus dollar amount in the Transmission Account shall not include any amounts in such account that are necessary for funding the transmission function (including amounts for working capital for, or otherwise necessary to defray emergency expenses or insuring continuous operation of, such function), (ii) the surplus dollar amount in the Power Sales Account shall not include any amounts in such account that are necessary for funding the power sale function (including amounts for working capital for, or otherwise necessary to defray emergency expenses or insuring continuous operation of, such function), and (iii) any deficit in an account of a function shall not include any obligation of the deficit function to make payments to the Treasury.
Within one year of the enactment of this Act, the Commission shall promulgate regulations providing for the recovery of any stranded power costs (as determined by the Commission) imposed upon Bonneville by any departing power customer and providing for recovery of the costs of any stranded transmission facilities (as determined by the Commission) imposed upon Bonneville by any departing transmission customer. These regulations shall provide that customers that did not impose stranded costs upon Bonneville are not obligated to pay such costs on behalf of other customers. The Commission’s methodology for determining the amount of Bonneville’s stranded costs shall be consistent with the methodology used by the Commission in determining stranded costs for public utilities. Within one year of the enactment of this Act, the Commission shall also promulgate regulations providing for the recovery of any stranded costs imposed upon a utility as a consequence of Bonneville’s granting transmission service to or for the benefit of any departing customer of that utility, to the extent a state does not otherwise provide for such recovery.
In addition to the regulations which the Commission is required to adopt pursuant to this Act, the Commission may adopt other regulations and issue such orders as it deems appropriate to implement the provisions of this Act.
Transmission System Act Section 6, 16 USC 838(d), and Section 208 of P.L. 99-349 and Section 212(i) of the Federal Power Act are repealed.