Determination

Capital cost recovery oriented to interest and principal payments determined by a repayment study that includes only transmission debt.

Transmission revenue requirements have included charges for revenue financing of new investments or cash required for risk mitigation.

Capital cost recovery oriented to costs on utility’s (ratemaking) books: depreciation and rate of return (the company’s overall weighted average cost of capital and equity) applied to depreciated transmission plant-in-service.

Rates based on forecasted (budgeted) costs for the period.

FERC has taken conservative approach to BPA rate approval, requiring frequent review of cost recovery and timely repayment to Treasury.

Long-term rates (>7 years) approved only upon showing that they accounted for small portion of total revenue requirement; long-term rates require more justification/regional support to secure FERC approval.

Rates are based on the costs of a test year with heavy reliance on most recent actual costs.

BPA believes that it could rely on section 7(a) of the Northwest Power Act to recover power costs in transmission rates; to date, this position is untested.

Transmission rates based on the cost of transmission service.

BPA takes position that FERC stranded cost rules cannot be applied to BPA to prevent recovery of costs.

FERC will determine on a case-by-case basis whether costs stranded by transmission access are recoverable from specified customers.

BPA takes position that FERC stranded cost rules cannot be applied to BPA to prevent recovery of costs.

FERC will determine on a case-by-case basis whether costs stranded by transmission access are recoverable from specified customers.

Allocation

Pacificorp and PGE are joint owners with BPA.

.. Six utilities (including Pacificorp) purchased a total of 725 MW of capacity ownership on BPA’s portion of the intertie.

96 Rate Case: After the Settlement agreement had been negotiated, Clark PU argued to roll in the Southern Intertie; no other party addressed this issue in the rate case.

FERC has strongly encouraged the formation of IGOs/ISOs, in part to do away with pancaked rates which result when transmission customers must use more than one transmission system.

Step-up transformers are considered power costs.

The entire cost of the G-I segment is allocated to the PBL to be recovered through power rates.

However, FERC will allow the transmission provider to propose an alternative method that assigns costs consistently to firm PTP and NT services.

BPA’s NT rate schedule includes 2 average embedded charges:

Base charge (NT customers may exclude from the NT Base charge the load served: with internal generation, over another provider’s transmission systems, and using the power provider’s BPA transmission contract)

.. Load Shaping charge

The load ratio method equals:

1) the annual revenue requirement reduced for firm PTP revenues 2) multiplied by (a 12-month rolling average of) the customer’s contribution to the transmission owner’s monthly transmission system peak.

2) FERC also requires a credit for the customer’s own transmission facilities that are integrated with the transmission system of the transmission provider.

Scheduling, System Control and Dispatch Service, and Reactive Supply and Voltage Control from Generation Sources Service are not separately identified and offered as ancillary services.

.. Other BPA ancillary services are packaged differently from FERC’s schedule of ancillary services.

.. BPA includes transmission losses as an ancillary service, which is not required by FERC.