March 5, 1998

TO: Interested Parties

FROM: Dick Watson

SUBJECT: Draft Workplan for Development of the "Northwest Chapter" of Federal Restructuring Legislation

At its March 3 meeting, the Transition Board decided on a two-part response to the increasing pressure for development of Northwest-specific provisions of possible federal electricity industry restructuring legislation. The process and the schedule for development of a "Northwest Chapter" are outlined on the attached figure.

The Board understands that there is some chance of legislation being moved in the next several weeks. However, the Board believes it must conduct a more deliberative process to develop a regional position with reasonably broad support.

Progress Report

To respond to the immediate pressures, the Board proposes first to provide the congressional delegation with a "progress report." That progress report will:

• Summarize the progress that has been achieved to date in the areas of:

• subscription,

• FERC-equivalent regulation of Bonneville transmission,

• cost control,

• future fish and wildlife costs,

• river governance, and

• stranded cost recovery;

• Identify the points at issue; and

• Describe the positions of the parties on these issues.

The target date for the progress report in April 9^th. In addition, the Board will be prepared to respond to legislative drafts that may emerge during this period. Any responses will avoid compromising the Board’s independence and objectivity in development of a Northwest chapter.

Draft Northwest Chapter

Second, the Board will carry out a deliberative process aimed at delivering a "Northwest Chapter" that has reasonably broad regional support no later than July 1^st. The initial vehicle for accomplishing this will be a staff draft proposal. The Board wants the development of this staff draft to be informed by the views of interested parties in the region. Therefore, we are asking that parties submit their written proposals or positions to the Board at the Board’s March 19^th meeting and be prepared to discuss them with the Board at that meeting.

The Board will adhere to the following schedule after the March 19^th meeting:

• Staff will develop an initial draft proposal by April 23^rd. At this stage, the draft will be a statement of objectives and description of mechanisms to achieve those objectives, not bill language.

• The staff’s initial draft regarding subscription (if necessary) and FERC-equivalent regulation (except for issues related to stranded cost recovery) will be made available and discussed at the Board’s April 9^th meeting.

• The staff’s initial draft for stranded cost recovery will be made available and discussed April 23^rd meeting.

• Information from the Council’s analysis of Bonneville’s costs and potential market revenues will available to inform the development of the staff draft and subsequent discussions.

• The Transition Board will consult with interest parties through May 7^th and take comment on the staff draft at its May 7^th meeting.

• Based on direction from the Transition Board, staff will revise the draft and make it available for public review by May 15^th. Drafting of legislative language will take place concurrently.

• From May 21^st through June 25^th the Transition Board will consult with interested parties and hold public hearings on the proposal.

• The Board will make its recommendations on the final package at the June 25^th meeting. The legislative proposal will be delivered to the governors by July 1.

The Transition Board will take comment on this draft workplan at its March 19 meeting in Spokane.