Northwest Energy Review Transition Board	John Etchart, Montana
851 S.W. Sixth Avenue, Suite 1100 Portland, Oregon 97204-1348	Roy Hemmingway, Oregon
Phone 503-222-5161 or 1-800-452-5161 FAX 503-795-3370	Mike Kreidler, Washington
	Todd Maddock, Idaho

Transition Board Transmission Work Group

Meeting 6

June 17, 1997

Al Wright chaired the work group’s sixth meeting at the Northwest Power Planning Council’s offices in Portland. About 40 people attended.

The meeting began with a presentation by Robb Roberts and Claudia Andrews of BPA. They presented a fleshed-out version of a diagram, initially suggested by Jim Litchfield at the group’s fourth meeting, showing the relationship of net billing to Bonneville’s other revenue requirements. The group seems to agree that WPPSS bondholders face very little risk, even if Bonneville can’t cover all its cost, since Bonneville’s net billing obligations must be covered ahead of other obligations. There is still disagreement, however, about whether a complete separation of Bonneville’s transmission from its power marketing function is likely to be perceived by bondholders and their representatives as a reduction in the bonds’ security.

The group returned to the issue of appropriate responses to a Bonneville revenue shortfall. Several members of the group made the point that a short-term shortfall that might occur sporadically would be appropriate to handle with some sort of loan, as they have been in the past. A chronic shortfall is a different matter. The group is interested in some analysis of the potential size and duration of shortfalls. Al Wright said that he thought that he could arrange for some work along these lines to be presented to the group. Randy Hardy’s testimony of June 12 before the Subcommittee on Water and Power of the House Committee on Resources was distributed and his call for a contingent stranded cost recovery mechanism was noted.

Paul Murphy presented a draft report on the meeting of a "less-than-full-separation" task force that met since the last meeting. The task force assumed that Bonneville transmission and power marketing would continue to have a single administrator and a single fund at the U.S. Treasury, but that legislation would functionally separate the two functions, would require dealings between them to meet all standards of conduct required by FERC Order 889, and would grant the FERC greater regulatory authority over the Bonneville transmission business than it has now. The draft report listed 9 general issue areas, with policy options for dealing with each issue.

The working group discussed the report and identified policy options that would bring the FERC’s treatment of Bonneville most closely to equivalent to FERC’s treatment of investor-owned utilities. Paul Murphy will bring a revised draft presenting these options to the next meeting, and the group will consider whether there are any issue areas in which there are good reasons for FERC regulation of Bonneville to depart from equivalency with its regulation of IOUs. The group will also consider the other issues and benefits that would result from a more complete separation.

John Saven announced that a meeting to discuss the differential financial impacts on Bonneville customers of "FERC-equivalent" regulation will be held at Bonneville (Room 618) at 9:00 AM on June 20.

The next meeting of the work group is scheduled for 9:00 AM, July 1, 1997 at the Northwest Power Planning Council office at 851 S.W. 6th Ave. Portland.