Northwest Energy Review Transition Board - Summary of meeting 7 of TWG

*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 7

July 1, 1997

Al Wright chaired the work group’s seventh meeting at the Northwest Power Planning Council’s offices in Portland. About 35 people attended.

The meeting began with an adjustment of the group’s meeting schedule. Our next meeting will be July 22, with following meetings scheduled on August 5, August 19, September 2, September 16 and September 30. This schedule will maintain the transmission work group meetings the day before those of the subscription work group for the convenience of those who participate in both groups.

The group discussed whether this work group should provide a forum for the Transition Board’s examination of transition costs. Many in the group feel that discussing transition cost mechanisms anywhere will distract from other discussion that would be more productive. Some said that if the discussion of transition cost mechanisms must take place, it should be separate from the discussion of transmission. The work group decided that the discussion of transition cost mechanisms will not be in the transmission work group. Al said that the Transition Board intends that consideration of transition cost mechanism not interfere with subscription discussion; what that means for the schedule of transition cost discussions will be made clearer at the Transition Board meeting July 14.

Al described the early thinking regarding the process for evaluating the control of Bonneville costs. The Power Planning Council "Power 4" and Bonneville plan a joint effort, with numerous small meetings with interested parties. Part of the effort is to identify a few (~4) advisors with experience in redefining the mission and structure of large organizations. It’s hoped to have a product in between 90 and 180 days.

The letter of the Northwest senatorial delegation to the four Northwest governors was circulated and discussed briefly. The delegation has concluded that the region needs to begin developing legislative options to separate Bonneville’s transmission and power marketing, and it recognizes the difficulty of accomplishing the separation while preserving Bonneville’s ability to meet its obligation, and without shifting costs among customers.

The group took up Paul Murphy’s draft of features that would constitute "IOU-equivalent" FERC regulation of Bonneville. Paul and others reiterated that this draft was not a set of recommendations, but was intended to focus discussion on a working definition of "IOU-equivalent" regulation. The next stage of discussion will attempt to identify features of Bonneville’s regulation that are appropriately different than regulation of IOUs. The group generally agreed that the issue of how the FERC should deal with Bonneville’s lack of equity holders is one of the important issues for the next stage of discussion. A "small" task force coordinated by Paul Murphy will meet to bring a more clearly-defined list of such issues to the next work group meeting.

John Saven and Lon Peters reported to the group on the results of task force meetings on potential cost shifts among customer groups that might be caused by "IOU-equivalent" regulation of Bonneville by the FERC. They reported that Bonneville’s current practice (the use of "repayment studies" to schedule Treasury payments) results in payments that are different than a simpler straight-line depreciation plus interest method. If the FERC insisted that Bonneville change from its current method, the total amount of Bonneville’s transmission revenue requirement could change. This task force will try to bring estimates of the size and direction of this change, and possible effects on customer groups, to the next working group meeting.

The meeting concluded with discussion of what the most productive subjects of discussion might be for the next few meetings. Many in the group felt that we have made good progress toward understanding what features would be desirable in a redefined regulation of Bonneville by the FERC, and that we should continue to pursue the topic. There were differences of opinion as to whether the group should concentrate on issues related to FERC regulation to the exclusion of issues related to legal separation. Some pointed out that much of the discussion on FERC regulation covers topics that need to be covered for legal separation as well. We’ll discuss this again on July 22.

The next meeting of the work group is scheduled for 9:00 AM, July 22, 1997 at the Northwest Power Planning Council office at 851 S.W. 6th Ave. Portland.