The Northwest Energy Review Transition Board took an interest in the saga of the slice and released new proposals for Federal Energy Regulatory Commission (FERC) regulation of BPA transmission and a "contingent cost recovery mechanism." All members were present, except Roy Hemmingway, who participated by phone. The audience was about 35.

Next Meeting: June 25 in Portland.

• SUMMERTIME AND WE WANT COMMENTING TO BE EASY -- Chairman John Etchart said he wanted upcoming opportunities for public comment and involvement made clear in response to a complaint the board’s schedule doesn’t afford sufficient opportunity for public input. We will release proposals on FERC regulation of BPA transmission and transition costs today and will take public comment on them at a hearing June 25 at 1:30 p.m. at the Council offices in Portland, he stated. Written comments will be taken through June, and members of the board and staff will be available for discussions and consultations until July 23, at which time the board intends to adopt final versions of the proposals, Etchart said.

• DOES THE SLICE OF THE SYSTEM PRODUCT HAVE A FUTURE? -- Larry Weis, general manager of Pend Oreille County PUD and past president of the Public Generating Pool defined the slice of the system product as the right of a customer to receive a defined percentage share of Federal Columbia River Power System (FCRPS) capability. We want slice purchases to be a subscription product, and the terms of the contracts to be five to 20 years, he stated. While generating utilities can use this more than non-generators, we’re not interested in a product that shifts costs among customers, Weis said.

We had a "tissue reject reaction" to this proposal earlier this year, but we’ve re-engaged the discussion on the slice since then and attempted to broaden the discussion to involve the public, said Paul Norman of BPA. We are making a sincere effort to "find a variant of the concept that complies with the basic principles we’ve laid out," he stated. I don’t know what the outcome will be, but we’re trying to find a "variant" that accomplishes what these customers want without hurting other customers, Norman explained. He added that he thinks the matter needs to be resolved by August.

• T-BOARD’S PROPOSAL FOR FERC REGULATION OF BPA’S TRANSMISSION -- Consultant Al Wright said the new version of the Transition Board’s proposal on FERC regulation of BPA transmission uses the Federal Power Act (FPA) as the "legislative starting point," as did the strawman proposal. Among the modifications needed to the FPA, he stated, are that FERC has to recognize BPA has to be able to recover its costs so "it doesn’t stiff the Treasury," and nothing in FERC regulation should adversely affect BPA’s priority of payments or the security of its third-party debt. Wright noted FERC has before it the question of whether it can mandate IOUs to join an Independent System Operator (ISO), and the board’s proposal only says BPA should be permitted to join an ISO. Mike Kreidler pointed out the Northwest Power Planning Council recently told FERC it will need to order ISO participation to ensure transmission pricing reform.

Like the strawman, the proposal lays out a process that clearly leaves FERC as the decisionmaker, Wright noted. Shelly Richardson of the Public Power Council asked if the Council’s letter could lead to mandated participation in an ISO by non-jurisdictional utilities, and she questioned whether the proposal is clear enough in its requirement that a hearing on BPA rates must be held in the region.

• T-BOARD’S LATEST THINKING ON A "CONTINGENT COST RECOVERY MECHANISM" -- Staffer Dick Watson pointed out that the "share-the-benefits" provision and the concept of a directed transmission charge that were in the strawman proposal are not in the latest version. The proposed "contingent cost recovery mechanism" has three stages, and Treasury deferral is still the trigger, he said. Stage 1 is the "use of credits and reserves," Stage 2 is a "capped rate adjustment clause," and Stage 3 is a "uniform transmission charge" limited to $100 million in any year, up to a total of $500 million, with a duration of 15 years, Watson explained. The Administrator’s decision to impose a transmission surcharge would be reviewed by FERC "to see that BPA is adequately mitigating stranded costs through opportunities to reduce costs and increase revenues while fulfilling its legal obligations," he noted. Jim Baker of the Sierra Club called the proposal a "regrettable step backwards" from the strawman and asked why it doesn’t include a requirement for an adequate level of reserves. Other speakers promised to make detailed comments on the proposal at the June 25 hearing.

Kreidler encouraged everyone to share their thoughts and comments with the board as soon as possible. We need to submit a report to the governors in July, he said, adding that the subscription process and rate case are contingent on the board addressing these issues.

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Please Note: This summary is based on detailed reports of the meetings of the Northwest Energy Review Transition Board. The reports are prepared by Resource Writers Northwest and distributed by the Northwest Power Planning Council. The Pacific Northwest Utilities Conference Committee (PNUCC) contributes financial support for these reports. To request a copy, please call the Council at 1-800-452-5161.