• Goals
• Principles
• Assignments
• Future meetings
• Initial List of Questions and Issues - subject to modification after review

The work group had its first meeting at the Northwest Power Planning Council’s offices, with about 40 attending. Transition Board member Todd Maddock welcomed the group and announced that Al Wright had been asked to chair the work group.

The first order of business was a quick review of the work plan. The group then moved on to discussion of what was intended to be achieved. It arrived at a list of six goals, most of which are drawn from the recommendations of the Comprehensive Review. The group recognized that it may not be possible to fully realize all the goals simultaneously (quotes are from the report of the Comprehensive Review Steering Committee):

Goals

1. "The primary goal of the Steering Committee’s recommendations for transmission is a transmission system whose structure and operation help ensure a fully competitive generation market. . . . Bonneville’s generation and transmission systems should be separated to promote competitive practices and to avoid the problem of self-dealing between the generation apparatus and the transmission system."
2. ". . . the formation of an independent grid operator, regulated by FERC and including the transmission assets of the Bonneville Power Administration and other owners of major transmission assets in the region."
3. "Legislation should also subject Bonneville’s transmission to FERC regulation that is equivalent to FERC regulation of investor-owned utilities."
4. "[A]ny separation of generation and transmission – whether by administrative or legislative means – be achieved in such a way that it does not jeopardize or diminish the legal obligation and ability of Bonneville to meet fish and wildlife and other obligations."
5. ". . . maintain the [transmission] system’s reliability. . . ."
6. Transmission separation should not increase the cost of transmission or shift costs among transmission users.

Principles

The group discussed a set of tentative principles suggested by the staff and raised some of them to the level of goals (numbers 2 and 5 above). The group took up the tentative questions and issues suggested by the staff but decided to examine and assign some of the tasks in the work plan, returning to questions and issues later to make sure they’re all covered.

Assignments

The group formed two subgroups to begin work on Tasks 2 and 3 of the workplan:

• The Task 2 subgroup will examine existing statutes and other relevant materials for obstacles to effective separation of Bonneville transmission from its power marketing function and participation in an independent grid operator. Bonneville has done significant analysis in this area; the group has asked Bonneville to make its analysis and the documentation on which the analysis is based available. The subgroup also requested that Bonneville establish a "documents room" in which the relevant statutes, legislative history, contracts and agreements would be made available to the work group members.

• The Task 3 subgroup will not begin by "formulating alternatives for separating BPA’s financial funds..." as laid out in Task 3. Instead, it will examine Bonneville’s current treatment of costs of different categories, as the first step in understanding alternative approaches to separating the Bonneville fund into components that could be assigned to separated functions. The subgroup asked that past Bonneville work on ways of achieving effective splitting of the Bonneville fund be made available.

Future meetings

At the next meeting, the work group will be briefed by Bonneville staff on Bonneville work regarding the legal issues involved in separation and the alternative means of splitting the Bonneville fund. The rest of the meeting will be devoted to development of an issues list; a draft list suggested by staff is attached.

The group adopted a tentative schedule of meetings the first and third Tuesday of each month. This schedule is linked to the meetings of the Federal Power Marketing Subscription Work Group, which are the first and third Wednesdays of each month, so that attendees can reduce travel cost and inconvenience.

The next meeting of the work group is scheduled for April 15, 1997 at the Northwest Power Planning Council offices. People who would like to join the work group or either of the subgroups should contact Ken Corum at the Northwest Power Planning Council (503-222-5161 or ).

Initial List of Questions and Issues - subject to modification after review

1. What conditions have to be met in order for Bonneville to participate as fully as possible in the independent grid operator?
2. What are the alternatives for separating Bonneville’s generation and transmission?
3. What are the implications of the separation alternatives for the membership and possible role of the federal transmission entity in the independent grid operator?
4. Will the transmission entity be able to continue federal borrowing? If not, how would it acquire funds?
5. What will the entity’s relationship be to other federal entities such as OMB?
6. What are the transmission entity’s responsibilities to fish recovery and other public purposes?
7. How can such an entity be formed and maintain tax exempt status and security for Supply System and other third party bonds?
8. How can FERC regulation equivalent to that to which investor-owned utilities are subject be accomplished consistent with the principles of security of treasury debt and fish and wildlife obligations?
9. Are there practical limits to "wire charges" for fish and public purposes before bypassing occurs? How are those limits affected by different pricing approaches?
10. What structure and governance should the federal transmission entity have? The structure should be flexible enough to accommodate what ever relationship develops between an independent grid operator and the federal transmission entity.
11. What kind of public accountability and responsibility should the federal transmission entity have?