Transition Board Transmission Work Group
Meeting 3
May 6, 1997
The work group’s third meeting was hosted by PGE, with about 40 attending. Al Wright chaired the meeting.
After some initial review of the goals of the group (see the summary of the April 1, 1997 meeting of the group) discussion moved to the issue of "FERC-equivalent" regulation of a separated Bonneville transmission entity. Bonneville has a study underway to compare the FERC’s regulation of Bonneville with its regulation of other transmitting utilities, and to identify legal impediments to eliminating the differences. Bonneville will bring this study, with a side-by-side comparison of regulatory elements, to the this group for its next meeting on May 20. Don Kari, Paul Murphy, Lon Peters and Terry Mundorf volunteered to help by reviewing Bonneville’s early drafts. Don Kari will also highlight the elements of the FERC’s regulation of IOUs that are most important to match if future regulation of Bonneville is to be "FERC-equivalent."
The group moved on to the annotated list of issues initially discussed in the April 15 meeting. The requirements for approval of Bonneville’s budget by the Executive Branch and Congress (Issue 4) were discussed. The group moved on to statutory priorities of transmission service for Federal power and Northwest loads (Issues 5 and 6); we explored the possibility that contractual arrangements could assure open access without legislative change. There were some opinions that these priorities might not conflict with open access if Bonneville’s power business line (PBL) paid its transmission business line (TBL) for priority access. The group didn’t reach a conclusion on these issues, except that they need more examination.
The discussion of Issue 7 (the ability of TBL to protect PBL rights under existing power sales contracts) covered the PBL’s potential need for protection after current contracts end and the protections available for the PBL if the TBL no longer plays that role. The PBL’s need for protection under future contracts will depend on the provisions of those contracts (e.g. take-or-pay contracts should make TBL protection unnecessary). The utilities forming IndeGO are voluntarily giving up protection for their power contracts by their transmission. In the absence of transmission protection, the courts would be means of enforcing contracts.
It appears that the allocation of Treaty responsibilities between the TBL and PBL (Issue 8) would not require legislative language, but could be accomplished by executive order. This issue doesn’t seem to present any insurmountable obstacles to separation of the TBL and PBL.
Issues 9 and 10 (the determination of the TBL’s rates and limitations on the inclusion of power-related costs in those rates) will be taken up together at the next meeting on May 20. Paul Murphy will bring the work group a paper examining Bonneville’s authority to recover power costs in transmission rates. Bonneville will bring a paper explaining their views on that authority. Bonneville also studying the elasticity of demand for its transmission, and will bring the results to the work group when the study is complete.
Bonneville will bring a more detailed description of the public responsibilities referred to in Issue 11, and any issues involved in their allocation to TBL and PBL, to the next meeting.
The group’s examination of Issue 12 (the assignment of assets and existing contractual obligations and rights between TBL and PBL) concentrated on TBL’s rights to control some generation facilities to maintain reliability of the transmission system. The FERC and IndeGO are still working on the best way to deal with these interactions. The work group will need to come back to the issue.
Bonneville will come to the meeting on May 20 prepared to explain the legal issues that affect Bonneville’s participation in IndeGO or any other IGO. Steve Larson indicated that the one legal barrier that would require legislation is Bonneville’s current inability to turn over operation of their transmission facilities to a non-federal entity. Al Mouncer will bring documentation of the statutory or contractual basis for the priorities of payments from Bonneville’s revenues to the next meeting as well.
The last topic discussed by the group was a staff strawman proposal to specify the FERC as "gatekeeper" of any collection of revenues by the TBL to help meet the PBL’s costs. There were a number of concerns about whether any such collection would be treated as a loan or a grant, and about the problem of letting one federal agency determine the ability of another to cover its cost. The group agreed that it was best to postpone discussing strawman proposals until it had a better idea of Bonneville’s authority make such collections.
To review assignments for the next meeting:
The next meeting of the work group is scheduled for 9:00 AM, May 20, 1997 at the offices of the Northwest Power Planning Council, 851 S.W. Sixth Avenue.