04/23/2021 Portland Update

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BPA and Parties Move Towards Rate Case Settlement

The BP-22 rate case is on track for settlement. After extensive negotiations between BPA and the rate case parties, including NRU, the legal concerns that NRU had earlier have been addressed, and only two parties to the case have indicated that they will oppose a slightly revised version of the “counterproposal” settlement package BPA presented on April 14. The objecting parties, the Idaho Conservation League and Brookfield Renewables, will oppose the settlement based on specific, narrow issues, and Bonneville has indicated that it will move forward with the settlement despite their objections. The nearly unanimous support of public power for the settlement was a key factor in BPA moving forward with the settlement in the face of some initial opposition.

Next week, we expect to negotiate and – if all goes well - agree to a formal settlement and have a timeline in place for wrapping up the remainder of the case with the settlement intact.

The settlement would provide significant benefit to NRU members and is, we believe, a fair package for all parties and will put us on track for addressing revenue financing and other issues in a coordinated, collaborative, and durable fashion after the formal rate case concludes.

In terms of projected rate impacts, it is important to remember that all studies, including market price forecasts and secondary revenues, will be updated prior to setting rates. The best information we have at this time is in comparison to the Initial Proposal that was released in December. Remember, under the Initial Proposal, the median rate change for NRU members was a 2.5% rate decrease compared to BP-20 final rates. Under the settlement, the median rate change for NRU members, using the Initial Proposal information as a basis, would be a 4.6% rate decrease compared to BP-20 rates.

The best information available to us indicates the market price forecasts BPA used in the Initial Proposal have not changed substantially, meaning these rate projections are still reasonable. However, please remember that the settlement would not set the final rates, though it would create more certainty about several major components to the final rates, particularly the amount of revenue financing. Therefore, while we are optimistic the final rates will result in a fairly substantial rate decrease compared to BP-20, the rates will not be finalized until July.

We are pleased that nearly all parties, including all of public power and nearly all of Bonneville’s transmission customers, were able to put aside their disagreements to allow this settlement to move forward. We hope we can build on this success in other forums.

NRU Submits Letter to BPA Administrator Urging Restoration of Original EIM Decision Timeline

As suggested in the April 5 Portland Update, NRU submitted a letter to the BPA Administrator last week asking to restore the original Phase V decision timeline for BPA’s decision to join the EIM. NRU worked diligently with BPA to establish a decision framework for joining the EIM that would give NRU and other customers time to assess all available information, including outcomes from the BP-22 rate case. The truncated timeline essentially precludes including outcomes from BP-22 because the decision process begins only two days after issuance of the final record of decision and ex-parte restrictions are lifted. The letter is attached to this update.

BPA Shares Intention to Negotiate Ten Year Successor Accords

This week, BPA fish and wildlife staff announced their intention to negotiate and secure ten-year successor fish and wildlife mitigation accords with the existing accord partners. BPA staff pointed to the perceived benefits of 1) funding certainty, 2) strengthened relationships with tribes and states, and 3) mitigation of litigation due to forbearance language in previous accords as reasons for pursuing another round of long-term accords. BPA wants to modernize the agreements to make sure they work for BPA and make improvements to the accord language related to affirmation of adequacy and forbearance. BPA expects the process will span from now until the current accord extensions expire in 18 months.

Several on the call, including NRU, questioned what measurements were used to prove out the benefits from the first accords as cited by BPA. Also mentioned by those on the call were the effectiveness of future accords when all parties previously did not sign an accord and are not bound by language limiting their rights to sue and what budget assumptions are being used for the ten-year horizon of the successor accords. The measurement of benefits by BPA staff was largely subjective, but BPA staff did state they are assuming budgets to support future accords remain flat when compared to current budgets with the potential for inflationary increases.

The announcement was unexpected and generated a significant amount of feedback on a call with many attendees, so NRU staff did not have an opportunity to ask all the questions we have regarding this effort. NRU has already arranged a follow up conversation with both the Manager of the Fish and Wildlife programs, Crystal Ball, and the Executive Vice President Environment, Fish and Wildlife, Scott Armentrout. We will be keeping a close eye on this process for our members.

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