Reminder – NRU’s First Listening Session is Scheduled for Next Thursday
We will be holding two listening sessions for NRU members to give voice to their concerns for the future and what might represent the art of the possible. As stated during the NRU meeting, these will not be staff driven presentations but a forum where our members can come together to discuss what’s on their minds and potential future strategic actions. Examples given during the meeting include a comprehensive overhaul of the Northwest Power Act, incremental changes like those currently being pursued by PPC, specifically deauthorization of the power function at the Willamette projects and changes to the 4 (h) (10) (c) credit, and a region wide tax for funding environmental mitigation. These examples represent significant undertakings, but the listening session is for us to brainstorm all ideas.
The first session will be held virtually on Thursday May 20, 2021 from 1:00 to 2:30 pm. A second identical session is being held later in May to accommodate member schedules. Connection information for the May 20 session is included below for your convenience.
Please join my meeting from your computer, tablet or smartphone. https://global.gotomeeting.com/join/580089469 You can also dial in using your phone. United States: +1 (571) 317-3122 Access Code: 580-089-469
Q2 Quarterly Business Review (QBR)
On Tuesday of this week, BPA held the QBR for the second quarter of fiscal year 2021. The QBR provides a regular update on the agency’s financial status and high-level drivers behind that status. The report this quarter shows that overall, the agency is in increasingly strong financial health and is meeting all but one of its key performance indicators and key strategic initiatives; the key performance indicator not achieved this quarter is related to forced outages. Some takeaways and caveats from the presentation are listed below:
· Agency net revenues are approximately $100 million higher than the rate case forecast. This is due to the high market prices BPA is fetching with secondary sales.
· The worsening drought year could impact inventory and limit secondary sales towards the latter part of the fiscal year.
· IPR expenses are essentially equal to the rate case forecast.
· Capital expenditures are significantly below the rate case forecast.
· Transmission accounts for two-thirds of the capital underspend at $121 million and approximately $40 million of that underspend is related to customers delaying projects in the queue.
· Days cash on hand is at 93 days, well in excess of the 60-day target set by the agency.
· Limited hydro inventory could impact days cash on hand in the latter part of the fiscal year as well.
To view the presentation materials from the QBR, please click here. A more detailed technical workshop to dive deeper into the makeup of variances between forecast and actual will be held on May 18th. Information for that meeting can be found at this link.
May Carbon Forum
On Monday, Bonneville and public power held the latest edition of the regional Carbon Forum, with presentations on implications for Bonneville of Washington’s new cap-and trade legislation, Bonneville’s greenhouse gas accounting if the agency participates in the EIM, state legislative updates, and Washington CETA compliance.
In the first presentation, Bonneville presented several uncertainties for greenhouse gas accounting under Washington’s cap-and trade. The legislation is still extremely new, subject to rulemaking, and there are many, many details to work out. In general, though, Bonneville believes that utilities should receive sufficient free allowances under program through 2044 to mostly or completely cover any costs of compliance.
Regarding EIM greenhouse gas accounting if Bonneville decides to participate in the EIM, Bonneville presented a business case showing net financial benefits to making direct sales into California. Therefore, Bonneville anticipates that it will make direct sales into California if it joins the EIM but conceded that it will continue to assess this determination taking into account evolving requirements of Washington’s CETA and cap-and-trade requirements. There will be further discussion of this topic with customers at the upcoming EIM workshop.
The state legislative updates focused on our beginnings of understanding Washington’s new cap-and-trade legislation. The cap-and-trade program would begin in 2023, but only if the legislature passes a transportation bill that includes a $0.05 per gallon gas tax before then. In very general terms, the program would lead to a 95% reduction in greenhouse gas emissions from 2005 levels in Washington by 2050. For Bonneville customers, compliance obligations will depend greatly on whether Bonneville decides to “opt-in” to become a jurisdictional entity, and Bonneville is just beginning to consider the implications of doing so. Many other details of the program are left to agency rulemaking, and so we will be paying close attention to these processes going forward.
Oregon is also considering carbon legislation, with the most significant bill imposing a “100% clean” standard on IOUs only. This bill is currently stalled in committee.
For CETA, an upcoming rulemaking will address several outstanding issues, including the definition of “use” of electricity for determining compliance obligations, how energy storage is treated, the relationship of unspecified market purchases by Bonneville and others and the no coal requirement that goes into effect in 2025, and how Bonneville customers can comply with CETA both before and after 2028.
The next carbon forum is scheduled for July 12 and will feature presentations from NRU staff on post- and pre-2028 carbon issues that Bonneville and NRU members face. There will be more details about these presentations as we get closer to that date.
Rate Case Settlement Still on Track
This week, the formalities of the BP-22 rate case settlement and associated filings proceeded as expected. The Idaho environmental parties and Brookfield renewables filed their expected briefs on their narrow issues in the case, and the hearing officer issued an order formally cancelling oral arguments. We are still on track with the settlement and expect a Record of Decision with final rate determinations on July 28.