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05/21/2021 Portland Update

NRU Listening Sessions

On Thursday of this week, NRU held our first listening session where we removed the confines of a planned meeting agenda and could hear more of what is on our members minds. The conversation was lively and not surprisingly, primarily focused on the future of BPA and how we might best optimize BPA as a resource.

We are holding a second session on Tuesday May 25th to account for scheduling conflicts and to ensure we have an opportunity to hear from all NRU members. I would also encourage those members who attended the first listening session to attend the second as well to again share their perspectives and hear those of other NRU members. Connection information for the meeting next Tuesday is included below.

NRU Member Listening Session #2 Tue, May 25, 2021 1:00 PM - 2:30 PM (PDT) Please join my meeting from your computer, tablet or smartphone. https://global.gotomeeting.com/join/740039365 You can also dial in using your phone. United States: +1 (872) 240-3412 Access Code: 740-039-365

EIM Workshop

At this week’s EIM Implementation Workshop, BPA shared the topics they intend to include in the Phase V close-out letter. Recall that Phase V is the last step in BPA’s process to consider potential participation in the Energy Imbalance Market (EIM). Phase V will last for 22 calendar days, beginning at the conclusion of the BP-22 and TC-22 proceedings. The draft close-out letter will be posted August 2nd, with comments due by August 23rd. The final close-out letter will be issued September 28th. The next steps would be for BPA to notify the CAISO, and the CAISO to submit relevant information to FERC. The full list of topics that will be included in the close-out letter are listed on slides 44-47 here; a summary is below:

· Assessment of changes since 2019 Record of Decision, which is when BPA decided to sign the EIM Implementation Agreement, concluding Phase II. Examples include:

o CAISO summer 2020 load shedding event and 2021 summer readiness process

o Governance developments

o Greenhouse gas issues

o BP-22 and TC-22 decisions

· Assessment of BPA’s EIM participation principles

· Final decision on whether Bonneville will join the EIM

BPA also agreed to provide post Go Live EIM reporting via BPA’s quarterly business reviews (QBR). This would include CAISO’s quarterly benefit metric and qualitative market updates on BPA’s participation.

Quarterly Business Review (QBR) – FY2021-Q2 Technical Workshop

At this week’s QBR technical workshop, BPA shared additional details from its FY2021-Q2 review. Here are some key takeaways:

· Power’s Composite cost pool revenues have decreased compared to rate case due to loads coming in lower than forecasted, but this was partially offset by higher Demand and Load Shaping revenues compared to forecast.

· Trading floor revenues are strong, coming in $178M higher than rate case forecast due to higher-than-expected prices.

· Transfer costs are also lower than rate case forecast.

· Forecast end of year reserves available for risk are right on target, with the agency, Power and Transmission all coming in around the 90 days cash on hand target.

· There is a 0% modeled probability of a CRAC, Financial Reserves Policy Surcharge or Reserves Distribution Clause triggering for both Power and Transmission at the end of FY 2021.

BPA plans to begin public workshops in Q4 of this fiscal year to “refresh” its 2018 Financial Plan, including consideration of BPA’s financial health, access-to-capital issues, sustainable capital funding approaches and long-term debt management.

Columbia River Treaty Power Group (CRTPG) – Spring Surge

Before going into an update on the efforts of the CRTPG, it’s important to recognize the many NRU members who attended the virtual meeting with Senator Cantwell’s staff that was held immediately following the NRU quarterly meeting. Your presence at that meeting was impactful to Cantwell’s staff and impressed upon them the far-reaching impacts of inequities of the treaty as it exists today. Every member of the CRTPG and the consultants working on behalf of the CRTPG, commented to me on how beneficial it was to have representation from across the state of Washington and from those who are not regular government affairs professionals. Thank you for the overwhelming response to our request for help as we continue our push to modernize the Columbia River Treaty.

The CRTPG continues its spring surge, a campaign intended to create broad support within our delegation for asking the Biden administration to get behind and move forward termination of the treaty’s power provisions; the stalemate in negotiations, ten rounds with no discernible progress, clearly indicates that Canada is not motivated to engage in good-faith modernization discussions without the leverage provided by issuance of a notice to terminate. One of the sticking points for several members of the delegation is lack of consistent support for termination among stakeholders in the treaty process, specifically the Army Corps of Engineers (USACE). The CRTPG met with the USACE this week to share that our frustrations with the lack of progress in the negotiations and mounting costs are our primary reasons for leaning on termination to being Canada to the negotiating table and to hear why the UASCE is reluctant to get behind issuance of termination. The USACE was sensitive to our plight, but their focus is on flood risk management (FRM) and they are concerned termination of the power provisions may carry over into their efforts to coordinate FRM with Canada. Although we did not agree on a path forward, the meeting was positive and both parties agreed to more regular conversations in an effort to collaboratively identify a mutually beneficial path forward.

As the past eight years have shown, modernization of the treaty will be a long and frustrating slog. The benefits from modernization, or more bluntly stated a reduction in the Canadian entitlement, are too significant for us to get frustrated and reduce our engagement in this effort and we will continue to pressure the delegation to advance our interests. The CRTPG continues to evolve its efforts to match the current political climate and the underlying feeling is that leaning on the importance of keeping the carbon free power generated by the Columbia River System in the United States will be appealing to the Biden administration and will be a positive factor in our engagement with decision makers in Washington DC.

2021 Power Plan Delayed

The NW Power and Conservation Council announced another delay to the release of the 2021 Power Plan (aka 8th Power Plan). The new schedule has the draft Plan released in August for a 60-day public comment period, with the Final Plan released by February 2022. There are still many moving pieces of the draft Plan, including an expectation that energy efficiency acquisitions will be far less than previous Plans, driven by the plummeting cost of renewable resources, such as solar and wind. More to come as we continue to learn more.

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