05/22/2020 Portland Update

Official BP-22 Rate Case Workshops Kick-Off

In what was the longest “kick-off” in recent memory, BPA officially began the BP-22 rate case workshops this week. This means that the typical rate case issues will begin to be discussed, in addition to the ongoing workshops to modify BPA’s rates and tariff in light of BPA’s likely participation in the EIM.

Most of the topics are the regular ones we’re used to, such as forecasting loads, resources, and gas and market prices to use in the modeling that serves as the basis for the Initial Proposal and proposed Tier 1 rate.

Unsurprisingly, there will be considerable discussions related to ancillary services (aka Gen Inputs) rate design, in large part due to BPA joining the EIM.

Finally, there are a couple of new, though highly esoteric topics that BPA staff will bring forward, such as simplifying the risk mechanism triggers and looking at Treasury Payment Probability at the agency level, instead of just at the business line level.

BPA has scheduled workshops once per month through September, which feels quite light given the enormity of issues we are still working through related to the EIM. BPA also issued its proposed rate case schedule, with the Federal Register Notice being published on November 12 and the direct case issued on November 19. This will start our normal rate case grind, with the Final Record of Decision and final rates published July 26, 2021.

BPA Commences Rate Period High Water Mark Process for FY 2022-23

BPA kicked off its Rate Period High Water Mark process for FY 2022-23 earlier this week. This is BPA’s method for determining each preference customer’s net load service requirement and Above High Water Mark Load amounts for the next two-year rate period.

BPA’s preliminary results included the largest reduction in the Tier One System Firm Critical Output (“T1SFCO”) during the Regional Dialogue era—a 288 aMW reduction, which is a 4.14% decrease. We were anticipating at least a 160aMW reduction as a result of modified spill pattern that was recommended as part of the CRSO preferred alternative. What we did not expect was an additional CRSO driven reduction of 110 aMW from BPA implementing a sliding scale summer draft at Libby and Hungry Horse and Grand Coulee draft variable limits. There were also a small number of expiring resource acquisition contracts that rounded out the total T1FSCO reduction.

While it’s been rare for BPA to deviate from its preliminary T1FSCO, BPA did increase it by 37 aMW back in FY 2016-2017, which was in response to comments submitted by NRU staff at that time. We intend to dig into the additional CRSO reduction of 110 aMW and ensure that it is appropriate. So, please consider BPA’s initial Rate Period High Water Mark amounts to be preliminary until we run that to ground.

NRU Submits Integrated Program Review (IPR) Letter to BPA Administrator

In response to concerns voiced by the NRU Board during the May quarterly meeting, NRU submitted a letter to Elliot Mainzer regarding the upcoming IPR process. The letter recognizes BPA’s efforts to bend the cost curve in the last IPR and goes on to stress the importance of continued efforts to maintain that discipline and identify further cost savings. We specifically ask BPA to take into consideration the current financial pressures utilities are experiencing due to the COVID-19 pandemic and limitations the pandemic will place on BPA’s ability to execute projects during the budget cycle covered by the 2020 IPR. A key takeaway expressed in the letter is the need for an IPR II process. The IPR II would give BPA and its customers as much time as possible to fully assess the impacts of the pandemic and how customers and BPA are faring under unexpected and unprecedented operating conditions.

A copy of the letter sent to BPA is attached to this update for your review.

August NIU/NRU Meetings

Our may meeting is only two weeks behind us and already we are looking forward to the August meetings. It’s difficult, if not impossible, to predict when businesses will reopen, and large gatherings will be allowed. Oregon has banned large gatherings such as concerts, festivals, sporting events and fairs through at least the end of September. It’s uncertain where an NIU or NRU meeting would fall on the spectrum of large gatherings so we are proceeding under the assumption August meetings will be held virtually.

Unlike May, August meetings are planned for our normal length and content. We realize how difficult it is to stay actively engaged in the webinar environment but with only four meetings per year it’s hard to have truncated meetings back to back. We will have more frequent but shorter breaks during the NRU meeting. We will also strive to keep information at the appropriate level of detail and our delivery at a cadence that allows for interaction but moves quickly along. Please let us know if you have any concerns with our initial thinking.

All of us at NRU hope you have a fun filled and safe holiday weekend!!

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