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09/18/2020 Portland Update

The sound of rain falling for most of the day has been a welcome companion to the workday and change from the dry weather that has created such treacherous conditions in our region this summer. We at NRU sincerely hope all of the crews are staying safe as they continue to work long hours to restore service to areas damaged in the recent fires and storms.

Lots of Comments!

This week, NRU submitted comments on a variety of issues affecting BPA power and transmission affordability and reliability. Our comments are attached and are summarized below.

Topic: Resource Adequacy (RA)

Recipient

Northwest Power Pool (NWPP) Steering Committee

Summary of Issue

· Coordinated by the NWPP, 18 regional entities (including BPA) have joined together to explore and develop a RA program in the West to address capacity shortfalls and resource adequacy concerns.

· The RA Program Conceptual Document was published in July, marking completion of Phase 2A. The document proposes a skeletal framework for a potential RA program, with most of the significant details to be worked out in Phase 2B.

· The preliminary conceptual design is for a bilateral market structure that is voluntary to join, but with forward-showing capacity requirements for those who join. The RA program would require participants to show 7 months in advance that they have enough resources to meet their loads, plus some margin. The RA program would also facilitate access to and sharing of excess capacity to those short, with compensation.

· Most of the details have yet to be decided, meaning Phase 2B (which we are now in) will be critical.


Summary of NRU Comments

· We expressed general support for the conceptual design, noting the importance of maintaining resource adequacy and appropriately compensating resources providing it.

· We offered the following comments to guide the development of details in Phase 2B:

o While NRU members will not directly participate in the RA program, they will be impacted as customers of BPA. Even if BPA doesn’t participate, NRU members served by transfer may be impacted if their host BAA joins. BPA needs to engage with its customers to determine how RA requirements will be met by BPA on behalf of its Load Following customers.

o The following topics will be decided in Phase 2B and will be critical to our evaluation of the RA program: compensation structure for deployment of capacity; interaction with the EIM or other organized markets; where the point of compliance is; governance structure.

Next Steps

· As a member of the Stakeholder Advisory Committee, NRU has expressed support for deep dive sessions on key topics, such as the role of load serving entities, governance, FERC jurisdiction, interaction with EIM/EDAM, qualifying capacity of storage hydro resources.

· Phase 2B “Detailed Design” is targeted for completion by “early 2021,” which we feel is extremely ambitious given the complexity of outstanding issues.

Topic: BPA Transmission Losses

Recipient

BPA

Summary of Issue

· We shared the latest on BPA’s BP-22 and TC-22 rate case issues at the Sept. 10th NRU webinar.

Summary of NRU Comments

· Our comments were consistent with the guidance received during the Sept. 10th webinar, specifically:

o Support for an updated, seasonal loss factor to reflect actual losses on the system

o Support for compensation of the FCRPS for filling in gaps related to loss returns

o Support for using the embedded cost of capacity of the FCRPS as the rate structure, but we need more analysis and documentation of the methodology to convert that into a $/MWh fee

o Do not support moving to financial-only loss returns in the future – we believe there are higher-value uses of the FCRPS, such as serving preference customer needs

Next Steps

· At the Sept. 29th workshop, BPA will share its reactions to the submitted comments and share what will be in the Initial Proposal that will be released in mid-Nov.

Topic: BPA BP-22 and TC-22 Rate Case Issues

Recipient

BPA

Summary of Issue

· We shared the latest on BPA’s BP-22 and TC-22 rate case issues at the Sept. 10th NRU webinar.

Summary of NRU Comments

· Our comments are consistent with the guidance received during the Sept. 10th webinar, specifically:

o Strongly do not support the proposed change to the net secondary revenue methodology

o Questions regarding the differential in BPA’s AURORA modeling of market prices, compared to what we received from TEA and ICE futures

o Supported BPA’s proposals on: changes to EI/GI due to joining the EIM; not developing a revised NLSL product for BP-22; the phased approach to evaluating BPA joining the EIM.

Next Steps

· At the Sept. 29th workshop, BPA will share its reactions to the submitted comments and share what will be in the Initial Proposal that will be released in mid-Nov.

Topic: Draft EIS for Boise River Basin Feasibility Study

Recipient

Bureau of Reclamation

Summary of Issue

· Reclamation is considering a project that would increase storage within the Boise River basin via a dam raise at Anderson Ranch Dam.

· In its cost allocation analysis, Reclamation made assumptions about power markets and the impact to BPA’s marketing capability due to this increased storage.

· However, Reclamation did not consult BPA for its expertise on power markets and how the system is managed, resulting in a proposed cost allocation that does not reflect actual potential benefits to Power.

· BPA gets credit for bringing our attention to this issue and for being concerned with the proposed cost allocation, even though it is “only” $3M – we are pleased BPA is paying close attention to every dollar spent.

Summary of NRU Comments

· We do not take a position on the project, just state that Reclamation needs to work with BPA early in the process when it is considering projects that might include a cost allocation to BPA, so BPA can help inform the assumptions and methodologies used in calculating potential benefits (and thus costs) attributable to Power.

Next Steps

· We have heard Reclamation has improved its coordination with BPA in recent weeks, so we are hopeful this issue is being addressed and will be better handled going forward.

Post 2028 Working Group Making Steady Progress; NRU Staff Meets With BPA

The NRU Post 2028 Working Group met this week to continue its work on the General Resource Investigation (GRI) and deep dive on BPA’s Tier One Rates forecasts for the Post 2028 era. The Working Group is making good progress and is on track to complete the GRI by November, which will give the entire NRU membership a solid analytical foundation on which to build our Post 2028 contract negotiating positions. As you’ll recall, the GRI will take a series of different contract options and “stress test” them against a range of different real-world scenarios (low and high tier one rates, market prices, load growth, etc.). This week, NRU staff also proposed to the Working Group an array of additional variables to include in our modeling like Low Density Discount, Irrigation Rate Mitigation Product, and Residential Exchange. All in all, we are very excited not only about the forthcoming results of the GRI, but also how the process will educate both NRU staff and the membership in regard to how all these contract, rates and market pieces all fit together.

NRU staff also met with BPA’s Post 2028 Team this week to discuss what BPA has heard during its recent outreach efforts to customers. As you may know, BPA’s Account Executives have been meeting with most customers to discuss the key themes for the Post 2028 contract negotiations and ensure that the customer voice is included in a Post 2028 Concept Paper that BPA intends to publish sometime next calendar year. Here are the key themes that BPA heard:

  • This is a time of great uncertainty with changing markets, evolving carbon regulations, COVID and other externalities. There is also much uncertainty regarding BPA issues such as fish and wildlife, the Columbia River Treaty, and Residential Exchange.

  • Most of the drivers behind the Regional Dialogue policy and contract are still very much in play.

  • By and large, the current contract and tiered rates methodology is working fairly well, though there are some tweaks and increased flexibilities that customers have identified.

  • The ability to comply with carbon regulations is a key externality for many customers.

We found the meeting to be highly useful, and BPA has committed to meet with NRU staff on a monthly basis to keep us up to speed on their progress and maintain a strong dialogue as we barrel toward BPA’s issuance of a concept paper sometime next year.

BPA Concludes Rate Period High Water Mark Process for FY 2022-2023

BPA has closed out its BP-22 RHWM process with a letter to the region and publication of final RHWM outputs. Further details including each BPA customers’ specific RHWM and Above Rate Period High Water Mark Load amounts can be found here. There were no surprises and no adjustments to BPA’s Tier One System Firm Critical Output (“T1SFCO”) calculations from what was presented in early August, and only two customers had minor adjustments to their Total Retail Load amounts.

Overall, this RHWM process resulted in the largest decrease to the T1SFCO during the Regional Dialogue era. NRU was on the forefront of challenging BPA’s assumptions and really held their feet to the fire in order to ensure the T1SFCO reduction was justified. Ultimately, BPA provided sufficient rationale for their proposed T1SFCO adjustments. NRU also led the charge on urging BPA to commit in the future to work with its tribal utility customers to extend their Contract High Water Mark augmentation process, and we were ultimately successful in this push.


NRU and PNGC File Joint Comments on Second Discussion Draft Rules for CETA

NRU again collaborated with PNGC to file comments urging the Department of Commerce in Washington to adopt rules that reflect the following principles:

  • The rules should acknowledge the unique attributes of the consumer-owned utility business.

  • The rules should acknowledge the virtually carbon free power supply of small (less than 25,000 customers), full requirements customers of BPA.

  • The rules should acknowledge the small size of our member utilities and offer a compliance path that meets the statutory requirements of CETA without being unduly burdensome.

The scope of our comments has broadened slightly as the rules have evolved and we have identified potential points of concern in the draft rules. However, our primary focus remains on carving out a less onerous compliance path for identifying and setting targets for both energy efficiency and demand response. We have expended the bulk of our energies here because we think we can have the most impact in this section and other groups in public power are not putting effort into this area.

We have met with Commerce twice since the release of the second set of draft rules to collaborate on language that would serve the high-level purpose of allowing BPA’s resource program to serve as the technical analysis supporting energy efficiency and demand response targets adopted by utilities. Our proposed language is included on page five of the comments attached to this update.

We anticipate this will be the last opportunity to comment on draft rules as Commerce is scheduled to file the CR-102 by October 1st; the CR-102 is the code revisers notice of proposed rulemaking. There is a public hearing and comment opportunity scheduled for December 2nd, but the rules will be essentially set in stone by then.


NRU comments_August workshops_final
.pdf
Download PDF • 255KB

NRU comments on tx losses_9-14_final
.pdf
Download PDF • 233KB

NRU comments on RA concept paper comment
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Download • 192KB

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