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10/09/2020 Portland Update

Proposed Comments on Bonneville Rates Issues – Due Tues, 10/13

Your feedback is requested on our draft comments that are due on Tuesday, October 13, in response to the September 29th BP-22/TC-22 workshop. Our outline is below. Please provide any feedback to Zabyn (ztowner@nru-nw.com) by noon on Tuesday, October 13.

  • Transmission Losses – Reiterate support for positions we have previously provided, including:

  • Update the loss factor, shaped monthly or seasonally in order to capture variations across the year.

  • The FCRPS should be compensated for providing capacity.

  • Both in-kind loss return and financial loss returns should continue to be allowed.

  • Support the Financial for Inaccuracy structure to penalize failure to return losses, but the proposed penalty is likely not sufficiently high enough.

  • Financial Health – We reiterated statements we have previously made on BPA’s financial health issues, specifically access to capital and its Leverage Policy, such as:

  • We supported the Leverage Policy “because it targets one of the key factors of BPA’s financial health and establishes a plan to directly respond to it” but continue to urge the agency to “thoroughly scrub its capital plans, both for project need and efficiencies in completing the same work at less cost.”

  • We supported the extension of the Regional Cooperation Debt (RCD) program, but with qualifying conditions including “no revenue-financing of capital projects for Power Services” and that “BPA should continue to scrub its planned capital expenditures for necessity, timeliness,  efficiencies, and to reflect actual deployment.”

  • We then say that the current two-week comment period is far too short for us to have meaningful engagement with our members on an issue as complex as BPA’s financial health, but remain committed to working with the agency and customers to develop prudent actions to maintain the agency’s financial health while also maintaining affordable and reliable power supply to end-users. We encourage BPA staff to review our previously submitted comments on these issues as they develop the Initial Proposal.

Update: Post-2028 Working Group

Here is a summary of the Post-20288 Working Group (WG) meeting we held this week:

  • We are in the final stretch of completing the General Resource Investigation (GRI). We received feedback from the WG on which scenarios to use to calculate individual member forecasted power supply costs post-2028.

  • Staff is now finishing the modeling to combine all the inputs and assumptions.

  • In order to ensure the full NRU membership has the opportunity to understand and engage in the GRI, we plan to share the GRI results in two phases:

  • Phase 1 – Will be shared with the Board at the November, 2020 meeting – focus on the quantitative analysis and underlying methodology and assumptions, including presentation of the per-member power supply cost estimates under different scenarios at four “snapshots in time” post-2028.

  • Phase 2 – Will be shared with the Board at the February, 2021 meeting – observations and discussions of more “qualitative” issues, based on the quantitative analysis. Topics would include: BPA-related issues, such as hydro variability and impact on secondary revenues; capacity and resource adequacy; counterparty risks; regulatory risks (e.g., carbon, RPS).

  • The GRI will be heavily used as a point of reference in our ongoing post-2028 conversations and will help guide us on which issues to drill into further.

Got Post-2028 Resources? We’d Like to Include Them in the General Resource Investigation

NRU staff and the Post 2028 Working Group are close to completing the General Resource Investigation, which will analyze an array of Post 2028 contract options and attempt to forecast anticipated power supply costs for each member under each contract option. As part of this analysis, members may also include their own resources so that we can more accurately calculate your future Post 2028 power supply. This can include member owned specific generation or Power Purchase Agreements with a third party that you intend to serve load with in the Post 2028 era. Otherwise, the General Resource Investigation will assume that your utility will use non-federal market purchases to serve load that is not otherwise served by BPA’s Tier One or PF Rate.

If you would like us to include your resources in the analysis, please let Blake Weathers (bweathers@nru-nw.com) know by next Friday, October 16.

California ISO Policy Initiatives Briefing

On Wednesday, the California Independent System Operator (CAISO) provided a briefing outlining its policy setting plans for 2021 and beyond. In very general terms, the CAISO’s policy goals are to (1) meet the operational goals of the California grid while rapidly replacing thermal resources with renewable resources, and (2) improve power market efficiency and operations. To those ends, CAISO plans to move forward with major policy initiatives to improve extended day-ahead markets, investigate and ensure resource adequacy, and better integrate distributed energy and storage resources.

It is notable that CAISO’s policy goals and initiatives do not include keeping power rates affordable for consumers or specifically addressing the interests of parties outside of California. Instead, the massive project of integrating renewables will continue to be the focus in California in the coming years. In the face of this, NRU will continue to participate in CAISO public processes and advocate for our interests in all available forums.

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