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08/21/2020 Portland Update

Updated: Nov 12

NRU Hires General Counsel!

We are very excited to introduce Zabyn Towner as the newest member of the NRU team! Please join me in welcoming Zabyn to the family. His first day won’t be until September 21st, but his email is already active at ztowner@nru-nw.com. Feel free to drop him a welcome message.

Zabyn is a native of Whitefish, Montana, where he grew up in NRU-member service territory. He comes to NRU with more than a decade of Northwest energy industry legal experience. He has served as General Counsel for Pacific Northwest Generating Cooperative (PNGC), as a staff attorney for the Energy Trust of Oregon and was a law clerk for the Bonneville Power Administration.

Zabyn holds a law degree from Lewis & Clark Law School and a bachelor’s degree from Whitman College. He is admitted to the Oregon State Bar, the United States District Court for the State of Oregon, and the United States Court of Appeals for the Ninth Circuit. Prior to law school, he served as a legislative aide to United States Senator Kent Conrad (ND).

When not in the office, Zabyn enjoys trail running, fly fishing and, most importantly, spending time with his family.

NRU Staff Meets with BPA to Discuss Boardman to Hemingway

We met earlier this week with several BPA executives and staff to discuss an emerging proposal on the Boardman-to-Hemingway (“B2H”) 500kV transmission line project. B2H, which would stretch from northeast Oregon to southern Idaho, has long been considered a three-party project between BPA, PacifiCorp, and Idaho Power. BPA was expected to hold a 25% ownership share under the initial proposal. Under this new proposal, BPA would no longer have an ownership share in the project but would instead commit to use the new transmission line via NT transmission service with Idaho Power to serve its transfer customers in Southeast Idaho. There are additional aspects of the deal like asset swaps between the three parties—these details are still highly nuanced and quite frankly unclear at this point—but we believe the high-level proposal has promise and may accomplish the following:

  • Reduce BPA’s transfer service costs since the combination of new line and asset swap would mean BPA would avoid using PacifiCorp’s transmission system to serve SE Idaho loads.

  • Free up BPA borrowing authority that would have otherwise been used on B2H.

  • The project would still provide much needed transmission capacity from the Northwest to Idaho that BPA could use to serve its transfer loads in the Burley area.

All that said, the devil is usually in the details for these types of multilayered deals. In order for Idaho Power to commit to this proposal, BPA must commit to using (and paying for) transmission service on the line so that Idaho Power is guaranteed a large enough revenue source to pay for the transmission build. In order to make this guarantee, BPA is suggesting that they will require the SE Idaho customers to sign an assignment agreement whereupon those utilities would commit in advance to signing the Post-2028 contracts, and if they do not, then they would be assigned Idaho Power’s stranded transmission costs. This seems problematic at this point since (1) BPA has provided little to no insight into the terms and conditions of the Post 2028 contracts that they will be asking these customers to commit to, and (2) most of the benefits described above flow through to all BPA customers and not just the SE Idaho customers.

At this point, BPA is seeking non-binding support from the SE Idaho customers in order to continue the negotiations with PacifiCorp and Idaho Power. We believe it is appropriate to continue to move forward and further flesh out the details and also think this will give us the opportunity to influence the longer-term transfer policy issues. We are currently in the process of reaching out to the NRU members in SE Idaho (Lower Valley, Salmon River, and Lost River) to coordinate a response to BPA.

BPA Holds Network Operating Committee Meeting

BPA held its Network Operating Committee this week, which is the forum for BPA to discuss planning, policy, and operational issues with its NT customers. The focal point of the discussion was on the NT Dialogue Process, which is the process BPA uses to kick off its annual load and resource forecast process. Here are the key takeaways for the NRU membership:

  • Your BPA load forecaster will be reaching out to you in late August with a prepopulated load and resource forecast template. This must be reviewed and returned to BPA by the end of September.

  • The load forecast process is no different than in prior years. It is important to note that any load forecast submittals may be changed through the end of this calendar year.

  • For resource forecasts, if your utility intends to solely use its Regional Dialogue contract to serve load (i.e., no non-federal resources) then you do not need to make any changes or updates to the resource forecast portion.

  • This forecast submittal will have no impacts whatsoever on the current BPA Rate Period High Water Mark process. The deadline has now passed for load forecast modifications that would impact Above Rate Period High Water Mark Load amounts in the BP-22 rate period.

BPA Quarterly Business Review Update

BPA presented the technical details of its Quarterly Business Review for Q3 of FY 2020. A good portion of the meeting was devoted to discussing COVID-19 impacts, and BPA announced that it was now assuming a “bad case” COVID-19 scenario for Q3. What was interesting about this is that later on in the presentation, BPA staff indicated that COVID-19 has had little impact on both Power and Transmission revenues, though it was a factor in BPA’s significant underspend on capital projects. Otherwise, here were some notable takeaways from the meeting:

  • Transmission revenues are largely on track. There has been a reduction in long-term PTP renewals, but NT transmission revenues have picked up from the recent warm weather. Also, COVID-19 did not have much of an impact due to increased residential loads offsetting reductions in commercial loads.

  • On the Power side, Net Secondary Revenue forecasts are largely the same from Q2 with increased water volumes and lower market prices offsetting each other.

  • Reserves for Risk for Transmission are anticipated to be $257M, which is well above the rate case forecast ($148M). On the Power side, Reserves for Risk are forecasted to be $309M, which is only slightly lower than the rate case forecast ($321M).

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