Northwest Energy Review Transition Board

*Northwest Energy Review Transition Board*	John Etchart, Montana
851 S.W. Sixth Avenue, Suite 1100 Portland, Oregon 97204-1348	Roy Hemmingway, Oregon
Phone 503-222-5161 or 1-800-452-5161 FAX 503-795-3370	Mike Kreidler, Washington
	Todd Maddock, Idaho

NORTHWEST ENERGY REVIEW TRANSITION BOARD MEETING SUMMARY

Tuesday, February 3, 1998
NWPPC Conference Room, Portland, Oregon

DOE will insist the Northwest come up with a transition cost mechanism before federal power subscription goes forward, the Northwest Energy Review Transition Board was told at its meeting this week. The work groups indicated they are considering issues related to a BPA rate case, and BPA reported presubscription sales are going well. Customer and public interest reps had a lively discussion of transition costs. All board members were present; Todd Maddock participated by phone; the audience was about 40.

Next Meeting: March 3 in Portland; the February 19 meeting has been canceled.

• DOE SPEAKS: NO SUBSCRIPTION WITHOUT A TRANSITION COST REMEDY -- Staffer Mark Walker reported on a trip to Washington, D.C., with Roy Hemmingway and Todd Maddock. We came away from DOE clear about their thinking with regard to BPA and subscription, he said. DOE said BPA cannot proceed with subscription unless the region agrees on a stranded cost mechanism, Walker stated. If the region cannot agree, DOE is ready to make the decision, he added.

The Administration is continuing to work on restructuring legislation, Walker said, and the action in Congress is concentrated on the House side. Congressman Rick White of Washington has emerged as the region’s leader on the issue; on the Senate side, Slade Gorton of Washington is the most active, he reported. Hemmingway said the transition cost mechanism and fish funding are priority items. Maddock said some aggressive proponents of legislation have realized they can’t move as fast as they once thought.

• WORK GROUPS GAIN ON THEIR TASKS -- Consultant Al Wright reported that issues related to a BPA rate case have recently emerged that are significant to both the Subscription and Transmission work groups. The issues include: Should the rate case address power only, with a customer waiting for a transmission rate, or should the power business line (PBL) offer a delivered product and bear the risk of whatever transmission rate is settled upon later? Wright noted that the Transmission group is again making progress, after calling off its meetings in October. "We’ve walled off transition costs, and we’re back to the FERC-equivalency issues," he said. By some time this spring, we should be able to report an agreement on all but the transition cost issue, Wright reported.

• THREE SOVEREIGNS’ MOA STILL IN COMMITTEE -- The three sovereigns’ senior staff met to look at a draft memorandum of agreement (MOA), staffer John Volkman reported. The MOA proposes to create two new groups: a Forum, made up of the Northwest’s governors and other political officials; and a Committee, made up of policy-level people, he explained. The draft MOA calls for three phases: a survey of issues and schedules; development of a unified fish and wildlife plan; and implementation of the unified plan, Volkman said. A big question is how the work would be staffed and funded, he added. "There is some impatience, including that of my governor, to get this rolling," Hemmingway commented. "We are optimistic that by February 27 we can take the draft out [for public review] and can wrap this up and get to work," he stated.

• WHAT WILL FISH NEED POST 2001? -- Bob Lohn of BPA reported on meetings related to BPA’s post-2001 fish budget. He said there is unlikely to be agreement on what needs to be done and on who decides. There is some acknowledgment of BPA’s need to move ahead with subscription, Lohn added. BPA’s senior staff believe the agency needs to keep its options open and has been deliberating on a rate case structure that allows for not making the decision today, he explained. Over the next several weeks, BPA will network and hold small informal sessions, Lohn stated. At the end, there will be a report issued and a public meeting, likely followed by the Administrator’s decision, he said.

• BPA FLIRTS WITH PRESUBSCRIPTION BOUNDARIES -- Paul Norman of BPA reported that presubscription activity authorized by the Transition Board has worked out fairly well. The sales have "created a little momentum and perception that BPA is likely to be competitive," he stated. BPA has signed contracts for 400 megawatts of sales, in addition to a 150 MW sale from the Hungry Horse project. If the agency wraps up the transactions being negotiated, sales would total 1,208 average MW, Norman said.

• PARTIES AIR SOME STRANDED COST LAUNDRY -- Customer and environmental reps reported on stranded cost discussions. Steve Weiss of the Northwest Energy Coalition said fish and environmental advocates will be upset if subscription offers below-market prices, without a stranded cost mechanism. Paul Murphy, representing the Pacific Northwest Aluminum Group, said his clients are concerned about "empowering BPA to collect money for some unknown purpose in the future." Ken Canon of the Industrial Customers of Northwest Utilities suggested talking about things that are actually stranded costs -- the difficulty is in looking at future cost overruns. Maureen Carr said the Public Power Council is developing approaches that can be phased in, depending upon the order of magnitude of the problem. "No one will give you their wallet" in advance of sorting out the biological and financial issues in fish recovery, consultant Jim Litchfield said. The group decided to hold more working sessions and report to the Transition Board on March 3.

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Please Note: This summary is based on detailed reports of the meetings of the Northwest Energy Review Transition Board. The reports are prepared by Resource Writers Northwest and distributed by the Northwest Power Planning Council. The Pacific Northwest Utilities Conference Committee (PNUCC) contributes financial support for these reports. To request a copy, please call the Council at 1-800-452-5161 and ask for Public Affairs.