The Northwest Energy Review Transition Board approved a final version of the letter to Northwest members of Congress about recommendations for legislation. The board also heard the latest on Transmission and Federal Power Subscription work group activities. All board members were present. The audience was about 40.

Next Meeting: July 14 in Portland (changed from July 17).

• SUBSCRIPTION WORK GROUP WANTS TO ACCELERATE -- Dick Adams, executive director of PNUCC, reported that the Federal Power Subscription Work Group is thinking of accelerating its schedule by nine to 12 months. Syd Berwager of BPA noted that moving the timeline up is advantageous to Bonneville from a customer-service standpoint, but poses a challenge to establish prices in time to meet the accelerated schedule. We don’t see any showstoppers right now, he said. Adams reported the group finished its task of identifying business interests earlier than anticipated and will now begin work to define specific products. Themes that have emerged thus far, he said, are that customers want products with a known price, and they want a menu of products and services, and simple and shorter-term contracts.

Steve Weiss of the Northwest Conservation Act Coalition raised the question of who should represent IOU residential and small farm customers in the subscription and contract process. He said IOUs cannot represent these customers because of conflicts of interest. Weiss urged the board to recommend each state immediately appoint an entity to represent residential and small farm customers in the subscription and transmission work groups.

• THREE BIG ENCHILADAS ON THE TRANSMISSION WORK GROUP’S PLATE -- Consultant Al Wright reported the Transmission Work Group has identified about 12-14 issues with respect to legal separation, and that it is now focusing in on three of these: 1) FERC regulation of BPA’s transmission equivalent to FERC regulation of IOUs; 2) Financial issues, such as the BPA fund and the security and tax-exempt status of the Supply System bonds; and 3) The allocation of costs between generation and transmission. Of the latter, he said, we are trying to narrow this debate to what we agree on and what is purely an issue of interpretation of the law that we’ll never agree on. Once we do that, we’ll bring it to you, Wright told the board.

• LETTER TO CONGRESS READY TO MAIL -- Staffer Wally Gibson reviewed the latest changes in the letter to Northwest members of Congress regarding which recommendations of the Comprehensive Review would require federal legislation. The stranded costs section of the letter has been retitled "transition costs" and now says that "developing a realistic process for BPA’s possible transition costs will take time and should not be postponed." The letter states the board intends to carry out a process to discuss BPA’s potential transition costs and that it should go forward "parallel to, but somewhat slower than, the subscription process." The letter also contains a new section on public purposes. The board asked a few clarifying questions and then approved the revised letter.

• A TRANSITION COST PROCESS WILL MOVE FORWARD -- Wright explained that the new language on transition costs in the letter to Congress responds to concerns that while there is a transmission process and a subscription process, and the states are working on public purposes, nothing is being done on transition costs. Staff is preparing a short background paper that explains what other places in the country on doing on transition costs, he said. Wright suggested that Transition Board members meet with interested parties to talk about principles to govern transition cost mechanisms and a scoping process "to see how big or little a problem this is," and then take the matter up again at the July 14 meeting. The key thing is to not do something that focuses everyone on this and distracts the subscription and transmission processes, he stated.

Mike Steward of Puget Sound Energy noted two fundamental principles: that power costs should remain power costs and not become transmission costs; and that costs incurred on behalf of particular customers should remain with those customers. Weiss said he didn’t think the transition cost process should be slower than the subscription process. This approach is trying to find a compromise -- the intent is not to delay; we are trying to look for possible solutions, stated Mike Kreidler.

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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 Inc. 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.