The Northwest Energy Review Transition Board agreed to complete an analysis of transition costs by the end of the year. Consultant Al Wright reported that discussions in the Federal Power Subscription Work Group continue to move along briskly, while the Transmission Work Group may not be ready to draft legislation as early as this fall. Roy Hemmingway brought news from a July 9 Congressional hearing in Washington D.C., and he said the Northwest’s efforts on restructuring compare favorably to what is going on elsewhere in the country. All board members were present; the audience was about 25.

Next Meeting: August 14 in Portland.  

• A PROPOSAL TO SLOW DOWN TRANSITION COST PROCESS SURFACES, BUT GOES UNDER -- Transition Board chair John Etchart asked for comment on the staff’s background paper on transition costs, and staffer Dick Watson explained a proposed schedule for the transition cost process, which would extend from June to December. Under the schedule, the board would aim to adopt principles on transition costs and transition cost recovery by September. The staff would also develop options based on the principles, and a "straw" proposal would be presented in November.
  
  Angus Duncan of the Columbia/Pacific Policy Institute for Energy and the Environment made a "lukewarm" endorsement of the proposed process and urged the board to assure the process takes place in a way that does not disrupt the work groups. Steve Waddington of the DSIs called the proposed schedule "naive," and indicated his organization supports deferring deliberations for six months. Mike Kreidler said he would be nervous about the region failing to press ahead aggressively on transition costs. The board considered the merits of extending the schedule by 60 days so it would end on March 1, but decided it would be better to stay on the proposed schedule. Watson said staff would have draft principles out for discussion in early August.

• COST REVIEW MANAGEMENT COMMITTEE WILL MEET IN EARLY AUGUST -- Watson reported that comments on the paper outlining the BPA cost review focus on defining the boundary between "what’s inside and what’s outside" the scope. Ultimately, the management committee for the review will make that decision, he noted. The committee’s membership could be announced by mid-week, Watson said. The committee will hold its initial meeting the first week of August, he stated, with conference calls and consultations during the last week of July providing "fodder" for the first committee meeting.

• TRACKING THE WORK GROUPS’ PROGRESS -- Consultant Al Wright said participants in the Federal Power Subscription Work Group are working in two major areas: exploring what services customers are looking for and what services BPA can offer, and how these match up; and identifying the type of relationship BPA will have with its customers, including how contracts would be fashioned. The "good news" is that discussions are moving along quickly, and throughout the rest of the year, you’ll see progress, he said. Wright suggested that some bilateral discussions would get under way in late 1998 and early 1999, and by 2000, "you’ll have a good feel about how many customers will step up." I’ve heard there may be commitments as early as late 1998, said Dick Adams of PNUCC, suggesting that could signal an earlier juncture for BPA to determine if the subscription process has been successful.
  
  The Transmission Work Group, according to Wright, will address five topic areas: form and governance of the organizations, if BPA’s generation and transmission are separated; BPA’s participation in IndeGO; regulation equivalent to Federal Energy Regulatory Commission regulation of investor-owned utilities; WPPSS bonds; and the revenue obligation for the transmission system. He pointed out the group has spent a lot of time on some of these areas, but not on others. The work group is falling behind on its plan to draft legislation this fall, Wright said, and he suggested the group may end up with a sequence of legislative proposals.

NORTHWEST OUTDISTANCES OTHER REGIONS WITH RESTRUCTURING EFFORTS -- Roy Hemmingway reported on a July 9 hearing before the House Subcommittee on Energy and Power where Northwest representatives followed panelists from the Tennessee Valley Authority. It is important to recognize how much progress we have made, especially when compared to TVA, he stated. What we’ve done in the Northwest with the Regional Review and the work BPA has done in defining its role is "unprecedented," compared with what’s happening in the rest of the country, Hemmingway said. The hearing was largely an update opportunity, and the subcommittee has been very deferential to what we’re trying to do, he added. __________________________________________________________________________

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.