Policy on Excess Federal Power

DEPARTMENT OF ENERGY

Bonneville Power Administration

Policy on Excess Federal Power

AGENCY: Bonneville Power Administration (Bonneville), Department of

Energy (DOE).

ACTION: Notice.

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SUMMARY: On March 29, 1996, BPA initiated a public process to develop a

policy to implement the excess federal power marketing provisions of

the Energy and Water Development Act of 1996, Pub. L. No. 104-46,

Sec. 508(a) and (b), 109 Stat. 402, (1995) (codified at 16 U.S.C.

Sec. 832m) (hereinafter ``P.L. 104-46''). BPA published a proposed

policy in the Federal Register for public review and received comment

during a 60-day public comment period. BPA has considered all comments

received and has finalized its policy to implement this new power

marketing authority. The policy is published below.

A Record of Decision (ROD) regarding this policy has been prepared

and explains the public process; the distinction between BPA's surplus

power marketing under prior legislation and excess federal power

marketing activities under P.L. 104-46; provides an overview and

delineates BPA's final policy on excess federal power; responds to

public comment; explains this action's compliance with the National

Environmental Policy Act; and adopts a final policy on excess federal

power.

The publication of this policy and execution of the ROD is a final

action of the BPA Administrator under section 9(e) of the Pacific

Northwest Electric Power Planning and Conservation Act (Northwest Power

Act), 16 U.S.C. Sec. 839(e).

ADDRESSES: Copies of the ROD may be obtained by calling BPA's toll-free

document request line: 1-800-622-4520.

FOR FURTHER INFORMATION, CONTACT: David J. Armstrong--MPF, Bonneville

Power Administration, P.O. Box 3621, Portland, Oregon, 97208-3621,

phone number (503) 230-3658, fax number (503) 230-7568.

Policy on Excess Federal Power

I. Definitions

A. Firm Contractual Obligations: are those Bonneville sales or

other dispositions of power entered into under and governed by sections

5(b) and 5(d) of the Pacific Northwest Electric Power Planning and

Conservation Act (Northwest Power Act), 16 U.S.C. 839c(b) and 839c(d).

Such sales include the firm requirements power sales in the Pacific

Northwest region to Bonneville's actual and planned computed

requirements customers, metered requirements customers, direct-service

industrial customers and investor-owned utility customers.

B. Delayed-Delivery Contracts: are contracts by Bonneville for the

sale or disposition of power which provide for actual delivery of power

to begin at some time after the effective date of the contract.

C. Surplus Power: shall have the same meaning as electric power

which is surplus under section 5(f) of the Northwest Power Act. 16

U.S.C. 839c(f).

II. Determination of Excess Federal Power

A. Reductions in Contractual Obligations under Sections 5(b) and

5(d) of the Northwest Power Act:

1. As of January 1, 1995, BPA's Firm Contractual Obligations

equaled 8298 average megawatts (aMW). This number

[[Page 50811]]

will be the baseline for comparing reductions in such obligations to

determine annual amounts of excess federal power. This is a fixed

number that will not change.

2. To determine the energy component of excess federal power, each

year Bonneville will prepare a current forecast, in average megawatts,

of Firm Contractual Obligations based upon its then-current contracts.

In order to allow for sales or dispositions of excess federal power

under Delayed-Delivery Contracts with delivery terms of up to 7 years,

Bonneville will produce a 10-year annual average energy (average

megawatts) forecast of its then-current Firm Contractual Obligations.

For each year of the forecast period, the excess federal power in firm

energy from reductions in Firm Contractual Obligations will equal the

difference between the forecasted Firm Contractual Obligations and 8298

aMW.

3. Bonneville will calculate an amount of excess peaking capacity

(megawatts) associated with reductions and increases in its then-

current Firm Contractual Obligations by calculating an average annual

load factor based on all of its forecasted Firm Contractual

Obligations. This load factor will be applied to the result of the

calculation in section (2) above to determine an amount of excess

capacity.

B. Operations of the Federal Columbia River Power System Primarily

for the Benefit of Fish and Wildlife: The amount of excess federal

power resulting from operations of the Federal Columbia River Power

System primarily for the benefit of fish and wildlife is 129 average

megawatts annually. The amount of excess peaking capacity associated

with these operations is 129 megawatts. This is a fixed number that

will not change unless there is a need to modify the number as

determined by Bonneville.

C. Net Excess Federal Power: The sum of the results of the

calculation in (2) above (the Reductions in Bonneville's sections 5(b)

and 5(d) contractual obligations) and, unless modified, 129 aMW will be

reduced by the amount of then-current sales or other dispositions of

excess federal power to determine the net amount available for

marketing in each year of the forecast period. Bonneville will

determine this amount annually.

D. Process: The results of the preceding determinations will be

included in an annual notification to Bonneville's then-existing

regional customers, and at Bonneville's discretion, non-regional

customers, of Bonneville's intent to market excess federal power.

Bonneville may also include in this annual notification the amount of

Surplus Power available for disposition.

III. Sales of Excess Federal Power in Any Region

A. Bonneville will, at its discretion, sell or otherwise dispose of

excess federal power in any region consistent with its authority to

market federal power under its authorizing legislation, including

section 508 of the 1996 Energy and Water Development Appropriations Act

(P.L. 104-46). The actual amount of power sold or otherwise disposed of

as excess federal power will not exceed and may be less than the amount

of Surplus Power projected to be available based upon Bonneville's

then-current load/resource planning and the amount of excess federal

power Bonneville determines to be available consistent with section II

above.

B. Sales or other dispositions of excess federal power shall not be

subject to the second sentence of section 5(a) of the Bonneville

Project Act. 16 U.S.C 832d(a).

C. Bonneville will annually notify then-existing regional

customers, and at its discretion, non-regional customers, of the amount

of excess federal power resulting from the determinations in section II

above. This notification will also contain the range of rates, terms

and conditions within which Bonneville will market available power and

may contain the amount of Surplus Power determined by Bonneville to be

available for marketing. This notice will be an invitation to contract

for the sale or other disposition of power consistent with the range of

terms and conditions contained in the notice. Regional customers will

have 30 days from the date of this notification to contact Bonneville

with a request to purchase power consistent with the notice in order to

have preference and priority to purchase the power. Upon such a

request, Bonneville will enter into good faith negotiations for the

sale or other disposition of power with the regional customer

consistent with the general rate, terms and conditions contained in the

notice. Upon conclusion of the negotiations, Bonneville will offer the

power to the regional customer. If Bonneville receives competing

requests to purchase excess federal power, Bonneville will proceed to

negotiate sales consistent with public preference and then preference

under section 508 of P.L. 104-46. Within each class of customer,

Bonneville will negotiate and offer to sell, based upon the time of

receipt of the request.

D. On a case by case basis, Bonneville will average the net amount

of available excess federal power in each year of a proposed sale or

other disposition to determine whether the amount of excess federal

power is sufficient for a multi-year transaction.

E. All contracts for the sale or other disposition of excess

federal power will be binding in accordance with their terms for the

duration of the contract and will be firm obligations of the

Administrator.

IV. Sales or Other Dispositions of Excess Federal Power to Purchasers

Outside the Pacific Northwest Region

A. Bonneville will, at its discretion, sell or otherwise dispose of

excess federal power, to purchasers outside the region for delivery

terms of up to 7 years as permitted by section 508(b) of P.L. 104-46.

Such transactions may be renewed subject to the availability of excess

federal power. Prior to executing a renewal of one or more years,

Bonneville will notify regional customers of the proposed renewal,

consistent with the notice procedures for long-term transactions in

subsection IV(C) below.

B. Sales or other dispositions of excess federal power to

purchasers outside the region will not be subject to section 2,

subsections (a), (b), and (c) of section 3, and section 7 of the Act of

August 31, 1964, 16 U.S.C. 837a, 837b(a), (b) and (c), and 837f (the

Northwest Preference Act), and section 9(c) of the Northwest Power Act,

16 U.S.C. 839f(c).

C. Long-term Sales or Other Dispositions of Excess Federal Power To

Purchasers Outside the Pacific Northwest: For proposed sales or other

dispositions of excess federal power to purchasers outside the region

for a period of one or more years, Bonneville will notify then-existing

regional customers of the proposed transactions. This notice will

contain information on the essential rate, terms and conditions of the

proposed out-of-region transaction as determined by Bonneville.

Regional customers interested in purchasing the power under the rate,

terms and conditions contained in the notice will have up to 30 days

and no less than five days, as determined by Bonneville, to request a

purchase. Upon a request to purchase, Bonneville will offer the power

to the regional customer under the identical rate, terms and conditions

in the notice, except those terms and conditions that clearly do not

apply to the particular purchaser (such as points of delivery). This

offer will remain open for five days.

[[Page 50812]]

D. Short-term Sales or Other Dispositions of Excess Federal Power

To Purchasers Outside the Pacific Northwest:

1. Primary Notice: For proposed sales or other dispositions of

excess federal power to purchasers outside the region for a period of

less than one year, the annual notification in section III(C) above

will be the primary notification.

2. Additional Notice: As determined by Bonneville and as warranted

in Bonneville's opinion by system or market conditions, Bonneville will

issue additional notices of available excess federal power which will

contain the same type of information as in the annual notice. Regional

customers interested in purchasing this power will have 5 days or less,

depending upon the effective delivery date and the duration of the

short-term sale or other disposition, within which to contact

Bonneville may provide such notices in its daily prescheduling

conferences with customers.

Policy on Sales of Excess Federal Power Outside the Pacific Northwest

Region to Retail Customers

In marketing excess Federal power outside the Pacific Northwest,

Bonneville does not intend to use its status as a Federal agency as a

basis for seeking to shield retail sales to non-Federal entities from

restrictions, terms and conditions of State law concerning access to

retail markets. Moreover, Bonneville intends to defer to State policies

concerning access to retail markets with respect to any dispositions of

excess Federal power to Federal end users unless an exception is made

by the Secretary of Energy in a specific circumstance. Consequently,

Bonneville adopts the following policy:

A. Retail Sales to non-Federal Customers: Bonneville will not make

direct retail sales of excess Federal power outside the Pacific

Northwest to non-Federal customers unless the purchaser obtains any

third-party transmission or distribution services needed to effect

delivery of such power to the purchaser. As a matter of law, the

purchaser's acquisition of such transmission or distribution services

would be subject to any terms and conditions of service established

under applicable State and Federal law (including rules and orders

thereunder).

B. Dispositions to Federal End Users: The policy under subsection

(a) will guide dispositions of excess Federal power to Federal end

users outside the Pacific Northwest unless the Secretary of Energy

determines on a case-by-case basis that the interests of the United

States otherwise require.

Issued in Portland, OR on September 19, 1996.

Randall W. Hardy,

Administrator and Chief Executive Officer.

[FR Doc. 96-24807 Filed 9-26-96; 8:45 am]

BILLING CODE 6450-01-P