United States Department of Energy-Bonneville Power Administration; Order Approving Rates on an Interim Basis and Providing Opportunity for Additional Comments

In this order, we approve the Bonneville Power Administration's (Bonneville) proposed rates on an interim basis, pending our full review for final approval. We also provide for an additional period of time for the parties to file comments.

Background

On March 21, 2000, the Bonneville Power Administration (Bonneville) filed a request for interim and final approval of an adjustment of its Firm Power Products and Services rate schedule (FPS-96R) in accordance with the Pacific Northwest Electric Power Planning and Conservation Act (Northwest Power Act) and Subpart B of Part 300 of the Commission's regulations. FPS-96R was previously approved by the Commission for a ten-year period through September 30, 2006. The filing incorporates into FPS-96R seasonally and diurnally adjusted rates for the capacity without energy product; the rates were inadvertently omitted when the rate schedule was originally adopted. Bonneville contends that the purpose of this filing is to allow Bonneville to recover the costs that are incurred by Bonneville offering this product, as the inadvertent omission could distort the revenue requirements already adopted by the Commission. Bonneville states that no other aspect of FPS-96R is being adjusted, and it otherwise continues in full force and effect through September 30, 2006.

In accordance with the statutory procedure, Bonneville seeks interim approval of its rates, effective May 1, 2000, pending Commission consideration of whether to approve the rates on a final basis. Bonneville requests approval of the modification of the FPS-96R rate for the period beginning May 1, 2000, through September 30, 2006.

Notice of Filing and Interventions

Notice of Bonneville's filing was published in the Federal Register, 65 Fed. Reg. 19,370 (2000), with comments, protests, or motions to intervene due on or before April 20, 2000.

Goldendale Aluminum Company, Northwest Aluminum Company, Reynolds Metals Company, Kaiser Aluminum & Chemical Corporation, and Elf Atochem, North America (the Aluminum Companies) jointly filed a timely motion to intervene, raising no substantive issues.

Southern California Edison Company (SoCal Edison) filed a timely motion to intervene and protest. SoCal Edison requests that Bonneville's filing be rejected and that interim approval of the rate be denied. SoCal Edison argues that there is no evidence supporting the filing and that Bonneville has failed to comply with the applicable provisions of the Northwest Power Act. SoCal Edison further opposes Bonneville's request for waiver of the filing requirements and the 60-day prior notice requirement of the Commission's regulations. In the alternative, SoCal Edison requests that the Commission deny Bonneville interim approval of the proposed rate, suspend the proposed rate and set this matter for an evidentiary hearing.

SoCal Edison disputes both the procedure by which Bonneville developed the rate and the procedures it has followed in this processing. SoCal Edison states that the methodology used by Bonneville in developing the proposed rate is inconsistent with Bonneville's general obligations to set rates having regard to the recovery of the cost of generation and transmission, to encourage the most widespread use of Bonneville power, and to set rates at the lowest possible rates to consumers. SoCal Edison asserts that the proposed rate is not based upon the actual costs of generation and transmission incurred by Bonneville. Instead, SoCal Edison asserts, Bonneville has proposed a rate supposedly based upon the market even though, by the testimony of its own witness, no market exists. SoCal Edison argues that Bonneville's methodology used in developing this market rate is not supported by credible data or analyses and is inconsistent with the methodology used in developing either market-based rates or cost-based rates in both the 1996 general rate proceeding and the general rate proceeding that Bonneville initiated concurrently with the FPS-96R expedited proceeding.

Bonneville filed an answer to SoCal Edison's motion to intervene and protest. Bonneville states, among other things, that it has no objection to a proposed effective date of May 22, 2000. SoCal Edison filed a reply to Bonneville's answer on May 12, 2000.

Discussion

Under Rule 214 of the Commission's Rules of Practice and Procedure, 18 CFR 385.214 (1996), the timely and unopposed motions to intervene to the Aluminum Companies and SoCal Edison serve to make them parties to this proceeding.

Rule 213 of the Commission's Rules of Practice and Procedure, 18 CFR 385.213(a)(2), (1999), prohibits answers unless otherwise permitted by decisional authority. We find good cause to allow part of Bonneville's answer, that pertaining to the issue of the effective date, because it provides additional information that assists us in the decision-making process. We will, however, reject that the remainder of Bonneville's answer and SoCal Edison's reply as an impermissible answer to a protest and an answer to an answer, respectively, because they deal with issues other than the effective date.

Standard of Review

Under the Northwest Power Act, the Commission's review of Bonneville's regional power and transmission rates is limited to determining whether Bonneville's proposed rates meet the three specific requirements of section 7(a)(2):

(1) They must be sufficient to assure repayment of the Federal investment in the Federal Columbia River Power System over a reasonable number of years after first meeting the Administrator's other costs;

(2) They must be based upon the Administrator's total system costs; and

(3) Insofar as transmission rates are concerned, they must equitably allocate the costs of the Federal transmission system between Federal and non-Federal power.

Commission review of Bonneville's non-regional, nonfirm rates also is limited. Review is restricted to determining whether such rates meet the requirements of section 7(k) of the Northwest Power Act, which requires that they comply with the Bonneville Project Act, the Flood Control Act of 1944, and the Federal Columbia River Transmission System Act (Transmission System Act). Taken together, those statutes require Bonneville to design its non-regional, nonfirm rates:

(1) To recover the cost of generation and transmission of such electric energy, including the amortization of investments in the power projects within a reasonable period;

(2) To encourage the most widespread use of Bonneville power; and

(3) To provide the lowest possible rates to consumers consistent with sound business principles.

Unlike the Commission's statutory authority under the Federal Power Act, the Commission's authority under sections 7(a) and 7(k) of the Northwest Power Act does not include the power to modify the rates. The responsibility for developing rates in the first instance is vested with Bonneville's Administrator. The rates are then submitted to the Commission for approval or disapproval. In this regard, the Commission's role can be viewed as an appellate one: to affirm or remand the rates submitted to it for review.

Moreover, review at this interim stage is further limited. In view of the volume and complexity of a Bonneville rate application, such as the one now before the Commission in this filing, and the limited period in advance of the requested effective date in which to review the application, the Commission generally defers resolution of issues on the merits of Bonneville's application until the order on final confirmation. Thus, the proposed rates, if not patently deficient, generally are approved on an interim basis and the parties are afforded an additional opportunity in which to raise issues with regard to Bonneville's filing.

Interim Approval

SoCal Edison argues that Bonneville violated the procedural requirements of section 7(i) of the Northwest Power Act in proposing these rates. The Commission, however, does not review purported deficiencies in the Administrator's compliance with the procedural requirements of the Act.

In addition, we are unpersuaded that the arguments of SoCal Edison justify summary rejection of the filing or refusal to approve these rates on an interim basis. We believe, rather, that these issues should be addressed in the course of our final review of these rates. At that time, intervenors may challenge the assumptions underlying Bonneville's filing. Moreover, intervenors will be protected by an express condition that the interim rates will be collected subject to refund with interest.

In its transmittal letter, Bonneville requests interim approval of its proposed FPS-96R rate adjustment effective May 1, 2000; however, the transmittal letter does not include a request for waiver of the Commission's 60-day prior notice requirement to permit a May 1, 2000 effective date or any justification for such waiver. SoCal Edison points out that the draft notice filed by Bonneville with the Commission states that Bonneville is requesting an effective date of May 19, 2000, which date is 60 days after the date of Bonneville's transmittal letter, and which appears to be Bonneville's attempt to design an effective date that complies with the 60-day prior notice requirement. SoCal Edison requests that Bonneville's request for a May 19, 2000 effective date be rejected because the 60th day would be May 20, 2000, and a request for waiver should be filed for any date prior to May 21, 2000. SoCal Edison adds that Bonneville did not request such a waiver, nor did Bonneville show any good cause for the waiver. In its answer, Bonneville states that it simply miscalculated the number of days, and inadvertently requested to have the effective date occur on the 59th day. Bonneville states that it has no objection to changing the proposed effective date to Monday, May 22, 2000. Accordingly, we will accept Bonneville's proposed rate schedule to become effective on May 22, 2000.

The Commission's preliminary review indicates that the filing appears to meet the minimum threshold filing requirements of Part 300 of the Commission's regulations and the statutory standards. Because the Commission's preliminary review of Bonneville's submittal indicates that it does not contain any patent deficiencies, the proposed rates will be approved on an interim basis pending our full review for final approval.

In addition, we will provide an additional period of time for the parties to file comments and reply comments on all issues related to final confirmation and approval of Bonneville's proposed rates.

The Commission Orders:

(A) SoCal Edison's request to reject Bonneville's request for interim approval of the proposed rates is hereby denied.

(B) SoCal Edison's motion for summary rejection of the filing is hereby denied.

(C) Interim approval of Bonneville's proposed FPS-96R rate schedule is hereby granted, to become effective on May 22, 2000, subject to refund with interest as set forth in section 300.20(c) of the Commission's regulations, 18 CFR 300.20(c) (1999), pending final action on either its approval or disapproval.

(D) Within thirty (30) days of the date on the date of this order, all parties who wish to do so may file additional comments regarding final confirmation and approval of Bonneville's proposed rates. All parties who wish to do so may file reply comments within twenty (20) days thereafter.

(E) The Secretary shall promptly publish this order in the Federal Register.