82 FR 45835 - Before Commissioners: Neil Chatterjee, Chairman; Cheryl A. LaFleur, and Robert F. Powelson; Bonneville Power Administration; Order Approving Rates on an Interim Basis and Providing Opportunity for Additional Comments

DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission

Federal Register Volume 82, Issue 189 (October 2, 2017)

[Federal Register Volume 82, Number 189 (Monday, October 2, 2017)]
[Notices]
[Pages 45835-45837]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-21061]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket EF17-4-000]


Before Commissioners: Neil Chatterjee, Chairman; Cheryl A. 
LaFleur, and Robert F. Powelson; Bonneville Power Administration; Order 
Approving Rates on an Interim Basis and Providing Opportunity for 
Additional Comments

    1. In this order, we approve on an interim basis Bonneville Power 
Administration's (Bonneville) proposed 2018-2019 transmission rates for 
transmission service on the Southern Intertie (IS Rates),\1\ pending 
our further review.\2\ We also provide an additional period of time for 
parties to file comments.
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    \1\ The Southern Intertie is a system of transmission lines and 
substations that transmit power between the Pacific Northwest and 
California, and is primarily used to export power from the Pacific 
Northwest and Canada to California. Bonneville Administrator's Final 
Record of Decision 5.2.2.
    \2\ Today, we also approve on an interim basis Bonneville's 
other transmission rates filed in Docket No. EF17-3-000. See 
Bonneville Power Admin., 160 FERC ]61,112 (2017).
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I. Background

    2. On July 31, 2017,\3\ Bonneville filed a request for interim and 
final approval of its IS Rates (IS-18) in accordance with section 7 of 
the Pacific Northwest Electric Power Planning and Conservation Act 
(Northwest Power Act) \4\ and Part 300 of the Commission's 
regulations.\5\ Bonneville states that, although its rate design is not 
subject to Commission review, it provides a summary of the hourly rate 
design change on the Southern Intertie for informational purposes. 
Bonneville explains that the change is significant, increasing the 
hourly rates approximately 170 percent, but asserts that the adopted 
revisions are necessary to address the impact of increased renewable 
generation in California in combination with seams issues between the 
transmission system connecting the Pacific Northwest and California.\6\
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    \3\ Bonneville submitted errata filings on August 7, 2017, and 
August 10, 2017 to correct various attachments to the July 31, 2017 
Transmittal Letter and to add inadvertently omitted documents to the 
record.
    \4\ 16 U.S.C. 839e (2012).
    \5\ 18 CFR pt. 300 (2017).
    \6\ Bonneville July 31, 2017 Transmittal Letter at 2. See also 
Bonneville Administrator's Final Record of Decision Sec.  5.2.2 
(explaining the justification for the rate increase in greater 
detail).
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    3. Bonneville projects that the filed rates will produce average 
annual transmission revenues of $1.044 billion and annual net revenues 
of $4.65 million.\7\ Bonneville asserts that this level of annual 
revenues is sufficient to recover its costs for the 2018-2019 rate 
approval period, while providing cash flow to ensure at least a 95 
percent probability of making all payments to the United States 
Treasury in full and on time for each year of the rate period.\8\
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    \7\ These values are the totals of all of Bonneville's 
transmission revenues, inclusive of the transmission rates at issue 
in Docket No. EF17-3-000. See Bonneville August 7, 2017 Transmittal 
Letter at 2; Bonneville Power Admin., 160 FERC ]61,112 (2017) 
(approving on an interim basis those transmission rates not 
associated with the Southern Intertie).
    \8\ Bonneville July 31, 2017 Transmittal Letter at 4, 7.
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II. Notice of Filing

    4. Notice of Bonneville's July 31, 2017 filing was published in the 
Federal Register, 82 FR 37,445 (2017),\9\ with protests and 
interventions due on or before August 30, 2017. Timely motions to 
intervene were filed by Pacific Northwest Generating Cooperative, 
Powerex Corporation, Sierra Club and Montana Environmental Information 
Center, Avista Corporation, Northwest Requirements Utilities, 
Industrial Customers of Northwest Utilities, NorthWestern Corporation, 
Western Public Agencies Group, M-S-R Public Power Agency, Snohomish 
County Public Utility District No. 1, Public Power Council, Puget Sound 
Energy Inc., Idaho Power Company, and Avangrid Renewables LLC. 
Renewable Northwest filed a timely motion to intervene and comments. 
Sacramento Municipal Utility District, Transmission Agency of Northern 
California, and Turlock Irrigation District (collectively, Northern 
California Utilities) filed a timely motion to intervene, protest, 
objection to the motion for interim rate approval, request for an 
evidentiary hearing, and alternative request for stay of implementation 
of hourly transmission rates. On September 15, 2017, Bonneville filed a 
request for leave to answer and an answer to Northern California 
Utilities' protest, and on September 19, 2017, Northern California 
Utilities filed an answer to Bonneville's answer. On September 22, 
2017, Bonneville filed an answer to Northern California Utilities' 
September 19 answer.
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    \9\ Notices of Bonneville's errata filings were published in the 
Federal Register, 82 FR 41,014 (2017) and 82 FR 40,151 (2017). The 
notices of the errata filings retained the August 30, 2017 date by 
which protests or interventions were due.
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    5. Northern California Utilities generally object to Bonneville's 
proposed rate increase for southbound hourly transmission service on 
the

[[Page 45836]]

Southern Intertie.\10\ Northern California Utilities first argue that 
interim approval is inappropriate because Bonneville's filing is 
deficient. Specifically, Northern California Utilities argue that the 
instant filing is governed by section 7(k) of the Northwest Power Act, 
which according to the protestors is broader than section 7(a), and 
Bonneville fails to comply with the applicable statutes.\11\ They 
further assert that Bonneville's filing is deficient under the 
Commission's regulations because its rates fail to adhere to cost-based 
ratemaking, or alternatively, Bonneville's filing fails to explain why 
it has departed from cost-based ratemaking standards.\12\ In addition, 
Northern California Utilities argue that any refund condition that the 
Commission attaches to its order will not protect them because they do 
not purchase transmission service from Bonneville on the Southern 
Intertie.\13\ Alternatively, the Northern California Utilities argue 
that, if the Commission will not summarily reject Bonneville's IS Rate, 
the Commission should nevertheless stay implementation of the rate.\14\
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    \10\ Northern California Utilities Protest at 5-6, 80.
    \11\ Id. at 12-15, 23-25.
    \12\ Id. at 16-23.
    \13\ Id. at 25-27. Northern California Utilities state that they 
do not directly purchase transmission service from Bonneville, but 
that they will be harmed nonetheless by the trickle-down effects of 
the hourly rate increase because they purchase services from 
resellers that use or base prices on the Southern Intertie, 
including but not limited to hourly transmission service. Id.
    \14\ Id. at 27-51.
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    6. Northern California Utilities further argue that the Commission 
should summarily dispose of Bonneville's request for approval because 
it has failed to carry its burden and provide substantial evidence of 
its rates being the lowest reasonable rates consistent with sound 
business principles. Here, Northern California Utilities again assert 
that section 7(k) of the Northwest Power Act sets the applicable 
standard and that charging intentionally unaffordable rates is facially 
in conflict with the statutory provision.\15\ Alternatively, Northern 
California Utilities argue that, if the Commission does not reject the 
IS Rate filing as deficient or on the merits, it should set those 
issues for evidentiary hearings under section 7(k) of the Northwest 
Power Act.\16\
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    \15\ Id. at 52-59.
    \16\ Id. at 59-79.
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    7. Renewable Northwest filed comments in both this docket and 
Docket No. EF17-3-000 requesting that the Commission disapprove 
Bonneville's proposed Montana Intertie Rate on the basis that it does 
not ``encourage[e] the widest possible diversified use of electric 
power at the lowest possible rates to consumers consistent with sound 
business principles.'' \17\
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    \17\ Renewable Northwest Comments at 7 (quoting 16 U.S.C. 838g 
(2012)). We note that the Montana Intertie Rate is not at issue in 
this docket, but rather is before the Commission in Docket No. EF17-
3-000. See Bonneville Power Admin., 160 FERC ]61,112.
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III. Discussion

A. Procedural Matters

    8. Pursuant to Rule 214 of the Commission's Rules of Practice and 
Procedure, 18 CFR 385.214 (2017), the timely, unopposed motions to 
intervene serve to make the entities that filed them parties to this 
proceeding.
    9. Rule 213(a)(2) of the Commission's Rules of Practice and 
Procedure, 18 CFR 385.213(a)(2) (2017), prohibits an answer to a 
protest or an answer unless otherwise ordered by the decisional 
authority. We are not persuaded to accept Bonneville's answer to 
Northern California Utilities' protest, Northern California Utilities' 
answer to Bonneville's answer, or Bonneville's answer to Northern 
California Utilities' answer, and therefore, we reject all answers.

B. Standard of Review

    10. Under the Northwest Power Act, the Commission's review of 
Bonneville's transmission rates is limited to determining whether 
Bonneville's proposed rates satisfy the specific requirements of 
section 7(a)(2) of the Northwest Power Act, including that such rates:
    (A) Are sufficient to assure repayment of the Federal investment in 
the Federal Columbia River Power System over a reasonable number of 
years after first meeting [Bonneville's] other costs;
    (B) are based upon [Bonneville's] total system costs; and
    (C) insofar as transmission rates are concerned, equitably allocate 
the costs of the Federal transmission system between Federal and non-
Federal power utilizing such system.\18\
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    \18\ 16 U.S.C. 839e(a)(2) (2012). Bonneville also must comply 
with the financial, accounting, and ratemaking requirements in 
Department of Energy Order No. RA 6120.2.
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    11. Unlike the Commission's statutory authority under the Federal 
Power Act, the Commission's authority under section 7(a) 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.\19\
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    \19\ See, e.g., Bonneville Power Admin., 152 FERC ] 61,201, at P 
10 (2015) (citing U.S. Dep't of Energy--Bonneville Power Admin., 67 
FERC ] 61,351, at 62,216-17 (1994); see also Aluminum Co. of Am. v. 
Bonneville Power Admin., 903 F.2d 585, 592-93 (9th Cir. 1989)).
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    12. 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 us in this filing, and the limited period in 
advance of the requested effective date in which to review the 
application,\20\ the Commission generally defers resolution of issues 
on the merits of Bonneville's application until the order on final 
confirmation. Thus, the Commission generally approves the proposed 
rates on an interim basis, unless the filing is patently deficient, and 
provides the parties with an additional opportunity to raise issues 
with regard to Bonneville's filing.\21\
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    \20\ See 18 CFR 300.10(a)(3)(ii) (2017).
    \21\ See, e.g., Bonneville Power Admin., 152 FERC ] 61,201 at P 
11 (citing U.S. Dep't of Energy--Bonneville Power Admin., 64 FERC ] 
61,375, at 63,606 (1993); U.S. Dep't of Energy--Bonneville Power 
Admin., 40 FERC ] 61,351, at 62,059-60 (1987)).
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    13. We decline at this time to grant Bonneville's request for final 
confirmation and approval of Bonneville's proposed transmission rates. 
However, we will grant Bonneville's request for interim approval. Our 
preliminary review indicates that Bonneville's IS Rates filing appears 
to meet the statutory standards and the minimum threshold filing 
requirements of Part 300 of the Commission's regulations.\22\ Moreover, 
our preliminary review of Bonneville's submittal indicates that the 
filing is not patently deficient. Contrary to the Northern California 
Utilities' arguments, we find that section 7(a) of the Northwest Power 
Act, and not section 7(k), governs the transmission rates at issue here 
and thus governs our review.\23\ The language of section 7(k) of

[[Page 45837]]

the Northwest Power Act addresses power rates, not transmission 
rates.\24\ Thus, Northern California Utilities' arguments that 
Bonneville's filing is deficient for failing to meet the statutory 
standards of section 7(k) of the Northwest Power Act and the 
Commission's regulations promulgated pursuant to section 7(k), 
specifically 18 CFR 300.14 (2017) and by incorporation 18 CFR 
35.13(a)(2) (2017), are irrelevant to our approval on an interim basis 
of Bonneville's transmission rates for the Southern Intertie.\25\ The 
proposed rates therefore will be approved on an interim basis pending 
our further review. In addition, we note that interim approval allows 
Bonneville's rates to go into effect subject to refund with interest; 
the Commission may order refunds with interest if the Commission later 
determines in its final decision not to approve the rates.\26\
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    \22\ See, e.g., id. P 12 (citing U.S. Dep't of Energy--
Bonneville Power Admin., 105 FERC ] 61,006, at PP 13-14 (2003); U.S. 
Dep't of Energy--Bonneville Power Admin., 96 FERC ] 61,360, at 
62,358 (2001)).
    \23\ See 16 U.S.C. 839e(k) (2012) (stating ``Notwithstanding any 
other provision of this chapter, all rates or rate schedules for the 
sale of nonfirm electric power. . . .'' (emphasis added)); 16 U.S.C. 
839a(9) (2012) (defining ``[e]lectric power'' within the Northwest 
Power Act as ``electric peaking capacity, or electric energy, or 
both.''); Aluminum Co. of Am. v. Bonneville Power Admin., 903 F.2d 
585, 587-89 (discussing the first nonfirm power rates that 
Bonneville established under section 7(k) and defining nonfirm power 
as ``energy in excess of firm power, and is provided only when such 
excess exists.''); U.S. Dep't of Energy--Bonneville Power Admin., 53 
FERC ] 61,193, 61,667 (1990) (stating that ``nonfirm energy is 
energy in excess of that which Bonneville can reliably plan on 
producing, based on estimates that water levels used for power 
generation will at times be low or critical. That is, nonfirm energy 
is energy that is available to Bonneville as the result of it[ ] 
having water available for power generation. . . .'').
    \24\ See 16 U.S.C. 839e(k) (2012) (``Notwithstanding any other 
provision of this chapter, all rates or rate schedules for the sale 
of nonfirm electric power. . . .'' (emphasis added)).
    \25\ Because section 7(k) of the Northwest Power Act does not 
govern our review of the rates at issue in this proceeding, section 
7(k)'s allowance for a further trial-type evidentiary hearing does 
not provide a basis for such a trial-type evidentiary hearing here.
    \26\ See 18 CFR 300.20(c) (2017). We further find that Northern 
California Utilities' arguments that our refund condition will not 
protect them to be speculative, and their request for the Commission 
to stay implementation of the rates to be unsupported.
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    14. In addition, we will provide an additional period of time for 
parties to file comments and reply comments on issues related to final 
confirmation and approval of Bonneville's proposed rates. This will 
ensure that the record in this proceeding is complete and fully 
developed. Specifically, if parties wish to file additional comments, 
they will be due within 30 days of the date of this order. Reply 
comments are due 20 days thereafter.

The Commission Orders

    (A) Interim approval of Bonneville's proposed IS Rates is hereby 
granted, to become effective on October 1, 2017, through September 30, 
2019, subject to refund with interest as set forth in section 300.20(c) 
of the Commission's regulations, 18 CFR 300.20(c) (2017), pending final 
action and either their approval or their disapproval.
    (B) Within 30 days of the date of this order, parties who wish to 
do so may file additional comments regarding final confirmation and 
approval of Bonneville's proposed rates. Parties who wish to do so may 
file reply comments within 20 days thereafter.
    (C) The Secretary shall promptly publish this order in the Federal 
Register.

    By the Commission.

    Issued: September 25, 2017.
Kimberly D. Bose,
Secretary.
[FR Doc. 2017-21061 Filed 9-29-17; 8:45 am]
 BILLING CODE 6717-01-P