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Federal Register
/Vol. 69, No. 138/Tuesday, July 20, 2004/Notices
should take on a slower, more deliberatepace, focusing only on a couple of keyitems, such as the level of benefits forthe residential and small-farmconsumers of the region
’
s IOUs, untilthe rate case concluded.In a June 5, 2003, letter, the governorsof the four Pacific Northwest statesencouraged BPA and the Council tojointly restart the Regional Dialogue. Inresponse, BPA and the Council hosteda series of informal meetings withcustomers and interested partiesthroughout the region in the fall of 2003.Shortly thereafter, the Council releaseda set of principles and an issue paperentitled
‘‘
Proposed Council Principlesfor the Future Role of the BonnevillePower Administration in PowerSupply
’’
for public comment. Followingthe close of comment in December 2003,the Council held several workgroupmeetings aimed at gathering input fromcustomers and others to help guide itsnext round of recommendations on thefuture role of BPA in power supply.Following conclusion of theworkgroup meetings, the Councilreleased in April 2004 its draftrecommendations on
‘‘
The Future Roleof the Bonneville Power Administrationin Power Supply
’’
and took publiccomment. Those recommendations werefinalized and sent to BPA in May 2004.In February 2004, BPA sent a letter tothe region updating BPA
’
s plans forresolving Regional Dialogue issues. Thisletter included a plan to present thispolicy proposal to the region forcomment by the end of June 2004.
II. Scope of the Proposal
BPA
’
s current firm power rates expireat the end of FY 2006 while nearly allof BPA
’
s regional power sales contractscontinue through FY 2011. BPA believesits first priority in the Regional Dialoguemust be to resolve policy issues thatlikely will influence the next rate caseand which must otherwise be made before 2007. This is the focus of thisproposal.In the February 2004 letter, BPAidentified issues that are a priority toresolve for the FY 2007
–
2011 period.While this Regional Dialogue proposalfocuses primarily on the FY 2007
–
2011issues, key long-term questions remainunanswered. BPA is committed toresolving the long-term issues soon afterthe conclusion of this current process. Aproposed process and schedule forresolving these issues is included inSection VII.B. BPA is strongly motivatedto meet that schedule with the greatestdegree of regional alignment possible.However, even if regional consensusdoes not emerge, BPA is committed toresolving the longer-term issues of whohas the obligation to serve. BPA intendsto make decisions based on the scheduleoutlined in Section VII.B.
III. Council Recommendations onBPA’s Future Role
BPA thoroughly examined theCouncil
’
s recommendations as itdeveloped this proposal. This reviewshowed that BPA
’
s proposal and theCouncil
’
s recommendations differrelatively little where the two addressthe same issues. BPA has intentionallylimited the scope of this proposalprimarily to issues that have to beresolved for FY 2007
–
2011.Consequently, issues such as the long-term
‘‘
allocation
’’
of the system are notaddressed. As already mentioned, BPAagrees with the Council over theimportance of these long-term issuesand proposes a schedule for theirresolution in Section VII.B.Overall, BPA and the Council agreeon the overall goals of the RegionalDialogue process
—
resolution of BPA
’
slong-term role in providing power toregional customers at the lowestembedded cost-based rate, andcapturing that role in long-termcontracts and rates as soon as possibleto create a durable solution. Thisproposal is the first step toward meetingthese goals.
IV. Link to FY 2007–2011 StrategicDirection
The financial impacts of the WestCoast energy crisis of 2000
–
2001 ledmany utilities to examine their policiesand approaches to their power supply.BPA is no exception. Over the past year,BPA has invested much time and effortin strategic planning. The agency is inthe process of finalizing its strategicdirection with emphasis on FY 2007
–
2011.This re-examination of BPA
’
s missionand values is, along with comments andadvice from the Council, customers, andother regional stakeholders, informingthe agency
’
s approach to the RegionalDialogue process.
A. The Report to the Region
In early 2003, BPA initiated a detailedexamination of the events that began in2000 that led to the significant rateincreases and deterioration of BPA
’
sfinancial condition. On April 18, 2003,BPA released a Report to the Region thatincluded lessons the agency hadlearned, with the intention of translatingthose lessons into future actions.Among a number of other lessons, thereport noted that the level of BPA
’
scosts and risks are driven heavily by theload obligations BPA assumes. Meetingthose obligations was a large driver of BPA
’
s cost and rate levels. The reportpointed out that the amount of risk(market volatility and uncertainty) to bemanaged in the region
’
s power systemhas grown substantially in recent years,and the fraction of that risk that BPAcan absorb has gotten smaller. Thereport also noted that BPA must avoidthe need to acquire large amounts of power on short notice to meet demand.There were also a number of recommendations for processimprovement in cost management,decision making, risk analysis, andcommunications that BPA has put intoplace agency wide and used indeveloping this proposal.The Regional Dialogue proposal has been developed specifically with thoselessons in mind, particularly to resolvethe agency
’
s load uncertainty as soon aspossible and provide customers with thecertainty they need.
B. Strategic Direction
The Report to the Region highlightedthe need for BPA to have a clear andsteady strategy and manage to clearobjectives. In response, the agencydevoted a significant amount of time inthe last year to clarifying its strategicdirection.BPA
’
s strategic direction establishesthe agency
’
s most important objectivesand the actions that will help it manageto these objectives. The strategicdirection calls on BPA to advance thePacific Northwest
’
s future leadership infour core values
—
high reliability, lowrates consistent with sound businessprinciples, responsible environmentalstewardship, and clear accountability tothe region.It should come as no surprise that thesubjects to be covered in the RegionalDialogue process are well represented inthe agency
’
s strategic direction,particularly with regard to BPA
’
s role asa low-cost provider and for clearregional accountability. The strategicdirection guiding this proposalincludes:1.
Regional InfrastructureDevelopment:
BPA policies encourageregional actions that ensure adequate,efficient, and reliable transmission andpower service.2.
Conservation and Renewables:
Development of all cost-effective energyefficiency to meet BPA loads,facilitation of regional renewableresources, and adoption of cost-effectivenon-construction alternatives totransmission expansion.3.
Benefits to Residential and Small-Farm Consumers of IOUs:
The post-2011 benefit that BPA provides to IOUsfor their residential and small-farm
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