S1: Policy and Regional Actions

BPA policies result in regional actions that ensure adequate, efficient and reliable regional transmission and power service.

Other Information:

BPA policies will seek regionally optimized solutions for the adequacy, efficiency and reliability of power and transmission service in the Pacific Northwest. BPA intends to seek the best outcomes for regional consumers of electricity, whether through policies set by BPA or through recommendations made to regional or other bodies. Key BPA policy areas looking ahead include but are not limited to regional electric infrastructure investment, regional resource adequacy standards, one-utility transmission management and reliability standards. Regional Electric Infrastructure Investment: Adequate infrastructure development is essential to ensuring a reliable future power supply and avoiding excessive market price volatility. By offering 20-year power contracts, BPA seeks to increase long-term certainty for regional federal power customers and thereby substantially contribute to stable conditions for resource and transmission infrastructure investment. By offering tiered rates within these contracts, BPA intends to define the amount of power each public preference customer is able to buy at a low embedded cost rate (the Tier 1 rate). We also intend to define pricing and terms for incremental power beyond this base amount (the Tier 2 rate) both to reflect the cost of purchasing power to meet those incremental loads and to encourage the region to make resource provider decisions sufficiently in advance of 2011 when current BPA power sales contracts expire. To these ends, BPA will engage customers in the process of developing new contracts well in advance of the expiration of existing power sales contracts. Adequate infrastructure development is essential to ensuring reliable electricity service to consumers and avoiding excessive market price volatility. BPA will work with the region to develop policies for reducing congestion on the transmission grid and for transmission expansion to enable delivery of new resources to load. Further, BPA will continue to work with FERC, the Western Electricity Coordinating Council (WECC) and the region to develop workable regional and internal processes that provide for coordinated and eventually more integrated resource and transmission planning within the region and at BPA, while complying with Standards of Conduct. Regional Resource Adequacy Standards: The development of consensusbased regional resource adequacy standards, which create transparency over whether the region will have sufficient resources to reliably serve load three-tofive years out, is a critical first step toward clearly defining the respective responsibilities of resource providers across the region. Another important step is developing mechanisms to reasonably assure utilities will plan and build resources consistent with these regional standards. With strong BPA leadership, the PNW Resource Adequacy Forum (Forum) has already developed energy and pilot capacity adequacy standards and an implementation plan for the region (adopted in 2006 by the Northwest Power and Conservation Council, or the Council). BPA will continue to actively support and rely on the Forum to assure long-term regional resource adequacy. BPA will support the next steps toward establishing a more robust resource adequacy framework, including finalization of a capacity adequacy standard, development of an economic adequacy standard and formulation of a utility-specific translation of the regional standards (to show utilities how their resource plans relate to the regional standard). BPA will also strive to assure additional participation in and coordinate progress on adequacy issues by working with national, Western and regional institutions such as the North American Electric Reliability Corporation, WECC, Northwest Power Pool, Council and ColumbiaGrid. One-Utility Transmission Management: For the last decade, BPA and Northwest utilities have been considering ways to improve operation and management of the Northwest transmission system. BPA will continue to support a “one-utility” vision for the Northwest’s transmission system consistent with FERC open access requirements and SOC standards. While BPA believes that it is important to have an independent entity that is free of market interests to manage this development, an evolutionary approach also is needed to provide a meaningful set of checks and balances to ensure nondiscriminatory access, regional accountability and responsiveness to regional needs. BPA will continue to support ColumbiaGrid as an independent entity to foster regional transmission planning, reliability and operational efficiency objectives in an open and transparent forum. ColumbiaGrid’s organization, board, CEO and Functional Agreements for Planning and Expansion and Reliability are now in place. To continue to pursue its “one-utility” vision in the near term, BPA will strive to increase participation in ColumbiaGrid. BPA will also work with ColumbiaGrid to develop a common OASIS Functional Agreement and, as a long-term objective, a Transmission Operator and Balancing Authority Functional Agreement (consolidated control area). Reliability Standards: BPA will continue its active engagement in North American Electric Reliability Council (NERC) and WECC on national and regional reliability issues in order to shape related policies, standards and tools and to advance the quality of the region’s power and transmission systems, including their interface with other regions.

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