BPA revises proposed oversupply cost allocation plan

The Bonneville Power Administration (BPA) has revised its initial proposal to recover costs incurred when it invokes its oversupply management protocol (OMP) and is now proposing to spread the costs of the OMP among those who are using its transmission system during the oversupply period.

The cost recovery plan would kick in when BPA invokes its OMP and orders wind generators in the Pacific Northwest to cease generating.

Under BPA’s OMP, generators that are turned off, or “decommitted,” and which have elected to receive compensation for lost revenues and other associated expensees, will receive compensation. In addition, invoking the OMP incurrs administrative costs paid to an independent, third-party evaluator.

BPA’s previously submitted rate design proposed to allocate half the cost of instituting the OMP to the power function and half to the transmission function within BPA. Costs to power customers would have been allocated based on the individual customer’s load relative to the total system load, while costs assigned to transmission rates would have been recovered through a new control area services rate paid by generators that elect to receive compensation under the OMP.

Under the revised proposal, the costs of oversupply would be allocated among all customers using the transmission system during periods of oversupply and shared proportionally, a BPA spokesperson told TransmissionHub April 26.

“Under this proposed framework, each of the users, including BPA Power Services, bears its proportionate share of the costs based on its level of use,” the spokesperson added. It would also provide incentives to customers wheeling power through BPA to cease using the system and allow their power to be replaced with free federal hydropower during periods of oversupply.

As previously reported by TransmissionHub, several organizations filed protests to the original proposal. Although BPA has amended that proposal, the revision does not appear to negate concerns raised previously.

For example, Southern California Edison (SCE), a subsidiary of Edison International (NYSE:EIX), said in its narrative comments that it believes the Northwest Power Act requires BPA to allocate oversupply costs only to power rates.

Powerex, the energy marketing subsidiary of BC Hydro, agreed, noting in its testimony, “It would be wholly impermissible and inappropriate under BPA’s statutory requirements and ratemaking principles to allocate OMP costs to BPA transmission customers.”

BPA will accept comments on its proposed rate design to recover OMP costs through May 22. The agency will issue a final record of decision on Aug. 28, and will then submit the cost allocation methodology to FERC for approval.