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Enron Mail |
request_number: PG-BPA: 134
firstname: Sarah lastname: Westenberg e-mail: sawestenberg@bpa.gov exhibit_wp-02-e-: BPA-77 page_numbers: Attachment A, pages 14-15 request_text: Please state and explain the rationale for the proposal to u= se=20 revenues to effectively allocate net augmentation costs between Slice and= =20 non-Slice rates, rather than (a) the approach used to reflect other BPA cos= ts=20 in the calculation of the Slice Rate, which was determined in BPA's Record = of=20 Decision published in May 2000, or (b) the approach to this issue proposed = by=20 BPA in the December 2000 Amended Proposal." response_text: First, regarding the specific requests contained in this da= ta=20 request, neither the ROD in May 2000 nor the December 2000 Amended Proposal= =20 contained a methodology to adjust both Slice and non-Slice power rates=20 multiple times each year during the rate period for changes in BPA=01,s=20 augmentation costs. In fact, the issue now is not a Slice vs. non-Slice=20 issue. Rather, it is an issue of which power products subject to LB CRAC= =20 recover what amount of the additional net augmentation costs. The approaches to recovering net augmentation costs in May ROD and December= =20 2000 Amended Proposal are different than that proposed in the Supplemental= =20 Proposal. It simply is not possible to explain some distinction that is=20 alleged to be introduced in this Supplemental Proposal when neither the May= =20 2000 or December 2000 proposals contained no method for calculating and the= n=20 apportioning these costs in one way between individual power products. No= =20 such segmentation was required in either of those two prior proposals. In the May ROD, there was only one CRAC, which allocated the amount of=20 revenues to be raised by non-Slicer power products based on revenues=20 (WP-02-FS-BPA-02A, p. 283). However, that one CRAC did not attempt to=20 collect BPA=01,s net augmentation costs as the currently proposed LB CRAC= =20 attempted to do. In the December Amended Proposal, BPA proposed two very different methods f= or=20 collecting net augmentation costs from customers. Slice share of=20 augmentation costs was determined based on share of the FBS. Non-Slice pow= er=20 products=01, share of net augmentation costs was determined using loads. = =20 Together, these two approaches collected more than 100% of BPA=01,s net=20 augmentation costs. So, the Supplemental Proposal contains a new methodology to recover net=20 augmentation costs using twice-annual rate adjustments to all power product= s=20 subject to LB CRAC. This new approach required a new methodology, and, as = a=20 result, this new methodology cannot be directly compared to methodologies i= n=20 the earlier proposals. Second, turning to the broader question of the justification for using=20 revenues, there are several reasons why BPA considers this to be the correc= t=20 approach. The first policy objective driving the Amended Proposal and Supplemental=20 Proposal is that =01&It should be as simple as possible.=018 (WP-02-E-BPA-7= 0, pg.=20 6, line 4). One principle underlying settlement discussions was that the L= B=20 CRAC method ought to assure that each power product subject to the LB CRAC = is=20 charged with recovering the same percentage increase in revenue. The approach to determining the equal percentage increases in revenue=20 required from each power product subject to LB CRAC is to use revenues in t= he=20 determination of the LB CRAC%. In this calculation, net augmentation cost= =20 are spread across the sum of all expected revenues from all power products= =20 subject to LB CRAC for the entire 6-month duration of the LB CRAC. The=20 resulting percentage, referred to as LB CRAC%, is then applied equally to= =20 each power product subject to the LB CRAC. This approach assures that each= =20 separate power product, subject to the LB CRAC, will then have a revised ra= te=20 that is determined using the same percentage increase in required revenue. Additionally, the problem BPA is grappling with is one of sufficient=20 revenues. Net augmentation costs are expressed in dollars. Revenues from= =20 power products without the LB CRAC is expressed in dollars. By spreading th= e=20 former dollars over the latter dollars, and applying the resulting percenta= ge=20 to revenues without the LB CRAC, results in incremental dollars required fr= om=20 each separate power product that is subject to the LB CRAC. This appears = to=20 BPA to be a very fair and equitable approach to recover net augmentation=20 costs. The following information is from the web server: 1. Logon: IUSR_GRANITE 2. Remote Host: 53.180.74.220 3. Remote IP Address: 53.180.74.220 4. Form URL: =20 http://www.bpa.gov/power/secure/psp/ratecase/discovery/wp_02_response.html 5. Browser Client: Mozilla/4.0 (compatible; MSIE 5.01; Windows NT; BPA 4.= 01=20 SP2; BPA 5.01 SP1)
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