The Bonneville Power Administration is developing the next phase of its Residential Exchange Program (REP) and presented proposed provisions during a Sept. 24 workshop.
The REP helps residential and farm customers of higher-cost Pacific Northwest utilities — mainly investor-owned utilities — access lower-cost federal power reserved for public power customers. The REP is managed under a settlement that expires Sept. 30, 2028, and the agency is developing the next phase of the post-2028 REP agreement.
The Sept. 24 workshop focused in part on the REP’s in-lieu provision, which means that “instead of purchasing any amount of power offered by a utility, BPA may acquire power from other sources and sell that power to the utility if the cost of such power is less than the utility’s [average system cost],” according to BPA’s presentation.
Under the proposed post-2028 REP in-lieu provision, BPA must provide notice to the utility 10 months prior to implementing or scheduling the in-lieu power. Also, once BPA issues the notice, the IOU has 30 days to opt out of the in-lieu power.
The notice would include the amount of in-lieu power expressed in monthly increments in MW and MWh, how much BPA paid to acquire the in-lieu power, duration of the in-lieu power sale, source of the power and the customer’s point of delivery, according to the presentation.
The Northwest Power Act established the REP, which is structured as a power exchange where utilities with high-cost resources sell power to BPA at their average system cost (ASC) of resources, and BPA, in turn, sells the same power quantity back to the utilities at BPA’s cost of power. No actual power is transmitted; the deal is instead treated as a financial transaction, according to BPA documents.
Specifically, the agency pays the IOU the net difference between the two sales, multiplied by the utility’s qualifying residential and farm load. The cost benefits of the exchange are passed on to the utility’s retail residential and farm consumers as a credit on their power bill.
Public Power’s Input
In a Sept. 17 letter, a group of public power organizations and utilities said BPA’s proposal to implement the post-2028 REP through a financial settlement rather than physical delivery of power “is consistent with BPA’s statutory obligations and authorities.”
“Also, the practical constraints with implementing the REP through physical deliveries appear daunting, if not impossible to overcome,” the authors said.
The organizations also wrote that consumer-owned utilities have “first right to federally generated power.”
“BPA’s proposal to implement REP through a financial settlement ensures that the statutory preference rights of the COU’s are preserved notwithstanding the purchase and exchange sales authorized under Section 5(c) of the Northwest Power Planning and Conservation Act, as intended by Congress when the act was passed in 1980,” the authors said.
The organizations also said they are unable to take a stance on duration, activation, termination and suspension issues discussed during a Sept. 11 workshop. The letter stated that “consideration of these issues hinges on their alignment with rate periods and ASC submittals.”
“Accordingly, at this time, public power is unable to take a position without a better understanding of how important aspects of BPA’s financial policies will be implicated, as well as potential linkages to the ‘in-lieu’ provisions in the Residential Purchase and Sale Agreement (RPSA),” the letter stated.
“In particular, if the Cost Recovery Adjustment Clause, Financial Reserve Policy Surcharge or Reserves Distribution Clause are triggered, a significant shift in benefits could occur,” public power argued. “We would like to better understand the impact of these tools on the REP as it relates to duration, activation, termination and suspension issues, including whether investor-owned utilities will share in the costs and benefits of BPA’s risk mitigation tools for power services.”
BPA will release a draft of the RPSA on Oct. 29 for comment and input. The agency will hold the next workshop Oct. 9.
