Progress Report

Report Index

• Summary
   
• Schedule
  • Game Plan
  • Timeline
  
   
• Products and Services
  • Index
  • Sample Product
  
   
• Business Relationships
  • "Commercial Contract" Agreements
  • Umbrella/Subsidiary Agreements
  
   

Summary

The Federal Power Subscription Work Group has been meeting since March of 1997. The overall goal is to provide reliable and predictable revenues for BPA while ensuring no stranded costs.

Our last progress report to the Transition Board indicated that the Work Group had investigated and recorded an exhaustive list of business interests that were brought to the table by the parties.

At our six-month check-in we have several things to report. We have updated and refined the Work Group schedule to better reflect the issues we are addressing. The latest version is shown in the game plan and timeline included in this packet.

Currently we are:

• Finalizing a list of products and services BPA would offer;
• Exploring a few new products that have surfaced during our discussions;
• Focusing our attention on alternative business relationships;

Present conclusions:

• Based on the work thus far there are no obstacles and no needed legislation for a successful subscription.

Next steps include:

• BPA will begin pricing the products and services;
• Developing, by the end of October 1997, alternative business relationships that will support the Comprehensive Review's Federal Power Subscription recommendations;
• Addressing issues of implementation, starting with the Comprehensive Review recommendations.

The following pages provide an overview of the effort of the Subscription Work Group.

Game Plan

As the Work Group moves to the next step in our discussions, the following key milestones are guiding the group's efforts. The topics that the group will address fall into the following four categories:

1. Defined Products and Services
   The Work Group is discussing the specific products and services customers want to purchase and BPA will indicate which products they will offer. These products will be clearly defined and include any parameters necessary to define the scope of the product. The price for each product would not be developed at this stage.
    
2. Business Relationships Between BPA and its Customers
   The Work Group is identifying the business relationship(s) that would be created between Bonneville and its customers. An example might include the Umbrella/Subsidiary Agreements.
    
3. Price of Products and Services
   Bonneville will determine prices and pricing principles for the basic products and services they will offer.
    
4. Implementation of Subscription
   The Work Group will identify the steps to implement subscription. This includes who is eligible, the timing, the amounts, and other details of how subscription will be implemented.
    

Given this general organization of topics to be addressed, the following milestones reflect the Work Group's next steps.

Time Line

Products and Services
 
Index

Product Description

Sample Product 1: Full Service

This product provides all the firm power and services the customer needs to meet actual loads, including transmission. There are some risks inherent in the deregulation of the electric utility industry. This product provides a means for mitigating those risks. For this example, the customer is in BPA's control area and has some small generating resources.

Examples of options associated with this product include:

• Term: If a customer wants to begin this service before 10/1/01, we can negotiate a new agreement describing the change in the current contractual relationship.
   
• Retail Access Load Loss: Customer can purchase a separate insurance product to mitigate retail access load loss.
   

Business Relationships

"Commercial Contract" Agreements

• Individual agreements between customers and BPA.
   
• Traditional, negotiated contract describing the product with specific terms and conditions.
   
• Contract would include price and length of the contract.
   

Umbrella/Subsidiary Agreements

• The goal of this structure is to encourage a longer term commitment to purchase power for BPA without it being a commitment to buy power at unknown costs (and, thus, prices) for the next 20 years.
   
• Umbrella Agreement
  • Long-term (e.g. 20 years)
  • Specifies amount of subscription power
  • Includes cost-cap guarantee
  • "Costs" are defined
     
• Subsidiary Agreement
  • Short-term (e.g. 3-5 years)
  • Actual power sales are defined
  • Price is specified
  • The shorter-term subsidiary agreements could be renewed periodically throughout the term of the umbrella agreement.