California Energy Com'n v. Bonneville Power Admin.

Decision Date26 July 1990
Docket NumberNo. 2,No. 1,88-7318 and 88-7319,Nos. 88-7280,88-7315,1,2,s. 88-7280
Citation909 F.2d 1298
PartiesCALIFORNIA ENERGY COMMISSION, Petitioner, Puget Sound Power & Light Company, Washington Water Power Company ("WWP"), Petitioner-Intervenor, v. BONNEVILLE POWER ADMINISTRATION; U.S. Department of Energy, Respondents, Association of Public Agency Customers; Public Power Council; Public Utility Districtof Chelan County, Washington; Pacificorp, DBA Pacific Power & Light Company ("Pacific"); Public Utility Districtof Grant County, Washington; Western Public Agencies Group ("WPAG"); Montana Power Company; City of Seattle, City Light Department ("City"); Public Generating Pool ("PGP"); Eugene Water & Electric Board ("EWEB"); Director Service Industrial Customers ("DSIS"), Respondent-Intervenor. PACIFIC NORTHWEST GENERATING COMPANY ("PNGC"), Petitioner, v. BONNEVILLE POWER ADMINISTRATION; U.S. Department of Energy; United States of America, Respondents. VANALCO INC.; Aluminum Company of America; Columbia Falls Aluminum Company, Petitioners, Washington Water Power Company ("WWP"); Puget Sound Power and Light Company, Petitioner-Intervenor, v. BONNEVILLE POWER ADMINISTRATION, Respondent, Portland General Electric Company; Association of Public Agency Customers; ARCO; Montana Power Company; Public Generating Pool ("PGP"); Eugene Water & Electric Board ("EWEB"); Non-Generating Public Utilities ("NGPU"), Respondent-Intervenor. CALIFORNIA PUBLIC UTILITIES COMMISSION, Petitioner, Puget Sound Power and Light Company; The Department of Water & Power of the City of Los Angeles; Public Service Department of the City of Burbank; Public Service Department of the City of Glendale; Water & Power Department of the City of Pasadena; San Diego Gas & Electric Company and Southern California Edison Company; Pacific Gas and Electric Company, Petitioner-Intervenor, v. BONNEVILLE POWER ADMINISTRATION; U.S. Department of Energy, Respondents, Pacific Power & Light Company; Eugene Water & Electric Board ("EWEB"); Public Generating Pool ("PGP"); Northwest Power Planning Council; Direct Service Indust
CourtU.S. Court of Appeals — Ninth Circuit

William M. Chamberlain, Sacramento, Cal., for petitioners California Energy Com'n.

Paul M. Murphy, Portland, Or., for intervenors Direct Service Indus. Customers and Western Public Agencies Group.

Sherilyn Peterson, Seattle, Wash., for Puget Sound Power & Light Co.

Thomas Millet, Dept. of Justice, Washington, D.C., for BPA.

Jay T. Waldron, Portland, Or., for Public Generating Pool.

Petition to Review Bonneville Power Administration Agency Action.

Before CANBY, and LEAVY, Circuit Judges, and ORRICK, District Judge. *

CANBY, Circuit Judge:

This case involves consolidated challenges to the Bonneville Power Administration's ("BPA") Long-Term Intertie Access Policy ("LTIAP") which allocates access to the Pacific Northwest-Pacific Southwest Intertie, a system of high voltage lines transmitting federal and non-federal power between the two regions. The LTIAP is being attacked on several fronts by parties with diverse and sometimes competing interests. None of the parties with an interest in access to the Intertie is completely satisfied with the policy. Upon the whole record, however, we conclude that the LTIAP reasonably balances the interests of the affected parties in a manner consistent with the directives of Congress.

A. BPA and the Intertie

BPA is a federal agency within the Department of Energy that produces and markets power produced from dams that comprise the Federal Columbia River Power System. BPA also oversees access to the Intertie. The Intertie, completed in 1968, was designed to even out the peaks and troughs in the production and consumption of power in the Northwest and Southwest. During most of the year the Northwest produces more electricity than it can use and the Southwest experiences particularly heavy consumption. Less frequently, this pattern is reversed with the Northwest experiencing heavy demand and the Southwest able to produce surplus power. The Intertie allows the regions to assist each other during times of heavy demand.

That portion of the Intertie extending north of Oregon's border with California and Nevada is owned by BPA, Portland General Electric, and Pacific Power & Light, with BPA owning approximately 80% of the capacity. The southern end of the Intertie is owned by a group of California utilities, with PG & E, Southern California Edison, the Los Angeles Department of Water and Power, and San Diego Gas & Electric owning approximately 80% of the capacity.

B. Governing Statutory Authority

The primary authority, obligations and restrictions which govern BPA's operation of the Intertie are found in four statutes: the Pacific Northwest Electric Power Planning and Conservation Act of 1980, 16 U.S.C. Secs. 839-839h. ("Northwest Power Act"); the Federal Columbia River Transmission System Act of 1974, 16 U.S.C. Secs. 838-838k. ("Transmission Act"); the Pacific Northwest Consumer Power Preference Act of 1964, 16 U.S.C. Secs. 837-837h. ("Preference Act"); and the Bonneville Project Act of 1937, 16 U.S.C. Secs. 832-832l. ("Project Act").

The Northwest Power Act requires BPA, in marketing federal power, to establish rates that will produce sufficient revenues to ensure BPA's fiscal independence and repay the U.S. Treasury for the federal funds that were borrowed to build the projects in the Federal Columbia River Power System. 16 U.S.C. Secs. 838g and 839e(a)(1). At the same time, Congress requires that BPA market federal power "with a view to encouraging the widest possible diversified use of electric power at the lowest possible rates to consumers consistent with sound business principles...." 16 U.S.C. Secs. 838g; see also 839e(a)(1). Under the Preference Act, BPA must give priority to public bodies, 16 U.S.C. Sec. 832c(a), and to purchasers within the Northwest, 16 U.S.C. Sec. 837a. Sales to purchasers outside of the Northwest are limited to energy "which would otherwise be wasted because of the lack of a market therefor in the Pacific Northwest at any established rate." 16 U.S.C. Sec. 837(c); see also Secs. 837(d) and 837a.

In allocating limited transmission capacity, BPA must give itself priority. 16 U.S.C. Sec. 837e. Nevertheless, it must transmit non-federal power to the extent that the Federal transmission lines have capacity not needed to transmit federal power. Id. Congress directed BPA to reserve sufficient Intertie capacity to meet "current" and "foreseeable" federal needs. Department of Water and Power of Los Angeles v. Bonneville Power Administration, 759 F.2d 684, 692 (9th Cir.1985) ("LADWP "). That excess capacity is to be made available to non-federal utilities "on a fair and nondiscriminatory basis." 16 U.S.C. Sec. 838d.

The authority to transmit non-federal power is limited in two additional ways. First, the transmission must not be in conflict with BPA's other marketing obligations, applicable operating limitations or existing contractual obligations. 16 U.S.C. Sec. 839f(i)(3). Second, any such transmission must be "[a]t the request and expense of any customer or group of customers" that sell power by transmitting it on the Intertie. 16 U.S.C. Sec. 839f(i)(1).

In addition to these somewhat conflicting responsibilities to maintain low rates, repay the federal treasury, and provide transmission access for other utilities, BPA must also "protect, mitigate, and enhance fish and wildlife" affected by the operation of the federal hydroelectric system. 16 U.S.C. Sec. 839b(h)(10).

C. The Long-Term Intertie Access Policy

The LTIAP is a result of BPA's attempt to balance the mandates of its governing statutes. The long-term policy had its roots in two temporary allocation policies--the Interim Intertie Access Policy and the Near Term Intertie Access Policy ("NTIAP"). We found those policies to be within BPA's statutory authority and consistent with the relevant statutes. See LADWP, 759 F.2d at 695; California Energy Resources Conservation and Development Commission v. Bonneville Power Administration, 831 F.2d 1467, 1469 (9th Cir.1987), cert. denied, 488 U.S. 818, 109 S.Ct. 58, 102 L.Ed.2d 36 (1988) ("CEC "). In 1985 and 1986, BPA held public meetings on long-term Intertie access policy issues which culminated in the release of a proposed LTIAP in October, 1986. After receiving public comment, BPA issued a revised LTIAP in December, 1987. In May, 1988, after further public comment, BPA adopted the final LTIAP. The policy provides non-federal utilities with Intertie capacity on two bases: Formula Allocation and Assured Delivery.

1. Formula Allocation

Formula Allocation is the policy which apportions Intertie capacity in excess of that required for firm power transactions. This policy allows non-federal utilities to make short-term spot sales of surplus power. The allocation system varies depending on which of three conditions exists. Condition 1 exists when there is a likelihood of spill 1 in the Northwest hydro system. Under Condition 1, BPA and each scheduling utility are allocated a pro rata share of the available Intertie capacity based on their declarations of surplus energy. 2 Whenever BPA is unable to make sales equal to its pro rata share, BPA takes larger allocations on subsequent days until it is able to sell its full pro rata market share. 3

Condition 2 occurs when there is no likelihood of spill in the power system but BPA and the Northwest utilities have more than enough surplus nonfirm energy to fill the Intertie. Under Condition 2, BPA and each scheduling utility again receive a pro rata share of the available capacity based on their declared surplus. If BPA's sales drop below 75% of its allocation, BPA may take larger allocations on ensuing days until the difference is eliminated.

Finally, under Condition 3, which becomes...

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