CFR Part 301

CFR Part 301
in effect

18 C.F.R. § 301.1 Applicability.

The regulations in this part apply to the sales of electric power by any Utility to the Bonneville Power Administration (Bonneville) under section 5(c) of the Pacific Northwest Electric Power Planning and Conservation Act (Northwest Power Act). 16 U.S.C. 839c(c).

18 C.F.R. § 301.2 Definitions.

For purposes of this section, the following definitions apply: Account(s). The Accounts prescribed in the Commission's Uniform System of Accounts in part 101 of this chapter. Appendix 1. Appendix 1 is the electronic form on which a Utility reports its Contract System Cost, Contract System Load, and other necessary data to Bonneville for the calculation of the Utility's Average System Cost. Average System Cost (ASC). The rate charged by a Utility to Bonneville for the agency's purchase of power from the Utility under section 5(c) of the Northwest Power Act for each Exchange Period, and the quotient obtained by dividing Contract System Cost by Contract System Load. 16 U.S.C. 839c(c). Average System Cost delta (ASC delta). The change in a Utility's ASC during the Exchange Period resulting from the inclusion in the Average System Cost forecast model of costs, loads, revenues, and other information related to the commercial operation of a major resource addition or reduction that was identified in the Utility's ASC filing. Average System Cost forecast model (ASC forecast model). The model Bonneville uses to escalate a Utility's costs, revenues, and other information contained in the Appendix 1 to calculate the Exchange Period ASC. Average System Cost review process (ASC review process). The administrative proceeding conducted before Bonneville under Bonneville's ASC review procedures in which a Utility's ASC is determined. Base Period. The calendar year of the most recent Form 1 data. Base Period ASC. The ASC determined in the Review Period using the Utility's Base Period data and additional specified data. Contract High Water Mark (CHWM). The average MW amount used to define access to Tier 1 Priced-Power. CHWM is equal to the adjusted historical load for each customer proportionately scaled to Tier 1 System Resources and adjusted for conservation achieved. The CHWM is specified in each eligible customer's CHWM Contract. Commission. Federal Energy Regulatory Commission. Consumer-owned Utility. A public body or cooperative that is eligible to purchase preference power from Bonneville under section 5(b) of the Northwest Power Act. 16 U.S.C. 839c(b). Contract System Cost. The Utility's costs for production and transmission resources, including power purchases and conservation measures, which costs are includable in, and subject to, the provision of Appendix 1. Under no circumstances will Contract System Cost include costs excluded from ASC by section 5(c)(7) of the Northwest Power Act. 16 U.S.C. 839c(c)(7). Contract System Load. The total regional retail load included in the most recently filed FERC Form 1 or, for a Consumer-owned Utility, the total retail load from the most recent annual audited financial statement, as adjusted pursuant to the ASC methodology. Direct Analysis. An analysis, including supporting documentation, prepared by the Utility that assigns the costs, debits, credits, and revenues in an Account to the Production, Transmission, and/or Distribution/Other functions of the Utility. Escalator. A factor used to adjust an Account in the Base Period ASC filing to the value for the period of the Exchange Period ASC. Exchange Load. All residential, apartment, seasonal dwelling and farm electrical loads eligible for the Residential Exchange Program under the terms of a Utility's Residential Purchase and Sales Agreement. Exchange Period(s). The period during which a Utility's Bonneville-approved ASC is effective for the calculation of the Utility's Residential Exchange Program benefits. The initial Exchange Period under this ASC methodology is from October 1, 2008, through September 30, 2009. Subsequent Exchange Periods will be the period of time concurrent with Bonneville's wholesale power rate periods beginning October 1 or, if not beginning October 1, then beginning on the effective date of Bonneville's subsequent wholesale power rate periods. Exchange Period ASC. The Base Period ASC escalated to a year(s) consistent with the Exchange Period. FERC Form 1. The annual filing submitted to the Federal Energy Regulatory Commission, required by 18 CFR 141.1. Functionalization. The process of assigning a Utility's costs, debits, credits, and revenues in an Account to the Production, Transmission, and/or Distribution/Other functions of the Utility. Global Insight. The company that provides the escalation factors identified in § 301.4(a)(3) that are used in the ASC forecasting model, or the successor or replacement of that company, as determined by Bonneville. Jurisdiction. The service territory of the Utility within which a particular regulatory body has authority to approve the Utility's retail rates. Jurisdictions must be within the Pacific Northwest region as defined in section 3(14) of the Northwest Power Act. 16 U.S.C. 839a(14). Labor Ratios. The ratios that assign costs on a pro rata basis using salary and wage data for Production, Transmission, and Distribution/Other functions included in the Utility's most recently filed FERC Form 1. For Consumer-owned Utilities, comparable data will be utilized based on the cost-of-service study used as the basis for retail rates at the time of review. Net Requirements. The amount of Federal power that a Consumer-owned Utility is entitled to purchase from Bonneville under section 5(b) of the Northwest Power Act. 16 U.S.C. 839c(b). New Large Single Load. That load defined in section 3(13) of the Northwest Power Act, and determined by Bonneville as specified in power sales contracts and Residential Purchase and Sales Agreements with its Regional Power Sales Customers. 16 U.S.C. 839a(13). Priority Firm Power. Priority Firm Power is electric power (capacity and energy) that Bonneville will make continuously available for direct consumption or resale to public bodies, cooperatives, and Federal Agencies (under the Priority Firm Preference rate) and to Utilities participating in the Residential Exchange Program (under the Priority Firm Exchange rate). Utilities participating in the Residential Exchange Program under section 5(c) of the Northwest Power Act may purchase Priority Firm Power under their Residential Purchase and Sales Agreements with Bonneville. Priority Firm Power is not available to serve New Large Single Loads. Deliveries of Priority Firm Power may be reduced or interrupted as permitted by the terms of the Utilities' power sales contracts and/or Residential Purchase and Sales Agreements with Bonneville. Public Purpose Charge. Any charge based on a Utility's total retail sales in a Jurisdiction that is provided to independent entities or agencies of state and local governments for the purpose of funding within the Utility's service territory one or both of the following: (a) Conservation programs in lieu of Utility conservation programs; or (b) Acquisition of renewable resources. Rate Period. The period during which Bonneville's wholesale power rates are effective. The period is coincident with the Exchange Period. Rate Period High Water Mark (RHWM). The amount used to define each customer's eligibility to purchase Tier 1 Priced Power for the relevant Rate Period, subject to the customer's Net Requirement expressed in average megawatts (aMW). RHWM is equal to the customer's CHWM as adjusted for changes in Tier 1 System Resources. The RHWM is determined for each eligible customer in the RHWM Process preceding each Bonneville wholesale power rate case. Rate Period High Water Mark Process (RHWM Process). The process or processes where each eligible Consumer-owned Utility RHWM is determined. Regional Power Sales Customer. Any entity that contracts directly with Bonneville for the purchase of power under sections 5(b) (16 U.S.C. 839c(b)), 5(c) (16 U.S.C. 839c(c)), or 5(d) (16 U.S.C. 839c(d)) of the Northwest Power Act for delivery in the Pacific Northwest region as defined by section 3(14) of the Northwest Power Act. 16 U.S.C. 839a(14). Residential Purchase and Sales Agreement. The contract under section 5(c) of the Northwest Power Act between Bonneville and a Utility that defines and implements the power purchase and sale under the Residential Exchange Program. Review Period. The period of time during which a Utility's Appendix 1 is under review by Bonneville. The Review Period begins on or about June 1, and ends on or about November 15 of the fiscal year prior to the fiscal year Bonneville implements a change in wholesale power rates. Regulatory Body. A state commission, Consumer-owned Utility governing body, or other entity authorized to establish retail electric rates in a Jurisdiction. RHWM Exchange Load. The Exchange Load as determined in section 20 of the Residential Purchase and Sales Agreement. RHWM System Resources. The Rate Period High Water Mark (RHWM) as calculated in section 4.2.1 of the Tiered Rates Methodology plus the resource amounts used in calculating a customer's Contract High Water Mark (CHWM). Tier 1 Priced-Power. Priority Firm Power as defined in Bonneville's Tiered Rates Methodology. Tier 1 System Resources. Resources as defined in Bonneville's Tiered Rates Methodology. Tiered Rates Methodology. The long-term methodology established by Bonneville for the determination of tiered wholesale power rates. Utility. A Regional Power Sales Customer that has executed a Residential Purchase and Sales Agreement.

18 C.F.R. § 301.3 Filing procedures.

(a) Bonneville's ASC review procedures. The procedures established by Bonneville's Administrator provide the filing requirements for all Utilities that file an Appendix 1 with Bonneville. Utilities must file Appendix 1s, ASC forecast models, and other required documents with Bonneville in compliance with Bonneville's ASC review procedures. (b) Exchange Period. The Exchange Period will be equal to the term of Bonneville's Rate Period. ASCs will change during the Exchange Period only for the reasons provided in § 301.4.

18 C.F.R. § 301.4 Exchange Period Average System Cost determination.

(a) Escalation to Exchange Period. (1) This section describes the method Bonneville will use to escalate the Base Period ASC to and through the Exchange Period to calculate the Exchange Period ASC. (2) Bonneville will escalate the Bonneville-approved Base Period ASC to the midpoint of the fiscal year for a one-year Rate Period/Exchange Period, and to the midpoint of the two-year period for a two-year Rate Period/Exchange Period to calculate Exchange Period ASCs. (3) For purposes of the escalation referenced in paragraph (a)(2) of this section, Bonneville will use the following codes in the ASC forecast model to calculate the Exchange Period ASCs: (i) A&G—Administrative and General. (ii) CACNT—Customer Account. (iii) CD—Construction, Distribution Plant. (iv) CONSTANT—Constant. (v) CSALES—Customer Sales. (vi) CSERVE—Customer Service. (vii) COAL—Coal. (viii) DMN—Distribution Maintenance. (ix) DOPS—Distribution Operations (x) HMN—Hydro Maintenance. (xi) HOPS—Hydro Operations. (xii) INF—Inflation. (xiii) NATGAS—Natural Gas. (xiv) NFUEL—Nuclear Fuel. (xv) NMN—Nuclear Maintenance. (xvi) NOPS—Nuclear Operations. (xvii) OMN—Other Production Maintenance. (xviii) OOPS—Other Production Operations. (xix) SNM—Steam Maintenance. (xx) SOPS—Steam Operations. (xxi) TMN—Transmission Maintenance. (xxii) TOPS—Transmission Operations. (xxiii) WAGES—Wages. (4) Table 1 identifies which codes from paragraph (a)(3) of this section apply to the line items and associated FERC Accounts in the Appendix 1. Bonneville will use Global Insight as the source of data for the escalation codes identified in paragraph (a)(3) of this section, except for the NATGAS and CONSTANT codes. For the NATGAS code identified in paragraph (a)(3)(xiii) of this section, Bonneville will calculate the escalation rate using Bonneville's most current forecast of natural gas prices. The code CONSTANT in paragraph (a)(3)(iv) of this section indicates that no escalation to the Account will be made. (5) Bonneville will base the costs of power products purchased from Bonneville on Bonneville's forecast of prices for its products. (6) Bonneville will escalate the Public Purpose Charge forward to the midpoint of the Exchange Period by the same rate of growth as total Contract System Load. (7) If any of the escalators specified in paragraph (a) of this section are no longer available, Bonneville will designate a replacement source of such escalator(s) that, as near as possible, replicates the results produced by the prior escalator. If a replacement source is not available, Bonneville will use the INF escalation code identified in paragraph (a)(3)(xii) of this section as the replacement escalator. (b) Calculation of sales for resale and power purchases—(1) Long-term and intermediate-term sales for resale and power purchases. Bonneville will use the INF escalation code identified in paragraph (a)(3)(xii) of this section to escalate long-term and intermediate-term (as defined by the Commission) firm purchased power costs and long-term and intermediate-term sales for resale revenues. (2) Short-term sales for resale and power purchases. (i) The short-term purchases and short-term sales for resale for the Base Period will be used as the starting values. A Utility will be allowed to include new plant additions, and to use a utility-specific forecast for the price of purchased power and for the price of sales for resale in order to value purchased power expenses and sales for resale revenue to be included in the Exchange Period ASC. (ii) Bonneville will use the following method to determine separate market prices to forecast short-term purchased power expenses and sales for resale revenues to calculate Exchange Period ASCs: (A) The Utility's average short-term purchased power price and short-term sales for resale price will be calculated for each year for the most recent three years of actual data (Base Period and prior two years). (B) The midpoint between the Utility's average short-term purchased power price and the average short-term sales for resale price will be calculated for each of the years in paragraph (b)(2)(ii)(A) of this section. (C) The percentage spread around the Utility's midpoint between the average short-term purchase power price and short-term sales for resale price will be calculated for each of the years identified in paragraph (b)(2)(ii)(A) of this section. (D) A weighted average spread for the Utility's most recent three years of actual data (Base Period and prior two years) will be calculated. The following weighting scale will be used: (1) Three (3) times Base Period spread. (2) Two (2) times (Base Period minus 1) spread. (3) One (1) time (Base Period minus 2) spread. (E) The Base Period midpoint calculated in paragraph (b)(2)(ii)(B) of this section will be escalated at the same rate as Bonneville's electric market price forecast. (F) The weighted average spread calculated in paragraph (b)(2)(ii)(D) of this section will be applied to the escalated midpoint price calculated in paragraph (b)(2)(ii)(E) of this section to determine the purchased power price and sales for resale price to value purchased power expenses and sales for resale revenues to be included in the Exchange Period ASC. (iii) The method described in paragraph (b)(2)(ii) of this section will be used to forecast the electric market price for power purchases needed to meet load growth not met by major resource additions, and to forecast the electric market price for any additional surplus power sales resulting from major resource additions. (c) Major resource additions and reductions and materiality thresholds. (1) During the Exchange Period, Bonneville will allow changes to a Utility's ASC to account for major resource additions or reductions that are used to meet a Utility's retail load. These changes, however, must meet the requirements of paragraph (c)(3) of this section and the materiality threshold described in paragraph (c)(4) of this section in order for Bonneville to allow an ASC to change. The ASC reflecting the major resource addition or reduction will be determined by Bonneville in the ASC review process during the Review Period. (2) For major resource additions, the change to ASC will become effective when the resource begins commercial operation, or power is received under the purchased power contract. For major resource reductions, the change to ASC will become effective when the resource is sold, retired, or transferred. (3) A major resource addition or reduction must be related to one or more of the following categories to be eligible for consideration as a major resource: (i) Production or generating resource investments; (ii) Transmission investments; (iii) Long-term generating contracts; (iv) Pollution control and environmental compliance investments relating to generating resources; (v) Long-term transmission contracts; (vi) Hydroelectric relicensing costs and fees; and (vii) Plant rehabilitation investments. (4) Major resource additions or reductions that meet the criteria identified in paragraph (c)(3) of this section will be allowed to change a Utility's ASC within an Exchange Period provided that the major resource addition or reduction results in a 2.5 percent or greater change in a Utility's Base Period ASC. Bonneville will allow a Utility to submit stacks of individual resources that, when combined, meet the 2.5 percent or greater materiality threshold, provided, however, that each resource in the stack must result in a change to the Utility's Base Period ASC of 0.5 percent or more. (5) At the time the Utility submits its Appendix 1 filing, the Utility will provide its forecast of major resource additions or reductions and all associated costs. The forecast will cover the period from the end of the Base Period to the end of the Exchange Period. (6) Bonneville will calculate new transmission wheeling revenues associated with new transmission investment using the following formula: (7) The forecast of major resource additions or reduction costs to be included in the Utility's Exchange Period ASC will be reviewed by Bonneville in the ASC review process that is conducted during the Review Period. (8) All major resources included in an ASC calculation prior to the start of the Exchange Period will be projected forward to the midpoint of the Exchange Period. (9) For each major resource addition or reduction that is forecasted to occur during the Exchange Period, Bonneville will calculate the difference in ASC between the ASC without the major resource addition or reduction and the ASC with the major resource addition or reduction (ASC delta) at the midpoint of the Exchange Period. (10) Once the major resource addition or reduction becomes effective, as determined by paragraph (c)(2) of this section, Bonneville will add the ASC delta to the Utility's existing ASC to determine its new ASC. (11) For purposes of calculating ratios with Distribution Plant, Bonneville will escalate the Base Period average per-MWh cost of Distribution Plant forward to the midpoint of the Exchange Period, and use the escalated average cost to determine the distribution-related cost of meeting load growth since the Base Period. (12) Bonneville will escalate the cost of General Plant, Accounts 389 through 399.1, forward to the midpoint of the Exchange Period by calculating the ratio of each Account's value in the Base Period to the sum of Production, Transmission, and Distribution plant values in the Base Period, and then multiplying the Base Period ratio times the forecasted value for Production, Transmission, and Distribution plant. (13) Bonneville will issue procedural rules to ensure the confidentiality of information provided by Utilities regarding any major resource additions or reductions as part of its review process. Bonneville will provide parties with an opportunity to comment on the rules prior to their implementation in the review process. Failure to provide needed information may result in exclusion of the related costs from the Utility's ASC. However, load growth will be assumed to be met with purchases in the wholesale market, as described in paragraph (e) of this section. If the Utility fails to supply confidential resource data, it loses the difference between the cost of the resource and the price of electricity in the wholesale market. (d) Forecasted Contract System Load and Exchange Load. All Utilities are required to provide a forecast of their Contract System Load and associated Exchange Load, as well as a current distribution loss analysis as described in Endnote e of Appendix 1, with their Appendix 1 filings. The load forecast for Contract System Load and Exchange Load will start with the Base Period and extend through four (4) years after the Exchange Period. The load forecast for Contract System Load and Exchange Load will be provided on a monthly basis for the Exchange Period. (e) Load growth not met by major resource additions. All forecast load growth not met by major resource additions will be met by purchased power at the forecasted utility-specific, short-term purchased power price. (1) The Utility's forecast Load Growth will be met with electric market purchases priced at the Utility's forecast short-term purchased power price as determined in paragraph (b) of this section unless the Utility forecasts major resource additions. (2) In the event of major resource additions, forecast Load Growth will be met by the major resource(s). If the major resource is less than total forecast load growth, the unmet Load Growth will be met with electric market purchases priced at the Utility's forecast short-term purchased power price. (3) In the event the power provided by a major resource exceeds the Utility's forecast Load Growth, the excess power will be used to reduce the Utility's short-term purchases. If short-term power purchases are reduced to zero, any remaining power will be sold as surplus power at the short-term sales for resale price as determined in paragraph (b) of this section. (f) Changes to service territory. In the event a Utility forecasts that it will acquire a new service territory, or lose a portion of its existing service territory, and the gain or loss of that territory results in a 2.5 percent or greater change to the Utility's Base Period ASC, the Utility must file two Appendix 1 filings with Bonneville as follows: (1) First, a Base Period ASC that does not reflect the acquisition or loss of service territory; and (2) Second, a Base Period ASC that incorporates the following changes: (i) A forecast of the increase or reduction in Contract System Load associated with the acquisition or reduction in service territory. (ii) A forecast of the increase or reduction in Contract System Cost associated with the acquisition or reduction of the service territory. (iii) A forecast of capital and operating cost increases or reductions associated with the change in service territory. (iv) A forecast of the changes in purchased power expenses, sales for resale revenues, and other debits or credits based on the changes in the service territory. (3) Because the date of the actual change to the Utility's service territory could differ from the forecast date used to determine the ASC during the Review Period, Bonneville will not adjust the Utility's ASC until the change in service territory takes place. (g) ASC determination for Consumer-owned Utilities that elect to execute Regional Dialogue High Water Mark contracts. For Consumer-owned Utilities that elect to execute Regional Dialogue CHWM contracts, Bonneville will use the following approach: (1) Use the RHWM System Resources as determined in the Tiered Rates Methodology (TRM) process. (2) Determine the RHWM Exchange Load. (3) Calculate the Utility's Contract System Cost as described in the ASC Methodology. (4) Determine the fully allocated cost of resources used to meet Contract System Load that is not met by: (i) The lesser of the Utility's RHWM or Forecast New Requirement, plus (ii) Existing Resources for CHWM (as defined in the Tiered Rates Methodology). (5) RHWM Contract System Cost = Contract System Cost minus fully allocated cost of resources (from paragraph (g)(4) of this section). (6) RHWM Average System Cost = RHWM Contract System Cost (from paragraph (g)(5) of this section)/RHWM System Resource (from paragraph (g)(1) of this section). (h) Filing of Appendix 1. Utilities must file an Appendix 1, including ASC information, by June 1 of each year, as required in § 301.3, for Bonneville's review and determination of a Base Period ASC. Utilities will file multiple, contingent, Base Period ASC filings to reflect changes to service territories as required in paragraph (f) of this section. Where: TTWR = total transmission wheeling revenues WR (before additions) = wheeling revenues (before additions) NTA = new transmission additions NTP (before additions) = Net Transmission Plant (before additions)

18 C.F.R. § 301.5 Changes in Average System Cost methodology.

(a) The Administrator, at his or her discretion, or upon written request from three-quarters of the utilities that are parties to contracts authorized by section 5(c) of the Northwest Power Act, or from three-quarters of Bonneville's preference customers, or from three-quarters of Bonneville's direct-service industrial customers may initiate a consultation process as provided in section 5(c) of the Northwest Power Act. After completion of this process, Bonneville's Administrator may file the new ASC methodology with the Commission. (b) The Administrator will not initiate any consultation process until one year of experience has been gained under the then-existing ASC methodology, that is, one year after the then-existing ASC methodology is adopted by Bonneville and approved by the Commission, through interim or final approval, whichever occurs first. (c) The Administrator may, from time to time, issue interpretations of the ASC methodology. The Administrator also may modify the functionalization code of any Account to comply with the limitations identified in sections 5(c)(7)(A)-(C) of the Northwest Power Act or to conform to Commission revisions to the Uniform System of Accounts.

18 C.F.R. § 301.6 Appendix 1 instructions.

(a) Appendix 1 is the form on which a Utility reports its Contract System Cost, Contract System Load, and other necessary data for the calculation of ASC. Appendix 1 is an electronic template consisting of seven schedules and several supporting files that must be completed by the Utility in accordance with these instructions and with the provisions of the endnotes following the schedules. (b) Appendix 1 filings must be accompanied by an attestation statement of the Chief Financial Officer of the Utility or other responsible official who possesses the financial and accounting knowledge necessary to complete the attestation statement. (c) The primary source of data for the Investor-owned Utilities' Appendix 1 filings is the Utility's prior year FERC Form 1 filings with the Commission. Any items not applicable to the Utility must be identified. (d) For Consumer-owned Utilities that do not follow the Commission's Uniform System of Accounts, filings must include reconciliation between Utility Accounts and the items allowed as Contract System Cost. In addition, the cost-of-service report must be reviewed by an independent accounting or consulting firm, and must be accompanied by a report from that independent accounting or consulting firm that outlines the review work that was performed in preparing the cost-of-service report along with an assurance statement that the information contained in the cost-of-service report is presented fairly in all material respects. (e) The Appendix 1 template is available electronically at http://www.bpa.gov/corporate/finance/ascm/. The primary schedules are: (1) Schedule 1: Plant Investment/Rate Base (2) Schedule 1A: Cash Working Capital (3) Schedule 2: Capital Structure and Rate of Return (4) Schedule 3: Expenses (5) Schedule 3A: Taxes (6) Schedule 3B: Other Included Items (7) Schedule 4: Average System Cost (f) The filing Utility must reference and attach work papers, documentation and other required information that support costs and loads, including details of allocation and functionalization. All references to the Commission's Accounts are to the Commission's Uniform System of Accounts, as amended by subsequent Commission actions. The costs includable in the attached schedules are those includable by reason of the definitions in the Commission's Accounts. If the Commission's Accounts are later revised or renumbered, any changes will be incorporated into the Appendix 1 by reference, except to the extent Bonneville determines that a particular change results in a change in the type of costs allowable for Residential Exchange Program purposes. In that event, Bonneville will address the changes, including escalation rules, in its review process for the following Exchange Period. (g) Bonneville may require a Utility to account for all transactions with affiliated entities as though the affiliated entities were owned in whole or in part by the Utility, if necessary, to properly determine and/or functionalize the Utility's costs. (h) A Utility operating in more than one Pacific Northwest Jurisdiction must file one Appendix 1. (i)(1) A Utility operating in a Jurisdiction within the Pacific Northwest and within Jurisdictions outside the Pacific Northwest must allocate its total system costs among its Jurisdictions within the Pacific Northwest and outside the Pacific Northwest in accord with the same allocation methods and procedures used by the Regulatory Body(ies) to establish Jurisdictional costs and resulting revenue requirements. The Utility's Appendix filing must include details of the allocation. (2) The allocation must exclude all costs of additional resources used to meet loads outside the Pacific Northwest, as required by section 5(c)(7) of the Northwest Power Act. All schedule entries and supporting data must be in accord with Generally Accepted Accounting Principles and Practices as these principles and practices apply to the electric utility industry. (j) A Utility must file an attestation statement with each Appendix 1 filing and supporting documentation for each Review Period.

18 C.F.R. § 301.7 Average System Cost methodology functionalization.

(a) Functionalization of each Account included in a Utility's ASC must be according to the functionalization prescribed in Table 1, Functionalization and Escalation Codes. Direct analysis on an Account may be performed only if Table 1 states specifically that a Utility may perform a direct analysis on the Account, with the exception of conservation costs. Utilities will be able to functionalize all conservation-related costs to Production, regardless of the Account in which they are recorded. The direct analysis must be consistent with the directions provided in this section. (b) Functionalization codes. (1) DIRECT—Direct Analysis. (2) PROD—Production. (3) TRANS—Transmission. (4) DIST—Distribution/Other. (5) PTD—Production, Transmission, Distribution/Other Ratio. (6) TD—Transmission, Distribution/Other Ratio. (7) GP—General Plant Ratio. (8) GPM—General Plant Maintenance Ratio. (9) PTDG—Production, Transmission, Distribution/Other, General Plant Ratio. (10) LABOR—Labor Ratio. (c) Functionalization requirements. (1) Functionalization of certain Accounts may be based on Direct Analysis or with a default ratio associated with that specific Account as shown in Table 1. Once a Utility uses a specific functionalization method for an Account, the Utility may not change the functionalization method for that Account without prior written approval from Bonneville. (2) The Utility must submit with its Appendix 1 all work papers, documents, or other materials that demonstrate that the functionalization under its Direct Analysis assigns costs, revenues, debits or credits based upon the actual and/or intended functional use of those items. Failure to submit the documentation will result in the entire account being functionalized to Distribution/Other, or Production, or Transmission, as appropriate. (d) Functionalization methods. (1) Direct analysis, if allowed or required by Table 1, assigns costs, revenues, debits and credits to the Production, Transmission, and/or Distribution/Other function of the Utility. The only exception to this requirement is for Accounts that include conservation-related costs. Subject to the provisions of paragraph (d)(4) of this section, a Utility may conduct a Direct Analysis on any Account that contains conservation-related costs. The Direct Analysis performed by a Utility is subject to Bonneville review and approval. (2) Bonneville will not allow a Utility to use a combination of Direct Analysis and a prescribed functionalization method for the same Account. The Utility can develop and use a functionalization ratio, or use a prescribed functionalization method, if the Utility, through Direct Analysis, can justify how the ratio reflects the functional nature of the costs, revenues, debits, or credits included in any Account. (3) A Utility that wishes to include advertising and promotion costs related to conservation will use Direct Analysis. (4) If a Utility records conservation costs in an Account that is functionalized to Distribution/Other, the Utility will identify and document the conservation-related costs included in the Account, and the balance of the costs will be functionalized to Distribution/Other. The presence of conservation-related costs in an Account does not authorize the Utility to perform a Direct Analysis on the entire Account. This option allows a Utility to assign conservation costs in the specified Account to Production based on analysis and support from the Utility that demonstrates the cost assignment is appropriate. The Utility must submit with its ASC filing all work papers, documents, and other materials that demonstrate the functionalization contained in its Direct Analysis and assign costs based upon the actual and/or intended functional use of those items. Failure to submit the documentation will result in the entire Account being functionalized to Distribution/Other for all schedules with the exception of items included in Schedule 3B, Other Included Items, where certain Accounts must be functionalized to Production as appropriate.

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