s~ COl.. ~\ ~ .... QJ ~ ..,.':~:~ Ir..! Y c ~ ' ~ ~n ( / ' , >- • . ROBERT J. PELLATT COMMISSION SECRETARY /~S CO~~\ VIA FACSIMILE Ms. Darlene M. Barnett Senior Vice-President Marketing and Customer Services British Columbia Hydro and Power Authority 17th Floor, 333 Dunsmuir Street Vancouver, B.C. V6B 5R3 Dear Ms. Barnett: Re: British Columbia Hydro and Power Authority Application for Variance to Rate Schedule 1848 for September 4, 5 and 6, 1997 In reference to the September 5, 1997 complaint, registered by Willis Energy Services Ltd. on behalf of customers served under Rate Schedule 1848, regarding the unfair rate charged for the above-noted period and the subsequent application made by B.C. Hydro, we wish to comment as follows. The Commission has reviewed B.C. Hydro's September 16, 1997 application for a variance to Rate Schedule 1848 and determined that B.C. Hydro should be allowed to collect an RTP energy price for September 4, 5 and 6, 1997 equal to the comparable price prevailing on September 3, 1997. The Commission believes that the September 3, 1997 price represents the best available proxy for the B.C.ru.S. border price during the subsequent three days' transmission constraint. The Commission notes that the problems arising in this case are apparently not of a type contemplated at the time the current RTP rate was designed. In particular, the Powerex posted prices were seen as a proxy for the B.C./U.S. border price, but no provision was made for a case where this relationship became invalid. The September 3rd price reflects an attempt to address retrospectively this omission. The Commission does not accept B.C. Hydro's rationale for the proposed rebate of the 5 mill margin. The problem with the 1848 rate on the days in question was not the margin, but the very idea of using the LETTER No. L·66·97 u ~ . : .. .... 4 . ?< . s . > . 7 .. ~ .J ~ .' ~ :z: SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, B.C. CANADA V6Z 2N3 . , 'C \" l : IQ .:: i ' . . . , C r ;J _ TELEPHONE: (604) 660-4700 '~) BC TOLL FREE: 1-800-663-1385 FACSIMILE: (604) 660-1102 October 30, 1997 .. .12
2 Powerex buy price in a situation where this price is clearly reflective of Mid-C hub conditions, not B.C.fU.S. border conditions. The Commission notes that if a variance is granted, the new rate should endeavor to replicate the spirit of the old rate - namely, to act as a proxy for the price that would have prevailed that day at the B.C.fU.S. border had a market existed there. In the Commission's view, there is no truly suitable proxy available. The Commission believes, however, that, absent the transmission failure, the core supply and demand conditions of the market are unlikely to have changed sharply between September 3rd and the following three days. This view is supported by the similarity between the RTP prices on the day before the constraint and the day after it. Yours truly, "Obert J. Pellatt CBUlm cc: Mr. Paul Willis, President Willis Energy Services Ltd. Registered IntervenorslInterested Parties (BCHRTP97) BCH/CorlRTP & L-66-97
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