¢ CU-NU-0ce
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`en
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`Congress of the Anited States:
`ashington, BCE 20510
`
`January 24, 2012
`
`The Honorable Steven Chu
`Secretary
`Department ofEnergy
`1000 Independence Ave, SW
`Washington, DC 20585
`
`Dear Secretary Chu,
`
`4“aS-/4,
`
`Wewrite today regarding the December7, 2011 order issued by the Federal Energy Regulatory
`Commission (FERC) in the matter of the Bonneville Power Administration’s environmental
`redispatch policy.
`
`As you know,the Bonneville Power Administration (BPA) is a Power Marketing Administration
`(PMA),.one of four PMAsthat market and deliver powerin 32 states nationwide. BPA’s
`enabling statutes makeclear its obligations to provide cost-based power to its customers, operate
`within flood control restraints, and maintain and operate a reliable transmission system. Further,
`BPA must adhere to subsequent laws and mandates, including mitigating the impactof the
`federal hydropower system on fish and wildlife. As the Secretary of Energy, you are ultimately
`responsible-for helping ensure that BPA fulfills these multiple obligations.
`
`Weunderstand that the circumstances relating to high water events last spring led to complex
`and difficult policy tradeoffs, including impacts on flood control, threatened and endangered
`species, reliably ensuring transmissionservicesto all transmission customers, and the cost
`burdens borne by various customers. Weare also acutely aware that as we moveinto spring
`2012, the region may face these issues yet again.
`
`It is our understanding that a small group, representative of the stakeholders on this issue, has
`been meeting in good faith to seek resolution ofthis issue consistent with the request of several
`members of the Northwest delegation in August 2011. Our region has a longtradition of working
`together to resolve difficult challenges, and we believethis situation is no different.
`
`While we recognize certain authority granted to FERC in the Energy Policy Act of 2005 in
`adding Section 211A to the Federal Power Act, FERC has never previously exercised this
`authority, nor has such authority ever been subject to judicial review. Throughout its December
`7, 2011 order, FERC states that BPAis to find a way to satisfy all of its statutory obligations,
`including compliance with Section 211A. However,later in the order, FERC asserts thatits
`proposed remedyis appropriate and not limited by BPA’s enabling and applicable environmental
`statutes. A literal reading ofthis assertion indicates that FERC may believe Section211A ofthe
`Federal Power Act trumps BPA’s organic statute and all related enabling statutes, as well as the
`Endangered Species Act and the Clean Water Act. Absent further clarification on this issue, we
`are concerned that FERC may have oversteppedits authority in its order.
`
`

`

`Somecould interpret FERC’s intent to enforce Section 211A without regard for BPA’s statutory
`requirements, a view we feel strongly would set an unfortunate precedent that could damage
`BPA's ability to effectively manage these important and diverse responsibilities as well as those
`of other PMAsandotherhistorically non-FERCjurisdictional entities. BPA and other parties
`have asked for rehearing in the matter, including clarification on the meaning and breadth ofthe
`order, and a full and timely airing ofissues raised in this order needs to occur.
`
`As BPA haspublicly noted,the region is just weeks away from the spring snowmelt season and
`adoption of a new redispatch policy is urgently needed. BPA Administrator Steve Wright has
`been working for several months with diverse stakeholders in the region on settlement
`discussions. These settlement efforts should be given every chance to succeed before any further
`regulatory or judicial decisions are made. Once settlementtalks are concluded, we urge FERC to
`act promptly on the rehearing requests so that long term certainty can be obtained.
`
`As BPA worksto integrate renewables into the grid and remain a leaderin this effort, it must
`also appropriately meetits multiple obligations — remaining a low-cost provider of federal
`power, protecting endangeredspecies and wildlife, and ensuring that BPA maintainsits excellent
`record on its repayment obligations, and operating the transmission system in a reliable, cost-
`effective, and non-discriminatory manner.
`,
`
`While we may havedifferent views about the specific path forward, we fundamentally agree that
`the resolution of this dispute can and should come from the Northwest. We ask that you make
`every effort to support the ongoing discussions, and we expect regional stakeholders to remain at
`the table and bring forward a settlementthat can avoid protractedlitigation.
`
`Wecontinue to believe that the future development of renewable energy in the region needsto be
`preserved,for intermittent and base-load sources alike, and as more and more diverse resources
`comeonline, mitigation may bedifficult. We believe that working toward alternative solutions
`to BPA’s environmental dispatch policy can help avoid or significantly mitigate the costs
`associated with an oversupply situation, reduce economic uncertainty, and make the prospects
`and costoflitigating this issue far less likely to occur.
`
`Please keep us informed on the progress toward resolving this important issue.
`
`Sincerely,
`
`fear Mylan
`
`

`

`
`
`ce: Steve Wright, BPA Administrator
`Jon Wellinghoff, FERC Chairman
`Philip Moeller, FERC Commissioner
`John Norris, FERC Commissioner
`Chery! LaFleur, FERC Commissioner
`
`