Quarterly Business Review, 2018, 3rd Fiscal Quarter
Hello. And welcome to the third quarterly business review of fiscal year 2018, I'm Scott Sims director of communications, here at BPA we. Really appreciate you making time for this forum today before. We get started I want to run through a few reminders for today's meeting this. Qvr presentation, is being shared via WebEx the, link is available on our event calendar but if you're having trouble accessing WebEx, the, slide deck is also available at BPA, gov, /, go-to /qb. Are that, BPA gov, /, go to / qbr questions. Can be submitted at any time today but they will not be answered until the presentation is complete to. Submit a question click the chat button on the upper right hand side of your screen and to. Your question and press send your, questions, will be sent to the BPA host. So. Let's get started today, deputy, administrator Dan, James will start with his state of the business covering, integrated, program review updates and a BP 20 rate preview, then. Senior executives, from finance power, and transmission, will provide updates on the agency's plan shell and operational, performance, it's. Now my pleasure to turn it over to Dan James, good. Morning and welcome to the third quarter qbr, I'm. Excited, to share the state of business, for you today in Elliott's, absence, he's, not on vacation this week with his family and he will be back to share our a year-end, results, with you in November at. The, top of our list of key performance indicators, is safety which we are embedded into everything that we do our safety. KPI, looks, at incident, frequency rate an industry. Standard measure. Slips. Trips, and falls continue. To be our most frequent, issue not, just in the field but in our offices, cuts. And lacerations contributed. To about. One third of our injuries for, the quarter in, q3, we, continued, our efforts to increase safety awareness, and engagement among, employees with. Our annual stand, up for safety event, that's. A week of activities aimed at reducing incidents. And injuries at work at home and on the go we're. Not pleased with where we are and we, certainly want to see these numbers go down in q4. I'd like to spend the rest of my time on the 2018, integrated. Program review this. Is the first day I PR, since we released our strategic. Plan in January in. That plan we committed to improving our cost management, discipline and this, was the first test of our ability to deliver and, I'm happy to report that we rose to the challenge. We. Went into this IPR with the goal of bending the cost curve by slowing or eliminating. The trend of increases, in our program spending, levels which. We recognize is unsustainable in, this. IPR, we met our strategic, cost management, objective, by keeping program, costs, flat compared. To BPA teen, power. Services proposed, an expense, reduction, of 6 million a year compared. To BPA teen spending, levels we. Appreciate, the collaboration of, our generating, partners who, proposed to absorb, the rate of inflation for operations, and maintenance programs. Internally. We continue, to lower costs through savings on labor and service contracts, on, the capital, side power, proposes, to maintain its ramp to a 300, million annual, program, to, increase power production and reliability. Transmission. Services proposed, to increase costs by 3 million a year compared, to BPA teen spending, levels while. This is significantly. Below the rate of inflation, transmission. Is looking for additional reductions. To get to BP 18, levels by the end of this IPR. Expenses. Are prioritized, to, support safety compliance. And market transformation activities. As well, as modernize, our assets. Transmission. Took significant. Steps to offset, rising, cost pressures, such, as inflation filling. Critical positions, and licensing, cost. Proposed. Capital spending, is set to achieve safety, and high, reliability availability, and. Adequacy, standards and to, maximize economic. Value to the region. One. Of the most important, changes in this IPR, is the, new cost management, discipline, we are applying. We. Are changing the way we budget, and how we determine what to spend rate payer money on we're. Focusing, on the areas, that will move our strategic, goals for, and we're. Getting back to basics we. Can't ask others to make budget reductions, or raise. Rates to their customers, and members without, making, some hard choices ourselves. We've. Done that, we. Asked our finance team to evaluate spending.
Through The lens of our strategic plan and, we. Begun. To. Land a long-term cost savings, they've identified. More. Details about BPA's, program, costs, are available, in our initial publication, and workshop materials that, were shared at the meetings in June and on, the IPR, web page we've. Also posted a number of answers to questions, that were asked, at the workshops. During. The IPR workshops, and comment. Period we, heard a lot of questions, in two specific areas that I'd like to talk about the. First is our grid modernization key, strategic initiative. We. Are providing, more information on, this initiative as we, have it we. Have updated the website with, project information and we'll continue to update it as we work through the roadmap and many, of the other areas discussed, in the June 20th workshop, we. Also intend, to hold stakeholder, meetings as new information is, available we. Held the first of these meetings on July 24th, to share our current assessment of joining the Western energy, and balanced market which, is one of many grid modernization projects. We've. Identified. Please. Check the initiatives, web page and look for the Tech Forum meeting announcements. As this. Work moves forward. The. Second area we, received a lot of questions on is about rates. IP. Our costs, are just one factor, and we understand, we are asking, customers to weigh in on a variety of other financial, processes, that may impact rates we. Shared a rate preview, at last week's rates workshop, and hope, that that addresses, many of your questions I'm, going. To briefly cover the rate preview, but, these results will change with, the final RPO IPR, and financial, reserves policy, decisions, as well. As the modeling updates and refinements. That will be made between now and the. Release of the initial proposal in November. With. Information, we currently have we anticipate, a power rate increase, of just under, 5%, this. Increase, assumes, initial, IPR. Spending, levels with, an additional, 30 million dollars in cost reductions to the Fish & Wildlife Program as shared, in a July 17th, workshop, it. Also assumes that the financial, reserves policy, which, is not yet been decided will. Include, a rate reduction a rate action, of 40, million in power rates which. Is the equivalent, of a 20 million dollar increase in the upcoming rate period. Another. Major driver of the rate increase, is the end of the rate mitigation, measures we, took when, we moved energy efficiency, spending. From. Capital, to expense, that equates. To about a 3%, increase in, addition. We, will see a seven million dollar increase due, to the residential, exchange, program settlement, but. On the flip side we, are seeing lower capital, related, costs, that help to offset some, of these increases. While. We will meet our strategic plan goal of keeping program. Costs, at or below the rate of inflation, we. Miss an additional, internal, goal we set for ourselves this, rate period to, keep the power rate impact, at or below the rate of inflation as well. Forecast. Inflation, is near 2.5, percent annually, which, means BPA's, 2 year power rate increase, would, need to be at least below, 5% to. Meet the goal without. Question, we, want to meet or beat inflation, and, we, are being aggressive, to get the power rate increase, closer. To 4%. The. Transmission, rate increase is expected, to be 10% which is what we have been estimating, in many our funding of our financial process, workshops, the, biggest driver here is the updated, updated.
Depreciation. Study which. You may remember Mary, covered, in the second quarter QB are two. Other major, drivers, include. Increased. Interest expense, and the, decision, to amortize expenses. Related, to the i-5, corridor, reinforcement. Studies over five years starting, in 2012, more. Information on, the amortization, was, made available last, Wednesday, in the revenue requirement, presentation. Complete. Details about the rate preview, are available, in the BP 20 rate case web page. Now. I want to close on our next steps, the. Comment period will close on Thursday we. Will consider all comments. In combination. With more cost management actions, we have identified, over the summer we. Will issue a closeout, report in late September, or early October which. Will outline our financial, spending levels and address, your comments, the. Spending levels will be incorporated. Into the BP twenty initial, proposal, which, we plan on releasing in November. Now. I'd like to hand it off to Mary Hopkin who is going to provide an update on our finances, Mary. All right thank you Dan and good, morning today. I'll be covering the agency's. Financial, position. And Finance, KPIs. Just. As we did last quarter, Joel, and Richard, will then share, with you some more detailed breakdowns. Of power, and transmission, services, expenses, and revenues. Slide. 13, so just. Like previous QB, RS we're comparing, all of our metrics to the BP 18, rate case this. Chart shows the net revenues KPI, which, is total, revenue less, total expense. We. Currently, expect. To end fiscal, year 2018, with. Net revenues. 397. Million above, what, was anticipated, in, the rate case and this. Is due to both improving, revenues, and lower. Expenses. And I. Want to remind you that while we are in fact seeing, a better, than expected year, a large portion, of the change from rate case is due, to regional cooperation debt. Savings. Slide. 14, this. Slide breaks down our net revenue, net. Revenues, into two, more of our KPIs, total, revenues and expenses. Total. Expense, on the left side, includes. Operations. And maintenance. Wildlife energy, efficiency, depreciation. And interest and as. Of the third quarter, we, expect, to end the year with total, expenses. Three, hundred and sixty, five million, under. The, rate case projection. This. Reflects. Our cost management, actions, and also the regional cooperation debt. Total. Revenue, on the right side of this chart is the total, of power and transmission, revenues, we. Anticipate, ending the year thirty two million over. What, was assumed, in the BP eighteen rate case and, this. Is driven by better revenues, for both business, lines both power and transmission. Which, will be explained, later by, Joel and Richards. Moving. To slide 15. So. Before. I get to our third quarter forecast, four days cash, on hand I need to take a moment to explain, an additional. 70. Million in power financial. Reserves for risk that, was not included, last quarter, in our forecast but. We have included, it in this quarters, forecast.
The. 70, million stems, from regional, cooperation debt. Transactions. That, occurred, back in fiscal. Years 2014, and. 2015. Now. For those of you who are interested in more detail, about those transactions. You can find more information on, the. Website, it's, in the May. 2017. Qbr, materials, in. Previous. Quarters, this year we, modeled this 70, million as being used for an additional, Treasury, payment, above our scheduled, payment, when. In fact our, 2014. Agreement. With the region, was, to use the 70 million for, the scheduled Treasury payment. We. Caught this modeling, error after the second quarter this year and we've, made the correction, in this forecast that you see today I. Need. To take a moment to personally apologize, for, this error. Regardless. Of the fact that this error is in the customers favor, I understand. That unplanned, changes of this magnitude, are frustrating. For you they certainly, are for us, we're. Currently conducting a, root cause analysis. With our risk organization. To, improve our forecasting. And to, catch potential, errors, with before, reserve forecasts. Are finalized. Moving. Forward, to slide 16, even, absent. This correction, our days cash on hand has improved. Days. Cash on hand indicates, the number of days BPA, can pay its operating, expenses, based on the amount of financial reserves, available. Powers. Days cash on hand has increased. To a total of 33. Days. This. Is still short of our minimum threshold, of 60, days cash on hand but it's a great, improvement from, our second quarter forecast, and it. Has eliminated, the, chance of a crack, occurring, this year. Transmission. Also saw an improvement, since. The second order. The. Overall, positive improvement. To agency, financial, reserves has led to an agency, reserves outlook, of 96. Days cash on hand, this. Is a very, important, milestone in, our financial reserves policy, as 90. Days cash on hand is our upper threshold for, agency, financial, reserves, and the. Level at which a reserve a distribution. Clause could. Trigger. Slide. 17. So. A reserves distribution. Clause or, RDC. Occurs. If two conditions, exist, one. If a business lines financial, reserves are over, the upper threshold and two. If the, agency's. Financial reserves, are over, the upper threshold. The. Forecast, for transmissions. Days cash on hand is currently. 276. Days that's. Well, above the, 120. Day upper threshold. If the RCD triggers. The administrator, has discretion. Over whether, and how the additional, funds should be used. We've. Developed, an RTC. Probability. Calculation. Which is similar, to the one you've seen for a crack probability. Based. On our current forecast we, have an 80%. Probability that. An RDC, will, trigger for transmission, customers. Now. The actual. Determination of, an RDC and the amount is based off of accumulated. Calibrated. Net revenue or ACN. R on. This. Slide you see a ribbon chart that, shows the relationship. Between ACN. R for the agency, and our reserves for risk if. The. RDC, were to trigger today we. Anticipate, it would be 24, million dollars. DPA. Will make the final determination if, it triggers the RDC, in September. Along. With the administrators. This decision. On how to use these additional, funds. So. If there is an RDC will, hold a workshop by, the end of September, to inform, you about the calculation and, the final decision. Additional. Financial details, on what I shared today including. More information.
On The ACN, our accumulated. Calibrated, net revenue are available. In the quarterly, financial, package, published, on the financial, overview webpage, and. That's. All for my finance, update today now. I'll turn it over to senior, vice-president of, power services Joel, Cooke who, will provide more details on, power services financials. And initiative, thank. You Mary and good morning everyone, I'm excited, to share with you our third quarter, results for power services. Starting. On page 19. Over. The last three quarters we would consistently. Come in under our rate case and that's mainly due to two. Things the cost management efforts. Across, BPA, and our and our partners, and also. The big. Impacts, from the, regional cooperation debt. That. Mentioned. Earlier, I draw. Your attention to the upper right-hand chart. They're looking. At. Year-to-date. Numbers. We, are a hundred and fifty six million dollars, lower, than our, rate case year-to-date. Expenses. And we're. Forecasting to, come in at roughly a hundred and eighty two million, lower. Than, our total rate. Case expenses or. Cast by the end of the year. Turning. Next to power. Services. Revenues. Operating. Revenues, through June have been trending. Higher than rate case and that's, mainly due to two. Factors. One. Primarily. The higher. Excuse-me. Surplus, energy cells from. The above, water that. At above-average water. That we've experienced. This year, that's. Somewhat, offset by. The lower preference, loads we've had but. Then that, that has, been minimized, due to the remarketing, of the power that we've had I also. Want to note that revenues. From the spill surcharge, are also included. In the June actuals, and the. End-of-year revenue, forecast, again. Looking, to the upper right hand corner, there, in. Year-to-date. Were. Twenty. Six million dollars, above. Rate, case and. Forecast. For the end of the year we're anticipating to, be twenty three million, above. Rate, cases for our revenues. Turning. To the next slide and the discuss. Excuse. Me before we go there just, wanted to mention that when you combine the power revenues, expense. And. Revenue forecast. We're. Coming in at approximately four hundred and three million dollars or 79. Million greater, than the 325. Million net revenue, target, this. Strong secondary, sales and cost management efforts. Are key drivers disease gains the. Weather has been good to us this year and controlling. Our costs where possible, as put power services in the strong financial, position for. The remaining part of the year. I want. To take this time to thank, everybody for their efforts. Both, on the class management, and the revenue, side, now. Turning to water supply, this is a new slide for power three. Things I'd like to highlight here, for, you all, one. If you, look at the red and black, lines the black, line is. Represents. The natural stream flows or the unregulated, flow, that we would have, experienced. From the runoff this year from. The January through, July period the. Red line represents the, impact, of managing. That, water with, our federal, hydro system. As. You can see that. We've benefited, from more, water than we would have in, the early part of the year and. Important. To note we kept. Water, at. Below, flood levels. In the, May. June, runoff. Period, this. The, second thing the note on here is that. The. Stream. Flows peaked, earlier. Than, historical. Averages. So, we saw stream flows peak in the May period, rather, than more so in the June period. So. Not, only did we get a lot of water but it came off very hard. At the end of May there and then. The, third thing to point out is that what, I've mentioned previously the. Above average water, that we've experienced, so, if you look at the. Lightest. Shade of green you, notice that that represents the 50 percentile, and we, were a little bit above, that for a good part of the year so.
Good Water has helped our net, secondary, sales efforts. Turning. To the next slide. Talk. A little bit briefly about Henry, Hub prices, we. Saw prices, depart, from the rate case forecast, through October, and March, and they're largely, driven by warmer, than expected, national, average weather, in October, and February a, cold. April on a hot May brought, gas prices, back to our forecast, by. Keeping demand. Elevated, into the beginning of the Jackson season, and building, a large storage, deficit. Recent. Guests nymex forward curves are closer to our Henry Hub forecast, for the remainder of the year. Slide. 23, shows. Glitzy, prices, both, historical. And for. The rest of the year, mixing. Prices, are above our forecast, for the remainder of the year driven. In part by warmer, than average regional. Summer outlook, and lower, than average water, supply, these. High prices are also being, driven by weather conditions, in California. Coupled. With expectations. Of tighter evening, ramp conditions, in California. Moving. On to slide 24. This, again, is a new slide for power you, might look, familiar when, Richard, goes over his lives but this slide. Represents. Capital. Expenditure. And work completed, so. The line graph. Represents. The year to date, through. 2/3 amount, of capital spending, we've had at. 137. Million although. Our forecast. For the year was, 244. Million, we're. Expecting. The end of the year to come in at about a hundred and. 192. Million by, the end of the year so. Our capital, expenditure, is going to be. Far below the, plan, 244. The. Bar charts, represent. The percent. Of work plan completed, so. These are the projects, we anticipated. To complete, in this year, I should, point out that almost, all of our projects, are multi-year. Projects, so these bar. Charts represent. Those projects. That we anticipated. To be complete, this year, looking. At q3. We anticipated. 27. Projects, to complete, and we've. Completed. 223. So far this, year for. Projects. Missed their physical, completion. Milestone, this corner, largely, due the unstated.
Project, Scoping. Reclamation. Is under, spin significantly. From their rate case request, driven, largely by challenges. To resource the work, project. Holdups, at Grand Coulee firehouse. Work. Done at T's pumping, station, are causing. Under, execution. For. The Corps they're, on track to overspend. Their rate case request due, to acceleration of, transformer. Purchases, and installations, at The Dalles, turbine. And generator work at ice Harbor, emergency. Gantry, train work at John Day and. Unit. Three work at door shack as well, as station, service replacement. At McNary. Next. We're going to go to a, federal, hydropower. Forced, outage factor. This. Key. Performance, metrics, represents. The percentage, of hours the Fed title projects are offline, due to unplanned, outages, we. Are well under our target, of five point nine percent for. The year so that's a good thing the. Primary, thing that has. Kept. Us from. Exceeding. That target, our outages. At the DAO ice, harbor, lower, monumental. And John Day. Moving. On to Columbia generation. Stations. This. Metric. Represents, the percentage, of time when via generation, is available, to. Serve our demand, again. We've, seen good performance, from CGS. This year despite. A few bumps performance, through june has exceeded, the target there. Were two planned, unplanned. Outages, one. That was it we reported, the last few quarters and one that occurred in May however. That the length of that outage, was short enough not to impact the overall availability, factor. For q3. Finally. I'd like to turning. To the last slide like. To let. You know about some portent information, about, upcoming events, where. We'd like your feedback. Earlier. In the qvr dancies, out some potential. Rate impacts, and coming, bt 20 rate case the. Rate case has kicked off and at the August 8th rate case workshop, we, will look forward to customer, feedback, specifically. For, how the net revenue, next, secondary, revenue credit is determined. We. Will also be discussing how, rate case mechanisms. Such as the cost recovery, allocation. Clause and the, reserve surcharge, will be implemented, in the financial, reserve policy. Lastly. To public, comment periods, are coming up the, rate period. High-water, mark comment, period is open for BP 20, rate period, this. Is an important, component in, determining, the forecast, quantity, of power available, to be sold as our tier 1 rates, and the, net revenue requirements. Transparency. Process, opens. Tomorrow, before. I turn it over to Richard to talk about transmission, I just like to say that from my perspective we, are good financial. Position, to close out the year, more. Recently we've seen some high prices and, very, hot temperatures, and, then we think we have fared well. Through that period, we. Look forward to telling you more about what we are working on, incoming. QB RS and, I'd like to turn it over to our senior. Vice president, of transmission, services, Richard Seguin. All. Right Thank You Joel, it's. A pleasure to be with everyone, here today and to share transmissions. For third quarter results. I'm. Going to start my report with transmissions, expenses, and revenues then look at our capital, plans then, transmission. Grid reliability then. Wrap up with a few updates and, engagement. Items. Moving. To slide 29. Transmission. Services, expenses. This. Format is identical. To powers. Financial, information that, Joel just showed showing, the fiscal year and the VP, 18 rate, case spend per month versus. Our actual, expenses, per, month for. The third quarter consisting. Of April, May and June, we. Had actual expenses, of 261. Million. Verses. 261. Million rate case quarter, allocation, staying, directly, on plan. Referencing. The table. In the upper right hand of, the chart now for. Year-end, expenses. Our fourth, hour forecast, seven. Million dollars higher than rate, case due. To higher ancillary, services, and over supply costs, to have some offset offsetting, revenues and higher. Depreciation. Expense, the. Higher expenses, were partially, offset, by nineteen, million dollars in reductions taken, in q2 to, help me BPA's. Cost, management, objective, and a, decrease, in the interest expense forecast. Year-to-date. Expenses. Are, at seven hundred and forty six million dollars, versus. Rate case here today plan of 782. Million dollars, therefore. Actuals, are thirty, six million dollars, less, than planned. Moving. On to slide. Thirty. Transmission. Services, revenues. Revenues. Are consistently, running above, monthly, rate forecasts. We, expect higher revenues, to continue, for the rest of the year and anticipate.
Will, End the year above, rate, case projections. For. The third quarter again, actuals. Are at. 284. Million versus. A rate case projection, of, 268. Million, resulting. In actuals of sixteen million higher, than projected. For, the for, the quarter, our. Net revenues were higher due to higher net workload, than had been assumed, network. Load was higher because of the temperature differential and the duration, of higher temperatures, that, were built into the, revenue projection. Again. Representing, the table in the upper right-hand part. Of this slide. For. Year-end, we're. Forecasting revenues. Of 1.0. Seven eight billion versus. A rate case projection, of 1.05. Two billion there. For year-end actuals, of, six million dollars, more than, rape case. Year-to-date. Actual, revenues, are at 828. Million versus. Rate case year-to-date plan of 794. Million, therefore. Year today revenues, are at 34, million dollars higher, than planned. Next. Moving to slide 31. Transmission. Services, capital. There's. Actually two things that are depicted on this slide our. Capital spend and our, work plan progress, and Joel, did a good job describing the. Details. Of how. We count, our work plan progress, these are actual, in service, completions, of projects, although, many projects, span multiple years, this. Quarter end, of year forecast of capital expenditures. Is, 97. Million dollars less than rate case driven. By resource, management, and outage. Constraints, as well, as non-critical projects, being put on hold to accommodate customer, and compliance. Projects. Over. The rate case transmission. Has established a process to, regulate, the admittance of capital. Projects, into our portfolio and to require formal, scoping, of substation. Work this. Formal, scoping, improves our certainty, in outcomes. That, requires an investment of time. Similarly. An increase, in customer projects, entering the planning process, began in late FY, 16, and continues. To today which. Has displaced. Capital, projects, for BPA's sustained. And expand program, The effect of these factors, is that our FY 18 capital. Spend is below. Rate, case. For. Year today at the end of q3 we, remain below budgeting. Goals and have. Executed. More. Projects. In service, than actually, planned. One. Final note this. Quarter, Bonneville, accepted, an offer from its customer, lower valley energy, to build the hooper Springs transmission, project, in Southeast, Idaho, the.
Agreement Takes advantage, of the best each entity has to offer which. Will reduce costs and maintain, reliable, service to the region as we, continue, our flexible, scalable, and, cost-effective. Approaches. Advancing. To slide, 32. Transmission. Liability. Safety, the. System average, interruption. Frequency, index or safety tracks. Frequency, of unplanned outages, we. Track it in two forms, both. The. Voltage less, than 200, kV part of the grid and the. Voltage greater than 200 kV part of the grid we. Also have this we, also have on this chart dashed lines which depict, warning, levels these, are based on historical, performance within, the transmission. BPA grid and they, are not to exceed levels, down. Is good on this chart in F. Way in FY. 2018, to, date we maintain stable and good levels in our greater than 200 Devi lines and we, improve to an average of. 0.47. Unplanned. Outages, in our less than 200 K V lines, career. BPA's. Reliability. Overall is improving, these. Outages are going down from q1 to q3, this. Indicates, a better performance, however, part of this improvement, may be due to comma weather. Recent. Fire activity has driven some outages, and may impact, these numbers by the end of the fiscal year, fire. Impact, on reliability, is closely, monitored, in transmission. Bottom. Line BPA. Is showing improved reliability since, the beginning of the year and our, continuous, improvement project. Is investigating. Outages, in order. To find their root causes and, prevent, recurrences. Moving. On to slide 33. Transmission. Reliability, Sade's, the. System average interruption, duration, index or cedi tracks. Duration, of unplanned, outages. This. Is a measure of average minutes. Per outage as before. We track this in two parts of our grid to less than 200 kV and the greater than 200 kV, we. Also have on this chart dash lines which depict warning. Again. Down is good on this chart. Performance. Is below, limits and the overall trend is stable, again. Milder weather may be a factor, in these, measures through two three and again, fire activity has a potential, for negative impact, during q4 which. We continue, to closely monitor. Moving. On to my final, slide slide, 34, I want, to give an update a brief update on a few key topical, areas within transmission. First. Peak. Reliability. Announced, on July 18th, that they decided to pursue. An orderly, closure of its reliability, coordinator. Services, by, December, 31, 2019. We're. Committed to maintain, the reliability of the electric grid in the Northwest by, working with Pete through this transition, period as we, select a new, reliability. Coordinator. We. Began in January, of this year to, examine the options available for, us for, reliability, coordinator, services, and we'll continue our work to determine which. Option drives, the greatest benefit, and value for. Both BPA, and the region going forward, and we'll be holding a customer, meeting on August, 3rd to, discuss this. Next. At. Last week's workshop for, the TC 20 proceeding, BPA, shared, its intent, to initiate, settlement. Discussions, that, could lead to settling, key issues and allowing us to convert, all BPA. Aute customers. Open. Access transmission, tariffs, to a new common, tariff that will help execute, elements, of both our transmission. Business model, and our, BPA, agency, strategy. BPA. Will be sharing positions, on all open, issues currently within scope of the TC 20 workshops, on August. 21st, at the, final public workshop, followed, by a brief comment period, before settlement, discussions. Begin September. 10th. EPA's. Proposed, new Tara reflecting. Its positions, on all TC, 20 issues will, be posted, by early September. If EPA and. Its transmission, customers, are unable to reach settlement then. We're expecting, to begin the formal 212, hearing process in, November. Next. Earlier. This month we announced our, intent to conduct a 2019. Cluster, study this. Is the first step in evaluating all requests. For transmission, services, through. The TSR, study our transmission, service request study and expansion. Process, the. Deadline to submit requests, for eligibility, in the next cluster study is August, 31st, the. Study portion, will begin first, of the new calendar year and. Finally. Last. Month we saw the release of the Montana, renewables. Development. Action, plan, this. Report the, result of a process sponsored. By our administrator, Elliot manger and Montana's, Governor Steve Bullock was. Developed, in partnership, with a group of our regional partners and explores. Opportunities. And barriers of, renewables, resource. Development, in Montana, you can, find a link to the Montana, renewables, development, action plan and, this. Recent, report on BPA. Gov. Under, initiatives, or, by. Clicking the link in the presentation, materials for, today's qbr. We. Appreciate, all of the participants. Who, work to make this an effective, informative. And timely. Process, to, explore, the different aspects, of renewable. Resources development, in Moncton.
That. Concludes, today's, update, from the business line and I'm, going to turn it back over to Scott thank you yeah thank you Richard and thanks to all of our presenters today before, we take questions I have a few reminders to share out about upcoming opportunities. To engage with BPA, a complete. List of our upcoming events, and processes are listed, at BPA, gov. Let's. Begin with public. Processes, on slide 36, we, recognize that many of you are already engaged in attending, meetings on the topics listed here timing. And details of these meetings are posted on BPA's event calendar as, Richard, mentioned after, Peak announced, it will wind down BPA, will remain dedicated to May containing reliability, coordinator services, and will create opportunities for you to engage before we make a decision that. Meeting is listed on the slide as August, 2 both. Dan and Joel mentioned VP 20 workshops during their updates we have one scheduled for August 8 and one is tentatively set for August 22nd. On. The transmission side we have two more tc20 tariffs, customer workshops scheduled, for, August 21 and September 25, and. We plan to initiate settlement, discussions, in early, September, a topic. In which many of our stakeholders have an interest in is the Columbia River treaty the, State Department announced a town hall on September 6 that will be held in our rate hearing room in Portland at 5:30. P.m. on, on. September 6 u.s. Columbia, River treaty negotiator, Jill Smail will provide a general overview of negotiations. Questions. Can be submitted in advance to Columbia River treaty at state.gov. That's. Columbia, River treaty at state, gov and, last. But not least our grid, modernization. Efforts, include another public stakeholder, meeting on October 11th for those interested in potential. Gim. Participation. Now. Let's turn to comment periods on slide 37, this, is a big week for us as we will close out three comment, periods comments. On the integrative program review financial, reserves and leverage policies, and capital. Financing, are all due this Thursday August, 2nd, we're. Glad to see many, comments have already come in and appreciate the region and our customers, are engaged, because your feedback helps. Provide us with information we need to make well-informed decisions, we, can't do it without your involvement we. Also have to comment period closing this week next Wednesday the FY 2020. And 2021, rate, period high-water, mark closes these. Will be used to set power rates in the upcoming BP 20 rate case, next. Thursday a spark canyon round Valley Project comment, period closes we. Request your comments, on an environmental assessment that, was completed for that project. Also. We know many of you're anxious for an update on the Accords which Delia covered last qbr, where. We are looking at extensions, of the Accords and we anticipate having a public comment period on the proposal, later in August we. Will make sure to update our website and send out when these details have been finalized, more. Information about these comment periods is available, at, BPA gov. /, comment. So. That concludes the presentation portion, of today's qbr we will now begin answering your questions, from those who have submitted during today's presentation as a. Reminder you can still submit questions, by clicking the chat button on the upper right hand part of your screen enter your, question and press, send. And. We, would just save it so far today it's a quiet crowd out there. We. Have a question from Peter. Scanlon. How do the lower than projected capital, spends translate, into expenses.
You'll. See with lower capital, will, have lower interest expense, on the income statement and then also lower depreciation. Okay. Great. Looks. Like also we have a flag. On the reliability coordinator, mini workshop just want to make sure that folks see that it is listed as August, 3 on BPA gov, that's, why 36, says August 2 and Richard. Shaking also said August 3 so. We will get. That one they hammered out and corrected. Here as soon as possible. We. Also have another question about slide. 7, what does that represent. So. That's a slide 7. So. This was I think the schematic, for grid modernization know. That slide 8 slide 7 bending, the cost curve oh this is one, of our favorite topics lately here BPA Dan do you want to take down what's. This and would it be what. Was the question I think the question was what does this slide actually represent, in terms of what are we trying to display in this bending. The cost curve slide, so. That actually, shows a decline interact. In our program costs. And. A. Percentage of the cost change by rate period, - what you see there is. A decline, from. BP 10. All. The way through, BP, 18, ad - if, the current year 2018. As where we are in the current IP are. Great. Thank, you Dan. We're. Still waiting for additional, questions to be submitted, so again you. Can still submit questions, by clicking the chat button on the upper right hand part of your screen enter a question and press, send. This. One looks like I might be coming from the. Transmission side or for the trans inside does bpa plan on leveraging, tower assets, to provide radio, / cell coverage in the Pacific, Northwest. Well. Actually, we, currently, do, that now. And. We're always. Entertaining. Offers. Of. Telecom. Organizations. That want to use our facilities then, it could be anywhere from our existing. Radio towers, to our transmission, structures, to, any. Of our land. Areas. In substations, or service, centers that they would locate towers but, it is something we currently do and continue, to pursue. Thank. You Richard. Another. Question we have is how, much of power. Lower costs, are from our CD, regional. Cooperation. So. Sighs this is Joel I believe it's, roughly 130, million dollars and, saving. Okay. Okay. Just waiting for more questions here. One. More reminder as a reminder you can still submit questions by clicking the chat button on the upper right hand part of your screen enter, your question and press that. Ok. We have another one here. From. Marie Morrison's. Could, you give an update on the substation, fire and its impact on BPA, transmission. Assets. Well. Thus, far we've, been quite fortunate that, there hasn't been, any.
Significant. Damage. To, any, of our transmission. Facilities. No, damage to any substations. Or switch yards, there, have been a very. Minimal number of wood. Structures. That were impacted. No, impacts, of any of our steel. Lattice structures, we. Have had a few, line outages, due to, smoke. From. Fires moving. Underneath our transmission, lines but we continue. To have. Folks staged, safely. In monitoring. The fires progress, and in coordination with our dispatch, centers, thus. Far system. Impact. Has been minimal, and as, I stated, infrastructure. Damage has been very minimal and I, would just say as a side note on that the the dalles transmission, line maintenance crew helped by the olympia lineman's crew did a tremendous job out there in the field working, in coordination with fire. Fighters of course we do not ourselves, fight fires that work in close cooperation, with emergency management officials absolutely. That's true and there was a fire named the substation, fire although it really had no. No. Tie. To any, of our substations. It, just happened to be in visual. Vicinity, of our. Converter. DC station, and they chose. To name it the substation, fire because of that but, we've, been very fortunate and, hats off to all our crews and dispatch. Centers and entire. BPA teams for keeping watch on the fires and keeping our system safe and, reliable that's a good point the dispatch folks play a huge, role in that as well so, another question here is on a question. From Kevin O'Meara on slide. 15 and the 70 million dollar increase in revenues the, question is what, exactly happened, I think Mary is going to take that one on yeah let me try and explain that again so it says 70 million dollar increase in power financial. Reserves, for riff and, in. Our previous, forecast. Basically. We were overstating. Our Treasury payment which is cash leaving, the bonneville fund. And. What, we have done is corrected. That so, this additional. 70. Million that we had committed to back in 2014. And 2015. We. Were basically double, counting that Treasury payment we've corrected, that and the, result is. The. 70 million doesn't flow out of the Sun and therefore the balance is higher in this forecast than, it was in the previous forecast, I hope, that helps I know it's a little complicated, there.
Is Some additional information online, in the qbr package. And we're. Happy to talk more we. Need to clear, that up ok great thank you Mary next. Question is on regarded. With regard to slide 17, from, Fred Hewitt on, slide 17 how is the potential twenty four million dollars in regional, cooperation RDC. Return. And what are the options for allocating, that Mary me want to scream, that out a little bit better Oh. Always. A correction, here we go on slide 17 how is the potential twenty four million dollar in RDC, return calculated. And what are the options for allocating. That and Thank You Fred for rewriting, that question yeah so if you look at slide 17, this, ribbon. Is from, our rate case documentation. And if, you look at the very top line, it's the accumulated. Calibrated. Net revenue, and when. We move over to the right in the dark blue that's where an RDC, trigger and, you. Can see in the box of blood above, our q3. ACN. Our forecast, is, 782. Million. Which. Is 24. Million into. That dark blue zone so, that's how that is calculated. So. We're 24, million hi, then what, was shown in the rate case that moves us into the RDC zone and. Then. The options. So. The. Options, were documented, in our the. Rate case, the. Administrator. Could choose, to pay off additional debt. Use. It for other sources, or use. It in rates. Also so. There's quite a list that the administrator, can, rely. On as, he makes this decision, in September. And we'll. Have more that information, at that time okay. Great, thank you Mary as additional, question screen and I do want to make sure to circle back to that reliability. Coordinator, services, workshop, that we had listed, on slide. 36. That. Was listed on that slide as August, 2nd the we just got confirmation that, it is actually on August 3rd so we will make that correction inter. Posted materials but want to make sure folks flag that that reliability, coordinator, services workshop is on August 3rd so we apologize, for that error now. Let's go back to some questions here next. Question is. And. You explained how transmission, reserves are growing more than the increased transition, net revenues. I. Don't. Know who wants to take that one on this is the question from one. Of our stakeholders, here. We. May have to follow up on that one. Okay. So. We have a just. A we have a good, approach here on the QB yards if we can't answer your question today or need to do some follow-up we, will be pushing. Those out via our IPR website, maybe if we could have a little more information on this specific, if there's a certain, year or time period and, the person is looking at just a little more information on the question yeah they may it may be a timing, issue of, forecast. Versus, actuals, and when. We're seeing the actual reserves, change. Value, versus, net. Revenues, being reflected, in our current, budget, so. I think any difference, between the two is more related to timing, issues, than. Anything else because the, net revenue should ultimately. Match any, change furthers. Right okay let's do this. If we need additional clarity, on this what we'll ask, the participant to send that question, in, more detail to communications, at BPA uh and, that really goes for for, anyone here who either doesn't want to ask a question on the WebEx or would like to write a more detailed question to us again.
Its Communications. With an S at BPA, gov, and a, question, like that might be helpful to know what the individuals, looking at so we can specific, explain, the, discrepancy, which, 'red thank you okay. Additional. Questions so we currently do not have any other questions although I have to say this is the most robust line, of questions we've received so far on the QPR the, revised QPR format so that's the that's great news. We're. Going to wait for just a moment here to see if there's any other questions being submitted and otherwise we're going to go ahead and call it. Alright. With that we're. Going to wrap up our question-and-answer session, and, again if we're unable to get your question today or you want to submit a more detailed one communications. At BPA, gov, is the place to send that those. Questions already submitted via is today's WebEx do not need to be resubmitted but. If you want to clarify that would be great we'll be posting follow-up. Answers to all these questions on, the cubular webpage in the coming weeks along with a recording of today's meeting we. Really appreciate you listening today we really appreciate you engaging with us today and we look forward to you joining us on the November 6th, call for. Our end of your QPR. Thanks. Everyone have a great day. You.