1. Options for RTF Funding Allocation Mike Weedall Theresa Drake Jim West September 30, 2011

2. 2 Agenda  Objectives of funding allocation  Options  Discussion

3. 3 Objectives of Funding Allocation (Preliminary)  The Policy Advisory Committee (PAC) is seeking a funding allocation that results in: Stable funding: Achieves stable funding for the RTF Choice of projects: Connects funding levels to stakeholder value Workplan engagement: Involves funders in development of RTF high-level workplan Low resource requirement: Does not require significant RTF staff resources to maintain  Some additional objectives for consideration: Develops accountability of the RTF to funders Maintains some equity among stakeholders Minimizes free ridership

4. 4 Option Development  We recognize that some of the objectives may be at odds Therefore, we believe a balance is necessary  There are many dimensions that could be considered in funding allocation  We have chosen to two options that have tradeoffs: Stable Funding Choice of Projects

5. 5 Stable Funding  The bookends of these dimensions: A: Subscription/Menu: Allocation - based on funder choice of projects. Choice – very high. Stable funding – extremely low. D: Funder size: Allocation – based on funder size characteristics (sales/customers). Choice – low. Stable funding– very high.  We recommend the PAC consider middle options for more balance. Allocation Dimensions ADBC

6. 6 The middle ground….  B: Base funding plus subscriptions. Each funder would contribute its size-based share (e.g., sales) toward a base funding amount. Base funding would go to non-elective projects. Remainder of funding would be contributed on a subscription/menu basis for funder-chosen projects. Allocation – part characteristics, part subscription Choice of projects – medium Stable funding – medium/low Workplan engagement – high  C: Full funding, vote with your dollars. Each funder would contribute its size-based share to the RTF. PAC would decide on portion of total funding dedicated to Base/non-elective projects. Remainder of projects would be “voted” on by funders using TBD process. Allocation – full characteristics Choice of projects– medium Stable funding– high Workplan engagement – high

7. 7 Background for Examples: Illustrative RTF Workplan Number/$ of elective projects exceeds full funding level to encourage choice All stakeholders may add elective projects to the “list”, based on TBD criteria (e.g., must be within RTF scope, must have regional benefit, etc)

8. 8 Option Examples

9. 9 Option Examples, with some thoughts Funding level must be decided somewhat exogenously Additional process to “vote” Funders may choose projects differently than RTF Funding might be plus or minus rec. level, but likely that some funders choose no projects Need to decide on what is “base” level of funding Options B, C and D require decision on size share

10. 10 Additional Discussion Topics  What is the “size share”? (Options B, C, D) 1) Sales based (probably EIA 861 data) − Relatively simple. Timing of updates must be decided. Publics need to agree on approach to sales to BPA. 2) Combination of sales and customers − Current NEEA model - 87.5% sales; 12.5% customers.  NEEA model is included in current contracts, but does not include all utilities. May be a risk if NEEA’s funding allocation changes in the future.  Should we be considering a multi-year approach? This may be better for many parties, PAC should consider how to make the chosen allocation option multi-year  Are we missing any funders? Yes, PAC is missing the Mid-C utilities (Grant, Chelan, Douglas) and Rocky Mountain Power. PAC should solicit their funding (RTF staff has tried in the past). Are there other utilities or other stakeholders?  Are there any governance issues due to funding options? We don't think so.  Would other parties be able to add funding for additional projects? Options A, B and C provide this functionality; criteria would need to be defined.