[Federal Register Volume 59, Number 23 (Thursday, February 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2318]


[[Page Unknown]]

[Federal Register: February 3, 1994]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 11 and 381

[Docket No. RM93-7-000]

 

Charges and Fees for Hydroelectric Projects

January 26, 1994.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
inviting comments on whether it should revise its regulations governing 
the assessment of annual charges for the administration of Part I of 
the Federal Power Act and if so, what changes might be appropriate. One 
alternative that the Commission is considering is to allocate the 
annual charges for administrative costs among a single class of 
licensees and exemptees, based on the respective capacity of each 
hydropower project as measured in kilowatts, with a minimum and maximum 
charge, and with the assessments to commence at the same time as the 
commencement of project construction. To ameliorate the potential 
impact on licensees and exemptees, this alternative would include a 
transition period of several years for phasing-in the changes. Other 
alternatives would include, but would not be limited to, retention of 
the current distinction between municipal and non-municipal licensees 
including retention of the different formulae by which their respective 
annual charges are allocated.

DATES: Comments are due on or before April 4, 1994.

ADDRESSES: An original and 14 copies of written comments must be filed. 
All filings should refer to Docket No. RM93-7-000 and should be 
addressed to: Office of the Secretary, Federal Energy Regulatory 
Commission, 825 North Capitol Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT: Barry Smoler, Office of the General 
Counsel, Federal Energy Regulatory Commission, 825 North Capitol 
Street, NE., Washington, DC 20426, (202) 208-1269.

SUPPLEMENTARY INFORMATION: In addition to publishing the full text of 
this document in the Federal Register, the Commission also provides all 
interested persons an opportunity to inspect or copy the contents of 
this document during normal business hours in room 3104, 941 North 
Capitol Street, NE., Washington, DC 20426.
    The Commission Issuance Posting System (CIPS), an electronic 
bulletin board service, provides access to the texts of formal 
documents issued by the Commission. CIPS is available at no charge to 
the user and may be accessed using a personal computer with a modem by 
dialing (202) 208-1379. To access CIPS, set your communications 
software to use 300, 1200, or 2400 bps, full duplex, no parity, 8 data 
bits, and 1 stop bit. CIPS can also be accessed at 9600 bps by dialing 
(202) 208-1781. The full text of this rule will be available on CIPS 
for 30 days from the date of issuance. The complete text on diskette in 
Wordperfect format may also be purchased from the Commission's copy 
contractor, La Dorn Systems Corporation, located in room 3104, 941 
North Capitol Street NE., Washington, DC 20426.

I. Introduction

    The Federal Energy Regulatory Commission (Commission) invites 
comments on whether it should revise its regulations governing the 
assessment of annual charges for the administration of Part I of the 
Federal Power Act (FPA),\1\ and if so, what changes might be 
appropriate. One alternative that the Commission is considering is to 
allocate the annual charges for administrative costs among a single 
class of licensees and exemptees, based on the respective capacity of 
each hydropower project as measured in kilowatts, with a minimum and 
maximum charge, and with the assessments to commence at the same time 
as the commencement of project construction. To ameliorate the 
potential impact on licensees and exemptees, this alternative would 
include a transition period of several years for phasing-in the 
changes. Other alternatives would include, but would not be limited to, 
retention of the current distinction between municipal and non-
municipal licensees including retention of the different formulae by 
which their respective annual charges are allocated.
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    \1\16 U.S.C. 792-823b.
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II. Public Reporting Burden

    Under the current regulations, major non-municipal licensees file 
annual reports containing data on their electric generation during the 
prior fiscal year. If adopted, one alternative of the regulations 
discussed herein would eliminate that reporting burden.

III. Background

    The Commission is required by section 10(e)(1) of the FPA2 to 
collect annual charges from licensees for the cost of administering 
Part I of the FPA. Part 11 of the Commission's regulations3 
provides the manner in which licensees are charged for such costs. 
Prior to the adoption of the current regulations in 1958 and 1963, 
administrative charges were not based on the actual costs of the 
government, but were in the nature of set fees that were billed for a 
calendar year.\4\ Under the current regulations, the reimbursable costs 
are determined on a fiscal year basis.
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    \2\16 U.S.C. 803(e)(1).
    \3\18 CFR part 11.
    \4\The present system of basing the annual charges on actual 
costs was adopted in Order No. 205, 19 F.P.C. 907 (1958) (with 
respect to municipal licensees only), and in Order No. 272, 30 
F.P.C. 1333 (1963) (all other licensees); see also Order No. 272A, 
31 F.P.C. 1555 (1964).
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    Section 3401 of the Omnibus Budget Reconciliation Act of 1986 
(OBRA)\5\ requires the Commission to recover all of its costs for the 
fiscal year through annual charges and fees.\6\ The annual charges 
assessed pursuant to OBRA are based on an estimate of the Commission's 
current-fiscal-year costs, with subsequent adjustments based on actual 
costs.\7\ Pursuant to OBRA, the Commission collects annual charges to 
recover the costs of administering parts II and III of the FPA, as well 
as the costs the Commission incurs in administering the Natural Gas 
Act, the Natural Gas Policy Act, and the Interstate Commerce Act. In 
this regard, we note that section 3401(a)(2) of OBRA provides that 
``[t]he provisions of this subtitle shall not affect the authority, 
requirements, exceptions, or limitations in sections 10(e) and 30(e) of 
the Federal Power Act.''
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    \5\Pub. L. No. 99-509, Title III, Subtitle E, sec. 3401 (1986) 
(codified at 42 U.S.C. 7178). OBRA is implemented in Part 382 of the 
Commission's Regulations, 18 CFR Part 382.
    \6\See Joint Explanatory Statement of the Committee of 
Conference to Accompany H.R. 5300 (Conference Report), H.R. Rep. No. 
1012, 99th Cong., 2d Sess. 238, reprinted in 1986 U.S.C.C.A.N. 3607, 
3883.
    \7\The procedures for estimating the costs and later adjusting 
the assessments are described in Order No. 472, 52 FR 18201 (May 14, 
1987), FERC Stats. & Regs. (Regulations Preambles 1986-1990) 30,746 
at pp. 30,612 and 30,616-17.
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IV. Discussion

A. Allocation Among Different Classes of Licensees

    The existing Sec. 11.1 provides three different allocation formulae 
for three different classes of licensees. For non-municipal licensees 
of projects of more than 2,000 horsepower of installed capacity, 
Sec. 11.1(a) sets forth an allocation formula that is based on a 
combination of the project's authorized installed capacity and the 
energy actually generated.8 For municipal licensees of projects of 
more than 2,000 horsepower, Sec. 11.1(b) sets forth an allocation 
formula based solely on capacity.9 For all licensees (both 
municipal and non-municipal) of projects of 2,000 horsepower or less of 
installed capacity, Sec. 11.1(c) specifies an annual charge of five 
cents per horsepower, with a minimum charge of $5 per year.10
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    \8\The capacity is currently measured in horsepower, while the 
generation is measured in kilowatt-hours. The allocation for pumped 
storage projects is based solely on capacity.
    \9\The capacity is currently measured in horsepower.
    \1\0As noted above, the present allocation formulae were adopted 
in Order No. 205, 19 F.P.C. 907 (1958) and Order No. 272, 30 F.P.C. 
1333 (1963).
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    The Commission believes that the process of collecting data and 
assessing charges could be conducted more efficiently if the allocation 
were based on a single formula, and questions whether any presently-
valid purpose is served by perpetuating the divergent formulae. 
Therefore, one alternative the Commission is considering is to use the 
same formula to allocate the annual charges among a single pool of 
licensees that includes both municipal licensees (i.e., those who are 
not fully exempt from annual charges) and non-municipal licensees, as 
well as minor licensees and (as discussed below) exemptees. One 
variation of that alternative is to base that formula entirely on 
authorized installed capacity. Another variation would be to base the 
formula entirely on generation. A third alternative would be to base it 
on a combination of capacity and generation.
    We recognize that using the same formula to allocate the annual 
charges among a single pool of licensees (and exemptees) would cause a 
large increase, both in total dollars and percentage, that major 
municipal licensees as a group experience. We solicit comment on this 
impact. One approach the Commission could consider (discussed below) 
would be the adoption of a three-year transition period for phasing in 
the resulting cost changes.
    Changing the allocation formula from a mix of capacity and 
generation to capacity alone would reduce the Commission's 
administrative burden as well as the reporting requirements of major 
non-municipal licensees. Under the current system, the Commission 
obtains annual generation data from non-municipal project operators; 
delays in providing this information to the Commission complicate the 
billing process. By using authorized installed capacity exclusively, 
the Commission would always have the apportionment data on hand and the 
calculation of the bills would be simplified.
    The Commission is also considering alternative formulae, such as an 
allocation based in whole or in part on generation measured in kilowatt 
hours. In this regard, the Commission notes that the annual charges it 
assesses pursuant to OBRA are all allocated among the regulated 
entities pursuant to a formula based on an appropriate measure of 
volume rather than on a measure of capacity. OBRA requires the 
Commission to compute those annual charges based on methods which the 
Commission determines to be ``fair and equitable.''11 Annual 
charges under Parts II and III of the FPA and related statutes are 
apportioned to public utilities based on the data they submit with 
respect to megawatt-hours of adjusted sales for resale and adjusted 
coordination sales.12 Annual charges under the Natural Gas Act and 
the Natural Gas Policy Act of 1978 and related statutes are allocated 
among natural gas pipeline companies based on the volumes of gas sold 
or transported by each company.13 Annual charges under the 
Interstate Commerce Act are allocated among oil pipelines based on 
their operating revenues.14
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    \1\1See Annual Charges Under the Omnibus Budget Reconciliation 
Act of 1986, Order No. 472, FERC Stats. & Regs. (Regulations 
Preambles)  30,746 at p. 30,610 (1987).
    \1\2See 18 CFR 380.201. It also contains a comparable provision 
for allocating annual charges among power marketing agencies.
    \1\3See 18 CFR 380.202.
    \1\4See 18 CFR 380.203. As noted below, there is a maximum 
charge.
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    With respect to the annual charges for the administration of part I 
of the FPA pursuant to section 10(e)(1) of the FPA, the analog to 
allocation of the annual charges pursuant to OBRA would be an 
allocation scheme based on the electric energy actually generated by 
the various licensed and exempted hydropower projects rather than on 
their respective capacity to so generate. We are concerned, however, 
that the generation data reporting requirements necessary to implement 
such a scheme may impose an undue burden on smaller licensees and 
exemptees. Accordingly, the Commission invites comment on the propriety 
of using generation data rather than authorized capacity as the basis 
for allocating the charges, and on whether such a scheme would be 
unduly burdensome on some or all licensees or exemptees. We 
specifically invite comment from municipal and minor licensees as to 
whether they have equipment for measuring generation and whether it 
would be burdensome to report such data to us.
    Another alternative that the Commission is considering to simplify 
the allocation process is to eliminate only the third prong of the 
formula, and to include minor licensees in the respective allocation 
formulae for major licensees. In other words, the minor municipal 
licensees would be included in the same allocation formula with the 
major municipal licensees, and the minor non-municipal licensees would 
be included in the same allocation formula with the major non-municipal 
licensees. The Commission could include exemptees in the same manner. 
This alternative would preserve the existing use of a formula based on 
a combination of capacity and generation to determine the annual 
charges for non-municipal licensees, and of a formula based solely on 
capacity to determine the annual charges for municipal licensees. This 
alternative would avoid the large increase, both in total dollars and 
percentage, that major municipal licensees as a group would experience 
under a single, unified formula.
    The Commission could provide a transition period for phasing in the 
assessments for minor licensees and exemptees. The Commission 
specifically invites comment from minor licensees and exemptees on 
whether such a transition period would be helpful or appropriate.
    In this regard, the Commission notes that the current system of 
categorizing municipal and non-municipal projects separately for 
purposes of annual charges produces a sizeable disparity in the annual 
charges assessed for projects of comparable size depending on their 
class of ownership. The disparity is illustrated by the data in the 
table in Appendix A.
    Under the present regulations, and under the currently prevailing 
facts (which, as discussed below, can be expected to change), the non-
municipal licensees are assessed a substantially larger annual charge 
per kilowatt of capacity than the municipal licensees. This is 
occurring primarily because the bulk of the Commission's current 
licensing activities is focused on processing applications for new 
licenses for projects whose original licensees expired in 1993. Since a 
disproportionate number of these projects are owned by non-municipal 
licensees, the effect of segregating out the hours spent on those 
applications is to allocate more of the annual charges burden to the 
non-municipal licensees. In other words, non-municipal licensees as a 
group are paying comparatively higher annual charges today than 
municipal licensees because at this time the non-municipal licensees, 
as a group, are imposing comparatively greater regulatory costs.
    This is not to suggest, however, that the disproportionate charges 
are being assessed only to the non-municipal licensees who have filed 
pending applications for a new license or who are presently involved in 
compliance proceedings. To the contrary, the annual charge assessments 
for this work are allocated among all of the non-municipal licensees as 
a class, and most of those licensees are neither seeking a new license 
nor involved in a compliance proceeding.
    Furthermore, it is reasonable to assume that in some future year 
the shoe may shift to the other foot. On average, over time, the 
licenses for municipal projects expire at the same frequency as the 
licenses for non-municipal projects, and the frequency of compliance 
proceedings also tends to even out. Thus, given the current 
concentration of resources on processing cases involving non-municipal 
projects, it is reasonable to assume that eventually some years will 
occur in which there will be an equally disproportionate burden of 
annual charge assessments on municipal projects vis-a-vis non-municipal 
projects. The net effect of the present categorization of costs 
according to the municipal/non-municipal status of the project, 
therefore, is not to permanently favor either one class or the other, 
but to create swings--both up and down--in the annual charges assessed 
to the two classes, depending on the particular mix of the Commission's 
workload in any given year. The Commission welcomes comment on all of 
these matters.
    The Commission recognizes the possibility that the elimination of 
generation as a factor might have a significant impact on some 
licensees, and welcomes comment on it. The Commission also recognizes 
that the charges for minor licensees may increase substantially, but 
believes that the current charge of five cents per horsepower has been 
so heavily eroded by inflation since it was adopted in 1963 as to have 
been rendered comparatively meaningless.
    For instance, the table in Appendix A at the end of this NOPR shows 
the following illustrative examples of increases in annual charges for 
minor licensees from the 1993 charge to the charge that would result 
from the amendments described in the Alternative A regulatory text: 

------------------------------------------------------------------------
                                                               Proposed 
                                                  Current       method  
                Minor licensee                     method      charge,  
                                                   charge    fourth year
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Town of Rollingsford..........................         $100       $1,697
City of Marshall..............................           22          367
City of Lewiston..............................           67        1,134
STS Hydropower Ltd............................           75        1,279
John A. Dodson................................            5         100 
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    In particular, the Commission welcomes comment on whether there are 
distinctions between municipal and non-municipal projects that would 
justify the current difference in their allocation formulae or whether 
the substantial increases in some licensees' annual charges that would 
result from eliminating this distinction are reason enough to retain 
the distinction.
    The Commission recognizes that, in the case of major construction 
projects, the license may be in effect for several years before project 
construction is commenced and before the project commences operation 
and goes into service. With respect to non-municipal licensees, annual 
charges are payable each year from the date of issuance of the license 
but there is no incoming stream of revenue during those years because 
no power is being generated. Municipal licensees, on the other hand, do 
obtain an exemption from annual charges prior to and during the 
construction period because, since they are not generating power during 
that period, they are not selling power for profit. This is because 
Sec. 11.6(g) of the regulations provides a complete exemption from 
certain annual charges when a municipal project is under construction 
and not generating power, on the theory that the project is operating 
without profit within the meaning of the municipal exemption in FPA 
section 10(e).
    Under the various regulatory regimes discussed herein, the 
Commission would maintain the above-described exemption from annual 
charges with respect to municipal projects that have not yet commenced 
commercial operation. In addition, the Commission proposes to include 
in the assessment formula (whatever it may be) only licensed and 
exempted projects that have already been constructed or whose 
construction has commenced. Although framed in terms of all projects, 
as a practical matter, because of the exemption for municipal projects, 
the change would primarily affect non-municipal projects.
    We believe that commencement of construction is a more appropriate 
determinant than completion of construction, for two reasons. First of 
all, the date on which construction commenced is a legally precise, 
documented date15-16 whereas the date on which construction is 
completed is not defined with the same precision. Secondly, it is our 
understanding that licensees of projects under construction can draw on 
construction loan funds to pay the annual charges whereas such funds 
may not be available prior to the commencement of construction.
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    \1\5-16Section 13 of the FPA requires that the licensee commence 
construction of the project within fixed time periods after issuance 
of the license, as specified in section 13 and the license. Thus, 
the Commission has evolved standards for determining the precise 
date of commencement of construction, and the hydropower industry is 
familiar with those standards.
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    The Commission also proposes to establish a minimum and maximum 
annual charge. The minimum annual charge would be $100.17 We 
believe that $100 is a reasonable charge for a regulated project to 
pay, to participate in defraying the cost of administration of the 
hydropower regulatory program, regardless of how small the project's 
capacity may be.18
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    \1\7Under certain circumstances (e.g., commencement of 
construction, or transfer or termination of a license during a 
fiscal year) the minimum charge would be prorated.
    \1\8In the event that a municipal licensee was entitled to a 
partial exemption from annual charges, the exemption could reduce 
its charge below the $100 minimum.
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    The Commission also proposes to set a limit on annual charges so 
that, with respect to costs incurred by the Commission, no licensee's 
project would be required to pay more than 2.0 percent of the total 
costs. We believe that a maximum charge is appropriate to avoid having 
a small number of projects bearing most of the Commission's costs of 
administration. The proposed limit is modelled after the formula in 
Sec. 382.203(b) with respect to annual charges for oil pipelines. The 
maximum annual charge stated therein is 6.339 percent of the total 
charges, but that figure is based on a much smaller number of 
significant entities (interstate oil pipelines) sharing a much smaller 
total cost.
    With respect to a minimum charge, other alternatives would be to 
waive charges below a fixed dollar amount or below a fixed capacity. 
With respect to a maximum charge, different percentages could be used 
for the ceiling. If the formula were to be based solely on capacity, 
another alternative would be to have a 50 percent discount for all 
authorized capacity above a prescribed ceiling (e.g., 500 megawatts). 
In this example, if a project had an authorized capacity of 1000 
megawatts, it would be counted in the apportionment formula as 750 
megawatts (all of the first 500 megawatts plus half of the second 500 
megawatts). The Commission invites comments on these and other 
potential alternatives.
    The Commission notes that adoption of some of the alternatives 
discussed herein might increase the annual charges for certain pumped 
storage projects. Nevertheless there are other features (such as the 
start-of-construction date and the maximum charge) that would benefit 
some pumped storage projects, to the extent that large pumped storage 
projects have extended design and construction periods and 
comparatively massive capacity.
    We have included in this notice of proposed rulemaking two 
alternative examples of the regulatory text that might be used to 
implement the various alternative proposals discussed herein. The 
``Alternative A'' regulatory text is based on the allocation of all of 
the annual charges among a single class of licensees and exemptees, 
including all major and minor municipal and non-municipal licensees and 
all exemptees. The allocation is based solely on the respective 
capacity of each hydropower project as measured in kilowatts.
    The ``Alternative B'' regulatory text retains the current separate 
categories and formulae for major municipal and non-municipal 
licensees. Minor licensees and exemptees would be classified with the 
comparable groups of major licensees and their charges would be 
assessed pursuant to the formulae currently used for those groups.
    Both the ``Alternative A'' and ``Alternative B'' regulatory texts 
implement a minimum charge of $100 and a maximum charge of two percent 
of the total of all charges. Under both alternatives, assessments would 
not commence prior to the commencement of project construction.19
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    \1\9Attached to this NOPR as Appendices A, B and C are three 
tables prepared by the Commission's staff which shows the impact 
that some of the ideas discussed herein might have on the annual 
charges of representative licensees and exemptees.
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B. Transition Arrangements

    While the Commission believes that many of the regulatory 
amendments discussed above would in the long run render the regulations 
more rational and more fair and equitable, the Commission also 
recognizes that if these amendments were to be adopted en masse at a 
single stroke they might impose significant unanticipated burdens on 
some licensees and exemptees. Therefore, the Commission proposes a 
three-year transition period for phasing-in some of the changes it 
might adopt, particularly with respect to the changes described in the 
``Alternative A'' regulatory text.
    Charges during the transition described therein would be calculated 
by the following steps. First, the difference between a project's 
charge using the current method and the proposed method would be 
divided into fourths. The charge for the first transition year would be 
the current method charge plus the one-fourth increment. (If the charge 
is reduced in going from the current method to the proposed method, the 
one-fourth increment would be subtracted.)20 The charge for the 
second transition year would be the current method charge plus (or 
minus) the two-fourths increment. The charge for the third transition 
year would be the current method charge plus (or minus) the three-
fourths increment. The charge for the fourth year would be calculated 
solely by the proposed method.
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    \20\In order to avoid any net increase or decrease in the total 
of all charges assessed in any single year, the total amount of the 
reductions in the charges must be matched by an equal amount of 
``increases'' in charges. The ``increases,'' however, would in fact 
simply be a partial elimination of a reduction that would otherwise 
occur--to balance the elimination of part of an actual increase 
elsewhere that would otherwise occur.
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    The charges in all of these transition years, however, would be 
subject to the proposed minimum and maximum charges.\21\ In addition, 
in all of these transition years, charges would be assessed only with 
respect to hydropower projects that have been constructed or whose 
construction has commenced.\22\
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    \21\Thus, even during the transition period the minimum charge 
would be $100 and the maximum charge would not exceed two percent of 
the total of all charges assessed. See Appendices A and B for 
illustrative examples.
    \22\The regulatory amendments proposed herein are intended to be 
purely prospective in nature. Thus, to the extent that any licensee 
has obtained approval for an installment or deferred payment plan, 
the amendments, if adopted, would not extinguish that licensee's 
responsibility to pay whatever amounts were assessed under the 
existing regulations even if such amounts have been deferred for 
later payment.
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    Finally, as discussed above, if the major changes have their most 
significant impact only on minor licensees and exemptees, a transition 
period could be established solely for those entities.

C. From Horsepower to Kilowatts

    As discussed above, the existing regulations at Sec. 11.1 provide 
different allocation formulae for municipal and non-municipal projects 
of more than 2,000 horsepower of installed capacity. Both formulae, 
however, take into account a project's authorized installed capacity 
defined in terms of horsepower.
    The computation of a project's capacity in terms of horsepower 
likely arose in the earlier years of the Commission's regulatory 
oversight, when the then-existing projects included a greater 
percentage of hydromechanical equipment.\23\ Today, however, the 
determination of a hydroelectric project's authorized capacity is 
generally stated in terms of kilowatts; that is the manner in which 
authorized capacity is stated in the licenses.\24\ In fact, the 
Commission's staff determines a project's horsepower capacity by 
converting kilowatts into horsepower. Therefore, the Commission 
proposes to revise Sec. 11.1 to substitute kilowatts for horsepower in 
stating a project's authorized installed capacity.
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    \23\In other words, horsepower was a convenient measure for 
comparing the capacity of hydropower projects, some of which 
generated electricity and some which did not. In rough terms, 
horsepower measures the weight that an average draft horse can pull 
in a circular path around a rotary grinder. The common definition in 
the United States is that one horsepower is equal to 550 foot-pounds 
per second or approximately 746 watts.
    \24\The exception is that the license article on annual charges 
states the capacity in horsepower.
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    For the few licensed hydromechanical projects, all of which are 
quite small, the Commission would impute a kilowatt figure by 
multiplying these projects' existing horsepower capacity by three-
fourths. We believe that using kilowatts as the standard and converting 
the few hydromechanical project capacities into an imputed kilowatt 
capacity is far easier than converting all of the hydroelectric project 
capacities from kilowatts to horsepower.

D. The Determination of Authorized Installed Capacity

    Questions have occasionally arisen as to how to define ``authorized 
installed capacity.'' What if the capacity of the generator exceeds the 
capacity of the turbine? What if the available stream flow is 
insufficient to fully utilize the capacity of the turbine and generator 
installed in the project?\25\
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    \25\Such situations might arise, for instance, if it were 
cheaper for a project operator to purchase an ``off-the-shelf'' or a 
used generator whose capacity exceeded the capacity of the turbine 
or the stream flow available at the project site.
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    The Commission proposes to take this occasion to clarify the 
concept of ``authorized installed capacity'' by defining it. The 
authorized installed capacity would be expressed in kilowatts, and 
would be the lesser of the capacity of the generator or the turbine. 
Thus, if the capacity of the generator exceeded the capacity of the 
turbine, then the capacity of the turbine would apply, and vice-versa. 
The availability of stream flow, however, would not be considered.\26\
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    \26\The proposed rule would codify the policy articulated in 
Public Utility District No. 2 of Grant County, Washington, 62 FERC 
61,229 (1993).
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    The capacity would be based on the actual power of the equipment in 
question without regard to whatever ``nameplate'' rating might be 
physically affixed to the unit (although, with respect to a new or 
unmodified unit, the ``nameplate rating'' may well coincide with the 
definition proposed herein). If the generator or turbine are 
subsequently modified, such as by rewinding the generator, the capacity 
would be recalculated accordingly.
    We believe that the proposed definition provides a means of 
determining capacity that is both workable and fair. The capacity of 
the generator and the turbine are reasonably ascertainable, and do not 
involve the potential complexities and controversies inherent in 
determining the availability of usable stream flow. If a project 
operator, for whatever reason, chose to purchase, install or operate 
equipment whose capacity exceeded the available stream flow needed to 
operate it, the operator would have to accept the consequence of having 
that equipment's capacity used as the basis for determining the 
project's annual charges.

E. The Five Megawatt and Conduit Exemption Costs

    Section 30 of the FPA\27\ provides that the Commission may exempt 
from the FPA's licensing provisions any facility (other than a dam, and 
within certain megawatt limits) which is constructed or operated to 
generate electric power, if the facility is located on non-federal land 
and ``utilizes for such generation only the hydroelectric potential of 
a manmade conduit, which is operated for the distribution of water for 
agricultural, municipal, or industrial consumption and not primarily 
for the generation of electricity.''
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    \27\18 U.S.C. 823a.
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    Sections 405 and 408 of the Public Utility Regulatory Policies Act 
of 1978 (PURPA), as amended by section 408 of the Energy Security Act 
of 1980,\28\ provide that the Commission may exempt from the FPA's 
licensing requirements small hydroelectric power projects that are 
located at the site of an existing dam (or utilize natural water 
features without the need for a dam) and that have a proposed installed 
capacity of five megawatts (MW) or less.
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    \28\16 U.S.C. 2708.
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    The Commission's staff, however, performs similar safety and 
environmental compliance functions with respect to hydroelectric 
projects that are operated pursuant to a 5 MW or conduit exemption as 
it does for projects that are operated pursuant to a license. The 
Commission also incurs costs in processing exemption applications. 
Therefore, as a matter of policy, the Commission believes that it would 
be appropriate for projects that are operated pursuant to the 5 MW 
exemption to share the cost of the Commission's application and 
compliance programs, and that the same principle applies as well with 
respect to conduit exemptions.
    Section 10(e) of the FPA provides that ``the licensee shall pay * * 
* annual charges * * * for the costs of the administration of this Part 
* * *'' (emphasis added). We believe that this statutory language may 
preclude imposition of annual charges on 5 MW and conduit exemptees 
under section 10(e) of the FPA. It is arguable that such exemptees 
could not be construed as ``licensees'' within the meaning of section 
10(e). The Commission believes, however, that it has the legal 
authority under OBRA to assess annual charges to exemptees,29 and 
proposes to do so with respect to both the 5 MW and the conduit 
exemptions.30
---------------------------------------------------------------------------

    \2\9Section 3401(a) of OBRA provides as follows:
    (a) In General.--(1) Except as provided in paragraph (2) and 
beginning in fiscal year 1987 and in each fiscal year thereafter, 
the Federal Energy Regulatory Commission shall, using the provisions 
of this subtitle and authority provided by other laws, assess and 
collect fees and annual charges in any fiscal year in amounts equal 
to all of the costs incurred by the Commission in that fiscal year.
    (2) the provisions of this subtitle shall not affect the 
authority, requirements, exceptions, or limitations in sections 
10(e) and 30(e) of the Federal Power Act.
    Whereas this provision makes clear that OBRA does not authorize 
the collection of annual charges from, e.g., municipal licensees who 
qualify for an exemption under the terms of section 10(e) of the 
Federal Power Act, projects under exemptions from licensing are not 
subject to section 10(e), and therefore charging them under OBRA 
does not affect any provision of section 10(e).
    Section 30(e) of the Federal Power Act requires the Commission 
to collect from exemption applicants and certain license applicants, 
on behalf of the U.S. Fish and Wildlife Service, the National Marine 
Fisheries Service, and state fish and wildlife agencies, these 
agencies' project-specific costs under section 30(c) (establishment 
of mandatory conditions with respect to fish and wildlife 
resources). These agencies are required to subtract from their 
section 10(e) claims the money they recover under section 30(e).
    \3\0Holders of 5 MW and conduit exemptions would, however, be 
able to apply for exemption from annual charges based on their 
municipal status.
---------------------------------------------------------------------------

    Finally, pursuant to Sec. 381.601, the Commission currently imposes 
a filing fee for applications for a 5 MW exemption. The fee is based on 
the cost of processing all 5 MW exemption applications received each 
year divided by the number of applications that the Commission has 
completed processing in that year. At present, the fee established by 
Sec. 381.601 is $21,620. Because the Commission is proposing to assess 
annual charges on 5 MW exemptees, the Commission proposes to delete 
Sec. 381.601 from the regulations.31
---------------------------------------------------------------------------

    \3\1The Commission does not impose a filing fee for conduit 
exemptions.
---------------------------------------------------------------------------

F. Other Revisions to Annual Charges

    Section 11.1(d) currently states that the minimum annual charge for 
projects involving transmission lines will be $5. The Commission's 
current practice, however, is to state that charge in the articles of 
the individual licenses, as appropriate. Therefore, we propose to 
conform the text of Sec. 11.1(d) to that practice.
    In its current form, Sec. 11.20 provides two separate deadlines for 
payment of bills for annual charges: 30 days for headwater benefits 
bills and 45 days for other annual charges bills. The purpose of this 
distinction is not readily apparent. Therefore, the Commission proposes 
to make all such bills payable upon 30 days of their rendition.
    There has also been some confusion over the procedures that a 
licensee should follow if it believes that the bill is incorrect. The 
proposed new Sec. 11.20 provides for licensees to file an appeal of the 
bill to the Commission's Chief Financial Officer. All decisions of the 
Chief Financial Officer on appeals would be subject to rehearing by the 
Commission pursuant to Sec. 385.713. This would essentially codify the 
current informal practice. Most billing disputes involve mathematical 
calculations that can be readily resolved by discussion with the 
Commission's staff without the need for a formal request to the 
Commission for rehearing.
    The bill would still have to be paid within 30 days of its 
rendition in order to avoid the assessment of penalty payments under 
Sec. 11.21, but if a timely appeal or request for rehearing is filed 
the bill could be paid under protest and subject to refund. This 
provision would codify the Commission's current practice.
    As currently in effect, Sec. 11.6(i) requires that applications for 
exemptions from payment of annual charges ``shall be prepared on forms 
prescribed by the Commission * * *.'' Inasmuch as the Commission does 
not currently prescribe such forms, the reference to such forms will be 
deleted.
    We also propose to add a sentence at the end of Sec. 11.6(i) to 
clarify that bills for annual charges can be paid under protest and 
subject to refund in the event that an application for an exemption 
from payment is pending when the bill becomes payable. This provision 
would codify the Commission's current practice.

V. Regulatory Flexibility Certification

    The Regulatory Flexibility Act of 1980 (RFA)32 generally 
requires a description and analysis of proposed regulations that will 
have a significant economic impact on a substantial number of small 
entities.\33\ Pursuant to section 605(b) of the RFA, the Commission 
hereby certifies that the regulations proposed herein will not have a 
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \32\5 U.S.C. 601-612.
    \33\Section 601(c) of the RFA defines a ``small entity'' as a 
small business, a small not-for-profit enterprise, or a small 
governmental jurisdiction. A ``small business'' is defined by 
reference to section 3 of the Small Business Act as an enterprise 
which is ``independently owned and operated and which is not 
dominant in its field of operation.'' 15 U.S.C. 632(a).
---------------------------------------------------------------------------

VI. Environmental Statement

    Issuance of this notice of proposed rulemaking does not constitute 
a major federal action having a significant adverse impact on the 
quality of the human environment under the Commission's regulations 
implementing the National Environmental Policy Act.34 The 
regulations proposed herein are procedural in nature and therefore fall 
within the categorical exemptions provided in the Commission's 
regulations. Consequently, neither an environmental impact statement 
nor an environmental assessment is required.35
---------------------------------------------------------------------------

    \34\See Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. 
& Regs. (Regulations Preambles 1986-1990)  30,783 (Dec. 10, 1987) 
(codified at 18 CFR Part 380).
    \35\See 18 CFR 380.4(a)(1).
---------------------------------------------------------------------------

VII. Information Collection Statement

    The Office of Management and Budget's (OMB) regulations at 5 CFR 
1320.13 require that OMB approve certain information and recordkeeping 
requirements imposed by an agency. The information collection 
requirements that would be deleted by this proposed rule are contained 
in FERC-583 ``Annual Kilowatt Generating Report (Annual Charges)'' 
(1902-0136). The Commission's Financial Services Division uses the data 
for determination of the amount of annual charges to be assessed 
licensees for reimbursable government administrative costs. If the 
amendments proposed herein are adopted, the Commission would submit to 
the OMB a notification that these collections of information have been 
modified.
    Interested persons may obtain information on these reporting 
requirements by contacting the Federal Energy Regulatory Commission, 
941 North Capitol Street NE., Washington, DC 20426 [Attention: Michael 
Miller, Information Services Division, (202) 208-1415]. Comments on the 
requirements of this rule can be sent to the Office of Information and 
Regulatory Affairs of OMB [Attention: Desk Officer for Federal Energy 
Regulatory Commission].

VIII. Public Comment Procedures

    The Commission invites all interested persons to submit written 
comments on the matters discussed in this notice of proposed 
rulemaking. An original and 14 copies of the written comments must be 
filed with the Commission April 4, 1994. Comments should be submitted 
to the Office of the Secretary, Federal Energy Regulatory Commission, 
825 North Capitol Street NE., Washington, DC 20426, during regular 
business hours, and should refer to Docket No. RM93-7-000.
    All written comments will be placed in the Commission's public 
files and will be available for inspection in the Commission's Public 
Reference Room, room 3104, 941 North Capitol Street North East, 
Washington, DC 20426 during regular business hours.

List of Subjects

18 CFR Part 11

    Electric power, Reporting and recordkeeping requirements.

18 CFR Part 381

    Electric power plants, Electric utilities, Natural gas, Reporting 
and recordkeeping requirements.

    In consideration of the foregoing, the Commission invites comment 
on the potential amendments to 18 CFR parts 11 and 381 that are set 
forth below in two alternative versions (styled as ``Alternative A'' 
and ``Alternative B''), and also invites comments on any other 
potential alternatives.
Lois D. Cashell,
Secretary.
    For the reasons set out in the preamble, 18 CFR parts 11 and 381 
are proposed to be amended in the alternative as follows:

Alternative A

PART 11--ANNUAL CHARGES UNDER PART I OF THE FEDERAL POWER ACT

    1. The authority citation for Part ll continues to read as follows:

    Authority: 16 U.S.C. 791a-825r; 42 U.S.C. 7101-7352.

    2. Section 11.1 is revised to read as follows:


Sec. 11.1  Costs of administration.

    (a) Authority. Pursuant to section 10(e) of the Federal Power Act 
and section 3401 of the Omnibus Budget Reconciliation Act of 1986, the 
Commission will assess reasonable annual charges against licensees and 
exemptees to reimburse the United States for the costs of 
administration of the Commission's hydropower regulatory program.
    (b) Scope. The annual charges under this section will be charged to 
and allocated among:
    (1) all licensees;
    (2) all holders of exemptions under section 30 of the Federal Power 
Act; and
    (3) all holders of exemptions under sections 405 and 408 of the 
Public Utility Regulatory Policies Act of 1978, as amended by section 
408 of the Energy Security Act of 1980.
    (c) Formula. A determination shall be made for each fiscal year of 
the costs of administration of Part I of the Federal Power Act, from 
which shall be deducted administrative costs fixed in the licenses and 
exemptions and those fixed by the Commission in determining headwater 
benefit payments. For each fiscal year, the costs of administration 
will be assessed against each licensee and exemptee in the proportion 
that the annual charge factor for each such project bears to the total 
of the annual charge factors under all such outstanding licenses and 
exemptions. The annual charge factor for each such project shall be its 
authorized installed capacity as measured in kilowatts. The assessments 
will include all such licensed and exempted projects that have been 
constructed, and all such licensed and exempted projects whose 
construction has been commenced. In the event that construction 
commences during a fiscal year, the charges will be prorated based on 
the day on which construction commenced.
    (d) Municipal exemptions. (1) To enable the Commission to compute 
on the bill for annual charges the exemption to which State and 
municipal licensees and exemptees are entitled because of the use of 
power by the licensee or exemptees for State or municipal purposes, 
each such licensee or exemptee must file with the Commission, on or 
before November 1 of each year, a statement under oath showing the 
following information with respect to the power generated by the 
project and the disposition thereof during the preceding fiscal year, 
expressed in kilowatt-hours:
    (i) Gross amount of power generated by the project.
    (ii) Amount of power used for station purposes and lost in 
transmission, etc.
    (iii) Net amount of power available for sale or use by licensee or 
exemptee, classified as follows:
    (A) Used by licensee or exemptee.
    (B) Sold by licensee or exemptee.
    (2) When the power from a licensed or exempted project owned by a 
State or municipality enters into its electric system, making it 
impracticable to meet the requirements of this section with respect to 
the disposition of project power, such licensee or exemptee may, in 
lieu thereof, furnish similar information with respect to the 
disposition of the available power of the entire electric system of the 
licensee or exemptee.
    (e) Transmission lines. For projects involving transmission lines 
only, the administrative charge will be stated in the license.
    (f) Minimum and maximum charges. (1) The minimum annual charge 
under this section will be $100 per year for each licensed or exempted 
project, subject to reduction based on partial or total exemption 
pursuant to paragraph (d) of this section.
    (2) No licensed or exempted project's annual charge may exceed a 
maximum charge established each year by the Commission to equal 2.0 
percent of the adjusted costs of administration of the hydropower 
regulatory program. For every project with an annual charge determined 
to be above the maximum charge, that project's annual charge will be 
set at the maximum charge, and any amount above the maximum charge will 
be reapportioned to the remaining projects. The reapportionment will be 
computed using the method outlined in paragraph (c) of this section 
(but excluding any project whose annual charge is already set at the 
maximum amount). This procedure will be repeated until no project's 
annual charge exceeds the maximum charge.
    (g) Commission's costs. (1) With respect to costs incurred by the 
Commission, the assessment of annual charges will be based on an 
estimate of the costs of administration of Part I of the Federal Power 
Act that will be incurred during the fiscal year in which the annual 
charges are assessed. After the end of the fiscal year, the assessment 
will be recalculated based on the costs of administration that were 
actually incurred during that fiscal year; the actual costs will be 
compared to the estimated costs; and the difference between the actual 
and estimated costs will be carried over as an adjustment to the 
assessment for the subsequent fiscal year.
    (2) The issuance of bills based on the administrative costs 
incurred by the Commission during the year in which the bill is issued 
will commence in 1993. The annual charge for the administrative costs 
that were incurred in fiscal year 1992 will be billed in 1994. At the 
licensee's option, the charge may be paid in three equal annual 
installments in fiscal years 1994, 1995, and 1996, plus any accrued 
interest. If the licensee elects the three-year installment plan, the 
Commission will accrue interest (at the most recent yield of two-year 
Treasury securities) on the unpaid charges and add the accrued interest 
to the installments billed in fiscal years 1995 and 1996.
    (h) In making their annual reports to the Commission on their costs 
in administering Part I of the Federal Power Act, the United States 
Fish and Wildlife Service and the National Marine Fisheries Service are 
to deduct any amounts that were deposited into their Treasury accounts 
during that year as reimbursements for conducting studies and reviews 
pursuant to section 30(e) of the Federal Power Act.
    (i) Definition. As used in paragraph (c) of this section, 
authorized installed capacity means the lesser of the ratings of the 
generator or turbine units. The rating of a generator is the product of 
the continuous-load capacity rating of the generator in kilovolt-
amperes (kVA) and the system power factor in kW/kVA. If the licensee or 
exemptee does not know its power factor, a factor of 1.0 kW/kVA will be 
used. The rating of a turbine is the product of the turbine's capacity 
in horsepower (hp) at maximum head gate opening under the 
manufacturer's rating head times a conversion factor of 0.75 kW/hp. If 
the generator or turbine installed has a rating different from that 
authorized in the license or exemption, or the installed generator is 
rewound or otherwise modified to change its rating, or the turbine is 
modified to change its rating, the licensee or exemptee must apply to 
the Commission to amend its authorized installed capacity to reflect 
the change.
    (j) Transition rules. (1) For a license having the capacity of the 
project for annual charge purposes stated in horsepower, that capacity 
shall be deemed to be the capacity stated in kilowatts elsewhere in the 
license, including any amendments thereto.
    (2) During the first three fiscal years in which annual charges are 
assessed after [INSERT DATE ON WHICH THE FINAL RULE BECOMES EFFECTIVE], 
the annual charges will be determined as follows. The assessments will 
include (and be limited to) all licenses and exempted projects that 
have been constructed or whose construction has been commenced, and 
will be subject to the minimum and maximum charges specified in 
paragraph (f) of this section. Subject to those parameters, the 
Commission will determine the charge that would have been assessed 
pursuant to the regulations in effect prior to [INSERT DATE ON WHICH 
THE FINAL RULE BECOMES EFFECTIVE], the charge that would have been 
assessed pursuant to the regulations in effect subsequent to that date, 
and the difference between those two assessments. In the first fiscal 
year after [INSERT DATE ON WHICH THE FINAL RULE BECOMES EFFECTIVE], the 
Commission will adjust the assessment that would otherwise be payable 
under the regulations in effect after that date by an amount equal to 
75 percent of the difference between the amount that would have been 
payable under the regulations that were previously in effect and the 
amount that would have been payable under those regulations after they 
were amended. In the second fiscal year after [INSERT DATE ON WHICH THE 
FINAL RULE BECOMES EFFECTIVE], the Commission will adjust the 
assessment by 50 percent of that difference. In the third fiscal year 
after [INSERT DATE ON WHICH THE FINAL RULE BECOMES EFFECTIVE], the 
Commission will adjust the assessment by 25 percent of the difference.
    3. In Sec. 11.6, the title, the introductory sentence of paragraph 
(a), and paragraph (i), are revised, and the cross-reference at the end 
of the section is removed, to read as follows:


Sec. 11.6  Exemption of State and municipal licensees and exemptees.

    (a) Bases for exemption. A State or municipal licensee or exemptee 
may claim total or partial exemption from the assessment of annual 
charges upon one or more of the following grounds:
* * * * *
    (i) Application for exemption. Applications for exemption from 
payment of annual charges shall be signed by an authorized executive 
officer or chief accounting officer of the licensee or exemptee and 
verified under oath. An original and three copies of such application 
shall be filed with the Commission within the time allowed (by 
Sec. 11.28) for the payment of the annual charges. If the licensee or 
exemptee, within the time allowed for the payment of the annual 
charges, files notice that it intends to file an application for 
exemption, an additional period of 30 days is allowed within which to 
complete and file the application for exemption. The filing of an 
application for exemption does not by itself alleviate the requirement 
to pay the annual charges, nor does it exonerate the licensee or 
exemptee from the assessment of penalties under Sec. 11.21. If a bill 
for annual charges becomes payable after an application for an 
exemption has been filed and while the application is still pending for 
decision, the bill may be paid under protest and subject to refund.
    4. Section 11.20 is revised to read as follows:


Sec. 11.20  Time for payment.

    Annual charges must be paid no later than 30 days after rendition 
of a bill by the Commission. If the licensee or exemptee believes that 
the bill is incorrect, no later than 30 days after its rendition the 
licensee or exemptee may file an appeal of the bill with the Chief 
Financial Officer. No later than 30 days after the date of issuance of 
the Chief Financial Officer's decision on the appeal, the licensee or 
exemptee may file a request for rehearing of that decision pursuant to 
Sec. 385.713 of this chapter. In the event that a timely appeal to the 
Chief Financial Officer or a timely request to the Commission for 
rehearing is filed, the payment of the bill may be made under protest, 
and subject to refund pending the outcome of the appeal or rehearing.

PART 381--FEES

    5. The authority citation for part 381 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w; 16 U.S.C. 791-828c, 2601-2645; 31 
U.S.C. 9701; 42 U.S.C. 7101-7352; and 49 U.S.C. 1-27.


Sec. 381.601  [Removed]

    6. Section 381.601 is removed, and subpart F is reserved.

Alternative B

PART 11--ANNUAL CHARGES UNDER PART I OF THE FEDERAL POWER ACT

    1. The authority citation for part 11 continues to read as follows:

    Authority: 16 U.S.C. 791a-825r; 42 U.S.C. 7101-7352.

    2. Section 11.1 is revised to read as follows:


Sec. 11.1  Costs of administration.

    (a) Authority. Pursuant to section 10(e) of the Federal Power Act 
and section 3401 of the Omnibus Budget Reconciliation Act of 1986, the 
Commission will assess reasonable annual charges against licensees and 
exemptees to reimburse the United States for the costs of 
administration of the Commission's hydropower regulatory program.
    (b) Scope. The annual charges under this section will be charged to 
and allocated among:
    (1) All licensees;
    (2) All holders of exemptions under section 30 of the Federal Power 
Act; and
    (3) All holders of exemptions under sections 405 and 408 of the 
Public Utility Regulatory Policies Act of 1978, as amended by section 
408 of the Energy Security Act of 1980. The assessments will include 
all such licensed and exempted projects that have been constructed, and 
all such licensed and exempted projects whose construction has been 
commenced. In the event that construction commences during a fiscal 
year, the charges will be prorated based on the day on which 
construction commenced.
    (c) Licenses and exemptions other than State or municipal. For 
licensees and exemptees, other than State or municipal:
    (1) A determination shall be made for each fiscal year of the costs 
of administration of Part I of the Federal Power Act chargeable to such 
licensees or exemptees, from which shall be deducted any administrative 
costs that are stated in the license or exemption or fixed by the 
Commission in determining headwater benefit payments.
    (2) For each fiscal year the costs of administration determined 
under paragraph (c)(1) of this section will be assessed against such 
licensee or exemptee in the proportion that the annual charge factor 
for each such project bears to the total of the annual charge factors 
under all such outstanding licenses and exemptions.
    (3) The annual charge factor for each such project shall be found 
as follows:
    (i) For a conventional project the factor is its authorized 
installed capacity plus 150 times its annual energy output in millions 
of kilowatt-hours.
    (ii) For a pure pumped storage project the factor is its authorized 
installed capacity.
    (iii) For a mixed conventional-pumped storage project the factor is 
its authorized installed capacity plus 150 times its gross annual 
energy output in millions of kilowatt-hours less 100 times the annual 
energy used for pumped storage pumping in millions of kilowatt-hours.
    (iv) For purposes of determining their annual charges factor, 
projects that are operated pursuant to an exemption or whose authorized 
installed capacity does not exceed 1.5 megawatts will be deemed to have 
an annual energy output of zero.
    (4) To enable the Commission to determine such charges annually, 
each licensee whose authorized installed capacity exceeds 1.5 megawatts 
must file with the Commission, on or before November 1 of each year, a 
statement under oath showing the gross amount of power generated (or 
produced by nonelectrical equipment) and the amount of power used for 
pumped storage pumping by the project during the preceding fiscal year, 
expressed in kilowatt hours. If any licensee does not report the gross 
energy output of its project within the time specified above, the 
Commission's staff will estimate the energy output and this estimate 
may be used in lieu of the filings required by this section made by 
such licensee after November 1.
    (d) State and municipal licensees and exemptees. For State or 
municipal licensees and exemptees:
    (1) A determination shall be made for each fiscal year of the cost 
of administration under Part I of the Federal Power Act chargeable to 
such licensees and exemptees, from which shall be deducted any 
administrative costs that are stated in the license or exemption or 
that are fixed by the Commission in determining headwater benefit 
payments.
    (2) An exemption will be granted to a licensee or exemptee to the 
extent, if any, to which it may be entitled under section 10(e) of the 
Act provided the data is submitted as requested in paragraphs (d) (4) 
and (5) of this section.
    (3) For each fiscal year the total actual cost of administration as 
determined under paragraph (d)(1) of this section will be assessed 
against each such licensee or exemptee (except to the extent of the 
exemptions granted pursuant to paragraph (d)(2) of this section) in the 
proportion that the authorized installed capacity of each such project 
bears to the total such capacity under all such outstanding licenses or 
exemptions.
    (4) To enable the Commission to compute on the bill for annual 
charges the exemption to which State and municipal licensees and 
exemptees are entitled because of the use of power by the licensee or 
exemptees for State or municipal purposes, each such licensee or 
exemptee must file with the Commission, on or before November 1 of each 
year, a statement under oath showing the following information with 
respect to the power generated by the project and the disposition 
thereof during the preceding fiscal year, expressed in kilowatt-hours:
    (i) Gross amount of power generated by the project.
    (ii) Amount of power used for station purposes and lost in 
transmission, etc.
    (iii) Net amount of power available for sale or use by licensee or 
exemptee, classified as follows:
    (A) Used by licensee or exemptee.
    (B) Sold by licensee or exemptee.
    (5) When the power from a licensed or exempted project owned by a 
State or municipality enters into its electric system, making it 
impracticable to meet the requirements of this section with respect to 
the disposition of project power, such licensee or exemptee may, in 
lieu thereof, furnish similar information with respect to the 
disposition of the available power of the entire electric system of the 
licensee or exemptee.
    (e) Transmission lines. For projects involving transmission lines 
only, the administrative charge will be stated in the license.
    (f) Minimum and maximum charges. (1) The minimum annual charge 
under this section will be $100 per year for each licensed or exempted 
project, subject to reduction based on partial or total exemption 
pursuant to paragraph (d)(4) of this section.
    (2) No licensed or exempted project's annual charge may exceed a 
maximum charge established each year by the Commission to equal 2.0 
percent of the adjusted costs of administration of the hydropower 
regulatory program. For every project with an annual charge determined 
to be above the maximum charge, that project's annual charge will be 
set at the maximum charge, and any amount above the maximum charge will 
be reapportioned to the remaining projects. The reapportionment will be 
computed using the method outlined in paragraphs (c) and (d) of this 
section (but excluding any project whose annual charge is already set 
at the maximum amount). This procedure will be repeated until no 
project's annual charge exceeds the maximum charge.
    (g) Commission's costs. (1) With respect to costs incurred by the 
Commission, the assessment of annual charges will be based on an 
estimate of the costs of administration of Part I of the Federal Power 
Act that will be incurred during the fiscal year in which the annual 
charges are assessed. After the end of the fiscal year, the assessment 
will be recalculated based on the costs of administration that were 
actually incurred during that fiscal year; the actual costs will be 
compared to the estimated costs; and the difference between the actual 
and estimated costs will be carried over as an adjustment to the 
assessment for the subsequent fiscal year.
    (2) The issuance of bills based on the administrative costs 
incurred by the Commission during the year in which the bill is issued 
will commence in 1993. The annual charge for the administrative costs 
that were incurred in fiscal year 1992 will be billed in 1994. At the 
licensee's option, the charge may be paid in three equal annual 
installments in fiscal years 1994, 1995, and 1996, plus any accrued 
interest. If the licensee elects the three-year installment plan, the 
Commission will accrue interest (at the most recent yield of two-year 
Treasury securities) on the unpaid charges and add the accrued interest 
to the installments billed in fiscal years 1995 and 1996.
    (h) In making their annual reports to the Commission on their costs 
in administering Part I of the Federal Power Act, the United States 
Fish and Wildlife Service and the National Marine Fisheries Service are 
to deduct any amounts that were deposited into their Treasury accounts 
during that year as reimbursements for conducting studies and reviews 
pursuant to section 30(e) of the Federal Power Act.
    (i) Definition. As used in paragraph (c) of this section, 
``authorized installed capacity'' means the lesser of the ratings of 
the generator or turbine units. The rating of a generator is the 
product of the continuous-load capacity rating of the generator in 
kilovolt-amperes (kVA) and the system power factor in kW/kVA. If the 
licensee or exemptee does not know its power factor, a factor of 1.0 
kW/kVA will be used. The rating of a turbine is the product of the 
turbine's capacity in horsepower (hp) at maximum head gate opening 
under the manufacturer's rating head times a conversion factor of 0.75 
kW/hp. If the generator or turbine installed has a rating different 
from that authorized in the license or exemption, or the installed 
generator is rewound or otherwise modified to change its rating, or the 
turbine is modified to change its rating, the licensee or exemptee must 
apply to the Commission to amend its authorized installed capacity to 
reflect the change.
    (j) Transition. For a license having the capacity of the project 
for annual charge purposes stated in horsepower, that capacity shall be 
deemed to be the capacity stated in kilowatts elsewhere in the license, 
including any amendments thereto.
    3. In Sec. 11.6, the title, the introductory sentence of paragraph 
(a), and paragraph (i), are revised, and the cross-reference at the end 
of the section is removed, to read as follows:


Sec. 11.6  Exemption of State and municipal licensees and exemptees.

    (a) Bases for exemption. A State or municipal licensee or exemptee 
may claim total or partial exemption from the assessment of annual 
charges upon one or more of the following grounds:
* * * * *
    (i) Application for exemption. Applications for exemption from 
payment of annual charges shall be signed by an authorized executive 
officer or chief accounting officer of the licensee or exemptee and 
verified under oath. An original and three copies of such application 
shall be filed with the Commission within the time allowed (by 
Sec. 11.28) for the payment of the annual charges. If the licensee or 
exemptee, within the time allowed for the payment of the annual 
charges, files notice that it intends to file an application for 
exemption, an additional period of 30 days is allowed within which to 
complete and file the application for exemption. The filing of an 
application for exemption does not by itself alleviate the requirement 
to pay the annual charges, nor does it exonerate the licensee or 
exemptee from the assessment of penalties under Sec. 11.21. If a bill 
for annual charges becomes payable after an application for an 
exemption has been filed and while the application is still pending for 
decision, the bill may be paid under protest and subject to refund.
    4. Section 11.20 is revised to read as follows:


Sec. 11.20  Time for payment.

    Annual charges must be paid no later than 30 days after rendition 
of a bill by the Commission. If the licensee or exemptee believes that 
the bill is incorrect, no later than 30 days after its rendition the 
licensee or exemptee may file an appeal of the bill with the Chief 
Financial Officer. No later than 30 days after the date of issuance of 
the Chief Financial Officer's decision on the appeal, the licensee or 
exemptee may file a request for rehearing of that decision pursuant to 
Sec. 385.713 of this chapter. In the event that a timely appeal to the 
Chief Financial Officer or a timely request to the Commission for 
rehearing is filed, the payment of the bill may be made under protest, 
and subject to refund pending the outcome of the appeal or rehearing.

PART 381--FEES

    5. The authority citation for Part 381 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w; 16 U.S.C. 791-828c, 2601-2645; 31 
U.S.C. 9701; 42 U.S.C. 7101-7352; and 49 U.S.C. 1-27.


Sec. 381.601  [Removed]

    6. Section 381.601 is removed, and subpart F is reserved.

Appendix A

    Note: This Appendix will not be published in the Code of Federal 
Regulations.

    The table in Appendix A shows illustrative annual charges for 
representative municipal and non-municipal licensees and exemptees. It 
is based on the regulatory scheme described in the Alternative A 
regulatory text at the end of the NOPR. Thus, the table is based on 
allocation of all of the annual charges among a single class of 
licensees and exemptees, including all major and minor municipal and 
non-municipal licensees and all exemptees. The allocation is based 
solely on the respective capacity of each hydropower project as 
measured in kilowatts, with a minimum charge of $100 and a maximum 
charge of two percent of the total of all charges. Assessments would 
not commence prior to the commencement of project construction. 
Finally, the table reflects the charges as they would become due over a 
three-year phase-in period.

                                             FY 1993 ANNUAL CHARGES                                             
----------------------------------------------------------------------------------------------------------------
                                                                      Proposed method charge                    
 Project ID and    KW authorized  Current method ---------------------------------------------------------------
  company name                        charge          Year 1          Year 2          Year 3          Year 4    
----------------------------------------------------------------------------------------------------------------
Exemptions:                                                                                                     
06375Heed Co.                                                                                                   
 Inc............             116               0             100             100             100             100
08732Manassas,                                                                                                  
 City of........           1,200               0             400             700           1,100           1,400
10113Perpetual                                                                                                  
 Storage, Inc...           5,000               0           1,600           3,000           4,400           5,700
Major Municipal                                                                                                 
 Licenses:                                                                                                      
02183Grand River                                                                                                
 Dam Authority..          99,750          62,000          84,000          95,000         104,000         113,000
02216Power Auth.                                                                                                
 of the State of                                                                                                
 New York.......       2,815,500       1,361,000       1,027,000       1,027,000       1,027,000       1,027,000
02246Yuba County                                                                                                
 Water Agency...         361,875         225,000         305,000         343,000         379,000         411,000
Major Non-                                                                                                      
 Municipal                                                                                                      
 Licenses:                                                                                                      
01025Safe Harbor                                                                                                
 Water Power                                                                                                    
 Corp...........         424,650         504,000         560,000         533,000         507,000         483,000
01390Southern                                                                                                   
 California                                                                                                     
 Edison Co......           3,015           3,600           4,000           3,800           3,600           3,400
01971Idaho Power                                                                                                
 Company........       1,166,925       1,474,000       1,027,000       1,027,000       1,027,000       1,027,000
02071Pacificorp                                                                                                 
 DBA Utah Power                                                                                                 
 & Light........         105,000         146,000         156,000         143,000         131,000         119,000
02408Alabama                                                                                                    
 Power Co.......          57,975          81,000          87,000          79,000          72,000          66,000
Minor Municipal                                                                                                 
 Licenses:                                                                                                      
03777Rollingsfor                                                                                                
 d, Town of (NH)           1,493             100             600           1,000           1,300           1,700
06514Marshall,                                                                                                  
 City of (MI)...             323              22             100             200             300             400
11006Lewiston,                                                                                                  
 City of (ME)...             998              67             400             600             900           1,100
Minor Non-                                                                                                      
 Municipal                                                                                                      
 Licenses:                                                                                                      
07242STS                                                                                                        
 Hydropower, Ltd           1,125              75             400             700           1,000           1,300
07656Dodson,                                                                                                    
 John A.........              75               5             100             100             100             100
Pure Pumped                                                                                                     
 Storage                                                                                                        
 Licenses:                                                                                                      
02355Philadelphi                                                                                                
 a Electric                                                                                                     
 Company........         800,250         763,000         898,000         903,000         906,000         910,000
02716Virginia                                                                                                   
 Electric and                                                                                                   
 Power Company..       2,100,000       2,002,000       1,027,000       1,027,000       1,027,000       1,027,000
02735Pacific Gas                                                                                                
 & Electric                                                                                                     
 Company........       1,050,000       1,001,000       1,027,000       1,027,000       1,027,000       1,027,000
09423Summit                                                                                                     
 Energy Storage,                                                                                                
 Inc............       1,500,000       1,430,000               0               0               0              0 
----------------------------------------------------------------------------------------------------------------
Notes:                                                                                                          
--The maximum charge under ``Proposed Method Charge'' is $1,027,000.                                            
--This table addresses only the Commission's portion of the administrative annual charge statement.             
In FY 1993, an additional 7.5% was billed by the Commission for other agencies' administrative costs.           

Appendix B

    Note: This Appendix will not be published in the Code of Federal 
Regulations.

    The table in Appendix B shows illustrative annual charges for 
representative municipal and non-municipal licensees and exemptees 
based on the regulatory scheme described in the Alternative B 
regulatory text at the end of the NOPR. Thus, the table retains the 
current separate categories and formulae for major municipal and non-
municipal licensees. Minor licensees and exemptees are classified with 
the comparable groups of major licensees and their charges are assessed 
pursuant to the formulae currently used for those groups.

                         FY 1993 Annual Charges                         
------------------------------------------------------------------------
 Project ID and company                   Current method     Proposed   
          name             KW authorized      charge       method charge
------------------------------------------------------------------------
Exemptions:                                                             
06375Heed Co. Inc.......             116               0             100
08732Manassas, City of..           1,200               0             700
10113Perpetual Storage,                                                 
 Inc....................           5,000               0           5,300
Major Municipal                                                         
 Licenses:                                                              
02183Grand River Dam                                                    
 Authority..............          99,750          62,000          61,000
02216Power Auth of the                                                  
 State of New York......       2,815,500       1,361,000       1,027,000
02246Yuba County Water                                                  
 Agency.................         361,875         225,000         220,000
Major Non-Municipal                                                     
 Licenses:                                                              
01025Safe Harbor Water                                                  
 Power Corp.............         424,650         504,000         595,000
01390Southern California                                                
 Edison Co..............           3,015           3,600           4,000
01971Idaho Power Company       1,166,925       1,474,000       1,027,000
02071Pacificorp DBA Utah                                                
 Power & Light..........         105,000         146,000         178,000
02408Alabama Power Co...          57,975          81,000          99,000
Minor Municipal                                                         
 Licenses:                                                              
03777Rollingsford, Town                                                 
 of (NH)................           1,493             100             900
06514Marshall, City of                                                  
 (MI)...................             323              22             200
11006Lewiston, City of                                                  
 (ME)...................             998              67             600
Minor Non-Municipal                                                     
 Licenses:                                                              
07242STS Hydropower,                                                    
 Ltd....................           1,125              75           1,200
07656Dodson, John A.....              75               5             100
Pure Pumped Storage                                                     
 Licenses:                                                              
02355Philadelphia                                                       
 Electric Company.......         800,250         763,000         845,000
02716Virginia Electric                                                  
 and Power Company......       2,100,000       2,002,000       1,027,000
02735Pacific Gas &                                                      
 Electric Company.......       1,050,000       1,001,000       1,027,000
09423Summit Energy                                                      
 Storage, Inc...........       1,500,000       1,430,000              0 
------------------------------------------------------------------------
Notes:                                                                  
--The maximum charge under ``Proposed Method Charge'' is $1,027,000.    
--This table addresses only the Commission's portion of the             
  administrative annual charge statement. In FY 1993, an additional 7.5%
  was billed by the Commission for other agencies' administrative costs.
                                                                        

Appendix C

    Note: This Appendix will not be published in the Code of Federal 
Regulations.


    The table in Appendix C shows the approximate amounts currently 
assessed to certain categories of licensees and exemptees, the 
estimated amounts that would be assessed under the methodology applied 
in Appendix A, and the estimated amounts that would be assessed under 
the methodology applied in Appendix B.

                                 Totals by Alternative and Category--Appendix A                                 
----------------------------------------------------------------------------------------------------------------
                   Adm Assessed       Year 1          Year 2          Year 3          Year 4        Appendix B  
----------------------------------------------------------------------------------------------------------------
Exemption.......               0         200,000         400,000         600,000         800,000         600,000
Maj Muni Lic....       8,600,000      10,700,000      11,700,000      12,700,000      13,500,000       8,300,000
Min Muni Lic....           3,000          16,000          27,000          37,000          47,000          25,000
Maj NonMuni Lic.      24,600,000      25,600,000      24,000,000      22,400,000      20,900,000      28,200,000
Min NonMuni Lic.          13,600          69,000         116,000         160,000         202,000         187,000
Pure Pumped Sto.      13,400,000       9,300,000       9,300,000       9,300,000       9,300,000       9,000,000
Mixed PS/conv...       3,000,000       3,500,000       3,500,000       3,600,000       3,600,000       3,200,000
----------------------------------------------------------------------------------------------------------------

[FR Doc. 94-2318 Filed 2-1-94; 8:45 am]
BILLING CODE 6717-01-P