[Federal Register Volume 59, Number 52 (Thursday, March 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6259]


[[Page Unknown]]

[Federal Register: March 17, 1994]


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DEPARTMENT OF ENERGY
Alaska Power Administration

 

Snettisham Surplus Power Marketing Plan

AGENCY: Alaska Power Administration, Department of Energy.

ACTION: Final surplus power marketing plan and call for application for 
power.

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SUMMARY: The final marketing plan for the sale of surplus energy from 
the Snettisham Project is published herein together with a discussion 
of the issues raised during the public comment process. Alaska Power 
Administration (APA) published the Draft Surplus Power Marketing Plan 
on January 7, 1994 (59 FR 1013), to start the process to establish 
allocations of surplus energy and surplus energy sales contracts for 
the Snettisham Project. The Marketing Plan is fully compatible with the 
Department of Energy's legislative proposal for APA divestiture which 
is currently undergoing Congressional consideration.

DATES: Applications for an allocation of surplus energy must be 
received in APA's Headquarters Office by the close of business on May 
6, 1994. See section II for further details.

ADDRESSES: Applications for an allocation of surplus energy should be 
submitted to Mr. Michael Deihl, Alaska Power Administration, 2770 
Sherwood Lane, Suite #2B, Juneau, AK 99801.

FOR FURTHER INFORMATION CONTACT: Mr. Scott Willis, Alaska Power 
Administration, P.O. Box 020889, Juneau, AK 99802-0889, (907) 586-6963.

SUPPLEMENTARY INFORMATION:

Draft Surplus Marketing Plan--Snettisham Project

I. Background

    APA published the Draft Surplus Power Marketing Plan in the Federal 
Register on January 7, 1994 (FR 59 1013). A public information and 
comment forum was held January 18, 1994. Written comments were accepted 
until February 7, 1994. Two written comments were received. A 
discussion of the comments is presented in section III.
    APA has considered the comments received and is publishing herein 
the Final Surplus Power Marketing Plan. This Federal Register notice 
also formally invites requests for allocation of surplus energy in 
accordance with the plan. Based on the provisions of the Plan, APA will 
then allocate surplus energy and sign contracts with customers 
receiving allocations.
    An Environmental Assessment was prepared for these power marketing 
activities and a Finding of No Significant Impact was issued by the 
Department of Energy.

II. Application Procedures

    APA formally invites requests for allocations of surplus energy 
from the Snettisham Project from qualified applicants. Applicants 
should advise APA's Administrator in writing of their requests. Written 
requests must be received at the APA Headquarters Office at 2770 
Sherwood Lane, Suite #2B, Juneau, AK 99801, by the close of business on 
May 6, 1994. Applicants must identify the amount of energy desired.

III. Discussion of Public Comments and Summary of Revisions

    APA received two written comments on the Draft Surplus Power 
Marketing Plan. The points raised in the comments are discussed below.
    1. Comment: As originally proposed, a ``major industrial load'' 
would have been one which was not currently a firm customer of AEL&P, 
does not conduct utility type operations, and which has the capability 
to meet its own energy requirement in the absence of Snettisham energy.
    Both commentators objected to the definition excluding a potential 
major industrial load, such as a mine, simply because it is presently a 
firm customer of AEL&P for a small amount of firm energy used at an 
office facility. They proposed that the definition be changed so as not 
to preclude such loads.
    One commentator suggested that the definition be strengthened as to 
the requirement for being able to meet its own energy requirement. They 
pointed out that a qualified load should be able to meet its own 
baseload energy requirement rather than its peak requirements or its 
requirement during intermittent curtailment of Snettisham energy.
    Discussion: APA believes these suggestions clarify the intent of 
the marketing plan. As revised, a major industrial load is one which 
does not conduct utility-type operations and whose major load is not 
currently served as a firm load by AEL&P. The major industrial load 
must also have the capability to meet its own baseload energy 
requirement in the long-term absence of Snettisham energy.
    2. Comment: One commentator felt that there was apparently a 
conflict between the provision in section C that ``entities receiving 
an allocation of Snettisham resources will be offered an electric 
service contract . . .'' and the provision in section B.3. that 
``allocations will be made to AEL&P.'' They asked for clarification as 
to whether a major industrial load would enter into a contract with 
APA, with AEL&P, or with both.
    Discussion: Potential surplus energy customers are encouraged to 
work directly with AEL&P. In this case, AEL&P will make the request, 
the allocation will be to AEL&P, and the contract will be between APA 
and AEL&P. The major industrial customer and AEL&P will presumably have 
their own contractual arrangements. As indicated in the plan, if 
service through AEL&P is demonstrated to be infeasible, then APA will 
consider an allocation and contract directly with the major industrial 
customer.
    3. Comment: The contracts for surplus energy should not only 
include assurance that the allocation will continue after divestiture 
with APA, but that the rates charged for energy will continue also.
    Discussion: The contracts will contain language to assure that the 
allocation continues, but will not contain language which binds the new 
owner to a given rate structure. The existing purchase agreement for 
Snettisham was negotiated to assure only that allocations would 
continue, but that the new owner would set their own rates. The 
contracts will not ``guarantee'' rates for APA, but will allow APA to 
adjust rates within its own procedures and guidelines. This has been 
clarified in the final plan.
    4. Comment: The allocation reservation fee should be refundable to 
the extent that allocated energy is not made available for taking 
during the year.
    Discussion: This has been clarified in the final plan.
    5. Comment: APA should not allocate energy among competing 
applicants by dividing it equally, but should be made some other way, 
such as proportionate to the size of the requests, or by benefit to the 
local economy, etc.
    Discussion: There are any number of ways to allocate a limited 
resource. APA expects that if there are competing requests for 
allocation, they will all be in excess of the resource available and 
they will all be based on estimates of future loads rather than 
historic use. For this reason APA will divide the resource equally as 
explained in the plan.

IV. Final Surplus Power Marketing Plan

A. Conditions for Allocation
    Allocations of surplus energy will be made in accordance with the 
provisions of the Marketing Plan. These provisions include:
    1. No energy will be allocated for export outside the Juneau market 
area (that is, the AEL&P service territory) without firm plans and 
commitment to finance and build the necessary transmission facilities.
    2. In allocating surplus energy, APA will give preference to public 
bodies and cooperatives who conduct utility-type operations.
    3. Surplus energy not allocated to preference customers may be 
available to serve major industrial loads. For this marketing plan, a 
major industrial load is one which does not conduct utility-type 
operations and whose major load is not currently served as a firm load 
by AEL&P. The major industrial load must also have the capability to 
meet its own baseload energy requirement in the long-term absence of 
Snettisham energy. Major industrial loads are encouraged to work 
directly with AEL&P so that AEL&P can request an allocation to serve 
their needs. In this case, allocations will be made to AEL&P. APA will 
consider requests for direct service of major industrial loads only if 
it is demonstrated that service through the utility is infeasible.
B. Contract Provisions
    Entities receiving an allocation of Snettisham resources will be 
offered an electric service contract which will include the following 
provisions:
    1. Contracts will be for a period of 20 years or less beginning at 
contract execution. Contracts for less than 20 years may include an 
option to extend the period up to a total length of 20 years. Contracts 
will be compatible with the proposed APA divestiture. Contracts will 
contain language guaranteeing the continuation of the allocation after 
divestiture.
    2. Surplus energy will be marketed at the Snettisham firm rate. The 
rate is presently 3.21 cents/kwh and is subject to periodic review and 
adjustment.
    3. The contractor will be required to sign a contract within 270 
days of APA's letter granting an allocation.
    4. In order to reserve the allocation, the contractor will be 
required to deposit 10% of the expected cost of the following year's 
energy with APA. If the allocated energy is taken during the year, the 
deposit will be credited toward the cost of the energy. To the extent 
that energy is available for delivery, if the allocation is not 
completely taken the deposit is non-refundable. In any year, energy 
reserved in this way but not taken by the contractor may be marketed by 
APA. In any case, an applicant must be ready, willing, and able to take 
initial delivery of power by January 1, 1997 or the allocation will be 
withdrawn and the energy reallocated.
    5. If the contractor has not committed to a 20-year contract, the 
contractor will be required to pay a one-time, non-refundable payment 
within 30 days after contract execution. This payment will be based on 
3% of the average estimated annual energy delivery during the years 
between the end of the contract period and the 20-year period times 
each year less than 20 years.

C. Amount Available for Allocation

    Firm energy output (energy available 9 years out of 10) from the 
Snettisham Project is estimated at 275 gwh/year. Secondary energy is 
estimated to vary from 0 to 100 gwh/year and average around 50 gwh/
year. This invitation is for requests for allocation for energy that is 
surplus to the needs of the Juneau community. An estimate of that need 
is shown in the table below. Applicants must be aware that these are 
only estimates and that the amount of energy required by the community 
may vary from these projections. In the event that there are competing 
requests from qualified applicants, the surplus energy will be divided 
equally among the applicants up to their maximum request. 

------------------------------------------------------------------------
                                                 Estimated    Estimated 
     Water community energy surplus: year       requirement   available 
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1994..........................................          232           93
1995..........................................          242           83
1996..........................................          250           75
1997..........................................          255           70
1998..........................................          258           67
1999..........................................          259           66
2000..........................................          260           65
2001..........................................          263           62
2002..........................................          264           61
2003..........................................          266           59
2004..........................................          267           58
2005..........................................          270           55
2006..........................................          271           54
2007..........................................          274           51
2008..........................................          275           50
2009..........................................          277           48
2010..........................................          278           47
2011..........................................          281           44
2012..........................................          282           43
2013..........................................          285          40 
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    Issued at Juneau, Alaska; February 24, 1994.
Lloyd A. Linke,
Director, Power Division.
[FR Doc. 94-6259 Filed 03-16-94; 8:45 am]
BILLING CODE 6450-01-P