[Federal Register Volume 60, Number 111 (Friday, June 9, 1995)]
[Notices]
[Pages 30533-30535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14208]



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DEPARTMENT OF ENERGY
Western Area Power Administration


Final Principles of Integrated Resource Planning for Use in 
Resource Acquisition and Transmission Planning

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of final principles.

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SUMMARY: The Western Area Power Administration (Western) will use 
principles of integrated resource planning (IRP) in its acquisition of 
resources (supply-side and demand-side) and in its transmission 
planning. Western published proposed principles for public 
consideration in the Federal Register on December 6, 1994 (59 FR 
62724). After considering public comment on that proposal, Western has 
adopted the final principles of IRP contained in this notice as the 
policy under which project-specific resource acquisition and 
transmission planning procedures will be developed. These project-
specific procedures will be developed through separate public 
processes.

DATES: The final principles of IRP will be effective on July 10, 1995.

BACKGROUND: On August 9, 1994, Western provided notice of its proposed 
Energy Planning and Management Program (Program), 59 FR 40543, 
concerning requirements for Western's customers to undertake integrated 
resource planning consistent with the statutory requirements of the 
Energy Policy Act of 1992 (section 114 of the Energy Policy Act, 
codified at 42 U.S.C. Secs. 7275-7276c). In that notice, Western 
committed to develop and use principles of IRP in its own resource 
acquisition and transmission planning. The separate public process to 
develop principles of IRP began with publication of draft principles of 
IRP in the Federal Register on December 6, 1994. A public information 
and comment forum was held in Denver, Colorado, on January 12, 1995, to 
explain the proposed principles and receive comments on the proposal. 
Written comments on the proposal were received through March 7, 1995.
    The final Western principles of IRP outlined in this notice will be 
used by Western in its resource acquisition and transmission planning 
and differ from those proposed in the Program for Western's customers. 
Western's resource acquisitions are primarily short-term purchases of 
supplemental resources to firm variable hydropower generation and are 
not acquisitions of resources to meet long-term load growth. The 
principles of IRP also have been adapted to Western's transmission 
planning process, which does not deal with new generation resources, 
only new or upgraded transmission facilities.
    Western currently is involved in other public processes that can 
have an impact on future purchase power and transmission requirements. 
The final principles of IRP will be applied when acquiring resources or 
planning transmission related to the decisions from these other public 
processes. These principles will serve as the policy under which 
specific procedures are developed as each project identifies the need 
to acquire resources or increase Western's transmission capability.

RESPONSE TO COMMENTS: Western received 4 oral comments at the January 
12, 1995, public meeting and 11 comment letters on the proposed 
principles of IRP published December 6, 1994. The comments received and 
Western's responses follow.
    1. Comment: The scope of the principles of IRP should be broadened 
to possibly include examination of project-use loads.
    Response: Western is responsible for marketing the power surplus to 
the needs of the Bureau of Reclamation (Reclamation) projects. 
Reclamation has jurisdiction for operation of the projects. However, we 
do agree that there may be opportunities for collaborating with 
Reclamation to expand the IRP process to include, where feasible, 
energy efficiency improvements at project-use facilities. Western and 
Reclamation completed a study in 1992 that indicated very limited 
opportunity for cost-effective improvements at Central Valley Project 
project-use facilities. However, Western may continue to evaluate such 
opportunities as part of project-specific resource acquisition 
evaluation criteria.
    2. Comment: Western should increase cooperation with Reclamation on 
planning studies to extract the maximum possible benefit out of the 
projects to reduce the need for additional purchases.
    Response: We agree with this comment. As part of the National 
Performance Review, Reclamation is reviewing its power functions and 
operations. Western is cooperating in this effort.
    3. Comment: The evaluation of supply-side and demand-side 
alternatives requires some additional clarification of the interplay 
between the customer demand-side management (DSM) and the Western DSM 
programs.
    Response: The evaluation of demand-side alternatives for customers 
is generally focused on use of DSM to impact the customer's total load 
to reduce or delay resource acquisitions. Since Western is a partial 
requirements supplier for most of its customers, the evaluation of 
Western DSM alternatives will focus upon whether DSM will impact that 
portion of a customer's load supplied by Western (Western's contract 
obligation) to reduce the customer's need for the Western resource, 
which may, in some cases, reduce Western's resource acquisitions. 
Western DSM alternatives also may include improvements that reduce 
losses or project use energy efficiency improvements, if such 
alternatives reduce the amount of energy that Western needs to acquire 
to meet its contract commitments. A customer DSM activity that reduces 
only the amount a customer self-generates or purchases from an 
auxiliary supplier has no impact on Western's obligation and, 
therefore, is not a Western DSM alternative under these principles.
    4. Comment: Western's proposal to apply principles of IRP to 
resource acquisition and transmission planning was strongly supported 
by one commenter, and Western was commended for developing an internal 
IRP process by two commenters at the January 12, 1995, public meeting.
    Response: Western appreciates the support of these commenters.
    5. Comment: Several commenters expressed concerns that these 
principles of IRP should not interfere with or duplicate existing 
partnership efforts between our firm power customers and Area Offices 
for resource acquisition and transmission planning.
    Response: Western fully supports the on-going processes between 
Area Offices and customers relating to cost containment, transmission 
planning and resource acquisition. However, one of the basic 
foundations of IRP is full public involvement in resource decisions. To 
the extent that on-going partnership processes, such as the Glen Canyon 
Replacement Power process, include involvement by all interested 
stakeholders, those processes can integrate these final principles of 
IRP within their decision making process without additional effort.
    6. Comment: The Salt Lake City Area replacement power process for 
Glen Canyon resources provides for each [[Page 30534]] customer to 
decide if it wants its lost resource to be replaced by Western or by 
the customer. Principle number I.2 would violate this by taking the 
decision away from the customer and letting it be made by interested 
stakeholders.
    Response: Western has no intent to overturn any agreements in the 
Glen Canyon power replacement process. At the January 12, 1995, public 
meeting, Western recognized that ``* * * the extent of Western's future 
resource acquisitions * * * will depend on the choices made by long-
term firm power customers to arrange their own purchases of firming 
energy or to have Western acquire firming resources for them.'' 
Principle number I.2 has been modified to avoid confusion by deleting 
the provision for public input into the necessity for resource 
acquisitions and only provide for public input in the development of 
criteria to be used in evaluating power resource alternatives. This 
allows customers to decide whether or not Western should acquire 
firming resources for them and allows all interested stakeholders input 
into the criteria for evaluating resource alternatives consistent with 
the intent of integrated resource planning.
    7. Comment: Several commenters questioned the costs and benefits to 
Western and the power customers of yet another public process.
    Response: It is not Western's intent to add the additional cost and 
burden of yet another process. It is, however, Western's intent to 
fully integrate the principles of IRP into ongoing Western-Customer 
partnership processes and to ensure that all stakeholders have an 
opportunity to provide input into Western's resource acquisition and 
transmission planning processes. Western believes that making informed, 
least-cost resource acquisition and transmission planning decisions 
with involvement by all interested stakeholders will be worth the 
effort.
    8. Comment: Principles of IRP will become less useful as the 
industry becomes more competitive.
    Response: Western believes that the principles of IRP contained in 
this notice will facilitate Western's competitiveness by helping it 
make informed decisions with input from all interested stakeholders. In 
addition, the principles of IRP can be used to identify uncertainties 
associated with the more competitive generation sector of the industry, 
thereby providing the mechanism to evaluate risks associated with 
resource acquisition and transmission planning decisions.
    9. Comment: These principles could duplicate, delay, and complicate 
Western's participation in transmission projects proposed through a 
regional transmission group, such as the Western Regional Transmission 
Association (WRTA) and the Southwest Regional Transmission Association 
(SWRTA).
    Response: Western does not believe that these principles will 
impede its ability to participate in regional transmission groups. It 
is Western's intent to integrate the principles of IRP into Western's 
ongoing processes in order to ensure that transmission plans proposed 
by Western will have the benefit of input from all interested 
stakeholders. Western has joined WRTA and SWRTA. Both groups will 
promote coordinated planning and efficient use of transmission capacity 
and will provide another means for involvement by Western's customers. 
As appropriate, Western can invite other interested parties to attend 
SWRTA meetings as guests of Western. Additionally, both WRTA and SWRTA 
allow for State regulatory commissions' involvement as ex officio 
members. It is anticipated that some form of regional transmission 
group will be established in the Mid-Continent Area Power Pool. This 
will also facilitate public involvement in considering Western's future 
transmission needs.
    10. Comment: Western needs to be creative about DSM when applying 
these principles to actual decisions.
    Response: We agree. This issue will be addressed during Area Office 
development of resource evaluation criteria at the time that a resource 
acquisition appears to be necessary.
    11. Comment: Customers and the broader public should have 
opportunity to comment before Western signs long-term purchase power 
contracts.
    Response: These principles provide opportunity for all interested 
stakeholders to participate in the development of resource evaluation 
criteria by an Area Office for project-specific resource acquisitions. 
In addition, customers and the broader public will continue to have an 
opportunity to comment on power marketing plans which determine the 
need for long-term purchase power contracts. It is unnecessary and 
duplicative to have an additional comment opportunity on individual 
contracts implementing the evaluation criteria decisions.
    12. Comment: The transmission planning evaluation criteria should 
include the following criteria that were discussed at the January 12, 
1995, public meeting: (1) increased revenues from new transmission 
exceed costs; (2) customers benefit sufficiently that they support the 
project; or (3) new facilities are funded directly by others.
    Response: Western does not feel that it is appropriate to include 
these criteria in the final principles of IRP since they are part of 
Western's internal decision rules as currently adopted in its strategic 
planning process that may change from time to time based on customer 
feedback or Department of Energy or Congressional direction. However, 
Western is committed to our strategic planning process which currently 
includes these evaluation criteria. The intent of the principles of IRP 
as applied to transmission planning is to foster wide and early public 
involvement and a free exchange of ideas to develop alternatives that 
best meet regional needs.
    13. Comment: Western should change the scope to specify purchases 
for 2 years or longer or recurring purchases of more than 250 
gigawatthours per year.
    Response: Western believes such a requirement in the scope would 
reduce the flexibility of the Area Offices and interested stakeholders 
to collaboratively determine the amount of recurring purchases that 
would justify use of these principles. At the January 12, 1995, 
meeting, Western described a ``continuous'' or ``recurring'' purchase 
to mean, ``* * * a resource need, capacity and/or energy of a fixed 
quantity and seasonal pattern and over an extended period, usually 
longer than 5 years.'' Western believes that it is important to 
maintain flexibility within these principles.
    14. Comment: The principles of IRP do not apply to transmission 
planning.
    Response: Western believes that the principles of IRP do apply for 
public participation and consideration of alternatives to construction.
    15. Comment: One commenter asked several questions concerning 
implementation of these principles: What are classified as renewables? 
Will decentralized, smaller resources, such as PV, be considered as 
renewables? Will public education and incentives for conservation be 
included in DSM programs? Will global climate change needs be included 
in considerations of environmental impact?
    Response: Western believes that consideration of these important 
issues at this time is beyond the scope of these principles. However, 
these issues will be considered in Area Office development of 
evaluation criteria for specific resource acquisition or transmission 
planning activities.

SCOPE: The principles of IRP will apply specifically to:
    1. Resource acquisitions involving a commitment to purchase a 
resource [[Page 30535]] continuously or a commitment to make recurring 
purchases. Normally, formal principles will not be applied to 
unpredictable seasonal purchases, day-to-day economy energy purchases, 
and other short-term transactions.
    2. New or upgraded transmission system construction with a 1995 
total cost estimate in excess of $5 million for an individual project. 
This 1995 cost level will be adjusted each year using the construction 
cost index. Normally, formal principles of IRP will not be applied to 
transmission facilities needed for reliability. Transmission facilities 
needed for reliability will be based on mitigating problems related to 
power system operations or replacing unsafe, aged, worn out, or 
inefficient equipment.
    Where practicable, principles of IRP will also be applied 
informally to other Western transmission projects and/or resource 
acquisitions.

PROPOSED PRINCIPLES OF INTEGRATED RESOURCE PLANNING:
    I. Resource Acquisition Principles: Western's resource acquisition 
activities will be determined by project-specific power marketing 
plans, hydropower production capability, and the application of the 
following proposed principles of IRP:
    1. Western will consider a full range of resource options, both 
supply-side and demand-side, as well as renewable resource options.
    2. On a project-by-project basis, Western, through a public process 
involving interested stakeholders, will develop criteria to be used in 
evaluating power resource alternatives.
    3. Evaluation criteria will address cost, environmental impact, 
dependability, dispatchability, risk, diversity, and the ability to 
verify demand-side alternatives. Evaluation criteria will be reviewed 
as the need for resources changes or when long-term commitments to 
purchase power expire.
    4. Evaluation criteria will be consistent with Western's power 
marketing policy, which states that Federal power is to be marketed in 
such a manner as to encourage the most widespread use thereof at the 
lowest possible rates to consumers consistent with sound business 
principles. The policy, found in Delegation Order No. 0204-108, is 
derived from statutes authorizing the sale of power from both 
Department of the Army and Department of the Interior hydroelectric 
projects. These statutes include section 5 of the Flood Control Act of 
1944, 16 U.S.C. 825 and section 9(c) of the Reclamation Project Act of 
1939 .
    5. Resource acquisition planning will be consistent with power 
marketing plans and associated contractual obligations.
    6. Resource acquisition decisions will be documented and made 
available to Western's power customers and the public.

    II. Transmission Planning Principles: Western's transmission 
planning is conducted to assess the capability of the Federal 
transmission system to provide adequate and reliable electric service 
to its customers and the interconnected power grid. The principles of 
IRP that will apply to Western's transmission planning are as follows:
    1. Western will conduct early and wide public involvement to 
confirm the purpose and need of a proposed transmission project. 
Western proposes that a public meeting be held early in the planning 
process once the need for system modifications has been identified and 
prior to start of the National Environmental Policy Act of 1969 (NEPA) 
process. To the extent appropriate, Western's use of principles of IRP 
for transmission planning will include existing forums and customer 
partnerships with regard to public involvement.
    2. At the public meeting, Western will describe the need to be met 
and seek comments on alternative ways to address the need, including 
demand-side management, new construction, or upgrade of existing 
facilities.
    3. Western will include opportunity for participation in the early 
and wide public involvement process by interested parties, including 
power customers, residents of the area, environmental groups, various 
resource suppliers, including renewable generation entities, and other 
transmission utilities in the area, as well as other participants in 
the proposed transmission project if it is a joint participation 
project.
    4. Alternatives that are reasonable will be initially evaluated for 
cost, general environmental impacts, and system reliability concerns in 
coordination with interested parties. Data from this initial evaluation 
will be included in the subsequent NEPA analysis.
    5. The results of this preliminary evaluation will be made 
available to Western's power customers and the public.

ENVIRONMENTAL EVALUATION: Methods, procedures, and criteria for 
implementing these principles of IRP and any related environmental 
effects will be project-specific. Western will conduct appropriate 
public processes under NEPA and its implementing regulations for these 
project-specific actions.

DETERMINATION UNDER EXECUTIVE ORDER 12866: DOE has determined this is 
not a significant regulatory action because it does not meet the 
criteria of Executive Order 12866, 58 FR 51735. Western has an 
exemption from centralized regulatory review under Executive Order 
12866; accordingly, no clearance of this notice by the Office of 
Management and Budget is required.

    Issued at Golden, Colorado, May 17, 1995.
J.M. Shafer,
Administrator.
[FR Doc. 95-14208 Filed 6-8-95; 8:45 am]
BILLING CODE 6450-01-P