Federal Register, Volume 60 Issue 197 (Thursday, October 12, 1995)

[Federal Register Volume 60, Number 197 (Thursday, October 12, 1995)]
[Notices]
[Pages 53181-53184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25222]

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DEPARTMENT OF ENERGY
Western Area Power Administration

Record of Decision for the Energy Planning and Management Program

AGENCY: Western Area Power Administration, DOE.

ACTION: Record of decision.

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SUMMARY: The Department of Energy, Western Area Power Administration
(Western) completed a draft and final environmental impact statement
(EIS), DOE/EIS-0182, on its Energy Planning and Management Program
(Program). Western is publishing this Record of Decision (ROD) to adopt
the Program, which will require the preparation of integrated resource
plans (IRP) by Western's long-term firm power customers, and establish
a framework for extension of existing firm power resource commitments
to customers.

DATES: Western will proceed to take action with the publication of this
ROD. All parties who have previously expressed an interest in the
Program will be notified and copies of the ROD made available to them.

FOR FURTHER INFORMATION CONTACT: Robert C. Fullerton, Western Area
Power Administration, P.O. Box 3402, A3100, Golden, CO 80401-0098,
(303) 275-1610.

SUPPLEMENTARY INFORMATION: Western has prepared this (ROD) pursuant to
the National Environmental Policy Act of 1969 (NEPA), Council on
Environmental Quality NEPA implementing regulations (40 CFR Parts 1500-
1508), and DOE NEPA implementing regulations (10 CFR Part 1021). This
ROD is based on information contained in the ``Energy Planning and
Management Program Environmental Impact Statement,'' DOE/EIS-0182, and
related coordination with agencies, power customers, interested groups,
and individuals. Western has considered all comments received on the
proposed Program in preparing this ROD. The final Program also
implements the provisions of section 114 of the Energy Policy Act of
1992 (EPAct), Public Law 102-486.

Background

Western proposed the Program in concept on April 19, 1991 (56 FR
16093). The goal of the Program was, and is, to require planning and
efficient energy use by Western's long-term firm power customers and to
extend Western's firm power resource commitments as contracts expire.
Western published its notice of intent to prepare an EIS in the Federal
Register on May 1, 1991 (56 FR 19995).
Combined public information/environmental scoping meetings on the
proposed Program were held in seven states in June 1991. Based on the
feedback received from these meetings, Western developed alternatives
to be analyzed in the EIS. Public alternatives workshops were held in
eight cities in Western's service area during March and April 1992.
President Bush signed EPAct into law on October 24, 1992. Section
114 of EPAct requires the preparation of IRPs by Western's customers,
and amends Title II of the Hoover Power Plant Act of 1984. Western
adjusted its proposed Program to fully incorporate the provisions of
this law.
The draft EIS was printed and distributed during March of 1994.
Notices of availability for the draft EIS were published in the Federal
Register by Western on March 31, 1994 (59 FR 15198), and by the
Environmental Protection Agency (EPA) on April 1, 1994 (59 FR 15409).
Eight public hearings were held throughout Western's service area
during the 45-day public comment period. Western did not identify a
preferred alternative in the draft EIS, but solicited input from
interested parties and the public as to what they thought the
appropriate alternative should be.
Because the Program is also a rule-making action, Western conducted
a public process under the Administrative Procedure Act (APA),
coordinated with the ongoing NEPA process. A notice of the proposed
Program was published in the Federal Register on August 9, 1994 (59 FR
40543), with seven public information/comment forums held at various
locations during September 1994.
With input from oral and written comments from both the NEPA and
APA processes, Western modified the EIS alternatives where appropriate,
and revised the draft EIS. The final EIS was distributed to the public
on June 27, 1995. The EPA notice of availability was published on July
21, 1995 (60 FR 37640). The final EIS identified an agency preferred
alternative, a combination of features from Alternatives 5 and 6, as
presented in the draft EIS. The alternatives considered in the EIS are
described in the following section.

Alternatives

The EIS evaluated a total of 13 alternatives, including a no-action
alternative. All but the no-action alternative comprised different
approaches to implementing the proposed Program. The two parts of the
proposed Program are the IRP provision and the Power Marketing
Initiative (PMI). The IRP provision requires customers to prepare IRPs,
and establishes administrative procedures and requirements. Small
customers could be exempt from the IRP requirement, but would still
have to accomplish some resource planning on a simpler scale as needed.
Options for the PMI include PMI Extensions, PMI Limited Extensions,
and PMI Non-extensions. These options, which are explained more fully
in the EIS, include varying amounts of existing resources (from 90 to
100 percent of the present commitments) that would be extended to
Western's power customers, varying the lengths of contracts (from 10 to
35 years), determining the existence and size of a resource pool
ranging from 0 to 10 percent, establishing options for how pooled
resources would be generally allocated, and setting penalties for
noncompliance.
The alternatives in the EIS consisted of various reasonable
combinations of the above components. The summary of the EIS contains a
table, Table S.3, which concisely describes the principal attributes of
each alternative. That table is reprinted here. The no-action
alternative assumes the continuation of Western's Guidelines and
Acceptance Criteria for the Conservation and Renewable Energy Program.
The alternatives are not described in further detail here, as they are
combinations of the components discussed above, and the EIS analysis
did not reveal any important differences in impacts among the
alternatives, except with the no-action alternative.
All alternatives had positive impacts when compared to no action,
as each alternative would encourage energy efficiency on the part of
Western's customers. The predicted effect of the Program within
Western's service territory is reduced energy usage of approximately 2
to 6 percent in the year 2015, depending on the alternative. Western's
customers are forecast to use 5 to 15 percent less energy in 2015,
depending on the alternative. Within Western's service territory, the
savings varies from area to area, depending primarily on the amount of
conservation activity already accomplished and the number and type of
existing energy-efficient buildings.

[[Page 53182]]

The energy saved reduces the need for generation which, in turn,
reduces pollution as compared with the no action alternative. Although
small when compared with regional generation needs, the reduction of
emissions in absolute terms is important. A typical 500-megawatt coal
plant produces about 2,600 tons of sulphur oxides, 5,200 tons of oxides
of nitrogen, 500 tons of total suspended particulates, and 3.2 million
tons of carbon dioxide annually. The Program alternatives are estimated
to reduce annual emissions by the equivalent of one to two such coal
plants in 2015.
With the exception of the no-action alternative, the effects among
alternatives are very similar, positive, and in many cases within the
level of uncertainty of the analyses. The summary tables of impacts
included in the EIS (Tables S.5 and S.6) show that each alternative
except the no-action alternative is environmentally preferable in some
impact category. Because of the small differences in impacts, their
positive nature, and the uncertainty inherent in the future
projections, none of the alternatives was clearly superior to the
others in terms of overall environmental impact. Therefore, although
none of the action alternatives can be regarded as environmentally
preferable overall, each of them is environmentally preferable when
compared to the no-action alternative.

Scoping Issues Not Addressed

A number of issues were raised during the scoping process that were
determined to be outside the scope of the EIS. These issues included
transmission access, incentive rates and rate design, and river and dam
operations. Western already has an open transmission access policy.
Rates and rate design are accomplished under a separate public rate-
setting process as set forth in 10 CFR 903, and are not a part of a
power marketing plan. River and dam operations are not determined by
Western, but by the operating agencies, usually the Bureau of
Reclamation (Reclamation) or the Corps of Engineers.

Modifications to the Preferred Alternative

Two minor modifications to the preferred alternative were found to
be necessary to make the final EIS consistent with the final Program
regulations, which will be published in the Federal Register shortly
after publication of this ROD. The modifications are procedural or
administrative in nature, and do not affect the analyses in the EIS.
The first modification involves the timing of extension contract
offers to customers of the Pick-Sloan Missouri Basin Program-Eastern
Division and the Loveland Area Projects. The EIS indicates that
extension contracts would be offered upon publication of the ROD in the
Federal Register, subject to subsequent approval of the submitted IRP/
small customer plan. Under the final rule contracts signed pursuant to
the PMI would not be subject to termination if an IRP/small customer
plan is disapproved. In recognition of the fact that extension
contracts will make the penalty provisions of section 114 of EPAct
applicable to customers immediately, the final rule will allow
extension contracts to be unconditionally offered for execution no
sooner than the effective date of the final regulations.
The second modification involves the applicability of penalty
provisions for nonsubmittal of annual progress reports in a timely
manner, as described in the EIS. In the final regulations, the penalty
provision will not be applied to nonsubmittal or untimely submittal of
annual reports. There are two reasons for this change: EPAct does not
provide for application of a penalty in this circumstance, and a
penalty would be harsh and out of proportion to the importance of
annual report submittal.
In the final regulations, two decisions will be made that are
within ranges set forth in the preferred alternative. The term of
contract is established at 20 years, within the range of 18-20 years
analyzed for the preferred alternative. For the Pick-Sloan Missouri
Basin Program-Eastern Division and the Loveland Area Projects, the
final rule establishes an initial resource pool of 4 percent, with two
additional increments of up to 1 percent each, 5 and 10 years into the
extension term.

Responses to Late Comments on the Program

Several comment letters were received postmarked after May 16,
1994, the close of the comment period on the EIS, and too late to be
incorporated in the final EIS. The following section summarizes those
comments and addresses them.
1. Comment: Program implementation in Texas should mean less need
for energy, which would lead to less water demand for power generation
at the Falcon and Amistad projects. Texas law permits but does not
mandate integrated resource planning, and the Texas Public Utility
Commission has many IRP elements in place. Comprehensive IRP rules are
under consideration in Texas. Several utilities are experimenting with
IRP processes. Texas requires biennial filings of long-term forecasts
and capacity resource plans from all generating utilities, including
municipal utilities. Several utilities in Texas have achieved
significant demand-side management program impacts since 1981, and the
PUC has had a biennial energy efficiency reporting rule since August of
1984. The Texas PUC has not completed an IRP review process for any
utility. Two footnotes in Chapter 3 of the draft EIS refer incorrectly
to a point of contact at the Texas PUC. Table 3.9 in the draft EIS does
not give sufficient recognition to the status of IRP in Texas. The
draft EIS does not adequately emphasize the Texas PUC's requirement for
demand and supply-side solicitation as part of its power plant
licensing regulations (Texas Office of State-Federal Relations).
Response: Since Western's resources are favorably priced in
comparison to other sources of power, energy efficiency improvements
resulting from IRP implementation would result in conservation of
thermal resources or purchased electricity other than hydropower. No
impact on hydropower generation will take place.
The information on the status of IRP in Texas was largely derived
from national surveys that are regarded as authoritative in the utility
industry. Obviously, the best source of information on the status of
Texas PUC practices and regulations is the PUC itself. Western accepts
the information provided by this commenter as authoritative.
2. Comment: The direct environmental impacts of thermal generation
cannot be known until the location and projected emission levels are
known. In the absence of this information, we can only express our
concern about the potential impacts of locating plants in ozone
nonattainment areas in the state of Texas (Texas Natural Resource
Conservation Commission).
Response: Western agrees that the location of new generation is an
important factor that influences air quality. Western's Program will
increase efficient energy use and, compared with no action, will reduce
the need for new generation. Any entity proposing new thermal
generation for construction must apply for necessary permits from
appropriate authorities such as the State of Texas.
3. Comment: It is more practical and environmentally sound to make
contract extension and allocation decisions on a project-by-project
basis, as Western has

[[Page 53183]]
done in the past. A project-by-project approach will make it easier for
Western to coordinate its efforts with those of the Bureau of
Reclamation. The power contract extension alternatives proposed by
Western may create unrealistic expectations among Western's customers,
which may be difficult to satisfy in the event of future changes in the
operations of Reclamation dams. Decisions should not be made now on the
marketing of power during time periods more than ten years into the
future. Western's draft EIS may lock in resources to an inappropriate
degree. Western needs to analyze the environmental effects of (1)
rewarding customers that conserve energy with a larger power
allocation, (2) providing power to entities that intend to meet future
power needs with fossil fuel-fired generation, and (3) providing more
Western power for fish and wildlife purposes. The impacts of increasing
the costs of Western's power also need to be evaluated (Bureau of
Reclamation).
Response: The final Program provides a general framework for
marketing Western's long-term firm hydroelectric resources. Many
project-specific determinations are necessary before any final
decisions can be made on marketing power. Such important issues as the
resource available for marketing in the future, the size of a resource
pool, any adjustments to the size of this pool, and allocation criteria
for new customers must be decided on a project-specific basis, with
public input and appropriate environmental documentation. Project-
specific decisions will need to be made on whether to apply the Power
Marketing Initiative to Western's projects in the future, such as the
Colorado River Storage Project and the Central Valley Project. All of
these decisions will be made in the future, and on a project-specific
basis. Western is not making decisions today about all of the specifics
of power marketing in the future.
The Program will not create unrealistic expectations among
Western's power customers. Project-specific extension percentages will
be applied to the marketable resource determined to be available at the
time future resource extensions begin. This approach will allow Western
to accommodate changes in operations by the generating agencies before
the extension term begins. The Program also allows Western to adjust
its marketable resources on 5 years' notice after the extension term
starts. This feature allows the flexibility to respond to changing
operations or hydrology. Western's customers have been made aware of
these Program features.
Suggestions on how Western might allocate its power to new
customers will be addressed during project-specific allocation
processes in the future. For the two projects initially covered by the
Power Marketing Initiative, resource pool size was determined based
upon meeting a fair share of the needs of new customers within a
project-specific marketing area. For other projects, the fair share
needs of new customers will be determined at a time closer to the
expiration date of existing contracts.
Rates are not analyzed as part of the Program EIS, as they are
outside the scope of the Program. Rate issues should be addressed
within Western's long-established public ratemaking process.
At a congressional hearing on June 16, 1994, the Commissioner of
Reclamation expressed support for the Program proposal as documented in
the testimony of Deputy Secretary of Energy White. At the hearing,
Commissioner Beard stated that Deputy Secretary White's testimony
``reflects a very thorough attempt to look at the problem and to come
forward with * * * a very unique and innovative set of solutions.''
Beard continued: ``I think the changes that [Deputy] Secretary
White is recommending and that Western is going to be pursuing will
help us * * * be able to deal with future problems * * * quicker and
faster.'' WAPA Allocation of Hydroelectric Power: Oversight Hearing
before the Subcommittee on Oversight and Investigations of the
Committee on Natural Resources, House of Representatives, 103rd
Congress, Second Session at 141-42 (June 16, 1994).

Decision

Western has selected the preferred alternative as described in the
final EIS, with the modifications described earlier in this document,
as its proposed action. This alternative best meets Western's Program
requirements and the needs of Western's customers, while being
responsive to the comments received on the proposed Program. The
proposed action falls between Alternatives 5 and 6, described in the
EIS, in terms of its component provisions. The specific impacts of the
proposed action will fall somewhere between those identified for
Alternatives 5 and 6, which are very similar to each other. Essential
elements of the proposed action include requiring IRPs for Western's
long-term firm power customers, with a small customer provision for
those customers with total energy sales or usage of 25 gigawatt-hours
or less. The extension period for Federal power resources will be 20
years.
Project-specific extensions over the entire contract term will be
not less than 94 percent of the resource determined to be available at
the time new contracts are signed for the Pick-Sloan Missouri Basin
Program--Eastern Division and the Loveland Area Projects; the
percentage will be determined later for other projects. A resource pool
of up to 6 percent will be established for these two projects,
consisting of an initial pool of 4 percent, with additional withdrawal
opportunities of up to 1 percent 5 and 10 years into the contract term.
The pool may be used for allocations to new customers, customer
development of new technologies for conservation or renewable
resources, and contingencies. Decisions on pools for other projects
will be made at a later date.
Allocations may be adjusted on 5 years' notice for changes in
operations and hydrology. This does not mean that any changes in
operations will have to be deferred for 5 years; changes can be
implemented immediately. Any shortfall in generation will be replaced
with purchases or other resources until allocation adjustments are
made. Purchased resources will be evaluated in an internal IRP process
recently adopted through a separate public process. Project use
withdrawals will be made in accordance with the principles set forth in
existing marketing plans and contracts. The Program will carry the
progressive penalty provisions prescribed in EPAct.
The IRP provision will be effective for all of Western's customers
following publication of the final rule under the APA process. The PMI
will be in effect for the Pick-Sloan Missouri Basin Program--Eastern
Division and the Loveland Area Projects initially. Its application to
the Salt Lake City Integrated Projects marketing plan will be
determined following completion of the separate NEPA process currently
under way on marketing before 2004. PMI application to the Central
Valley Project will be evaluated during the project-specific NEPA
process for the marketing of power after the year 2004. Application of
the PMI to projects in the Phoenix Area will be considered closer to
the time the existing power contracts expire.
No Mitigation Action Plan will be prepared for the Program, as the
proposal involves no construction, and no mitigation was identified as
necessary to implement the Program.

[[Page 53184]]

Issued at Golden, Colorado, September 21, 1995.
J.M. Shafer,
Administrator. .......................................................

Table S.3.--Summary of Energy Planning and Management Program Alternatives Including the Preferred Alternative
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No action Program alternatives
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Program PMI extension PMI limited extension PMI non-extension Preferred
components 1 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2 3 4 5 6 7 8 9 10 11 12 13
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EMP.............. C&E, G&AC......... IRP............... IRP............... IRP............... IRP with Small IRP with Small IRP with Small IRP............... IRP.............. IRP with Small IRP.............. IRP with Small IRP with Small
Customer Customer Customer Customer Customer Customer
Provision. Provision. Provision. Provision. Provision. Provision.
Extension Period. Varies^{a........... 15 yrs^{b........... 25 yrs^{b........... 35 yrs^{b........... 15 yrs^{b........... 25 yrs^{b........... 35 yrs^{b........... 25 yrs^{b........... 10 yrs^{c.......... 10 yrs^{c.......... Varies^{a.......... Varies^{a.......... 18-20 years.
Percentage Varies^{a........... 98%............... 95%............... 90%............... 98%............... 95%............... 90%............... 98%............... 100%^{e............ 100%^{e............ Varies^{a.......... Varies^{a.......... Varies^{f
Allocation.
Resource Pool.... None^{d............. 2%................ 5%................ 10%............... 2%................ 5%................ 10%............... 2%................ None^{e............ None^{e............ None^{d............ None^{d............ Varies^{g
Adjustment None^{d............. Limited........... 1 adjust.......... 2 adjust.......... Limited........... 1 adjust.......... 2 adjust.......... 5 yr notice....... None^{e............ None............. None^{d............ None^{d............ 5 year notice.
Provisions.
Penalty Provision 10% Withdrawal....
(11) 10% to 30%
surcharge, see
Figure 2.1 and
Table 2.4.
Optional 10%
power reduction.
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^{aTo be determined by project-specific marketing plan.
^{bContract extension begins at time of current expiration. Contracts are excluded upon receipt of IRP by Western.
^{cContract extensions are executed at the time of IRP approval; extension will provide resource certainty to a customer for 10 years from the date of IRP approval. After 10 years, power marketing will be determined by project-specific marketing plans.
^{dUnless provided by project-specific marketing plan.
^{eWestern assumes that the percent allocation after the limited extension period will be determined by project-specific marketing plans. For purposes of analysis, this draft EIS assumes a 90% allocation after the expiration of the 10-year extension period.
^{fProject-specific extensions of not less than 94% for the Pick-Sloan Missouri Basin Program-Eastern Division and the Loveland Area Projects; percentage to be determined for other projects.
^{gTotal resource pool of up to 6% for the Pick-Sloan Missouri Basin Program-Eastern Division and Loveland Area Projects, which includes both an initial pool followed by additional withdrawal opportunities 5 and 10 years into the contract; other projects to be determined.

[FR Doc. 95-25222 Filed 10-11-95; 8:45 am]
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