[Federal Register Volume 62, Number 42 (Tuesday, March 4, 1997)]
[Notices]
[Pages 9763-9766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5256]


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DEPARTMENT OF ENERGY

Western Area Power Administration; Proposed Rates for Central 
Valley and California-Oregon Transmission Project

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rates.

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SUMMARY: The Western Area Power Administration (Western) is proposing 
rates (Proposed Rates) for Central Valley Project (CVP) commercial firm 
power, power scheduling service, CVP transmission, transmission of CVP 
power by others, network transmission, California-Oregon Transmission 
Project (COTP) transmission, and ancillary services. The current rates 
expire April 30, 1998. The Proposed Rates will provide sufficient 
revenue to pay all annual costs, including interest expense, and 
repayment of required investment within the allowable period. The rate 
impacts are detailed in a rate brochure to be provided to all 
interested parties. The Proposed Rates are scheduled to go into effect 
on October 1, 1997, to correspond with the start of the Federal fiscal 
year, and will remain in effect through September 30, 2002. This 
Federal Register notice initiates the formal process for the Proposed 
Rates.

DATES: The consultation and comment period will begin from the date of 
publication of this Federal Register notice and will end June 2, 1997. 
A public information forum at which Western will present a detailed 
explanation of the Proposed Rates is scheduled for March 25, 1997, 
beginning at 9 a.m. PST, at the Sierra Nevada Region, Western Area 
Power Administration, 114 Parkshore Drive, Folsom, CA 95630-4710. A 
public comment forum at which Western will receive oral and written 
comments is scheduled for April 22, 1997, beginning at 9 a.m. PDT, at 
the same location. Western should receive written comments by the end 
of the consultation and comment period to be assured consideration.

ADDRESSES: Written comments are to be sent to: James C. Feider, 
Regional Manager, Sierra Nevada Region, Western Area Power 
Administration, 114 Parkshore Drive, Folsom, CA 95630-4710.

FOR FURTHER INFORMATION CONTACT: Debbie Dietz, Rates Manager, Sierra 
Nevada Region, Western Area Power Administration, 114 Parkshore Drive, 
Folsom, CA 95630-4710, (916) 353-4453.

SUPPLEMENTARY INFORMATION: The Proposed Rates for CVP commercial firm 
power are designed to recover an annual revenue requirement that 
includes the investment repayment, interest, purchase power, and 
operation and maintenance expense. A cost of service study allocates 
the projected annual revenue requirement for commercial firm power 
between capacity and energy. The capacity revenue requirement includes 
100 percent of capacity purchase costs, 50 percent of the investment 
repayment, interest expense, and power operation and maintenance 
expense allocated to commercial power, and 100 percent of fixed 
transmission expense. These annual costs are reduced by the projected 
revenue from sales of CVP transmission to determine the capacity

[[Page 9764]]

revenue requirement. The energy revenue requirement includes 100 
percent of energy purchase costs and 50 percent of the investment 
repayment, interest expense, and power operation and maintenance 
expense allocated to commercial power. These annual costs are reduced 
by the projected revenue from sales of surplus power to determine the 
energy revenue requirement. The resulting capacity/energy revenue 
requirement split varies from 51 percent allocated to capacity in 
fiscal year (FY) 1998 to 44 percent allocated to capacity in FY 2002. 
The average capacity/energy revenue requirement split for the five-year 
period is 47 percent to capacity and 53 percent to energy.
    The Proposed Rates will also include an Annual Energy Rate 
Alignment (AERA). The AERA will be applied to firm energy purchases 
from Western at or above an average annual load factor of 80 percent. 
The AERA is the difference between the estimated market purchase rate 
used in the cost of service study for CVP commercial firm power and the 
CVP energy rate. The billing for the AERA will occur at the end of each 
fiscal year.
    The Proposed Rates for CVP commercial firm power, applicable 
revenue requirement split between capacity and energy, and the AERA are 
provided in Table 1 below.

                                 Table 1.--Proposed Commercial Firm Power Rates                                 
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                                                    Total                                Capacity/              
                Effective period                   composte     Capacity      Energy       energy    AERA (mills/
                                                 (mills/kWh)   ($/kW-mo)   (mills/kWh)     split         kWh)   
----------------------------------------------------------------------------------------------------------------
10/01/97 to 09/30/98...........................        20.64         5.00        10.11        51/49         3.06
10/01/98 to 09/30/99...........................        19.59         4.57         9.98        49/51         3.65
10/01/99 to 09/30/00...........................        19.59         4.51        10.10        49/51         4.01
10/01/00 to 09/30/01...........................        18.59         3.95        10.30        45/55         4.30
10/01/01 to 09/30/02...........................        20.09         4.15        11.35        44/56         3.76
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    The Deputy Secretary of the Department of Energy (DOE), approved 
the existing Rate Schedule CV-F8 for CVP commercial firm power on 
September 19, 1995 (Rate Order No. WAPA-72, 60 FR 52671, October 10, 
1995), and the Federal Energy Regulatory Commission (FERC) confirmed 
and approved the rate schedule on March 14, 1996, under FERC Docket No. 
EF95-5012-000 (74 FERC para. 62,136). The existing Rate Schedule CV-F8 
became effective on October 1, 1995, for the period ending April 30, 
1998. Under Rate Schedule CV-F8, the composite rate on October 1, 1997, 
is 26.50 mills per kilowatt-hour (mills/kWh), the base energy rate is 
16.93 mills/kWh, the tier energy rate is 26.48 mills/kWh, and the 
capacity rate is $4.58 per kilowatt-month (kW-mo). The Proposed Rates 
for CVP commercial firm power will result in an overall composite rate 
decrease of approximately 22 percent on October 1, 1997, when compared 
with the current CVP commercial firm power rates under Rate Schedule 
CV-F8. Table 2 provides a comparison of the current rates in Rate 
Schedule CV-F8 and the Proposed Rates along with the percentage change 
in the rates.

                               Table 2.--Comparison of Current and Proposed Rates                               
                               [Percentage Change in Commercial Firm Power Rates]                               
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                                       Total                                                Base                
         Effective period            composite     Percent      Capacity     Percent       energy      Percent  
                                    (mills/kWh)     change     ($/kW-mo)      change    (mills/kWh)     change  
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                                              Current Rate Schedule                                             
----------------------------------------------------------------------------------------------------------------
Existing 10/01/97 and thereafter..        26.50  ...........         4.58  ...........        16.93  ...........
----------------------------------------------------------------------------------------------------------------
                                                                                                                
                                                 Proposed Rates                                                 
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10/01/97 to 09/30/98..............        20.64          -22         5.00           +9        10.11          -40
10/01/98 to 09/30/99..............        19.59          -26         4.57  ...........         9.98          -41
10/01/99 to 09/30/00..............        19.59          -26         4.51           -2        10.10          -40
10/01/00 to 09/30/01..............        18.59          -30         3.95          -14        10.30          -39
10/01/01 to 09/30/02..............        20.09          -24         4.15           -9        11.35          -33
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Adjustment Clauses Associated With the Proposed Rates for CVP 
Commercial Firm Power

Power Factor Adjustment

    This provision contained in Rate Schedule CV-F8, will remain the 
same under the Proposed Rates for CVP commercial firm power.

Low Voltage Loss Adjustment

    This provision contained in Rate Schedule CV-F8, will remain the 
same under the Proposed Rates for CVP commercial firm power.

Revenue Adjustment

    The methodology for the Revenue Adjustment contained in Rate 
Schedule CV-F8, will remain the same under the Proposed Rates for CVP 
commercial firm power.

Proposed Rate for Power Scheduling Service

    The Proposed Rate for power scheduling service is $73.80 per hour 
and is based on an estimated time to provide the service. Power 
scheduling service provides for the scheduling of resources to meet 
loads and reserve requirements.

[[Page 9765]]

Proposed Rates for CVP Transmission

    The Proposed Rate for firm CVP transmission service is $0.48 per 
kW-mo., an 11.6 percent increase from the existing rate of $0.43 per 
kW-mo. currently under Rate Schedule CV-FT2. The Proposed Rate for non-
firm CVP transmission service is 1.00 mill/kWh, an 18.7 percent 
reduction in the existing 1.23 mills/kWh rate. Service of firm or non-
firm transmission for one year or less may be at rates lower than the 
Proposed Rates.
    The Proposed Rates for CVP transmission service are based on a 
revenue requirement that recovers: (i) The CVP transmission system 
costs for facilities associated with providing all transmission 
service; and (ii) the non-facilities costs allocated to transmission 
service. These rates include the cost for scheduling, system control 
and dispatch service, and reactive supply and voltage control 
associated with the transmission service. The Proposed Rates are 
applicable to existing CVP firm transmission service and future point-
to-point transmission service.

Proposed Rate for Transmission of CVP Power by Others

    Transmission service costs incurred by Western in the delivery of 
CVP power over a third party's transmission system to a CVP customer, 
will be directly passed through to that CVP customer. Rates under this 
schedule are proposed to be automatically adjusted as third party 
transmission costs are adjusted.

Proposed Rate for Network Transmission

    The Proposed Rate for network transmission service, if offered by 
Western, is the product of the network customer's load ratio share 
times one-twelfth (\1/12\) of the annual network transmission revenue 
requirement. The load ratio share is based on the network customer's 
hourly load coincident with Western's monthly CVP transmission system 
peak minus coincident peak for all firm CVP (including reserved 
capacity) point-to-point transmission service. The Proposed Rate for 
network transmission service is based on a revenue requirement that 
recovers: (i) The CVP transmission system costs for facilities 
associated with providing all transmission service; and (ii) the non-
facilities costs allocated to transmission service. These rates include 
the cost for scheduling, system control and dispatch service, and 
reactive supply and voltage control needed to provide the transmission 
service.

Proposed Rates for COTP Transmission

    The Proposed Rates for firm transmission service for Western's 
share of the California-Oregon Transmission Project (COTP) are $1.66 
per kW-mo. for FY 1998 and $1.12 per kW-mo. for FY 1999 through FY 
2002. These Proposed Rates for firm COTP transmission service result in 
18.2 percent (FY 1998) and 44.8 percent (FY 1999 through FY 2002) 
reductions in the existing rate of $2.03 per kW-mo. The Proposed Rates 
for non-firm COTP transmission service are 2.28 mills/kWh for FY 1998 
and 1.54 mills/kWh for FY 1999 through FY 2002. These Proposed Rates 
for non-firm COTP transmission service result in 18.0 percent (FY 1998) 
and 44.6 percent (FY 1999 through FY 2002) reductions in the existing 
rate of 2.78 mills/kWh. Service of firm or non-firm transmission for 
one year or less may be at rates lower than the Proposed Rates.
    The Proposed Rates for COTP transmission service are based on a 
revenue requirement that recovers the costs associated with: (i) 
Western's participation in the COTP; (ii) the offering of this service; 
and (iii) scheduling, system control and dispatch service, and reactive 
supply and voltage control needed to provide the transmission service. 
The Proposed Rates are applicable to existing COTP transmission service 
and future point-to-point transmission service.

Proposed Rates for Ancillary Services

    Western will provide ancillary services, subject to availability, 
at the Proposed Rates listed in Table 3. The Proposed Rates are 
designed to recover only the costs incurred by Western for providing 
the service(s). Sales of ancillary services of one year or less may be 
at rates lower than the Proposed Rates.

                                 Table 3.--Proposed CVP Ancillary Services Rates                                
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                 Ancillary service type                                            Rate                         
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Transmission Scheduling, System Control and Dispatch     Included in appropriate transmission rates.            
 Service--is required to schedule the movement of power                                                         
 through, out of, within, or into a control area                                                                
Reactive Supply and Voltage Control--is reactive power   Included in appropriate transmission rates.            
 support provided from generation facilities that is                                                            
 necessary to maintain transmission voltages within                                                             
 acceptable limits of the system                                                                                
Regulation and Frequency Response Service--providing     Monthly: $1.39 per kW-mo.                              
 generation to match resources and loads on a real-time  Weekly: $0.3192 per kW-week.                           
 continuous basis.                                       Daily: $0.0456 per kW-day.                             
Energy Imbalance Service--is provided when a difference  Within Limits of Deviation Band:                       
 occurs between the scheduled and actual delivery of     Accumulated deviations are to be corrected or          
 energy to a load or from a generation resource within    eliminated within 30 days. Any net deviations that are
 a control area over a single month                       accumulated at the end of the month (positive or      
                                                          negative) are to be exchanged with like hours of      
                                                          energy or charged at the composite rate for CVP       
                                                          commercial firm power, then in effect.                
Hourly Deviation (MW) is the net scheduled amount of     Outside Limits of Deviation Band:                      
 energy for the hour minus the hourly net metered        (I) Positive Deviations--no charge, lost to the system.
 (actual delivered) amount.                                                                                     
                                                         (ii) Negative Deviations--during on-peak hours, the    
                                                          greater of 3 times the Proposed Rates for CVP         
                                                          commercial firm power or any additional cost incurred.
                                                          During off-peak hours, the greater of the Proposed    
                                                          Rates for CVP commercial firm power or any additional 
                                                          cost incurred.                                        
Spinning Reserve Service--is providing capacity that is  Monthly: $1.14 per kW-mo. plus adder.                  
 available the first ten minutes to take load and is     Weekly: $0.2688 per kW-wk. plus adder.                 
 synchronized with the power system                      Daily: $0.0384 per kW-day plus adder.                  
                                                         Hourly: $0.0016 per kWh plus adder.                    
                                                         Adder for purchasing energy to motor unit will be at   
                                                          market purchase rate.                                 

[[Page 9766]]

                                                                                                                
Supplemental Reserve Service--is providing capacity      Monthly: $1.14 per kW-mo.                              
 that is not synchronized, but can be available to       Weekly: $0.2688 per kW-wk.                             
 serve loads within ten minutes                          Daily: $0.0384 per kW-day.                             
                                                         Hourly: $0.0016 per kWh.                               
----------------------------------------------------------------------------------------------------------------

    Since the Proposed Rates constitute a major rate adjustment as 
defined by the procedures for public participation in general rate 
adjustments, as cited below, both a public information forum and a 
public comment forum will be held. After review of public comments, 
Western will recommend the Proposed Rates (and as amended) for approval 
on an interim basis by the Deputy Secretary of DOE.
    Power and transmission rates for the CVP are established pursuant 
to the Department of Energy Organization Act (42 U.S.C. 7101 et seq.) 
and the Reclamation Act of 1902 (43 U.S.C. 371 et seq.), as amended and 
supplemented by subsequent enactments, particularly section 9(c) of the 
Reclamation Project Act of 1939 (43 U.S.C. 485h(c)) and Acts of 
Congress approved August 26, 1937 (50 Stat. 844, 850); August 12, 1955 
(69 Stat. 719); and October 23, 1962 (76 Stat. 1173, 1191), and Acts 
amendatory or supplementary thereof.
    By Amendment No. 3 to Delegation Order No. 0204-108, published 
November 10, 1993 (58 FR 59716), the Secretary of DOE delegated (1) the 
authority to develop long-term power and transmission rates on a 
nonexclusive basis to the Administrator of Western; (2) the authority 
to confirm, approve, and place such rates into effect on an interim 
basis to the Deputy Secretary; and (3) the authority to confirm, 
approve, and place into effect on a final basis, to remand, or to 
disapprove such rates to the FERC. Existing DOE procedures for public 
participation in power rate adjustments (10 CFR Part 903) became 
effective on September 18, 1985 (50 FR 37835).

Availability of Information

    All brochures, studies, comments, letters, memoranda, or other 
documents made or kept by Western for developing the Proposed Rates, 
are and will be made available for inspection and copying at the Sierra 
Nevada Region Office, located at 114 Parkshore Drive, Folsom, 
California 95630-4710.

Regulatory Procedure Requirements

Regulatory Flexibility Analysis

    Pursuant to the Regulatory Flexibility Act of 1980 (5 U.S.C. 601, 
et seq.), each agency, when required to publish a proposed rule, is 
further required to prepare and make available for public comment an 
initial regulatory flexibility analysis to describe the impact of the 
proposed rule on small entities. Western has determined that (1) this 
rulemaking relates to services offered by the Sierra Nevada Region and 
therefore is not a rule within the purview of the Act, and (2) the 
proposed rates for the services offered by the Sierra Nevada Region 
would not cause an adverse economic impact to such entities. The 
requirements of this Act can be waived if the head of the agency 
certifies that the rule will not, if promulgated, have a significant 
economic impact on a substantial number of small entities. By his 
execution of this Federal Register notice, Western's Administrator 
certifies that no significant economic impact on a substantial number 
of small entities will occur.

Environmental Compliance

    Pursuant to the National Environmental Policy Act of 1969 (42 
U.S.C. 4321 et seq.); the Council on Environmental Quality Regulations 
for implementing NEPA (40 CFR Parts 1500 through 1508); and the DOE 
NEPA Implementing Procedures and Guidelines (10 CFR Part 1021), Western 
conducts environmental evaluations of the proposed rates and develops 
the appropriate level of environmental documentation.

Review Under the Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980, 44 U.S.C. 
3501-3520, Western has received approval from the Office of Management 
and Budget for the collection of customer information in this rule, 
under control number 1910-1200.

Determination Under Executive Order 12866

    DOE has determined that 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 Office of Management and Budget is required.

    Issued at Golden, Colorado, February 20, 1997.
J.M. Shafer,
Administrator.
[FR Doc. 97-5256 Filed 3-4-97; 8:45 am]
BILLING CODE 6450-01-P