[Federal Register Volume 62, Number 122 (Wednesday, June 25, 1997)]
[Notices]
[Pages 34255-34258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16644]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Proposed Salt Lake City Area Integrated Projects Firm Power Rate 
and Colorado River Storage Project Transmission and Ancillary Services 
Rates Adjustments

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rate adjustments.

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SUMMARY: The Western Area Power Administration's (Western) Colorado 
River Storage Project (CRSP) Customer Service Center (CSC) is proposing 
rates (Proposed Rates) for long-term sales of Salt Lake City Area 
Integrated Projects (SLCA/IP) firm power, CRSP transmission service, 
and ancillary services. The current firm power rate expires November 
30, 1999. The current firm transmission rate expires September 30, 
1997, but is expected to be extended for 1 additional year, through 
September 30, 1998, or until superseded by the proposed firm point-to-
point transmission rate. The proposed rates will provide sufficient 
revenue to pay all annual costs, including operation, maintenance, 
replacement, and interest expenses, and to repay investment and 
irrigation assistance obligations within the required period. The rates 
and their impacts are explained in greater detail in a rate brochure to 
be provided to all interested parties. The proposed rates are scheduled 
to go into effect on April 1, 1998. This Federal Register notice 
initiates the formal process for the proposed rates.

DATES: The consultation and comment period will begin on the date of 
publication of this Federal Register notice and will end September 23, 
1997. The public information forums and public comment meeting dates 
are:

1. Public information forum--August 1, 1997, 1 p.m., Salt Lake City, 
Utah; Public comment forum--September 19, 1997, 1 p.m., Salt Lake 
City, Utah.
2. Public information forum--August 5, 1997, 1 p.m., Golden, 
Colorado; Public comment forum--September 16, 1997, 1 p.m., Golden, 
Colorado.
3. Public information forum--August 6, 1997, 1 p.m., Albuquerque, 
New Mexico; Public comment forum--September 17, 1997, 1 p.m., 
Albuquerque, New Mexico.
4. Public information forum--August 7, 1997, 1 p.m., Phoenix, 
Arizona; Public comment forum--September 18, 1997, 1 p.m., Phoenix, 
Arizona.

ADDRESSES:

    1. Doubletree Hotel (Previously Red Lion), 255 South West Temple, 
Salt Lake City, Utah.
    2. Marriott Denver West, 1717 Denver West Boulevard, Golden, 
Colorado.
    3. Albuquerque Marriott, 2101 Louisiana Boulevard NE, Albuquerque, 
New Mexico.
    4. Western Area Power Administration, Desert Southwest Region, 615 
South 43rd Avenue, Phoenix, Arizona.
    Western must receive written comments by the end of the 
consultation and comment period to be assured consideration. Oral 
comments will be received at the public comment meetings. Written 
comments are to be sent to: Mr. David Sabo, CRSP Manager, CRSP Customer 
Service Center, Western Area Power Administration, P.O. Box 11606, Salt 
Lake City, Utah, 84121-0606, or e-mail [email protected].

FOR FURTHER INFORMATION CONTACT: Carol Tafoya-Loftin, Rates Manager, 
CRSP Customer Service Center, Western Area Power Administration, P.O. 
Box 11606, Salt Lake City, Utah, 84121-0606, (801) 524-6380; e-mail: 
[email protected], or visit CRSP CSC's home page at: www.wapa.gov/crsp/
crsp.htm.

Proposed Rate for SLCA/IP Firm Power

SLCA/IP Firm Power Rate

    The proposed rate for SLCA/IP firm power is designed to recover an 
annual amount of revenue requirement that includes the repayment of 
power investment, payment of interest, purchased power, operation, 
maintenance and replacement expenses, and the repayment of irrigation 
assistance costs, as required by law.
    The Deputy Secretary of the Department of Energy (DOE) approved the 
existing Rate Schedule SLIP-F5 for SLCA/IP firm power on October 25, 
1994 (Rate Order No. WAPA-63). The Federal Energy Regulatory Commission 
(FERC) confirmed and approved the rate schedule on April 1, 1996, in 
FERC Docket No. EF95-5171-000. The existing Rate Schedule will expire 
on November 30, 1999. Under Rate Schedule SLIP-F5, the energy rate is 
8.9 mills/kWh, and the capacity rate is $3.83 per kW-month. The 
composite rate (revenue requirements per kWh) is

[[Page 34256]]

20.17 mills/kWh. The proposed rate for SLCA/IP firm power is 8.20 
mills/kWh for energy and $3.48 per kW-month for capacity. The proposed 
composite rate is 17.75 mills/kWh. This firm power rate is to be 
applied to all firm power customers, and is to become effective April 
1, 1998.
    Although the proposed composite rate reflects a decrease from the 
existing composite rate, the net effect does not necessarily result in 
an equivalent reduction in cost to the SLCA/IP firm power contractors. 
Two primary factors account for this decrease. First, annual net 
revenue requirements have reduced by $6.4 million. Second, due to 
constraints at Glen Canyon Dam, as a result of the long-term Glen 
Canyon Dam Operating Criteria, and generating constraints on other 
SLCA/IP facilities, the contractor will normally be receiving less 
Federally generated resource during on-peak hours. In order to receive 
its full SLCA/IP resource allocation the contractor must purchase 
replacement power from other sources through Western Replacement Power 
(WRP) and/or Customer Displacement Power (CDP) as outlined in amended 
contracts with Western. In addition to the actual costs of the 
replacement power purchased on the open market, the contractor will pay 
the incremental administrative costs that Western incurs for providing 
this service. Due to the restrictions of the Federal hydro facilities 
and resulting replacement resource costs, the total overall costs to 
the contractors may in fact increase.
    Lastly, the proposed firm power rate does not include pension 
benefits from Civil Service Retirement System and health benefits, 
which were included in the last rate adjustment. The inclusion of these 
costs will depend upon the outcome of a final legal decision of 
Western's authority to include these costs in the rate base. Should 
these costs be included, it is anticipated that they will increase the 
composite rate by .07 mills/kWh.

WRP and CDP Administrative Charges

    The first year the WRP and CDP replacement options are effective, 
April 1, 1998, through March 31, 1999, will be considered the base year 
for cost determination. Estimated costs for charges will be used during 
the base year. Prior to and during the base year, Western, in 
consultation with Colorado River Energy Distributors Association 
(CREDA) and other interested SLCA/IP firm power customers, will develop 
a method for tracking actual incremental WRP and CDP administrative 
costs. Subsequent years' charges will be based upon base year costs and 
streamlining experiences.

Adjustment Clauses Associated With the Proposed Rates for SLCA/IP Firm 
Power

Transformer Losses Adjustment

    This provision contained in Rate Schedule SLIP-F5 will remain the 
same under the proposed rates for SLCA/IP firm power.

Power Factor Adjustment

    This provision contained in Rate Schedule SLIP-F5 will remain the 
same under the proposed rates for SLCA/IP firm power.

Purchased Resources Adjustment

    This provision contained in Rate Schedule SLIP-F5 will remain the 
same under the proposed rates for SLCA/IP firm power; however, it will 
be applicable only to those contractors who are not receiving service 
under the amendment to the firm power sales contract effective April 1, 
1997.

WRP Adjustment

    Each contractor electing to receive WRP will pay for its share of 
the incremental administrative costs Western incurs as a direct result 
of providing this service to the firm SLCA/IP power contractor. The 
contractor will also pay for its proportionate share of the costs of 
the purchased replacement resource. These costs are not included in the 
firm power base rate.

CDP Adjustment

    Each contractor electing to receive CDP will pay for its share of 
the incremental administrative costs Western incurs as a direct result 
of providing this service to the contractor. This cost is not included 
in the firm power base rate.

Proposed Rates for CRSP Transmission

    The proposed rates for CRSP transmission service are based on a 
revenue requirement that recovers: (i) The CRSP transmission system 
investment and interest costs for facilities associated with providing 
all transmission service; and (ii) the operation, maintenance, and 
replacement costs allocated to transmission service. These revenue 
requirements are offset by appropriate CRSP transmission system 
revenues. The proposed rates are applicable to existing and future CRSP 
point-to-point transmission service.
    The rates for CRSP transmission service include the cost for 
scheduling, system control, and dispatch service.

Firm Point-to-Point

    The firm point-to-point rate is based on revenue requirements of a 
5-year cost evaluation period. CRSP transmission related investments 
are annualized. Transmission-related annual costs such as operation, 
maintenance and replacements and interest costs to arrive at the total 
annual transmission cost need to be recovered. The annual costs are 
reduced by revenue credits such as non-firm wheeling revenues and phase 
shifter revenues. The resultant net annual cost to be recovered is 
divided by the capacity reservation needed to meet firm power and 
transmission commitments in kW to derive a cost/kW-year. This is done 
for 5 future years, the results averaged, and the cost/kW-year average 
used as the firm point-to-point transmission rate. The proposed rate 
for firm point-to-point CRSP transmission service is $2.07 per kW-month 
for 1998, beginning April 1, 1998. This proposed rate may be adjusted 
each year by a recalculation based on the formula below, as needed. The 
rate formula is expected to be in effect until March 31, 2003.
    The cost/kW-year is calculated using the following formula:
    [GRAPHIC] [TIFF OMITTED] TN25JN97.000
    
Non Firm Point-to-Point Rate

    The proposed rate for non firm point-to-point CRSP transmission 
service is a kWh rate based on market conditions but never higher than 
the firm point-to point rate. This rate will remain in effect 
concurrently with the firm point-to-point rate.

Network Transmission Service Rate

    The proposed rate for network transmission, if offered by CRSP CSC, 
would be consistent with the CRSP CSC

[[Page 34257]]

Tariff Equivalent Package, and the rate methodology in FERC Order 888.
    Western is not currently providing network transmission on its CRSP 
transmission system and only has available transmission capacity on 
isolated portions of the CRSP transmission system.

Proposed Rates for Ancillary Services

    Western will provide ancillary services, subject to availability, 
as described below and as listed in Table 1. The proposed rates are 
designed to recover only the costs incurred for providing the 
service(s).
    It is anticipated that in June 1998, the Western Area Upper 
Colorado (WAUC) control area, within which most of the CRSP 
transmission system lies, currently operated by the CRSP CSC, will be 
merged into two other control areas, the Western Area Colorado Missouri 
(WACM) control area operated by Western's Rocky Mountain Region (RMR) 
and the Western Area Lower Colorado (WALC) control area operated by 
Western's Desert Southwest Region (DSWR).

Proposed Rate for Scheduling, System Control, and Dispatch Service

    Scheduling, system control, and dispatch costs are accumulated as 
an annual cost of all personnel and other related costs involved in 
providing the service for the CRSP CSC. That cost is divided by the 
number of yearly schedules performed to derive a rate per schedule. Up 
to five schedule changes per transaction per day are allowed at no 
extra charge.
    The proposed rate will be applied to all schedules which must be 
pre-scheduled and/or real-time dispatched within or out of the WACM 
control area and do not pertain to a SLCA/IP firm electric service or 
CRSP transmission schedule.
    The rate for the WAUC control area is $21.35 per schedule per day 
and will be in effect only until the WAUC control area merges. At that 
time, the tariffs developed by Western's RMR and DSWR Regions as 
operators of the WACM and WALC control areas, respectively, will apply.

Proposed Rate for Reactive Supply and Voltage Control

    Applicable tariffs are being developed by Western's RMR and DSWR 
Regions as operators of the WACM and WALC control areas, respectively, 
in which CRSP transmission facilities reside. This ancillary service is 
not included in any CRSP CSC transmission service rate, and the CRSP 
transmission customer will be required to purchase this service from 
RMR and/or DSWR.

Proposed Rate for Regulation and Frequency Response Service

    The CRSP CSC may obtain regulation on the open market for the 
customer and pass through the cost, with an added 10 percent 
administrative charge, if regulation is unavailable from SLCA/IP 
facilities. If the CRSP CSC has regulation available for sale, based on 
hydrological conditions, it will charge the SLCA/IP firm power capacity 
rate currently in effect. The transmission customer serving loads 
within the transmission provider's control area is required to acquire 
this ancillary service either from Western, from a third party, or by 
self supply.

Proposed Rate for Energy Imbalance Service

    The energy imbalance tariff will be based on a 2.5 
percent deadband, with a maximum of five deviations outside the band 
per month. Net deviations within the deadband limits will be 
accumulated through the time period. Energy imbalance will be settled 
on a seasonal basis, either in cash or energy return as mutually agreed 
upon. Energy returns will be returned in like hours, onpeak for onpeak 
and offpeak for offpeak. Cash settlements will be based on SLCA/IP's 
average like-hour purchase costs during the season. Positive or 
negative excursions outside the deadband greater than the five times 
per month maximum will be assessed a penalty charge of 100 mills/kWh. 
This rate will not apply under system emergency conditions. This 
ancillary service is not included in any CRSP CSC transmission service 
rate. The transmission customer serving loads within the transmission 
provider's control area is required to acquire this ancillary service 
either from Western, from a third party, or by self supply.

Proposed Rate for Operating Reserve--Spinning Reserve Service

    It is unlikely that spinning reserves will be available from SLCA/
IP resources. If spinning reserves are unavailable from SLCA/IP 
resources, the CRSP CSC may obtain spinning reserves on the open market 
for the customer and pass through the cost, with an added 10 percent 
administrative charge.
    If the CRSP CSC has spinning reserves available for sale from SLCA/
IP resources, it will charge the SLCA/IP firm power capacity rate 
currently in effect. Energy taken with the spinning reserve capacity 
will be settled on a seasonal basis, either in cash or energy as 
mutually agreed upon. Energy returns will be returned in like hours, 
onpeak for onpeak and offpeak for offpeak, unless otherwise mutually 
agreed. Cash settlements will be based on SLCA/IP's average like-hour 
purchase costs during the season.
    This ancillary service is not included in any CRSP CSC transmission 
service rate. The transmission customer serving loads within the 
transmission provider's control area is required to acquire this 
ancillary service either from Western, from a third party, or by self 
supply.

Proposed Rate for Operating Reserve--Supplemental Reserve Service

    It is unlikely that supplemental reserves will be available from 
the SLCA/IP resources. If supplemental reserves are unavailable from 
SLCA/IP resources, the CRSP CSC may obtain supplemental reserves on the 
open market for the customer, and pass through the cost, with an added 
10 percent administrative charge.
    If the CRSP CSC has supplemental reserves available for sale from 
SLCA/IP resources, it may charge the SLCA/IP firm power capacity rate 
currently in effect. Energy taken with the supplemental reserve 
capacity will be settled on a seasonal basis, either in cash or energy 
as mutually agreed upon. Energy returns will be returned in like hours, 
onpeak for onpeak and offpeak for offpeak, unless otherwise mutually 
agreed. Cash settlements will be based on SLCA/IP's average like-hour 
purchase costs during the season.
    This ancillary service is not included in any CRSP CSC transmission 
service rate. The transmission customer serving loads within the 
transmission provider's control area is required to acquire this 
ancillary service either from Western, from a third party, or by self 
supply.

               Table 1.--Proposed Ancillary Service Rates               
------------------------------------------------------------------------
       Type of ancillary service                       Rate             
------------------------------------------------------------------------
Scheduling, System Control and           WAUC control area--$21.35/     
 Dispatch--is required to schedule the    schedule/day (until merged).  
 movement of power through, out of,       After consolidation, the WALC 
 within, or into a control area.          and/or WACM charges will      
                                          apply.                        

[[Page 34258]]

                                                                        
Reactive Supply and Voltage Control--is  DSWR and/or RMR Tariff.        
 reactive power support provided from                                   
 generation facilities that is                                          
 necessary to maintain transmission                                     
 voltages within acceptable limits of                                   
 the system.                                                            
Regulation and Frequency Control--is     Market price plus 10 percent   
 providing generation to match            administrative charge or, if  
 resources and loads on a real-time       available, current firm power 
 continuous basis.                        capacity rate.                
Energy Imbalance Service--is provided    Deviations are accumulated at  
 when a difference occurs between the     the end of the season and are 
 scheduled and actual delivery of         to be exchanged with like     
 energy to a load or from a generation    hours of energy or charged at 
 resource within a control area over a    the average purchase rate,    
 single month.                            plus a penalty of 100 mills/  
                                          kWh.                          
Spinning Reserve Service--is providing   Market price plus 10 percent   
 capacity that is available the first     administrative charge or, if  
 10 minutes to serve load and is          available, current firm power 
 synchronized with the power system.      capacity rate.                
Supplemental Reserve Service--is         Market price plus 10 percent   
 providing capacity that is not           administrative charge or, if  
 synchronized, but can be available to    available, current firm power 
 serve loads within 10 minutes.           capacity rate.                
------------------------------------------------------------------------

    Since the proposed rates constitute a major rate adjustment as 
defined at 10 CFR Sec. 903.2, both public information forums and public 
comment forums will be held. After review of public comments, Western 
will recommend the proposed rates or revised proposed rates for 
approval on an interim basis by the Deputy Secretary of DOE.
    The proposed SLCA/IP firm power, CRSP transmission, and ancillary 
service rates are being 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 other acts specifically 
applicable to the projects involved.
    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 are found at 10 CFR part 903.

Availability of Information

    All brochures, studies, comments, letters, memoranda, and other 
documents made or kept by Western for developing the proposed rates are 
and will be made available for inspection and copying at the CRSP 
Customer Service Center, at 257 East 200 South, Suite 475, Salt Lake 
City, Utah 84111.

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 by 5 U.S.C. 553 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. In this instance, 
the initiation of the SLCA/IP firm power rate, CRSP transmission rate 
and ancillary service rate adjustments are related to nonregulatory 
services provided by Western at a particular rate. Under 5 U.S.C. 
601(2), rules of particular applicability relating to rates or services 
are not considered rules within the meaning of the act. Since the SLCA/
IP firm power rate, CRSP transmission rates and ancillary service rates 
are of limited applicability, no flexibility analysis is required.

Environmental Evaluation

    In compliance with the National Environmental Policy Act (NEPA) of 
1969 (42 U.S.C. 4321 et seq.), the Council on Environmental Quality 
Regulations (40 CFR parts 1500 through 1508); and the DOE NEPA 
Regulations (10 CFR part 1021), Western has determined that this action 
is categorically excluded from the preparation of an environmental 
assessment or an environmental impact statement.

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, and 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.

    Dated: June 13, 1997.
J.M. Shafer,
Administrator.
[FR Doc. 97-16644 Filed 6-24-97; 8:45 am]
BILLING CODE 6450-01-P