[Federal Register Volume 63, Number 10 (Thursday, January 15, 1998)]
[Notices]
[Pages 2390-2391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1059]



[[Page 2390]]

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DEPARTMENT OF ENERGY

Southwestern Power Administration


Robert Douglas Willis Hydro Power Rate Approving a Power Rate 
Increase on an Interim Basis

AGENCY: Southwestern Power Administration, DOE.

ACTION: Notice of rate order.

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SUMMARY: The Deputy Secretary acting under Amendment No. 3 to 
Delegation Order No. 0204-108, dated November 10, 1993, has approved 
Rate Order No. SWPA-36 which increases the power rate for the Robert 
Douglas Willis Hydro Project. This is an interim approval of the rate 
effective January 1, 1998, through September 30, 2001.

FOR FURTHER INFORMATION CONTACT: Forrest E. Reeves, Assistant 
Administrator, Office of Corporate Operations, Southwestern Power 
Administration, Department of Energy, P.O. Box 1619, Tulsa, Oklahoma 
74101-1619.

SUPPLEMENTARY INFORMATION: The existing rate for the Robert Douglas 
Willis Hydro Project is $266,928 per year. The rate was approved on a 
final basis by the Federal Energy Regulatory Commission on January 28, 
1997, for a period ending September 30, 2000.
    On September 24, 1997, the Southwestern Power Administration 
(Southwestern) published notice in the Federal Register, 62 FR 49976 of 
its proposed rate increase for the Robert Douglas Willis Hydro Project 
and to provide a 45-day comment period. One comment indicating no 
objection to the proposed rate increase was received from the sole 
customer, Sam Rayburn Municipal Power Agency.
    Following review of Southwestern's proposal within the Department 
of Energy, I approved, Rate Order No. SWPA-36, which increases the 
existing Robert Douglas Willis Rate to $302,928 per year for the period 
January 1, 1998, through September 30, 2001.

    Dated: January 7, 1998.
Elizabeth A. Moler,
Deputy Secretary.

Order Confirming, Approving and Placing Increased Power Rate in Effect 
on an Interim Basis

Rate Order No. SWPA-36

January 1, 1998.
    In the matter of: Southwestern Power Administration--Robert D. 
Willis

    Pursuant to Sections 302(a) and 301(b) of the Department of Energy 
Organization Act, Public Law 95-91, the functions of the Secretary of 
the Interior and the Federal Power Commission under Section 5 of the 
Flood Control Act of 1944, 16 U.S.C. 825s, for the Southwestern Power 
Administration (Southwestern) were transferred to and vested in the 
Secretary of Energy. By Delegation Order No. 0204-108, effective 
December 14, 1983, 48 FR 55664, the Secretary of Energy delegated to 
the Deputy Secretary of Energy on a non-exclusive basis the authority 
to confirm, approve and place into effect on an interim basis power and 
transmission rates, and delegated to the Federal Energy Regulatory 
Commission (FERC) on an exclusive basis the authority to confirm, 
approve and place in effect on a final basis, or to disapprove power 
and transmission rates. Amendment No. 1 to Delegation Order No. 0204-
108, effective May 30, 1986, 51 FR 19744, revised the delegation of 
authority to confirm, approve and place into effect on an interim basis 
power and transmission rates to the Under Secretary of Energy rather 
than the Deputy Secretary of Energy. This delegation was reassigned to 
the Deputy Secretary of Energy by Department of Energy (DOE) Notice 
1110.29, dated October 27, 1988, and clarified by Secretary of Energy 
Notice SEN-10-89, dated August 3, 1989, and subsequent revisions. By 
Amendment No. 2 to Delegation Order No. 0204-108, effective August 23, 
1991, 56 FR 41835, the Secretary of the Department of Energy revised 
Delegation Order No. 0204-108 to delegate to the Assistant Secretary, 
Conservation and Renewable Energy, the authority which was previously 
delegated to the Deputy Secretary in that Delegation Order. By 
Amendment No. 3 to Delegation Order No. 0204-108, effective November 
10, 1993, 58 FR 59717, the Secretary of Energy revised the delegation 
of authority to confirm, approve and place into effect on an interim 
basis power and transmission rates by delegating that authority to the 
Deputy Secretary of Energy. This rate order is issued by the Deputy 
Secretary pursuant to said Amendment to Delegation Order No. 0204-108.

Background

    Dam B (Town Bluff Dam), located on the Neches River in eastern 
Texas downstream from the Sam Rayburn Dam, was originally constructed 
in 1951 by the U.S. Army Corps of Engineers (Corps) and provides 
streamflow regulation of releases from the Sam Rayburn Dam. The Lower 
Neches Valley Authority contributed funds toward construction of both 
projects and makes established annual payments for the right to 
withdraw up to 2000 cubic feet of water per second from Town Bluff Dam 
for its own use. Power was legislatively authorized at the project, but 
installation of hydroelectric facilities was deferred until justified 
by economic conditions. A determination of feasibility was made in a 
1982 Corps study. In 1983 the Sam Rayburn Municipal Power Agency (SRMA) 
proposed to sponsor and finance the development of hydropower at Town 
Bluff Dam in return for the output of the project to be delivered to 
its member municipalities and participating member cooperatives of the 
Sam Rayburn Dam Electric Cooperative. Since the hydroelectric 
facilities at the Town Bluff Dam have been completed, the facilities 
have been renamed the Robert Douglas Willis Hydropower Project (Robert 
D. Willis).
    The Robert D. Willis rate is unique in that it excludes the costs 
associated with the hydropower design and construction performed by the 
Corps, because all funds for these costs were provided by SRMA. Under 
the Southwestern/SRMA power sales Contract No. DE-PM75-85SW00117, SRMA 
will continue to pay all annual operating and marketing costs, as well 
as expected capital replacement costs, through the rate paid to 
Southwestern, and will receive all power and energy produced at the 
project for a period of 50 years.

Discussion

    The 1997 Current Robert D. Willis Power Repayment Study (PRS) tests 
the adequacy of the existing rate based on the evaluation period 
extending from FY 1997 through FY 2001, to recover annual expenses for 
marketing, operation and maintenance, and to amortize additions to 
plant and major replacements of the generating facilities. Since the 
project's design and construction were financed in their entirety by 
SRMA, no component for amortization of the original investment of some 
$18 million is included in the rate determination. The Current PRS for 
the Robert D. Willis project, using the existing annual rate of 
$266,928, indicates that the legal requirements to repay all costs will 
not be met and an increase in revenue is necessary. The additional 
revenue needed is, in part, a result of the increase in replacement 
costs required to be recovered. In addition, the Corps had projected a 
significant increase in its estimates of operations and maintenance 
(O&M) costs for the Robert D. Willis project. The previous year's O&M 
projections were considered by the Corps to have been understated.

[[Page 2391]]

    The existing annual Robert D. Willis project power rate of $266,928 
was confirmed and approved on a final basis by the FERC on January 28, 
1997, for the period October 1, 1996, through September 30, 2000. The 
1997 Robert D. Willis Current Power Repayment Study (PRS) indicates 
that the present rate does not meet the cost recovery criteria for the 
isolated project. Over the entire repayment period the current rate 
will underpay requirements by $13,310,053. The 1997 Robert D. Willis 
Revised PRS indicates that an annual rate of $302,928 will satisfy 
repayment criteria in accordance with Department of Energy Order No. RA 
6120.2 and Section 5 of the Flood Control Act of 1944. The proposed 
increase in revenue amounts to $36,000 or 13.5 percent annually to 
begin January 1, 1998. The proposed rate of $302,928 annually would 
satisfy the present repayment criteria.
    Pursuant to Title 10, Part 903, Subpart A of the Code of Federal 
Regulations (10 CFR 903), ``Procedures for Public Participation in 
Power and Transmission Rate Adjustments and Extensions'', 50 FR 37837, 
the Administrator, Southwestern, published notice in the Federal 
Register (62 FR 49976), on September 24, 1997, announcing a 45-day 
period for public review and comment. Southwestern held informal 
meetings and a Public Information Forum on October 2, 1997, where 
Southwestern provided copies of supporting data for the 1997 Robert D. 
Willis PRS to interested parties. A letter was received on behalf of 
SRMA, indicating no opposition to the proposed rate increase. 
Southwestern did not receive any request to convene a formal Public 
Comment Forum and, as a result, did not convene such a meeting. 
Information regarding this rate proposal, including studies, comments 
and other supporting material, is available for public review and 
comment in the offices of the Southwestern Power Administration, One 
West Third Street, Tulsa, Oklahoma 74103.

Administrator's Certification

    The 1997 Revised Robert D. Willis PRS indicates that the annual 
power rate of $302,928 will repay all costs of the project including 
amortization of additions to plant and major replacements of the 
generating facilities consistent with provisions of DOE Order No. RA 
6120.2. In accordance with Section 1 of Delegation Order No. 0204-108, 
as amended November 10, 1993, 58 FR 59717, and Section 5 of the Flood 
Control Act of 1944, the Administrator has determined that the proposed 
Robert D. Willis power rate is consistent with applicable law and is 
the lowest possible rate consistent with sound business principles.

Environment

    The environmental impact of the rate increase proposal was 
evaluated in consideration of DOE's guidelines for implementing the 
procedural provisions of the National Environmental Policy Act and was 
determined to fall within the class of actions that are categorically 
excluded from the requirements of preparing either an Environmental 
Impact Statement or an Environmental Assessment.

Order

    In view of the foregoing and pursuant to the authority delegated to 
me by the Secretary of Energy, I hereby confirm, approve and place in 
effect on an interim basis, effective January 1, 1998, the proposed 
annual rate of $302,928 for the sale of power and energy from the 
Robert D. Willis project to the Sam Rayburn Municipal Power Agency, 
under Contract No. DE-PM75-85SW00117, as amended. The rate shall remain 
in effect on an interim basis through September 30, 2001, or until the 
FERC confirms and approves the rate on a final basis.

    Dated: January 7, 1998.
Elizabeth A. Moler,
Deputy Secretary.
[FR Doc. 98-1059 Filed 1-14-98; 8:45 am]
BILLING CODE 6450-01-P