[Federal Register Volume 63, Number 118 (Friday, June 19, 1998)]
[Notices]
[Pages 33649-33651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16341]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Proposed Rate Formulas for Desert Southwest Customer Service 
Region Transmission and Ancillary Services

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rate adjustments.

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SUMMARY: The Western Area Power Administration's (Western) Desert 
Southwest Region (DSW) is initiating a rate adjustment process for 
network integration transmission service for both the Parker-Davis 
Project (P-DP) and the Pacific Northwest-Pacific Southwest Intertie 
Project (Intertie) and for ancillary services from the P-DP, Boulder 
Canyon Project (BCP), and part of the Colorado River Storage Project 
(CRSP) located in DSW's Control Area. This action is necessary to bring 
DSW into compliance with the intent of Federal Energy Regulatory 
Commission (FERC) Order Nos. 888 and 888-A. To date, DSW has not 
developed charges for the long term sales of the six ancillary services 
defined by FERC, or for network integration transmission service.
    The proposed rate and its impact are explained in greater detail in 
a rate brochure which will be made available to all interested parties.
    The proposed rate is scheduled to go into effect on November 1, 
1998. This Federal Register notice initiates the formal process for the 
proposed rate.

DATES: Submit comments on or before September 17, 1998.
    The forum dates are:
    1. Public Information Forum, June 30, 1998, 10 a.m. MST, Phoenix, 
Arizona.
    2. Public Comment Forum, July 30, 1998, 10 a.m. MST, Phoenix, 
Arizona.

ADDRESSES: Written comments should be sent to Mr. J. Tyler Carlson, 
Regional Manager, Desert Southwest Customer Service Region, Western 
Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005-6457. 
Western should receive written comments by the end of the consultation 
and comment period to be assured consideration. The public forums will 
be held at the Desert Southwest Regional Office, 615 South 43rd Avenue, 
Phoenix, Arizona.

FOR FURTHER INFORMATION CONTACT: Mr. Maher A. Nasir, Rates Team Lead, 
Desert Southwest Customer Service Region, Western Area Power 
Administration, P.O. Box 6457, Phoenix, AZ 85005-6457; telephone (602) 
352-2768.

SUPPLEMENTARY INFORMATION:

Proposed Rate for Network Integration Transmission Service

    The DSW will offer, subject to provisions in its Open Access 
Transmission Service Tariff (OAT), Network Integration Transmission 
Service (NTS) to eligible transmission customers. The customer must 
obtain ancillary services for NTS pursuant to Western's OAT. The NTS 
charge for Intertie and P-DP will be calculated independently. The 
monthly charge for NTS is the product of the network transmission 
customer's load-ratio share times one-twelfth of the annual revenue 
requirement allocated to transmission. The customer's load-ratio share 
is calculated on a rolling 12-month basis (12 CP). It is equal to the 
network transmission customer's hourly load coincident with DSW's 
monthly transmission system peak divided by the resultant value of 
DSW's monthly transmission system peak minus the coincident peak (CP) 
for all firm point-to-point transmission service plus firm point-to-
point reservations. Service for point-to-point transmission service can 
be obtained through rate schedules PD-FT6 and INT-FT2.
    The projected annual revenue requirement allocated to transmission 
for Fiscal Year (FY) 1999 for P-DP is $23,001,589, and for Intertie the 
projected annual revenue requirement is $21,943,150. The annual power 
repayment study derives the revenue requirement to be recovered from 
network and firm point-to-point transmission service. The annual 
transmission costs included in the revenue requirement are operation 
and maintenance expenses, administrative and general expenses, interest 
expense, and principal expenses associated with transmission.

Proposed Rates For Ancillary Services

    Western will provide ancillary services subject to provisions in 
the OAT. The proposed rates are designed to recover only the costs 
incurred for the service(s). The annual generation costs included in 
the revenue requirement for Reactive Supply and Voltage Control, 
Regulation and Frequency Response, and Spinning and Supplemental 
Reserves are operation and maintenance expenses, administrative and 
general expenses, interest expense, and principal expense associated 
with providing ancillary services.
    On April 1, 1998, the Western Area Upper Colorado Control Area, 
which includes the Salt Lake City Area Integrated Projects (SLCA/IP) 
generation and most of the CRSP transmission system, was merged with 
two other Control Areas: The Western Area Colorado Missouri, operated 
by Western's Rocky Mountain Region, and the Western Area Lower Colorado 
(WALC) Control Area, operated by DSW. As a result, regulation and 
frequency response and reactive supply and voltage control ancillary 
services will include certain SLCA/IP generation costs as well as DSW 
generation costs.

Proposed Rate for Scheduling, System Control, and Dispatch Service

    Scheduling, System Control and Dispatch ancillary service is 
required to schedule the movement of power through, out of, within, or 
into a Control Area. This ancillary service can be provided only by the 
Control Area operator or transmission provider.
    Scheduling, System Control and Dispatch ancillary service costs are 
calculated as an annual cost of all personnel, capital costs (such as 
the dispatch center building), and other related costs involved in 
providing the service. The cost is divided by the number of schedules 
per year to derive a rate per schedule per day. Up to five schedule 
changes per transaction, per day will be allowed at no additional 
charge.
    The rates charged for the Scheduling, System Control and Dispatch 
ancillary service are contingent on the type of service required. The 
range of the service on a cost per schedule per day

[[Page 33650]]

is up to $34.10 for an existing schedule, which requires no Supervisory 
Control and Data Acquisition (SCADA) programming or intra-bus transfer, 
and up to $56.20 for a new schedule which requires both SCADA 
programming and intra-bus transfer. Intermediate rates are available 
for schedules requiring combinations of the two. This ancillary service 
is included in the transmission customer's rate.

Proposed Rate for Reactive Supply and Voltage Control from Generation 
Sources

    In order to maintain transmission voltages on the transmission 
provider's transmission facilities within acceptable limits, generation 
facilities under the control of the Control Area operator are operated 
to produce or absorb reactive power. Thus, Reactive Supply and Voltage 
Control from generation sources service must be provided for each 
transaction on the transmission provider's transmission facilities. 
This ancillary service is required to be offered to the transmission 
customer by the transmission provider in order to maintain transmission 
voltages on the transmission provider's transmission facilities within 
acceptable limits.
    The rate for Reactive Supply and Voltage Control ancillary service 
is calculated by combining the revenue requirements of P-DP, BCP, and 
SLCA/IP. This total revenue requirement is then divided by the sum of 
the long-term firm transmission reservations, yielding a rate of $0.08/
kilowattmonth (kWmo). The transmission customer is required to maintain 
a power factor between 95 percent leading and 95 percent lagging. The 
rate of $0.08/kWmo will be applied to all transmission customers taking 
service under Western's OAT.

Proposed Rate for Regulation and Frequency Response Service

    Regulation and Frequency Response service is necessary to provide 
for the continuous balancing of resources, generation and interchange, 
with load and for maintaining scheduled interconnection frequency at 60 
cycles per second (60 Hz). The transmission provider must offer this 
service when the transmission service is used to serve load within its 
Control Area. The transmission customer must either purchase this 
service from the transmission provider or make alternative comparable 
arrangements to satisfy its regulation and frequency response service 
obligation.
    DSW will offer regulation from its own resources, if available. The 
charge for this service from DSW resources is calculated based on P-DP, 
BCP, and SLCA/IP data. The total annual revenue requirement of P-DP, 
BCP, and SLCA/IP is divided by the nameplate plant capacities to derive 
an average revenue requirement per kilowatt (kW) result. The resultant 
average revenue requirement per kW is multiplied by the capacity used 
to provide regulation service and then divided by the CP of the Control 
Area load. This result is divided by 12 to derive a monthly rate of 
$0.20/kWmo. If DSW cannot supply this service from its resources, it 
will purchase the service on the market adding a 10 percent 
administrative charge.

Proposed Rate for Energy Imbalance Service

    Energy Imbalance service is provided when a difference occurs 
between the scheduled and the actual delivery of energy to a load 
located within a Control Area over a single hour. The transmission 
provider must offer this service when the transmission service is used 
to serve load within its Control Area. The transmission customer must 
either purchase this service from the transmission provider or make 
alternative comparable arrangements to satisfy its Energy Imbalance 
service obligation.
    The Energy Imbalance Service rate will be a penalty-type rate which 
DSW reserves the right to apply against deviations outside a 3 percent 
bandwidth ( 1.5 percent deviations), with a 2 MW deviation 
minimum. Negative excursions (under deliveries) greater than 1.5 
percent and occurring more than five times per month will be assessed a 
penalty charge of 100 mills/kilowatthour (kWh); e.g., the sixth time an 
under delivery occurs within a month, the 100 mills/kWh charge will be 
applied to the difference between the total excursion and 1.5 percent.
    Any positive excursion (over delivery) will be credited to the 
customer within thirty days for 50 percent of the market value of the 
over delivery, provided the over deliveries do not impinge upon WALC 
Control Area operations. For example, during times of high water or 
operating constraints, DSW reserves the right to eliminate credits for 
over deliveries. The market value determinant will be the average 
monthly non-firm price from Western merchants operating within the WALC 
Control Area.

Proposed Rate for Operating Reserves: Spinning Reserve Service

    Spinning Reserve service is needed to serve load immediately in the 
event of a system contingency. Spinning Reserve service may be provided 
by generating units that are on-line and loaded at less than maximum 
output. The transmission provider must offer this service when the 
transmission service is used to serve load within its Control Area. The 
transmission customer must purchase this ancillary service either from 
DSW or make alternative comparable arrangements to satisfy its Spinning 
Reserve service obligation. The transmission customer will be 
responsible for the transmission service to get these reserves to their 
destination.
    These reserves will not be available from DSW resources on a long-
term basis. If Spinning Reserves are unavailable from WALC resources, 
Western may obtain the reserves on the open market for the customer and 
pass through the cost, with an added 10 percent administrative charge.

Proposed Rate for Operating Reserves: Supplemental Reserve Service

    Supplemental Reserve service is needed to serve load in the event 
of a system contingency; however, it is not available immediately to 
serve load, but rather within a short period of time. Supplemental 
Reserve service may be provided by generating units that are on-line 
and unloaded, by quick-start generation or by interruptible load. The 
transmission provider must offer this service when the transmission 
service is used to serve load within its Control Area. The transmission 
customer must purchase this ancillary service either from DSW or make 
alternative comparable arrangements to satisfy its Supplemental Reserve 
service obligation. The transmission customer will be responsible for 
the transmission service to get these reserves to their destination.
    These reserves will not be available from DSW resources on a long-
term basis. If Supplemental Reserves are unavailable from WALC 
resources, Western may obtain the reserves on the open market for the 
customer and pass through the cost, with an added 10 percent 
administrative charge.

Authorities

    Since the proposed rates constitute a major rate adjustment as 
defined in 10 CFR 903.2, both a public information forum and a public 
comment forum 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 Department of 
Energy (DOE).
    The proposed Project transmission and ancillary service rates are 
being established pursuant to the Department

[[Page 33651]]

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 section 8 of 
the Act of August 31, 1964, (16 U.S.C. 837g).
    By Amendment No. 3 to Delegation Order No. 0204-108, published 
November 10, 1993 (58 FR 59716), the Secretary of Energy 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 in 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).

Regulatory Procedure Requirements

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, requires 
Federal agencies to perform a regulatory flexibility analysis if a 
proposed rule is likely to have a significant economic impact on a 
substantial number of small entities. Western has determined that this 
action relates to rates or services offered by Western, and therefore 
is not a rule within the purview of the act.

Environmental Compliance

    In compliance with the National Environmental Policy Act of 1969 
(NEPA), 42 U.S.C. 4321, et seq.; Council On Environmental Quality 
Regulations, 40 CFR Parts 1500-1508; and DOE NEPA Regulations, 10 CFR 
Part 1021, Western conducts environmental evaluations of the proposed 
rates and develops the appropriate level of documentation.

Determination Under Executive Order 12866

    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.

Availability of Information

    All brochures, studies, comments, letters, memorandums, and other 
documents made or kept by Western for the purpose of developing the 
proposed rates will be made available for inspection and copying at 
Western's Desert Southwest Regional Office at 615 South 43rd Avenue in 
Phoenix, Arizona.

    Dated: June 8, 1998.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 98-16341 Filed 6-18-98; 8:45 am]
BILLING CODE 6450-01-P