[Federal Register Volume 63, Number 230 (Tuesday, December 1, 1998)]
[Notices]
[Pages 66166-66167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32009]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Power Allocation Issues

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Inquiry on the Impact of Electric Utility Industry 
Restructuring.

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SUMMARY: The Western Area Power Administration (Western) is initiating 
an inquiry to explore the impact of electric utility industry 
restructuring on Western's power allocation policies.

DATES: The consultation and comment period will begin on the date of 
publication of this Federal Register notice and will end January 15, 
1999. A public comment forum at which Western will receive oral and 
written comments will be held on Wednesday, January 6, 1999, beginning 
at 1 p.m., Mountain Standard Time, at the Four Points Denver Central 
Hotel, 3535 Quebec Street, Denver, Colorado. To be assured of 
consideration, written comments must be received by the end of the 
consultation and comment period.

ADDRESSES: Written comments may be hand-delivered, mailed, emailed, or 
faxed to Robert C. Fullerton, Project Manager, Corporate Services 
Office, Western Area Power Administration, 1627 Cole Boulevard, P.O. 
Box 3402, Golden, CO 80401-0098, telephone (303) 275-2700, fax (303) 
275-1290, email: [email protected]. All documentation developed or 
retained by Western during the course of this public process will be 
available for inspection and copying at this address.

FOR FURTHER INFORMATION CONTACT:
Robert C. Fullerton, Project Manager, Corporate Services Office, 
Western Area Power Administration, 1627 Cole Boulevard, P. O. Box 3402, 
Golden, CO 80401-0098, telephone (303) 275-2700, email: 
[email protected].
Joel K. Bladow, Regional Manager, Rocky Mountain Region, Western Area 
Power Administration, P.O. Box 3700, Loveland, CO 80539-3003, telephone 
(970) 490-7201, email: [email protected].
J. Tyler Carlson, Regional Manager, Desert Southwest Region, Western 
Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005-6457, 
telephone (602) 352-2453, email: [email protected].
David Sabo, Customer Service Center Manager, Colorado River Storage 
Project, Western Area Power Administration, P.O. Box 11606, Salt Lake 
City, UT 84147-0606, telephone (801) 524-6372, email: [email protected].
Jerry W. Toenyes, Regional Manager, Sierra Nevada Region, Western Area 
Power Administration, 114 Parkshore Drive, Folsom, CA 95630-4710, 
telephone (916) 353-4418, email: [email protected].
Gerald C. Wegner, Regional Manager, Upper Great Plains Region, Western 
Area Power Administration, P.O. Box 35800, Billings, MT 59107-5800, 
telephone (406) 247-7405, email: [email protected].

SUPPLEMENTARY INFORMATION:

Authorities

    This public process is being conducted pursuant to the Department 
of Energy Organization Act (42 U.S.C. 7101, et seq.); 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.

Background

    Western is a Federal power marketing administration, charged with 
the responsibility of marketing electricity generated by power plants 
operated by the Bureau of Reclamation, the Corps of Engineers, and the 
International Boundary and Water Commission. Created in 1977, Western 
markets on a wholesale basis and transmits Federal hydroelectric power 
throughout 1.3 million square miles to more than 600 customers, 
including rural electric cooperatives, municipal utilities, public 
utility districts, Federal and State agencies, and irrigation 
districts. Western's power customers, in turn, provide service to 
millions of consumers in 15 western States.
    Western markets power on a project-specific basis. A marketing plan 
for each project is developed through a public process, with 
opportunity for comment on a marketing proposal before publication of 
the final marketing plan in the Federal Register. Reclamation law 
governs how Western markets electricity, including the requirement that 
Western offer power first to non-profit entities such as rural electric 
cooperatives and municipalities.
    In the first decade of Western's existence, marketing plans were 
relatively inflexible. Unless new generation was available, the amount 
of power made available for potential new customers was relatively 
small. Contracts with terms up to 30 years were negotiated and signed. 
No capability existed under contracts to adjust Western's marketable 
resources in the event that power plant operational changes were 
necessary due to environmental considerations.
    In recent years, Western added more flexibility to its marketing 
policies and power sales contracts. On October 20, 1995, Western 
adopted a final rule for the Energy Planning and Management Program 
(Program) (60 FR 54151), which established a framework for the project-
specific allocation of hydropower. Pursuant to the Program, Western 
signed resource extension contracts with existing customers for the 
sale of power from the Pick-Sloan Missouri Basin Program-Eastern 
Division and the Loveland Area Projects. These 20-year contracts 
contain withdrawal opportunities at 5 and 10 years to meet the needs of 
potential new customers and other purposes as determined by Western. 
Western also reserved the contractual ability to adjust power 
commitments in response to changes in operations and hydrology. In 
addition, Western has full flexibility to adjust its power rates under 
the terms of the contracts. Resource pools of up to 6 percent of the 
marketable resource were set aside to meet the needs of new customers, 
including Indian tribes.
    While the Program did not immediately impact the marketing of power 
from the Central Valley Project (CVP), Washoe Project, and Salt Lake 
City Area Integrated Projects (SLCA/IP), Western anticipated that 
Program

[[Page 66167]]

application would be evaluated for these projects in the future. Much 
work has already been done to advance the completion of the marketing 
plans for the CVP, Washoe Project, and SLCA/IP, pursuant to the 
Program's framework.
    There is now a further need to consider the impact of electric 
utility industry restructuring on the way that we allocate power. 
Western seeks public input on six questions to help in this 
consideration.
    Upon completion of this public process, Western will consult with 
the Department of Energy (DOE) prior to taking further action to 
complete pending power marketing plans.
    While this public process was triggered by marketing proposals for 
CVP, Washoe Project, and SLCA/IP firm power, Western regards the issues 
addressed in this public process as relevant to all of our power 
allocation efforts. However, the conclusions we reach will be applied 
prospectively, and will not impact existing marketing plans and 
contracts.
    As electric utility industry restructuring progresses over time, 
Western likely will evaluate the impact of industry change on a 
periodic basis to assure that our power marketing policy continues to 
be responsive to public needs.

Regulatory Procedure Requirements

Review 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.

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601, et seq.) 
requires Federal agencies to perform a regulatory flexibility analysis 
if a final rule is likely to have a significant economic impact on a 
substantial number of small entities and there is a legal requirement 
to issue a general notice of proposed rulemaking. Western has 
determined that this action does not require a regulatory flexibility 
analysis since it is a rulemaking of particular applicability involving 
rates or services applicable to public property.

Environmental Compliance

    DOE National Environmental Policy Act (NEPA) regulations 
categorically exclude marketing plans from NEPA documentation unless 
they involve new generation, new transmission, or a change in 
operations. Therefore, Western will not conduct further evaluation 
under NEPA. Considerable environmental evaluation has already occurred 
under the Energy Planning and Management Program and during project-
specific marketing plan development.
Scope of Issues
    Public comment is requested on the following questions:
    1. Should Western's power allocations system, including the term of 
firm power contract renewals, be modified to take into account changes 
in electricity markets that have occurred, and are expected to occur in 
the future, due to the enactment of California Assembly Bill 1890 and 
other State retail competition statutes? If so, please explain what 
modifications would be desirable. If not, please explain why the 
present system should be preserved.
    2. To the extent a utility with an allocation of preference power 
loses load due to retail competition, should it receive the same 
allocation as it received previously or should its allocation be 
reduced proportionately?
    3. Should Western allocate power directly to electricity end-users 
that are preference entities such as publicly-owned schools in States 
or localities that permit retail access? If so, how much power should 
be allocated for this purpose? Alternatively, should Western continue 
to allocate power primarily to its traditional customers such as 
municipal and cooperative utilities and Federal and State agencies?
    4. In a retail choice environment, what additional steps, if any, 
should Western take to ensure that the full economic benefits of 
preference power are passed through to end-users served by the 
distribution utility that receives a power allocation from Western?
    5. Should a distribution utility be permitted to transmit the 
economic benefits of preference power exclusively to industrial and/or 
commercial end users? Conversely, should a distribution utility be 
required to pass on the benefits of preference power exclusively to a 
certain class of customers such as residential or small business?
    6. Should a distribution utility be required to offer retail access 
to its distribution customers as a condition of receiving a preference 
power allocation in the future?

    Dated: November 20, 1998.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 98-32009 Filed 11-30-98; 8:45 am]
BILLING CODE 6450-01-P