[Federal Register Volume 64, Number 90 (Tuesday, May 11, 1999)]
[Notices]
[Pages 25323-25334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11864]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Desert Southwest Customer Service Region Network Integration 
Transmission and Ancillary Services--Rate Order No. WAPA-84

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Rate Order.

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SUMMARY: Notice is given of the confirmation and approval by the 
Secretary of the Department of Energy (DOE) of Rate Order No. WAPA-84 
and Rate Schedules DSW-SD1, DSW-RS1, DSW-FR1, DSW-EI1, DSW-SPR1, DSW-
SUR1, PD-NTS1, and INT-NTS1 placing into effect provisional formula 
rates for the Desert Southwest Customer Service Region (DSW) network 
integration transmission services (NTS) for Parker-Davis Project (P-DP) 
and Pacific Northwest-Pacific Southwest Intertie Project (Intertie) and 
ancillary services for the Western Area Lower Colorado (WALC) control 
area. The provisional formula rates will remain in effect on an interim 
basis until the Federal Energy Regulatory Commission (FERC) confirms, 
approves, and places them into effect on a final basis.

DATES: The formula rates will be placed into effect from April 1, 1999, 
through March 31, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. Maher A. Nasir, Rates Team Lead, 
telephone (602) 352-2768, or Mr. Tyler Carlson, Regional Manager, 
telephone (602) 352-2453, Desert Southwest Customer Service Region, 
Western Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005-
6457.

SUPPLEMENTARY INFORMATION: On December 7, 1998, the Administrator of 
Western Area Power Administration (Western) approved formula rate 
methodologies for short-term sales of NTS and ancillary services in the 
Western Area Lower Colorado (WALC) control area of the Desert Southwest 
Region. The six ancillary services include: scheduling, system control, 
and dispatch service; reactive supply and voltage control service; 
regulation and frequency response service; energy imbalance service; 
spinning reserve service, and supplemental reserve service. The 
provisional formula rates will replace the formula rates for short-term 
sales.

Provisional Rate Formula for Network Integration Transmission 
Service

    NTS will be separately provided from P-DP and Intertie. The charge 
for NTS is the product of the transmission customer's load-ratio share 
times one-twelfth of the annual transmission revenue requirement. The 
customer's load-ratio share is calculated on a rolling 12-month basis 
(12-CP). The customer's load-ratio share is equal to the network 
transmission customer's hourly load coincident with Western's 
corresponding transmission system's monthly peak divided by the 
resultant value of the corresponding transmission system's monthly peak 
minus the coincident peak for all corresponding firm point-to-point 
transmission service plus corresponding firm point-to-point 
reservations.

Provisional Rates for Ancillary Services

    Six ancillary services will be offered by DSW for WALC, two of 
which are required to be purchased by the transmission customer. These 
two are: (1) scheduling, system control, and dispatch service and (2) 
reactive supply and voltage control service. The remaining four 
ancillary services (3) regulation and frequency response service; (4) 
energy imbalance service; (5) spinning reserve service; and (6) 
supplemental reserve service will be offered, but are subject to 
availability from DSW generation resources. If DSW is unable to provide 
these services from its own resources, it will provide the services by 
making market purchases and passing these costs directly to the 
customer plus a 10 percent administrative charge.
    Scheduling, system control, and dispatch service costs are included 
in transmission service provided by DSW. The scheduling, system 
control, and dispatch formula rates apply only to non-transmission 
customers, and depending on the type of service, will vary between 
$34.10 and $56.20 per schedule per day.

[[Page 25324]]

    Reactive supply and voltage control ancillary service is calculated 
by dividing the combined revenue requirement for the service by the sum 
of control area average firm power allocation, network transmission 12-
CP and firm transmission reservations, yielding a rate of $0.07/
kWmonth.
    Regulation and frequency response service is not available on a 
long-term basis from DSW. If available for short-term sales, the price 
will be equal to the firm-capacity rate of the specific power project 
supplying the service.
    An energy imbalance account will be maintained for each customer 
scheduling energy in the WALC control area at no charge. DSW reserves 
the right to assess a penalty applied against deviations outside a 3 
percent bandwidth (1.5 percent deviations), with a 2 MW 
deviation minimum. A penalty charge of 100 mills/kWh may be assessed 
for under-deliveries (negative excursion) greater than 1.5 percent and 
occurring more than five times per month. Over-deliveries (positive 
excursion) will be credited to the customer for 50 percent of the 
market value of the over-delivery within 30 days, provided the over-
deliveries do not impinge upon DSW operations.
    No reserves of either spinning or supplemental are available from 
DSW resources.
    The formula rates for DSW NTS and ancillary services are developed 
pursuant to the Department of Energy Organization Act (42 U.S.C. 7101 
et seq.), through which the power marketing functions of the Secretary 
of the Interior and the Bureau of Reclamation under 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 project involved, were transferred to and vested in 
the Secretary of Energy.
    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 into effect on an interim 
basis to the Deputy Secretary of Energy; and (3) the authority to 
confirm, approve, and place into effect on a final basis, to remand, or 
to disapprove such rates to FERC. By subsequent Order effective April 
15, 1999, the Secretary rescinded all delegations of authority to the 
Deputy Secretary, whether contained in Delegation Orders, Departmental 
Directives, or elsewhere, concerning the Department's Power Marketing 
Administrations, including, but not limited to, authority delegated or 
affirmed in Delegation Order No. 204-108, as amended.
    Rate Order No. WAPA-84 was prepared pursuant to Delegation Order 
No. 0204-108, the Secretarial Order rescinding delegations to the 
Deputy Secretary concerning the Power Marketing Administrations 
effective April 15, 1999, existing DOE procedures for public 
participation in power rate adjustments in 10 CFR part 903, and 
procedures for approving power marketing administration rates by FERC 
in 18 CFR part 300. Rate Order No. WAPA-84, confirming, approving, and 
placing the provisional formula rates for DSW NTS and ancillary 
services into effect on an interim basis, is issued, and the new Rate 
Schedules DSW-SD1, DSW-RS1, DSW-FR1, DSW-EI1, DSW-SPR1, DSW-SUR1, PD-
NTS1, and INT-NTS1 will be submitted promptly to FERC for confirmation 
and approval on a final basis.

    Dated: April 29, 1999.
Bill Richardson,
Secretary.

Order Confirming, Approving, and Placing the Desert Southwest 
Customer Service Region Network Integration Transmission and 
Ancillary Services Formula Rates Into Effect on an Interim Basis

April 1, 1999.
    The Desert Southwest Customer Service Region (DSW) network 
integration transmission services (NTS) and ancillary services formula 
rates are developed pursuant to the Department of Energy (DOE) 
Organization Act (42 U.S.C. 7101 et seq.), through which the power 
marketing functions of the Secretary of the Interior and the Bureau of 
Reclamation under 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 project 
involved, were transferred to and vested in the Secretary of Energy 
(Secretary).
    By Amendment No. 3 to Delegation Order No. 0204-108, published 
November 10, 1993 (58 FR 59716), the Secretary delegated (1) the 
authority to develop long-term power and transmission rates on a 
nonexclusive basis to the Administrator of the Western Area Power 
Administration (Western); (2) the authority to confirm, approve, and 
place such rates into effect on an interim basis to the Deputy 
Secretary of Energy; and (3) the authority to confirm, approve, and 
place into effect on a final basis, to remand, or to disapprove such 
rates to the Federal Energy Regulatory Commission (FERC). By subsequent 
Order effective April 15, 1999, the Secretary rescinded all delegations 
of authority to the Deputy Secretary, whether contained in Delegation 
Orders, Departmental Directives, or elsewhere, concerning the 
Department's Power Marketing Administrations, including, but not 
limited to, authority delegated or affirmed in Delegation Order No. 
0204-108, as amended. Existing DOE procedures for public participation 
in power rate adjustments are found at 10 CFR part 903. Procedures for 
approving power marketing administration rates by FERC are found at 18 
CFR part 300.

Acronyms and Definitions

    As used in this rate order, the following acronyms and definitions 
apply:

    access: The contracted right to use an electrical system to 
transfer electrical energy.
    ancillary services: Those services necessary to support the 
transmission of capacity and energy from resources to loads while 
maintaining reliable operation of the transmission provider's 
transmission system in accordance with FERC Order Nos. 888 and 889 
and Western's Tariff.
    Basin Fund: Upper Colorado River Basin Fund, established as part 
of Colorado River Storage Project Act of April 11, 1956, for 
defraying the costs of operation, maintenance, and replacement of 
and emergency expenditures for all facilities of the CRSP.
    BCP: Boulder Canyon Project.
    capacity: The rated continuous load-carrying ability, expressed 
in megawatts (MW) or megavolt-amperes (MVA), of generation, 
transmission, or other electrical equipment.
    control area: An electric system or systems, bounded by 
interconnections metering and telemetry, capable of controlling 
generation to maintain its interchange schedule with other control 
areas and contributing to frequency regulation of the 
interconnection.
    CRSP: Colorado River Storage Project (includes Seedskadee and 
Dolores Projects).
    CRSP CSC: Western's Colorado River Storage Project Customer 
Service Center, in Salt Lake City, Utah.
    customer: Any entity which receives transmission, or ancillary 
services under this rate order.
    DOE: United States Department of Energy.
    demand: The rate at which electric energy is delivered to or by 
a system or part of a system, generally expressed in kilowatts or 
megawatts, at a given instant or average over any designated 
interval of time.
    DSW: Desert Southwest Customer Service Region.

[[Page 25325]]

    energy imbalance service: Is provided when a difference occurs 
between the scheduled and actual delivery of energy to a load or 
from a generation resource within a control area over a single 
month.
    FERC: Federal Energy Regulatory Commission.
    firm point-to-point transmission service: Transmission service 
that is reserved between points of receipt and delivery.
    FRN: Federal Register notice.
    FY: Fiscal Year.
    Glen Canyon: One of the storage units of the CRSP.
    Intertie: Pacific Northwest-Pacific Southwest Intertie Project.
    kW: Kilowatt; 1,000 watts.
    kWh: Kilowatt-hour; the common unit of electrical energy, equal 
to a kW taken for a period of 1 hour.
     kWmonth: Kilowatt-month; the common unit of electrical energy, 
equal to a kW taken for a period of 1 month.
     kWyear: Kilowatt-year; the common unit of electrical energy, 
equal to a kW taken for a period of 1 year.
     load: An end-use device or customer that receives power from 
the electric system.
     load-ratio share: Ratio of a transmission customer's network 
load to the transmission provider's system peak load calculated on a 
rolling twelve-month basis.
     mill: Unit of monetary value equal to .001 of a U.S. dollar; 
i.e., 1/10th of a cent.
     mills/kWh: Mills per kilowatt-hour.
    MW: Megawatt; equal to 1,000 kW or 1,000,000 watts.
    NEPA: National Environmental Policy Act of 1969.
    NTS: Network integration transmission service.
    non-firm point-to-point transmission service: Point-to-point 
transmission service under the Tariff that is scheduled on an as-
available basis and is subject to curtailment or interruption.
    OASIS: Open Access Same Time Information System.
    operating reserve: Spinning reserve service and supplemental 
reserve service.
    P-DP: Parker-Davis Project.
    PCF: Public comment forum.
    peak: Those hours or other periods defined by contract or other 
agreements or guides as periods of higher electrical demand.
    PIF: Public information forum.
    PRS: Power repayment study.
    Rate Brochure: A document prepared for public distribution 
explaining the background and purpose of this rate adjustment 
proposal.
    reactive power: Portion of total power required to produce flux 
necessary to the operation of electromagnetic devices (such as, 
transformers). The unit of measurement is the VAR.
    reactive supply and voltage control: Provides reactive supply 
through changes to generator reactive output to maintain 
transmission line voltage and facilitate electricity transfers.
    Reclamation: U.S. Bureau of Reclamation, Department of the 
Interior.
    regulation and frequency response service: Provides for 
following the moment-to-moment variations in the demand or supply in 
a control area and maintaining scheduled interconnection frequency.
    RMR: Rocky Mountain Customer Service Region.
    SCADA: System Control and Data Acquisition.
    schedule: An agreed upon transaction for delivery and receipt of 
power and energy between the contracting parties and the control 
area(s) or transmission provider involved in the transaction.
    scheduling, system control, and dispatch service: Provides for 
(a) scheduling; (b) confirming and implementing an interchange 
schedule with other control areas, including intermediary control 
areas providing transmission service; and (c) ensuring operational 
security during the interchange transaction.
    SLCA/IP: The Salt Lake City Area/Integrated Projects, which are 
the CRSP, Collbran, and Rio Grande projects.
    spinning reserve service: Providing capacity that is available 
to serve load immediately in the event of a system contingency. 
Spinning reserve may be provided by generating units that are on-
line and loaded at less than maximum output.
    supplemental reserve service: Is needed to serve load in the 
event of a system contingency. This service is not available 
immediately to serve load but rather within a short period of time.
    system: An interconnected combination of generation, 
transmission, and distribution components.
    Tariff: Open Access Transmission Service Tariff.
    transmission: The movement or transfer of electric energy 
between points of supply and points at which it is transformed for 
delivery to customers or is delivered to other electric systems.
    transmission customer: An eligible customer (or its designated 
agent) that can or does execute a transmission service agreement or 
can or does receive transmission service.
    transmission provider: Any public utility that owns, operates, 
or controls facilities used for the transmission of electric energy 
in interstate commerce.
    transmission service: Point-to-point transmission service 
provided on a firm or non-firm basis.
    transmission system: The facilities owned, controlled, or 
operated by the transmission provider that are used to provide 
transmission service.
    WALC: Western Area Lower Colorado control area.
    WACM: Western Area Colorado Missouri control area.

Effective Date

    The formula rates will become effective on the first day of the 
billing period on or after April 1, 1999, and remain in effect until 
March 31, 2004, pending FERC's approval of them or substitute rates or 
until superseded. These formula rates will be applied to transmission 
service agreements under the Tariff and conform with the spirit and 
intent of FERC Order No. 888.

Public Notice and Comments

    The following summarizes the steps taken by DSW to ensure the 
involvement of interested parties in the rate process:
    1. During 1997 and the spring of 1998, DSW hosted a series of 
meetings presenting alternatives for ancillary services and taking 
comments from those who attended.
    2. A Federal Register notice was published on June 19, 1998 (63 FR 
118), officially announcing the proposed NTS and ancillary services 
rates adjustment, initiating the public consultation and comment 
period, announcing the public information and public comment forums, 
and outlining procedures for public participation.
    3. On June 16, 1998, DSW mailed a copy of the ``Parker-Davis 
Project, Boulder Canyon Project, Pacific Northwest-Pacific Southwest 
Intertie Project Transmission and Ancillary Services Rate Adjustment 
Brochure'' to all firm transmission and power customers and interested 
parties of those projects and to the Salt Lake City Area/ Integrated 
Projects (SLCA/IP) firm power, and Colorado River Storage Project 
(CRSP) transmission customers who receive services from DSW's control 
area.
    4. On June 30, 1998, DSW held a public information forum (PIF) in 
which the information contained in the Brochure was explained. After 
the presentation, participants questioned DSW personnel on the 
particulars of the proposed rates.
    5. On July 30, 1998, DSW held a public comment forum (PCF). 
Participants gave statements of their concerns on the proposed rates.
    6. On August 28, 1998, DSW sent a letter to all participants in the 
PCF and PIF answering any questions which were not answered in the PIF.
    7. The consultation and comment period ended on September 18, 1998.

Project Description

    Western is a Federal power marketing administration. It was created 
in 1977 by section 302(a)(1)(E) and (F) of the Department of Energy 
Organization Act 42 U.S.C. 7152, to perform the power marketing and 
transmission functions previously performed by the Bureau of 
Reclamation (Reclamation) for the Secretary of the Interior. DSW 
markets approximately 2,243 MW of generation capacity from its two 
power projects--P-DP and BCP. DSW serves firm electric and transmission 
customers in a three-State area, over a transmission system of 
approximately 2,097 miles and 74 substations.

[[Page 25326]]

Parker-Davis Project

    In 1954, the Parker Dam Project and the Davis Dam Project were 
consolidated to form the Parker-Davis Project (P-DP). The major works 
include Davis Dam and Powerplant, Parker Dam and Powerplant, a high-
voltage transmission system, and substations which sectionalize the 
long transmission lines.
    Lake Havasu, formed by Parker Dam, provides a forebay and desilting 
basin from which the Metropolitan Water District pumps water into its 
Colorado River Aqueduct. Parker Dam Powerplant was added to provide 
low-cost electrical energy to Arizona and southern California. Davis 
Dam provides re-regulation of the Colorado River below Hoover Dam and 
facilitates water delivery beyond the boundary of the United States as 
required by treaty with Mexico. The Davis Dam portion of the project 
also provides for production and transmission of electrical energy, 
contributes to flood control, irrigation and municipal water supplies, 
navigation improvement, recreation, and wild waterfowl protection and 
related conservation purposes.
    The firm point-to-point transmission service rate for P-DP 
calculated under rate schedule PD-FT6 is $12.99/kWyear. The non-firm 
point-to-point transmission service rate for P-DP calculated under rate 
schedule PD-NFT6 is 2.47 mills/kWh.

Boulder Canyon Project

    Authorized by the Act of December 21, 1928 (45 Stat. 1057), subject 
to the terms of the Colorado River Compact, the Boulder Canyon Project 
(BCP) was conceived for the regulation of the Colorado River to relieve 
the constantly recurring cycles of flood and drought for the residences 
of the Southwest. Hoover Dam facilities include a 1,344,800-kilowatt 
powerplant. The dam and high-voltage switchyards are located in the 
Black Canyon of the Colorado River, on the Arizona-Nevada State line. 
Lake Mead, the reservoir behind Hoover Dam, will hold the entire flow 
of the river for 2 years. This storage, in addition to providing for 
improvement of navigation, river regulation, and flood control, 
provides for the delivery of stored water for irrigation and other 
beneficial consumptive uses, and for the generation of electrical 
energy.

Pacific Northwest-Pacific Southwest Intertie Project

    The Pacific Northwest-Pacific Southwest Intertie Project (Intertie) 
was authorized as part of a much larger alternating current and direct 
current combined transmission system, by Section 8 of the Act of August 
31, 1964, 16 U.S.C. 837g. The basic purpose of the combined 
transmission system was to provide, through power transmission system 
interconnections, maximum use of the total power resources to meet the 
Nation's growing demands. This purpose was to be accomplished through: 
(1) the exchange of summer-winter surplus peaking capacity between the 
northwest and southwest to reduce capital expenditures for new 
generating capacity, (2) the sale of northwest secondary energy to the 
southwest, (3) the sale of southwest energy to the northwest to 
``firm'' peaking hydroelectric sources during critical water years, (4) 
conservation of significant amounts of fuel through the use of surplus 
hydroelectric energy, and (5) increased efficiency in the operation of 
hydroelectric and thermal resources.
    The Intertie facilities extend from Mead Substation in southern 
Nevada near Boulder City and Hoover Dam, southeast through Arizona, to 
the Phoenix area. The major features of the system are the Mead and 
Liberty Substations, a 260-mile Mead-Phoenix 500-kV AC Transmission 
Line from the Marketplace Substation to Perkins Substation, a 238-mile 
Mead-Liberty 345-kV Transmission Line, a 31-mile Liberty-Westwing 230-
kV Transmission Line, and the 22-mile Westwing-Pinnacle Peak 230-kV 
Transmission Line.
    The firm point-to-point transmission service rate for the Intertie 
calculated under rate schedule INT-FT2 is $6.58/kWyear for service on 
the 230/345-kV transmission system and $17.23/kWyear for service on the 
500-kV transmission system. The non-firm point-to-point transmission 
service rate for the Intertie calculated under rate schedule INT-NFT2 
is 2.00 mills/kWh.

Discussion

Control Area Consolidation

    On April 1, 1998, the Western Area Upper Colorado control area, 
within which SLCA/IP generation and most of the CRSP transmission 
system lies, was divided between with two other control areas, the 
Western Area Colorado Missouri (WACM) operated by Western's Rocky 
Mountain Customer Service Region (RMR), and the Western Area Lower 
Colorado (WALC), operated by DSW. SLCA/IP generation is consolidated by 
the DSW operations, and the transmission lines were divided at Four 
Corners Substation.

Network Integration Transmission Service

    DSW will offer NTS to all eligible transmission customers. NTS is 
subject to availability. NTS will be offered separately for P-DP and 
Intertie. Annual power repayment studies (PRS), prepared separately for 
P-DP and Intertie, are used to derive the annual transmission revenue 
requirement for NTS. Annual transmission costs used to determine this 
revenue requirement are operation and maintenance expense, 
administrative and general expense, principal expense, and interest 
expense.
    The monthly charge for NTS is the product of the transmission 
customer's load-ratio share times one-twelfth of the annual 
transmission revenue requirement. The customer's load-ratio share is 
calculated on a rolling twelve-month basis (12-CP). As outlined in 
DSW's rate adjustment brochure, the customer's load-ratio share is 
equal to the network transmission customer's hourly load coincident 
with the corresponding transmission system's monthly peak hour divided 
by the resultant value of the corresponding transmission system's 
monthly peak minus the monthly coincident peak for all corresponding 
firm point-to-point transmission service plus corresponding firm point-
to-point reservations. In order to ensure the collection of the 
transmission systems' annual revenue requirement, the difference 
between the first two components of the resultant value outlined above 
constitutes the network transmission systems' monthly peak and is 
anticipated to be metered. Thus, an NTS customer, based on its 12-CP 
load, will pay its proportionate share of the revenue requirement for 
the month. Since DSW's point-to-point transmission customers are 
charged on a reservation and not a usage basis, for the purposes of 
determining the NTS charge, the transmission systems' monthly peak will 
coincide with the network transmission systems' monthly peak.
    Based on updated financial and load data a recalculated revenue 
requirement will go into effect on October 1 of each year during the 
effective rate schedule period.

Ancillary Services

    DSW has marketed the maximum practical amount of power from each of 
its projects, leaving little or no flexibility for provision of 
additional electric services from the projects. Changes in water 
conditions frequently affect the ability of hydroelectric projects to 
meet obligations on a short-term basis. The unique characteristics of

[[Page 25327]]

the hydro resource, Western's marketing plans, and the limitations of 
the resource due to changing water conditions limit Western's ability 
to provide generation-related services, including ancillary services 
using Federal hydro resources.
    Six ancillary services will be offered by DSW, two of which are 
required to be purchased by the transmission customer. These two are: 
(1) scheduling, system control, and dispatch service and (2) reactive 
supply and voltage control services. The remaining four ancillary 
services (3) regulation and frequency response service; (4) energy 
imbalance service; (5) spinning reserve service; and (6) supplemental 
reserve service--will be offered but are subject to availability from 
DSW generation resources. If DSW is unable to provide these services 
from its own resources, it will provide the services by making market 
purchases and passing these costs directly to the customer plus a 10 
percent administrative charge.
    The provisional formula rates for ancillary services are designed 
to recover only the costs incurred for providing the service(s). The 
rates for ancillary services are based on WALC control area costs. The 
formula rates will be recalculated every year, effective October 1, 
based on the approved formula and updated financial and load data. DSW 
will provide customer notice of changes in rates no later than 
September 1 of each year.
    The six ancillary services are as follows:

Scheduling, System Control, and Dispatch Service

    Scheduling, system control, and dispatch costs are included in the 
existing firm point-to-point transmission, firm power, and provisional 
network integration transmission service rates. The provisional 
scheduling, system control, and dispatch rate formulas apply only to 
non-transmission customers.
    The formula rates for scheduling, system control, and dispatch are 
based on an annual cost of all capital costs (such as the dispatch 
center building) and labor costs associated with the service. The 
ancillary service is charged on a per schedule basis shown on Table 1 
(below).
    The cost per schedule per day was determined by multiplying the 
labor cost per minute, times the average number of minutes it takes to 
accomplish each type of schedule and adding the associated capital cost 
amortized over 32 years divided by the average number of schedules in a 
year. DSW will allow up to five schedule changes per transaction per 
day at no additional charge. The sixth schedule change will be charged 
as a new schedule.
    The rates charged for scheduling, system control, and dispatch 
ancillary service are contingent on the type of service required (i.e., 
new versus existing schedule, SCADA versus no SCADA programming, and 
intra-bus transfer versus no intra-bus transfer). The rates are shown 
in the table below.

                                 Table 1
------------------------------------------------------------------------
                                                                Maximum
                                                               Cost ($)
                        Schedule type                             per
                                                               schedule
                                                                per day
------------------------------------------------------------------------
Existing schedule, requires no SCADA programming or intra-         34.10
 bus transfer \1\...........................................
New schedule, requires SCADA programming, no intra-bus             37.50
 transfer...................................................
Existing schedule, requires no SCADA programming, requires         46.85
 intra-bus transfer.........................................
New schedule, requires SCADA programming, and intra-bus           56.20
 transfer...................................................
------------------------------------------------------------------------
\1\ Multiple exchange of ownership in an interchange schedule is known
  as intra-bus transfer schedule.

Reactive Supply and Voltage Control Service From Generation Sources

    The transmission provider must offer this service to the 
transmission customer for each transaction on the transmission 
provider's transmission facilities. The transmission customer must 
purchase this service from the transmission provider or the control 
area operator. The rate for reactive supply and voltage control 
ancillary service is calculated by dividing the combined revenue 
requirement for the service of P-DP, BCP, and SLCA/IP, by the sum of 
the control area's average firm-power allocation transmission 
reservations, network transmission (12-CP) and average firm 
transmission reservations, yielding a rate of $0.07/kWmonth. Revenues 
from this service will be allocated to each project based on a 
relationship to reactive power produced.
    The rate presented at the PIF was $.08/kWmonth. The difference in 
the two rates is due to the addition of the Intertie transmission 
reservations, which had been inadvertently excluded, to the denominator 
of the equation.

Regulation and Frequency Response Service

    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 (Regulation) 
obligation. Regulation is not available from DSW resources on a long-
term firm basis.
    Initially, DSW proposed a single control area charge. However, 
based on comments received and further analysis, DSW has determined, if 
available, it will charge the firm-capacity rate of the project 
providing the regulation. The effective firm-capacity rate for BCP is 
found under rate schedule BCP-F5. The effective firm-capacity rate for 
P-DP is found under rate schedule PD-F6. The effective firm-capacity 
rate for SLCA/IP is found under rate schedule SP-FR1. If unavailable, 
DSW, upon request, will obtain the service on the open market for the 
customer and pass through the cost of the service, plus a 10 percent 
administrative charge.

Energy Imbalance Service

    An energy imbalance account will be maintained for each customer 
scheduling energy in the WALC control area. There will be no charge for 
maintaining an energy imbalance account. 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 request 
this service from the transmission provider or make alternative 
comparable arrangements to satisfy its energy imbalance service 
obligation. DSW established guidelines for energy imbalance service as 
deviations outside a 3 percent bandwidth ( 1.5 percent 
hourly deviations), with a 2 MW deviation minimum. These guidelines are 
consistent with FERC for this service. DSW reserves the right to assess 
a penalty applied against under-delivery (negative excursion) greater 
than 1.5 percent and occurring more than five times per month may be 
assessed a penalty charge of 100 mills/kWh; e.g., the sixth time an 
under-delivery occurs within a month, the 100 mills/kWh charge will be 
applied.
    Any over-delivery (positive excursion) will be credited to the 
customer for 50 percent of the market value of the over-delivery within 
30 days, provided the over-deliveries do not impinge upon DSW 
operations. Deviation accounting will be completed monthly on an hour-
to-hour basis. The market value determinant will be the average monthly 
nonfirm price from DSW merchants operating within the WALC control 
area.

[[Page 25328]]

Operating Reserves--Spinning Reserve Service

    Spinning reserves are unavailable from WALC resources. DSW, upon 
request, will obtain reserves on the open market for the customer and 
pass through the cost of those reserves, plus a 10 percent 
administrative charge. Transmission customers will be responsible for 
the transmission service to get these reserves to their destination.

Operating Reserves--Supplemental Reserve Service

    Supplemental reserves are unavailable from WALC resources. DSW, 
upon request, will obtain reserves on the open market for the customer 
and pass through the cost of those reserves, plus a 10 percent 
administrative charge. Transmission customers will be responsible for 
the transmission service to get these reserves to their destination.

Existing and Provisional Rates

    This rate order seeks to place DSW's first NTS formula rates and 
ancillary service formula rates for long-term sales, and as such, no 
existing rates for comparative purposes can be displayed. The following 
table is a summary of the formula rates for NTS and ancillary services 
and rates for April 1, 1999, to September 30, 1999, based on these 
formulas:

                                                     Table 2
----------------------------------------------------------------------------------------------------------------
                                                                    Formula rate with rate for April 1, 1999 to
            Service type                  Service Description                   September 30, 1999.
----------------------------------------------------------------------------------------------------------------
Scheduling, System Control, and       Required to schedule the    Included in appropriate transmission rates.
 Dispatch.                             movement of power           For non-transmission customers, rate per
                                       through, out of, within,    schedule per day is between $34.10 for
                                       or into a control area.     existing schedule and $56.20 for new with
                                                                   intra-bus schedule and SCADA programming.
Reactive Supply and Voltage Control.  Reactive power support      $0.07/kWmonth. Combined revenue requirement
                                       provided from generation    for service/WALC average firm transmission
                                       facilities that is          reservations, (includes electric service
                                       necessary to maintain       reservations and network reservations).
                                       transmission voltages
                                       within acceptable system
                                       limits.
Regulation and Frequency Response...  Necessary for providing     Not available from DSW resources. If available
                                       generation to match         on short-term it will be priced at the
                                       resources and loads on a    capacity rate of the project supplying the
                                       real-time continuous        service. If not available, the service will
                                       basis. Rate will be         be purchased on the open market and the cost
                                       applied to resources        passed to the customer plus a 10 percent
                                       reserved for this service.  administrative charge.
Energy Imbalance....................  Provided when a difference  No charge for maintaining an energy imbalance
                                       occurs between the          account. Under-deliveries outside a 3 percent
                                       scheduled and the actual    bandwidth with a 2 MW deviation minimum may
                                       delivery of energy to a     be assessed a penalty. Over-deliveries may be
                                       load located within a       credited 50 percent of market within 30 days.
                                       control area over a
                                       single hour.
Spinning Reserve....................  Needed to serve load        Not available from DSW resources. If
                                       immediately in the event    requested, DSW will obtain on the open market
                                       of a system contingency.    and pass on cost plus a 10 percent
                                                                   administrative charge.
Supplemental Reserve................  Needed to serve load        Not available from DSW resources. If requested
                                       immediately in the event    DSW will obtain on the open market and pass
                                       of a system contingency;    on cost plus a 10 percent administrative
                                       however, it is not          charge.
                                       available immediately to
                                       serve load but, rather
                                       within a short period of
                                       time.
Network Integration Transmission      Transmission service based  Revenue Requirement/12 x customer's load-ratio
 Service.                              on customer's load-ratio    share.
                                       share.                        P-DP = $23,001,589.
                                                                     Intertie = $21,943,150.
----------------------------------------------------------------------------------------------------------------

Certification of Rates

    Western's Administrator has certified that the DSW NTS and 
ancillary services formula rates placed into effect on an interim basis 
herein are the lowest possible consistent with sound business 
principles. The formula rates have been developed in accordance with 
agency administrative policies and applicable laws.

Comments

    During the public consultation and comment period, Western received 
19 written comments on the rate adjustment. In addition, customer 
representatives from 10 organizations asked questions during the June 
30, 1998, PIF or commented during the July 30, 1998, PCF. All comments 
received during the consultation and comment period were reviewed and 
considered in preparing this rate order.
    Representatives from the following organizations made oral comments 
during either the PIF or the PCF:

Arizona Electric Power Cooperative, Arizona
Arizona Power Authority, Arizona
Arizona Public Service Company, Arizona
Colorado River Energy Distributors Association, Arizona
Irrigation & Electrical District Association of Arizona, and others
K.R. Saline & Associates, Arizona
Metropolitan Water District, Arizona
Meyer, Hendricks, Phoenix, Arizona
Resource Management International, Phoenix, Arizona
Wellton-Mohawk Irrigation and Drainage District, Arizona

    Representatives from the following organizations submitted written 
comments:

Aguila Irrigation District, Arizona
Arizona Electric Power Cooperative, Arizona
Arizona Power Authority, Arizona
Arizona Public Service Company, Arizona
Buckeye Water Conservation & Drainage District, Arizona
Colorado River Commission, Nevada
Colorado River Energy Distributors Association, Arizona
Electrical District No. 2, Pinal County, Arizona
Electrical District No. 3, Maricopa County, Arizona
Electrical District No. 4, Pinal County, Arizona
Electrical District No. 6, Pinal County, Arizona
Electrical District No. 8, Maricopa County, Arizona
Harquahala Valley Power District, Arizona
Irrigation & Electrical District Association of Arizona, and others
Maricopa Water District, Arizona
McMullen Valley Water Conservation & Drainage District, Arizona
Metropolitan Water District of Southern California, California
Roosevelt Irrigation District, Arizona
Salt River Project, Arizona
San Tan Irrigation District, Arizona
City of Stafford, Arizona

    The following comments were received during the public comment

[[Page 25329]]

period. DSW paraphrased and combined comments when it did not affect 
the meaning. Several comments are outside the scope of this rate order. 
In response to these comments, DSW has either indicated the proper 
forum for the comment or generalized DSW policy for clarification. 
DSW's response follows each comment.

Network Integration Transmission Service

    Comment: Several commentors want to know the level of NTS that 
Western expects to have available in P-DP and Intertie, and if Western 
has received any requests for that service. A commentor stated that 
Western should offer NTS.
    Response: At the time this rate order was published, DSW had not 
received any requests for NTS and no studies have been done to 
determine availability of NTS for any customers.
    Comment: A commentor expressed concern about the effect NTS will 
have on dispatch of SLCA/IP, P-DP, and BCP generation resources (e.g., 
redispatch obligation during a transmission constraint). A commentor 
requests explanation of the process to be undertaken when assessing 
NTS, and is concerned whether or not Western will consider potential 
legal, environmental, and operational issues related to providing NTS 
as part of the impact study prepared for requests for NTS. A commentor 
questions if the process to assess NTS is in a descriptive form and can 
it be accessed through the OASIS.
    Response: This question is outside the scope of this rate order 
process because it does not speak to the pricing of the service. 
Redispatch is discussed in section III of the Tariff. Requests for NTS 
will be evaluated on a case-by-case basis. The process for this 
evaluation is discussed in the Tariff, which is available by hot links 
in the OASIS. Furthermore, Western will evaluate its ability to provide 
NTS under section 32 of the Tariff and will continue to meet its firm 
contractual obligations. Western will not enter into any agreements 
which cause it to operate outside its operational, legal, and 
environmental parameters.
    Comment: A commentor wants clarification of how Western will 
allocate the cost of a load across two systems when the delivery is 
from a receipt point to a delivery point for a customer taking NTS.
    Response: Each project is treated as a separate transmission 
system. A customer requesting NTS from two different transmission 
systems, would have to make separate requests for this service from the 
respective transmission system's provider, and each transmission system 
would have to be evaluated for its capability to provide network 
service. If both transmission systems have the availability to provide 
NTS, then the transmission customer would have to pay for the network 
service on each of the transmission systems. DSW's NTS formula rates 
for the P-DP and Intertie transmission systems are the same, but the 
variable values for annual revenue requirement and loads are unique for 
each project. Therefore, a transmission customer receiving NTS on both 
the P-DP and Intertie transmission systems would receive monthly 
charges from each project based on the resultant formula calculation 
for each individual project.

Ancillary Services

Scheduling, System Control, and Dispatch

    Comment: A commentor stated that the rate for scheduling, system 
control, and dispatch service is too high.
    Response: Scheduling, system control, and dispatch service costs 
are included in all types of transmission service provided by DSW. The 
formula rate presented in this rate order uses an incremental cost 
approach and is applicable to non-transmission customers.
    Comment: A commentor believes that using a per schedule instead of 
a rate based on megawatts discriminates against small customers and is 
not comparable to what DSW is charging under its bundled services to 
its statutory service customers since firm customers are charged on a 
per kilowatt basis.
    Response: DSW's methodology for developing a rate for scheduling, 
system control, and dispatch service applies incremental cost recovery 
for services supplied to non-transmission customers. It allows DSW to 
differentiate between requests that require no programming or intra-bus 
transfers from those that do. Ultimately, DSW's intent is to recover 
the costs for providing the service. This intent is consistent with 
what DSW charges under its bundled services.

Reactive Supply and Voltage Control

    Comment: A commentor does not know how Western will determine power 
factor for customers passing through the system as opposed to serving 
loads within the control area.
    Response: This comment is outside the scope of this rate order 
process. However, the power factor may be measured at the customer's 
demarcation points to the WALC control area provided that they can be 
discretely identified.

Regulation

    Comment: A commentor wants to know how and under what conditions 
does Western expect to have regulation service available to offer on a 
long-term and short-term basis.
    Response: This question is outside the scope of the rate order. DSW 
has stated in this rate order that it does not expect to have 
regulation available for sale from its project generation on a long-
term basis. However, there may be short-term, hourly regulation 
available which would be priced at the firm-capacity rate of the 
project providing the service.
    Comment: A commentor wants clarification on how Western plans to 
price regulation provided by SLCA/IP resources (CRSP CSC rate or DSW 
rate) and to credit revenues to SLCA/IP resources for regulation 
provided (CRSP CSC rate or DSW rate).
    Response: This comment is addressed in the CRSP CRC rate process. 
Initially, DSW proposed single control area rate which included SLCA/
IP, P-DP, and BCP generation costs. Since that time, DSW has determined 
it will apply the firm-capacity rate of the generation project 
providing the regulation service. If unavailable, DSW, upon request, 
will purchase this service from the market, plus a 10 percent 
administrative charge.
    As approved by FERC at 84 FERC 61 para. 039 in the CRSP CSC rate 
process, the price for regulation will be determined under the SP-FR1 
rate schedule. The rate schedule provides for CRSP CSC to ``. . . 
obtain regulation on the open market for the customer and pass through 
the costs, plus a 10 percent administrative charge, if unavailable from 
SLCA/IP resources. If available for sale, the SLCA/IP firm-power 
capacity rate, currently in effect, will be charged.''
    If a transmission customer purchases this service from SLCA/IP 
generation, those revenues will go directly to the Basin Fund.
    Comment: A commentor expressed a preference for regulation revenue 
being allocated to the unit (or at least the project) that supplies the 
service rather than having an allocation based on the installed 
capacity. A commentor gave an example that if Hoover is providing the 
regulation, revenue should be credited toward the Hoover project. 
Another commentor requests that Western consider allocating the 
revenues assigned to DSW on the same basis as they are allocated 
between DSW and CRSP CSC, that is, based on the capacity used to 
provide the service.
    Response: Western considered these comments and agrees. Western has

[[Page 25330]]

changed the basis for the regulation service charge. The regulation 
service rate will be equal to the capacity charge for the project which 
supplies the service and revenues will be credited to that project.

Energy Imbalance

    Comment: A commentor expressed concern that it may be risky for 
Western to allow up to five ``free'' energy imbalance deviations based 
on deviation during the most costly hours of the month.
    Response: DSW has included in its energy imbalance compensation 
methodology a provision which allows the transmission customer to 
exceed the 1.5 percent bandwidth ``five times'' per month without 
penalty. DSW included this provision in its proposed methodology 
because it believes it is fair and reasonable. If DSW determines that 
exceeding the bandwidth more than ``five times'' without penalty is not 
reasonable, it may revise its rate schedule to include a more 
appropriate penalty. However, given that five times results in 5 hours 
out of an average of 730 hours in a month, DSW does not believe this is 
unreasonable and would not result in a significant risk.
    Comment: A commentor suggests Western's assessment for under-
delivery should be based on the greater of 100 mills/kWh or the real-
time cost of dealing with the imbalance and requests that DSW consider 
imposing a penalty upon entities which continually under-deliver their 
schedule, even if they remain within the proposed 1.5 percent 
allowance.
    Response: DSW believes 100 mills/kWh is adequate to cover costs. 
The energy will be returned in addition to the penalty, if DSW 
determines it should be assessed. Within normal operations, it is 
reasonable to expect some amount of under-delivery throughout a month.

Spinning and Supplemental Reserves

    Comment: A commentor wants to know if Western intends to provide 
short-term spinning and supplemental reserve services. If so, at what 
rate?
    Response: DSW does not expect to have short-term spinning and 
supplemental reserve services. DSW will offer to purchase this service 
for a transmission customer, and pass through the cost, plus a 10 
percent administrative charge.
    Comment: A commentor requested clarification that Western would 
obtain reserves only upon the request of specific customers and that 
those costs would be borne entirely by the requesting customers.
    Response: This is correct. The costs to the requesting customer 
will also include a 10 percent administrative charge.

General

    Comment: A commentor wants to know how Western will determine what 
excess ancillary services are available for the market.
    Response: This comment is outside the scope of this rate process. 
The method for determining excess ancillary services will be determined 
in the implementation process.
    Comment: Several commentors questioned Western's ability to account 
for and properly allocate across the DSW projects the costs incurred in 
providing ancillary services.
    Response: DSW believes it has allocated costs appropriately among 
all projects. Costs are in the rates expressed as the revenue 
requirement. The method for accounting for the costs was developed in 
an informal work group.
    Comment: A commentor suggests that the rate order should document 
Western's limited ability to provide NTS and ancillary services and 
recommends adoption of language previously stated by CRSP CSC.
    Response: Western recognizes its limited ability to provide 
generation-related services from all its projects, as reflected in its 
Tariff which states, ``Western has marketed the maximum practical 
amount of power from each of its projects, leaving little or no 
flexibility for provision of additional power services.''
    DSW recognizes the fact that it has limited ability to provide NTS 
and ancillary services and has stated this fact in this rate order. For 
those ancillary services that DSW is unable to provide from its own 
resources, DSW, upon customer request, will purchase the service and 
pass through the costs to the customer plus a 10 percent administrative 
charge.
    Comment: A commentor stated Western does not have any services 
available because of its legal and statutory obligations. Several 
commentors questioned Western's ability to provide these services 
without contracting away resources which contractually belong to its 
statutory customers.
    Response: As stated in Western's Tariff, Western is, at the request 
of the Secretary of DOE, undertaking to comply with the principles of 
FERC Order Nos. 888 and 889 to the extent consistent with applicable 
law, and accordingly will provide NTS and ancillary services to the 
extent it has the capability to do so. As stated in the Tariff, 
``Nothing in this tariff shall alter, amend, or abridge the statutory 
or contractual obligations of Western to market and deliver Federal 
power resources and to repay the Federal investment in such projects.''
    Comment: A commentor wants to know what role the current customers 
will have when applications for services are entertained. A commentor 
suggests Western adopt specific processes which would include something 
like notification of current customers so they can protect their 
interests by some monitoring function. A commentor requests that 
Western consider ways to best use existing customer processes.
    Response: These questions are outside the scope of this rate order. 
However, DSW will not implement a new process for customer input on 
individual requests for firm or non-firm transmission. DSW believes 
that existing processes (such as Joint Planning) are still the best 
mechanisms for continuing customer communication.
    Comment: A commentor requests Western maintain a record of 
transactions to identify how the ancillary services are identified and 
provided, and how the revenues and costs are allocated. A commentor 
requests clarification on how Western plans to track the services 
provided by each office and allocate the revenues appropriately. Some 
recommendations made were that Western adopt a process which documents 
provider, cost, recipient, and revenue flow, and that there be a record 
that clearly identifies the flow of these revenues into the Basin Fund. 
Several commentors questioned Western's ability to properly allocate 
any revenues that may be received from ancillary service sales.
    Response: The comments are outside the scope of this rate order. 
However, Western has the ability and knowledge to properly allocate any 
revenues received from the sale of ancillary services to the 
appropriate project account. For each transaction, Western's financial 
records will indicate the entity that received the service, the type of 
service provided, the amount of revenues received, and which fund 
received the revenues. Western has established a separate code for each 
transmission and ancillary service. The flow of funds into the Basin 
Fund will be clearly identified in Western's financial records.
    Comment: A commentor requests that Western's OASIS postings and 
operating procedures reflect the nature of the availability of 
services.
    Response: This request is outside the scope of this rate order. 
However, the

[[Page 25331]]

Tariff outlines Western's limited ability to provide generation-related 
services, and the Tariff is the governing document under which all 
OASIS transactions will be conducted.
    Comment: Several commentors questioned what policies, procedures, 
or guidelines has Western developed to ensure that if these additional 
services are marketed and provided that they will have no adverse 
operational or financial effect on CRSP CSC customers.
    Response: This comment is outside the scope of this rate order. DSW 
does not anticipate having a substantial amount of ancillary service 
sales from its Federal generation. Because Western recognizes this 
fact, and is committed to its statutory obligations, Western has 
included in its Tariff provisions for purchases from other sources to 
satisfy requests for specific ancillary services.
    DSW will continue to operate in the same manner as it has in the 
past. That is, it will continue to meet its firm-power obligations and 
its firm-transmission obligations, all within allowable operational 
constraints. DSW will continue to review individual requests taking 
these factors into consideration. Western will also continue to not 
make any sales of generation-related services from the Federal 
generators if it does not have the capability to do so.
    Western will identify and track services provided by SLCA/IP and 
ensure that SLCA/IP is being compensated for those services 
appropriately.
    Comment: A commentor wants to know the revenue potential and 
overhead incurred if Western segregates the merchant function.
    Response: This comment is outside the scope of the rate order 
because, the rate proposal does not include merchant function costs. It 
is unknown at this time what costs may be incurred for overhead or what 
revenue potential exists if Western should separate the function.
    Comment: A commentor observed that many questions and comments at 
both the PIF and PCF were about the marketing of services, and not the 
pricing. A commentor requests Western address the questions related to 
marketing and marketing activities. A commentor recognizes that many of 
the questions will not be answered in final decision on rates.
    Response: Western agrees that many comments are outside the subject 
of this rate order but DSW has, when possible, addressed those 
questions and comments which relate to the marketing of NTS and 
ancillary services. Those questions or comments which were not 
addressed will be resolved as Western implements its Tariff, within the 
limits of its marketing plan.
    Comment: A commentor noted that the revenue stream from NTS and 
ancillary services seem to apply to a revenue requirement which is 
already being covered by existing DSW customers and appears to be 
profitable.
    Response: For the immediate future, these revenue streams were not 
included in the rate study projections. However at the end of each 
year, money from NTS and ancillary services will be included as ``other 
revenue'' in the PRS, thus offsetting the revenue requirement.
    Comment: A commentor requests that DSW take into consideration the 
importance of looking at current commitments, and statutory obligations 
under existing arrangements to understand Western's ability to provide 
the proposed services.
    Response: This rate order presents a methodology for determining 
rates for each service if it were to be sold. As part of implementing 
Western's Tariff, it will be determined if resources exist to supply 
any individual request. All requests will be looked at thoroughly to 
determine viability in a manner not detrimental to present commitments.
    Comment: A commentor questions Western's ability to provide NTS 
since Western would have to integrate loads and other generators into 
its control area, causing a change in the operation of its generators. 
A commentor asserts that integration would result in the violation of a 
generation project's environmental assessment and marketing plan, and 
that a change in the operations has not been studied in any of 
Western's marketing plans. As a result, the commentor requests Western 
state clearly in its documentation that it cannot provide NTS or 
ancillary services. A commentor expressed similar concerns. A commentor 
is concerned about any additional marketing by Western of generation-
related services because of the potential increase and magnitude of 
violations of operating criteria established for Glen Canyon Dam. A 
commentor is concerned that Western has some unique obligations and 
legal requirements, particularly related to operations at Glen Canyon 
Dam, that the commentor wants to ensure are not impinged upon.
    Response: Western has committed to providing NTS, to the extent it 
has the capability to do so. When an application for NTS is received by 
Western, Western must evaluate its ability to provide the service 
considering existing contractual firm obligations.
    The CRSP CSC, in its Notice of Rate Order, stated, ``Western has 
allocated most of its SLCA/IP power resources to preference entities 
under long-term commitments. Western will determine if any of its SLCA/
IP resources are available to provide the ancillary service requested 
at the time of the request. If Western does not have the resources 
available from the SLCA/IP, the CRSP CSC will offer to purchase the 
resource from the open market or from a control area operator, and pass 
the cost through to the customer.'' Since Glen Canyon Dam is a large 
component of SLCA/IP, no additional sales of generation-related 
services will be made from Glen Canyon Dam if the resources are not 
available.
    Operational constraints at Glen Canyon Dam will not be violated to 
provide sales of ancillary or transmission services. DSW and 
Reclamation ensure that operational constraints are adhered to and when 
resources are required beyond the operational capability of those 
facilities, purchases of supplemental resources are made by Western. In 
recognition of the resource limitations and restrictions of the 
generation facilities, Western included a provision in its Tariff, that 
provides Western the option to purchase ancillary services and pass 
through the cost to the transmission customer.

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 proposed 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

    In compliance with the National Environmental Policy Act of 1969, 
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 has determined that this action is categorically excluded from 
the preparation of an environmental assessment or of an environmental 
impact statement.

Determination Under Executive Order 12866

    Western has an exemption from centralized regulatory review under 
Executive Order 12866; accordingly, no

[[Page 25332]]

clearance of this notice by the Office of Management and Budget is 
required.

Submission to Federal Energy Regulatory Commission

    The formula rates herein confirmed, approved, and placed into 
effect on an interim basis, together with supporting documents, will be 
submitted to FERC for confirmation and approval on a final basis.

Order

    In view of the foregoing and pursuant to the authority vested in me 
as the Secretary of Energy, I confirm, approve, and place into effect 
on an interim basis, effective April 1, 1999, formula rates for 
transmission and ancillary services under Rate Schedules DSW-SD1, DSW-
RS1, DSW-FR1, DSW-EI1, DSW-SPR1, DSW-SUR1, PD-NTS1, and INT-NTS1. The 
rate schedules shall remain in effect on an interim basis, pending FERC 
confirmation and approval of them or substitute formula rates on a 
final basis through March 31, 2004.

    Dated: April 29, 1999.
Bill Richardson,
Secretary.

Rate Schedule DSW-SD1; Schedule 1 to Tariff--Scheduling, System 
Control, and Dispatch Service

Effective

    The first day of the first full billing period beginning on or 
after April 1, 1999, through March 31, 2004.

Applicable

    This service is required to schedule the movement of power through, 
out of, within, or into the Western Area Lower Colorado control area 
(WALC). The charges for scheduling, system control, and dispatch 
service are to be based on the rate referred to below. The formula rate 
used to calculate the charges for service under this schedule was 
promulgated and may be modified pursuant to applicable Federal laws, 
regulations, and policies.
    This formula rate is applicable to transactions with entities not 
taking transmission service in WALC. Charges for scheduling, system 
control, and dispatch service are included in the transmission rate. 
The Desert Southwest Customer Service Region's charges for scheduling, 
system control, and dispatch service may be modified upon written 
notice to the customer and any change to the charges for the service 
shall be as set forth in a revision to this rate schedule promulgated 
pursuant to applicable Federal laws, regulations, and policies and made 
part of the applicable service agreement.

Formula Rate

    Cost per schedule = annual capital costs per schedule + (hourly 
labor rate  x  avg time to execute schedule).

Rate

    The rates charged for the scheduling, system control, and dispatch 
service are contingent on the type of service required. The maximum 
rates that can be charged for the various schedule types are shown in 
the table below:

------------------------------------------------------------------------
                                                                Maximum
                                                               cost ($)
                        Schedule Type                             per
                                                               schedule
                                                                per day
------------------------------------------------------------------------
Existing schedule, requires no SCADA programming or intra-         34.10
 bus transfer \1\...........................................
New schedule, requires SCADA programming, no intra-bus             37.50
 transfer...................................................
Existing schedule, requires no SCADA programming, requires         46.85
 intra-bus transfer.........................................
New schedule, requires SCADA programming, and intra-bus          56.201
 transfer...................................................
------------------------------------------------------------------------
\1\ Multiple exchange of ownership in an interchange schedule is known
  as intra-bus transfer schedule.

    The above rates are based on FY 1997 financial and load data, and 
will be in effect April 1, 1999, through September 30, 1999. Based on 
updated financial and load data, a recalculated rate will go into 
effect on October 1 of each year during the effective rate period.

Rate Schedule DSW-RS1; Schedule 2 to Tariff--Reactive Supply and 
Voltage Control From Generation Sources Service

Effective

    The first day of the first full billing period beginning on or 
after April 1, 1999, through March 31, 2004.

Applicable

    In order to maintain transmission voltages on all transmission 
facilities within acceptable limits, generation facilities under the 
control of the Western Area Lower Colorado control area (WALC) are 
operated to produce or absorb reactive power. Thus, reactive supply and 
voltage control from generation sources service (VAR Support) must be 
provided for each transaction on the transmission provider's 
transmission facilities. Generation sources under WALC are the Parker-
Davis Project, the Boulder Canyon Project and the Salt Lake City Area/
Integrated Projects. This 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 customer must purchase this service from the WALC operator. The 
charges for such service will be based upon the rate referred to below.
    The formula rate used to calculate the charges for service under 
this schedule was promulgated and may be modified pursuant to 
applicable Federal laws, regulations, and policies. The Desert 
Southwest Customer Service Region (DSW) charges for VAR Support may be 
modified upon written notice to the customer. Any change to the charges 
for VAR Support shall be as set forth in a revision to this rate 
schedule promulgated pursuant to applicable Federal laws, regulations, 
and policies and made part of the applicable service agreement. DSW 
shall charge the customer in accordance with the rate then in effect.

Formula Rate
[GRAPHIC] [TIFF OMITTED] TN11MY99.007

[GRAPHIC] [TIFF OMITTED] TN11MY99.008


[[Page 25333]]


    TACRRS is determined by combining, for each generation project, the 
product of the percentage of resource capability used for reactive 
supply and the total generation projects revenue requirement.

Rate

    The rate to be in effect April 1, 1999, through September 30, 1999, 
is:

Monthly: $0.07/kWmonth.
Weekly: $0.02/kWweek.
Daily: $0.00237/kWday.
Hourly: 0.0986 mills/kWh.

    This rate is based on the above formula and on FY 97 financial and 
load data. Based on updated financial and load data, a recalculated 
rate will go into effect on October 1 of each year during the effective 
rate period.

Rate Schedule DSW-FR1; Schedule 3 to Tariff--Regulation and 
Frequency Response Service

Effective:

    The first day of the first full billing period beginning on or 
after April 1, 1999, through March 31, 2004.

Applicable

    Regulation and frequency response service (Regulation) is necessary 
to provide for the continuous balancing of resources, generation, and 
interchange, with load and for maintaining scheduled interconnection 
frequency at sixty cycles per second (60 Hz). Regulation is 
accomplished by committing on-line generation whose output is raised or 
lowered, predominantly through the use of automatic generating control 
equipment, as necessary to follow the moment-by-moment changes in load. 
The obligation to maintain this balance between resources and load lies 
with the transmission provider. The transmission customers and 
customers on others' transmission systems within WALC must either 
purchase this service from WALC or make alternative comparable 
arrangements to satisfy its Regulation obligation. The charges for 
Regulation are referred to below. The amount of Regulation will be set 
forth in the service agreement.
    The formula rate used to calculate the charges for service under 
this schedule was promulgated and may be modified pursuant to 
applicable Federal laws, regulations, and policies.
    The Desert Southwest Customer Service Region's (DSW) charges for 
Regulation may be modified upon written notice to the Customer. Any 
change to the Regulation charges shall be as set forth in a revision to 
this rate schedule promulgated pursuant to applicable Federal laws, 
regulations, and policies and made part of the applicable service 
agreement. DSW shall charge the customer in accordance with the rate 
then in effect.

Formula Rate:

    Regulation will not be available on a long-term basis from DSW 
resources. If this service is requested, and DSW determines that it is 
available on a short-term basis, it will be priced at the firm-capacity 
rate in effect for the generation project supplying the service. 
Otherwise, DSW, upon request, will obtain Regulation on the open market 
for the customer and pass through the cost, plus a 10 percent 
administrative charge.

Rate

DSW Regulation Rate = market price + 10 percent
      OR
=Capacity Rate of Generation Project Supplying Service (depending upon 
availability)

    The effective firm-capacity rate for Parker-Davis Project is found 
under rate schedule PD-F6. For Boulder Canyon Project, the effective 
firm-capacity rate is found under BCP-F5. For Salt Lake City Area/
Integrated Projects, the effective firm-capacity rate is found under 
rate schedule SP-FR1.

Rate Schedule DSW-EI1; Schedule 4 to Tariff--Energy Imbalance 
Service

Effective

    The first day of the first full billing period beginning on or 
after April 1, 1999, through March 31, 2004.

Applicable

    Energy imbalance service is provided when a difference occurs 
between the scheduled and the actual delivery of energy to a load 
located within the Western Area Lower Colorado control area (WALC) over 
a single hour. The transmission customer and customers on others' 
transmission system within WALC must either obtain this service from 
WALC or make alternative comparable arrangements to satisfy its energy 
imbalance service obligation.
    The WALC shall establish a deviation band width of 1.5 
percent (with a minimum of 2 MW) of the scheduled transaction to be 
applied hourly to any energy imbalance that occurs as a result of the 
customer's scheduled transaction(s). Deviation accounting will be 
completed monthly on an hour-to-hour basis.
    The formula rate used to calculate the charges for service under 
this schedule was promulgated and may be modified pursuant to 
applicable Federal laws, regulations, and policies.
    The energy imbalance service compensation may be modified upon 
written notice to the customer. Any change to the customer compensation 
for energy imbalance service shall be as set forth in a revision to 
this schedule promulgated pursuant to applicable Federal laws, 
regulations, and policies and made part of the applicable service 
agreement. The Desert Southwest Customer Service Region (DSW) shall 
charge the customer in accordance with the rate then in effect.

Formula Rate

    For negative excursions (under-deliveries) outside the bandwidth 
and occurring more than five times per month, DSW reserves the right to 
assess a penalty charge of 100 mills/kWh.
    For positive excursions (over-deliveries) outside the bandwidth, 
the customer will be credited on the customer's bill, lagged by 1 
month. The credit will be 50 percent of the market value of the over-
delivery, provided the over-deliveries do not impinge upon WALC 
operations. For example, during times of high water or operating 
constraints, DSW reserves the right to eliminate credits for over-
deliveries.

Rate

    The bandwidth in effect is 3 percent (1.5 percent 
hourly deviation) with a 2 MW deviation minimum.

Rate Schedule DSW-SPR1; Schedule 5 to Tariff--Operating Reserve--
Spinning Reserve Service

Effective

    The first day of the first full billing period beginning on or 
after April 1, 1999, through March 31, 2004.

Applicable

    Spinning reserve service (Reserves) is needed to serve load 
immediately in the event of a system contingency. Reserves may be 
provided by generating units that are on-line and loaded at less than 
maximum output. The transmission customer must either purchase this 
service from the Western Area Lower Colorado control area (WALC), or 
make alternative comparable arrangements to satisfy its Reserves 
requirements. The charges for Reserves are referred to below. The 
amount of Reserves will be set forth in the service agreement.

Formula Rate

    No long-term Reserves are available from WALC resources. The Desert 
Southwest Customer Service Region, upon request, will obtain the 
Reserves on the open market for the customer and

[[Page 25334]]

pass through the cost, plus a 10 percent administrative charge.

Rate

Cost for Reserves = market price + 10 percent.

Rate Schedule PD-NTS1; Attachment H-1 to Tariff--Schedule of Rate 
for Network Integration Transmission Service on the Parker-Davis 
Project

Effective

    The first day of the first full billing period beginning on or 
after April 1, 1999, through March 31, 2004.

Applicable

    The transmission customer shall compensate the Parker-Davis Project 
each month for network integration transmission service (NTS) pursuant 
to the applicable Network Integration Transmission Service Agreement 
and annual revenue requirement referred to below. The formula for the 
annual revenue requirement used to calculate the charges for this 
service under this schedule was promulgated and may be modified 
pursuant to applicable Federal laws, regulations, and policies.
    The Desert Southwest Customer Service Region (DSW) may modify the 
charges for NTS upon written notice to the transmission customer. Any 
change to the charges to the transmission customer for NTS shall be as 
set forth in a revision to this rate schedule promulgated pursuant to 
applicable Federal laws, regulations, and policies and made part of the 
applicable service agreement. DSW shall charge the transmission 
customer in accordance with the revenue requirement then in effect.

Formula Rate

Monthly Charge = Transmission Customer's Load-Ratio Share  x  (Revenue 
Requirement/12)

Rate

    The projected annual revenue requirement allocated to transmission 
for FY 1999 for the Parker-Davis Project is $23,001,589. Based on 
updated financial and load data, a recalculated revenue requirement 
will go into effect on October 1 of each year during the effective rate 
schedule period.

Rate Schedule INT-NTS1; Attachment H-2 to Tariff--Schedule of Rate 
for Network Integration Transmission Service on the Pacific 
Northwest-Pacific Southwest Intertie Project

Effective

    The first day of the first full billing period beginning on or 
after April 1, 1999, through March 31, 2004.

Applicable

    The transmission customer shall compensate the Pacific Northwest-
Pacific Southwest Intertie Project (Intertie) each month for network 
transmission service (NTS) pursuant to the applicable Network 
Integration Transmission Service Agreement and annual revenue 
requirement referred to below. The formula for the annual revenue 
requirement used to calculate the charges for this service under this 
schedule was promulgated and may be modified pursuant to applicable 
Federal laws, regulations, and policies.
    The Desert Southwest Customer Service Region (DSW) may modify the 
charges for NTS upon written notice to the transmission customer. Any 
change to the charges to the transmission customer for NTS shall be as 
set forth in a revision to this rate schedule promulgated pursuant to 
applicable Federal laws, regulations, and policies and made part of the 
applicable service agreement. DSW shall charge the transmission 
customer in accordance with the revenue requirement then in effect.

Formula Rate

Monthly Charge = Transmission Customer's Load-Ratio Share  x  (Revenue 
Requirement/12)

Rate

    The projected annual revenue requirement for FY 1999 for the 
Pacific Northwest-Pacific Southwest Intertie Project is $21,943,150. 
Based on updated financial and load data, a recalculated revenue 
requirement will go into effect on October 1 of each year during the 
effective rate schedule period.

[FR Doc. 99-11864 Filed 5-10-99; 8:45 am]
BILLING CODE 6450-01-P