[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Notices]
[Pages 34414-34417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16017]
[[Page 34413]]
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Part III
Department of Energy
_______________________________________________________________________
Western Area Power Administration
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Application of the Energy Planning and Management Program Power
Marketing Initiative to the Salt Lake Area Integrated Projects; Notice
2004 Power Market Plan; Notice
Power Allocation Issues; Notice
Federal Register / Vol. 64, No. 122 / Friday, June 25, 1999 /
Notices
[[Page 34414]]
DEPARTMENT OF ENERGY
Western Area Power Administration
Application of the Energy Planning and Management Program Power
Marketing Initiative to the Salt Lake City Area Integrated Projects
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of decision.
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SUMMARY: The Western Area Power Administration (Western) is applying
the Energy Planning and Management Program (EPAMP) Power Marketing
Initiative (PMI) to the Salt Lake City Area Integrated Projects (SLCA/
IP), as modified and discussed herein. For most of the current
customers, Western will extend 93 percent of the customer's pro rata
share of the SLCA/IP power resource available on October 1, 2004.
Effective on that same date, Western will make allocations of SLCA/IP
power to eligible new customers. Application procedures for new
customers will be set forth in a separate Federal Register notice in
the near future.
FOR FURTHER INFORMATION CONTACT: Mr. Dave Sabo, CRSP Manager, Western
Area Power Administration, PO Box 11606, Salt Lake City, UT 84147-0606,
telephone (801) 524-6372, email [email protected].
DATES: Western's decision to apply the PMI, as modified herein, to the
SLCA/IP will become effective on July 26, 1999.
SUPPLEMENTARY INFORMATION:
Authorities
This decision about the future marketing of the SLCA/IP power
resources was made pursuant to the Department of Energy (DOE)
Organization Act (42 U.S.C. 7101-7352); and the Reclamation Act of 1902
(ch. 1093, 32 Stat. 388), 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 published its proposal to apply the EPAMP PMI to the SLCA/
IP on February 26, 1997 (62 FR 8709-8710). Western proposed to extend
96 percent of the SLCA/IP firm Federal resources available on October
1, 2004, to its current firm-power customers for 20 years. The
remaining 4 percent of resources was proposed to be made available for
new customers. Further resource reductions of 1-percent each were
proposed to be made available to new customers on October 1, 2009, and
October 1, 2014.
In its February 26, 1997, notice, Western requested comments on its
proposal. Interested parties were given until May 27, 1997, to comment
in writing. In addition, public information and comment meetings were
held in Sandy, Utah; Golden, Colorado; Albuquerque, New Mexico; and
Phoenix, Arizona. Comments were received from firm-power customers,
Native American tribes, environmental organizations, and members of
Congress.
In a separate public process that started on December 1, 1998, at
63 FR 66166, Western published a Notice of Inquiry to explore the
impact of electric utility industry restructuring on Western's power
allocation policies. A forum was held in Denver, Colorado, on January
6, 1999, to receive public comment on this matter, and written comments
were accepted from the public until the end of a 45-day consultation
and comment period. The comments received during this process are being
addressed in a separate Federal Register notice published concurrently
with this notice.
Several of the comments Western received on the Notice of Inquiry
concerned the size of the proposed new customer power pool,
particularly the adequacy of the pool to meet the needs of Native
American tribes. Consequently, on January 29, 1999, at 64 FR 4646,
Western published a notice of an additional opportunity to comment on
the appropriate size of the new customer power pool and to consider the
needs of eligible Native American tribes. Western accepted comments on
this topic until March 1, 1999. Informational meetings were held on the
SLCA/IP resources in Phoenix, Arizona, and Albuquerque, New Mexico, to
better explain to potential new customers the opportunities available
to them under the proposal. Several comments were received from Native
American tribes, Native American organizations, and current Western
customers.
Availability of Information
All documents made or kept by Western for the purpose of developing
this decision are available for public review, inspection, and copying
at the CRSP Customer Service Center, at 257 East 200 South, Suite 475,
Salt Lake City, Utah.
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 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.
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.
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), considerable environmental documentation has been prepared
addressing EPAMP, and the marketing of SLCA/IP power. Western completed
an environmental impact statement (EIS) on EPAMP. The Record of
Decision was published in the Federal Register (60 FR 53181, October
12, 1995). Western also completed the SLCA/IP Electric Power Marketing
EIS, and the Record of Decision was published in the Federal Register
(61 FR 56534, November 1, 1996). In the Marketing EIS, Western stated
that when EPAMP was applied to the SLCA/IP that if further
environmental review was required it would be completed at that time.
Since then, Western has determined that this action is categorically
excluded from preparation of an additional environmental assessment or
EIS. Accordingly, no further environmental review will be conducted.
Major Comments and Western's Responses
Western has considered the comments presented by all parties on the
proposal. The major comments received and Western's responses to those
comments are summarized below.
1. The Extension of Existing Commitments to Current Customers
Existing firm-power customers and Native American tribes were
generally supportive of Western's proposal. Many customers pointed out
that EPAMP had two components: a requirement that Western's firm-power
customers must
[[Page 34415]]
prepare integrated resource plans (IRP), and that Western extend a
major percentage of the existing Federal resources to Western's
existing firm-power customers through the PMI, with the exact amount to
be determined on a project-specific basis. The customers stated they
have complied with the IRP requirement and believe that Western is now
obliged to extend resource commitments. The customers further argued
that in order to prepare meaningful IRPs, they reasonably had to assume
that a stable Federal resource would continue to be available to them
since an uncertain Federal resource would make it very difficult to
determine future resource needs.
Several customers also suggested that Federal power has become more
expensive in recent years; and, if the trend continued, Federal power
would soon become a noncompetitive resource. They commented that
revenues from the sale of power also repay up to 90 percent of the
Federal Government's investment in the irrigation features of the SLCA/
IP water development projects. These customers argued that Western
should offer contract extensions while customers are willing to enter
into longer term arrangements, thus assuring the Federal Government of
a stable revenue stream to repay its investment in power and irrigation
facilities. Further argument was made that the electric industry is
undergoing many changes and that an extension of resources would help
stabilize volatile resource markets.
Other arguments were made that this is not an appropriate time to
extend resource commitments. According to these other commentors,
changes in the electrical industry create uncertainties about who
should be Western's future customers and that Western should wait until
it has better knowledge of the marketplace. Concern was also expressed
that the extension would impede the progress of legislation to
privatize power marketing administration assets.
Western's Response
After consideration of the comments received and in light of the
broad discretion Congress has provided Western to implement policy
changes when warranted, Western has decided to modify its proposal. For
most of the current customers, Western will extend 93 percent of the
customer's pro rata share of the SLCA/IP power resource available on
October 1, 2004. No further reductions will be made in subsequent years
to meet the needs of new customers. Western will amend current
contracts to extend the term for 20 years effective October 1, 2004.
Western has decided it is appropriate to proceed now with
application of the PMI to the SLCA/IP. Western's determination about
whether to apply the PMI to the SLCA/IP was delayed until the EIS on
the Post 1989 SLCA/IP Power Marketing Plan was completed and the
associated marketing criteria were finalized and implemented. That EIS
was completed in October 1996, and the associated post-1989 marketing
criteria were finalized and implemented April 1, 1997. Customers have
already completed IRPs in compliance with the requirements of EPAMP and
should be able to rely on Western's resources. Western also believes
that it is in the best interest of the United States to help ensure
that the Federal Government's investment in the Federal power projects
be repaid. All of the investment in power facilities, as well as up to
90 percent of the irrigation investment and substantial new
environmental expenses, is being repaid by revenues received from the
sale of electricity. Extending resource commitments provides relative
assurance to the United States of a continued revenue stream to repay
these expenses and obligations.
Western also believes that although the electric industry is
undergoing many changes, it is important to extend resource commitments
now. These changes are affecting not only the competitiveness of
Western's customers, but also the diversity of energy providers in the
marketplace. Western must be able to operate in the new utility
environment in order to fulfill its mission of marketing Federal power.
Western's mission under current statutes is ongoing.
For many of Western's customers, Federal power is an essential
component of their resource mix, and a resource extension is critical
to planning strategies for dealing with the utility restructuring.
Western recognizes the need for flexibility to respond to the changing
utility industry and to changing dam operations. Recently, Western and
its SLCA/IP customers entered into an amendment to power sales
contracts which provides great flexibility for dealing with changing
hydropower situations.
Western recognizes that the Bureau of Reclamation is under a
continuing obligation to ensure that the operation of the hydroelectric
facilities comply with Federal environmental laws. Western may revise
the amount of power marketed by the SLCA/IP as required to respond to
changes in hydrology and river operations, upon 5 years' notice to
customers. Any such changes will be applied on a pro rata basis among
all customers.
2. Allocations to Native American Tribes
Native American tribes commented that they should be entitled to an
allocation of Federal power to help compensate them for the impacts to
their lands and lifestyles caused by the construction of the Federal
dams and power facilities. The tribes argued that the proposed power
pool of 4 percent of the SLCA/IP marketable resources was inadequate to
meet their current or future needs. Several comments were received that
the pool should be increased to 10-30 percent and if the tribes did not
use the total amount it could be returned to the current customers
after the reallocation process. The tribes were also concerned that the
30-day comment period was not adequate for them to determine their
loads and to make a reasonable recommendation of pool size.
Some commentors suggested that Western should provide enough power
to supply 100 percent of tribal loads as well as meet future needs.
Others commented that it is not appropriate or even possible for
Western to do this.
Western's current customers commented that the proposed power pool
was adequate to give tribes and other new customers a fair share of the
resource. They suggested that Western consider advancing the 2009 and
2014 resource pools to enhance the initial pool in 2004, with no
further changes in allocations for the term of the contracts, to allow
Native American tribes to make appropriate resource decisions. Both
tribes and customers commented that Western should work out
arrangements for tribes to receive the benefits of Federal power
through bill crediting or other beneficial arrangements.
A comment was also made that Western should commission a study to
determine tribal loads within the SLCA/IP marketing area.
Western's Response
Effective October 1, 2004, Western will make allocations of SLCA/IP
power to eligible new customers which apply for SLCA/IP power. The
source of electricity for allocations to the new customers will be a
resource pool of SLCA/IP power not extended to existing customers and
available beginning October 1, 2004. Western has determined that a
resource pool size of 7 percent of resources available on October 1,
2004, combined with an additional reduction to Tri-State Generation and
Transmission
[[Page 34416]]
Association's (Tri-State) SLCA/IP resource commitment, will enable
Western to supply up to 12.5 percent of the current load of new utility
applicants and 65 percent of the load of Native American entities that
apply.
Western believes that it would be in the best interests of both
current customers and potential customers including Native Americans to
establish one resource pool of a definite size at this time. Western
performed a study of tribal loads within the SLCA/IP marketing area.
Western received information on loads from tribes and serving utilities
for many potential customers. Others were estimated using data about
the size of the tribe and use of electricity in the local area. Western
determined that a power pool that would provide Native American tribes
enough power to serve 65 percent of their current loads would be
equitable to the tribes and to current customers. Serving tribal load
at this level would be consistent with DOE policy and the trust
responsibility that exists between Native Americans and the Federal
Government. Western's study indicates that a resource pool of the size
described in this Federal Register notice would be sufficient to meet a
fair share of Native American loads as well as those of other potential
new customers.
In an exemption to the general policy, the four existing firm-power
customers of the SLCA/IP that are Native American entities--the Navajo
Tribal Utility Authority, the Ak Chin Indian Community, the Bureau of
Indian Affairs' Colorado River Agency, and the San Carlos Irrigation
Project--will be extended 100 percent of their pro rata share of the
SLCA/IP resource available on October 1, 2004. In addition, Western
will, if necessary, allocate additional SLCA/IP resources from a
resource pool to these or other Native American organizations such that
a minimum of 65 percent of the current load of each is served by
Federal power resources.
For Native American tribes which currently receive power from
utilities that have allocations of Federal power, Western will take
into account the benefit received through the existing supplier when
determining the power allocation to the tribe.
During the process of allocating the resource pool to customers,
which will begin after conclusion of this process, further information
on actual loads will be collected and used to determine the final
allocations from the resource pool. Western, to the extent it is able,
will provide technical assistance to tribes requesting assistance in
preparation of their applications and load data. After applications are
received and power allocated, unallocated power remaining in the pool
may be returned to current customers. If a tribe receives an allocation
but is unable to accept power on October 1, 2004, the power allocated
to the tribe will be provided to existing customers until such time as
the tribe is able to use the power.
Western has also decided that the interest shown by tribes and
other potential new customers indicates that the resource pool should
be used to serve these loads rather than, as proposed in February 1997,
for encouragement of new technologies, conservation, or renewable
resources, or held in reserve by Western for contingencies. Other
eligibility criteria for allocations of SLCA/IP resources will be
addressed in subsequent Federal Register notices and mailings to
interested parties about the availability of SLCA/IP resources to new
customers. Western will initiate a separate public process soon to
accept applications from Native American tribes and potential new
customers for firm electric service of SLCA/IP power from October 1,
2004, through September 30, 2024.
Finally, Western has agreed to work out arrangements for tribes to
receive the benefits of Federal power through bill crediting or other
beneficial arrangements.
3. Other Comments
A comment was received that the prices charged by Western for its
power sales are too low and that the price should be raised to finance
development of alternative forms of energy. Although comments about the
pricing of Western power are outside the scope of Western's proposal,
Western has a long record of encouraging its customers to conserve
energy and develop renewable resources without the need to introduce
changes in how its rates are set. Additionally, Western prohibits its
customers from profiteering by reselling their Federal power to
entities other than their end users. Comments on Western's rates may be
addressed when Western issues notices of proposed rate changes.
Comments on actions Western might take to further encourage its
customers to conserve energy and to develop renewable resources may be
addressed later this year when Western begins a formal public process
to reconsider its regulations concerning its customers' IRPs.
Another comment suggested that Western should provide an official
public comment forum or official public record. Western has provided
adequate opportunity for formal comment. Four information and comment
forums were held in 1997, and an additional public comment forum was
held in Denver, Colorado, on January 6, 1999. Interested parties also
were encouraged during each of the three informational meetings, held
in early February of 1999, to comment in writing. Letters submitted in
response to the January 29, 1999, Federal Register notice on resource
pool size are part of Western's formal and official record. Western has
considered the comments presented by all parties on the proposed 2004
marketing plan. Western has also responded in detail to the comments
received as a result of the Notice of Inquiry in a separate document
published separately in the Federal Register. Those additional comments
are incorporated herein by reference.
Several comment letters were received regarding the impact of a
pending merger between Tri-State and Plains Electric Generation and
Transmission Cooperative (Plains). One member of Plains, Navopache
Electric Cooperative (Navopache), is choosing not to participate in the
merger and cannot receive a portion of the SLCA/IP power allocated to
Plains under the terms of the currently effective power sales contract
between Western and Plains. Navopache has asked to receive an
independent allocation of power in 2004 to remediate the
``overallocation'' to Tri-State.
In another exception to the general policy concerning the
allocation to Tri-State, Western has decided to allocate to Tri-State 7
megawatts less than 93 percent of Tri-State's pro rata share of the
SLCA/IP resource available on October 1, 2004. The 7 mega-watts will be
part of the resource pool to be made available to new customers. This
additional reduction to Tri-State's allocation is being taken in
recognition of the fact that Tri-State would otherwise receive a post-
2004 resource commitment based on all of the SLCA/IP power allocation
of Plains, even though Navopache has chosen not to use Tri-State as its
power supplier. Navopache is welcome to apply for power from the
resource pool as a new customer.
In order to provide additional flexibility in addressing changing
conditions, the new contracts will have language that gives the
Administrator the discretion to adjust a customer's power allocation in
the event the customer merges with another organizational entity,
acquires or ``spins off'' another utility, joins or withdraws from a
membership-based organization, or adds members from a membership
organization.
[[Page 34417]]
Dated: June 10, 1999.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 99-16017 Filed 6-24-99; 8:45 am]
BILLING CODE 6450-01-P