[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]]

_______________________________________________________________________

Part III





Department of Energy





_______________________________________________________________________



Western Area Power Administration



_______________________________________________________________________



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  

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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

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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.


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    Dated: June 10, 1999.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 99-16017 Filed 6-24-99; 8:45 am]
BILLING CODE 6450-01-P