[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Notices]
[Pages 34417-34433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16018]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Western Area Power Administration


2004 Power Marketing Plan

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of the final 2004 Power Marketing Plan.

-----------------------------------------------------------------------

SUMMARY: Western Area Power Administration (Western), a Federal power 
marketing administration of DOE, announces its 2004 Power Marketing 
Plan (Marketing Plan) for the Sierra Nevada Customer Service Region 
(Sierra Nevada Region). On December 31, 2004, all of the Sierra Nevada 
Region's long-term firm Central Valley Project (CVP) power sales 
contracts will expire. This notice responds to the comments received on 
the Proposed 2004 Power Marketing Plan (Proposed Plan) and sets forth 
the final Marketing Plan. The Marketing Plan specifies the terms and 
conditions under which Western will market power from the CVP and the 
Washoe Project beginning January 1, 2005. This Marketing Plan 
supersedes all previous marketing plans for these projects.
    Western plans to amend existing customers' power sales contracts to 
provide them with the right to purchase a percentage of the Sierra 
Nevada Region's power resources beginning January 1, 2005. After 
Western more fully develops products and services, it will offer new 
contracts for the sale of power under the Marketing Plan. Western will 
request entities who meet the criteria defined in the Marketing Plan, 
and who wish to apply for a new allocation of power from Western, to 
submit formal applications. Application procedures will be set forth in 
the Call for 2005 Resource Pool Applications in a separate Federal 
Register notice.

DATES: The Marketing Plan will become effective July 26, 1999.

FOR FURTHER INFORMATION CONTACT: Power Marketing Manager, Western Area 
Power Administration, Sierra Nevada Customer Service Region, 114 
Parkshore Drive, Folsom, CA 95630, telephone (916) 353-4416.

SUPPLEMENTARY INFORMATION:

Authorities

    The Marketing Plan for marketing power after 2004 by the Sierra 
Nevada Region is being established pursuant to the Department of Energy 
Organization Act (42 U.S.C. 7101-7352); the Reclamation Act of June 17, 
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. 485(c)); and other acts specifically applicable to the 
projects involved.

Development of the 2004 Power Marketing Plan

    Western began developing the Marketing Plan with a series of three 
informal public information meetings. These meetings helped Western 
identify pertinent issues and possible marketing options, including 
types of products and services, and eligibility and allocation 
criteria. During that process, Western evaluated several options for 
marketing power after existing contracts expire.
    Western began the Administrative Procedure Act process with its 
Notice of Proposed Plan in the Federal Register (62 FR 8710, February 
26, 1997). Western held a public information forum on April 8, 1997, to 
present the Proposed Plan and answer questions. On April 24, 1997, 
Western held a public comment forum to accept verbal comments on the 
Proposed Plan. In addition, Western accepted written comments from the 
public through May 27, 1997. Western considered the comments received 
in developing the Marketing Plan.
    In a separate public process, Western explored the impact of 
electric utility industry restructuring on Western's power allocation 
policies. A Notice of Inquiry for this process was published in the 
Federal Register (63 FR 66166, December 1, 1998). Western held a public 
comment forum on January 6, 1999, and accepted written comments through 
January 15, 1999. The results of this process will be published in a 
separate Federal Register notice.
    Western opened an additional comment period focused solely on the 
size of project-specific resource pools because several Native American 
tribes commented on the size of these pools. The Notice of Public 
Process on Resource Pool Size was published in the Federal Register (64 
FR 4646, January 29, 1999). Western held informational meetings on its 
resource pool size proposals and the requirements for receiving an 
allocation of power in Phoenix, Arizona, on February 3, 1999; 
Albuquerque, New Mexico, on February 5, 1999; and Folsom, California, 
on February 9, 1999. Western accepted written comments from the public 
through March 1, 1999. Western also considered the comments related to 
the Sierra Nevada Region's resource pool received during this comment 
period in developing the Marketing Plan.
    Western will market the Sierra Nevada Region's power resources 
consistent with the Power Marketing Initiative under the Energy 
Planning and Management Program (EPAMP) (60 FR 54151, October 20, 
1995). Western will initially offer 96 percent of the Sierra Nevada 
Region's power resources to existing customers and allocate, under a 
separate process, the remaining resources using the criteria in the 
Marketing Plan. Under a separate process, Western will reduce all 
customers' allocation percentages by up to 2 percent and establish a 
2015 Resource Pool. The Marketing Plan provides a balance between 
existing and new customers, including Native American tribes, while 
meeting Western's contractual obligations that continue beyond 2004. If 
unexpected circumstances cause early termination of existing electric 
service contracts, Western may market its power resources under the 
Marketing Plan before January 1, 2005.

Background

    CVP power facilities include 11 powerplants with a maximum 
operating capability of about 2,044 megawatts (MW), and an estimated 
average annual generation of 4.6 million megawatthours (MWh). Western 
markets and transmits the power available from the CVP.
    Western owns the 94 circuit-mile Malin-Round Mountain 500-kilovolt 
(kV) transmission line (an integral section of the Pacific Northwest-
Pacific Southwest Intertie (Pacific Intertie)), 803 circuit miles of 
230-kV transmission line, 7 circuit miles of 115-kV transmission line, 
and 44 circuit miles of 69-kV and below transmission line. Western also 
has part ownership in the 342-mile California-Oregon Transmission 
Project. Many of Western's existing customers have no direct access to 
Western's transmission lines and receive service over transmission 
lines owned by other utilities.
    The Washoe Project, Stampede Powerplant, has a maximum operating 
capability of 3.65 MW with an estimated annual generation of 10,000 
MWh. Sierra Pacific Power Company owns and operates the only 
transmission system available for access to Stampede Powerplant.
    The following table lists estimates of CVP power resources and 
adjustments. This table is for informational purposes only, and does 
not imply that the power resources and adjustments shown will

[[Page 34418]]

be the actual amounts available or adjustments applied.

                                  Estimated CVP Power Resources and Adjustments
----------------------------------------------------------------------------------------------------------------
           Power resources/adjustment                                       Range/value
----------------------------------------------------------------------------------------------------------------
Annual energy generation........................  2,400,000-8,600,000 MWh.
Monthly energy generation.......................  100,000-1,100,000 MWh.
Monthly capacity................................  1,100-1,900 MW.
Annual project use..............................  670,000-1,670,000 MWh.
Monthly project use.............................  10,000-180,000 MWh.
Monthly project use (on peak)...................  30-230 MW.
Monthly maintenance.............................  0-300 MW.
Reserves--hydro.................................  Minimum 5% of monthly capacity
CVP transmission and transformation losses from   1.8% (currently).
 the generator bus to a 230-kV load bus.
----------------------------------------------------------------------------------------------------------------

Legal Analysis

Regulatory Flexibility Analysis

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

Environmental Compliance

    In compliance with National Environmental Policy Act (NEPA) (42 
U.S.C. 4321, et seq.), Council on Environmental Quality NEPA 
implementing regulations (40 CFR parts 1500-1508), and DOE NEPA 
implementing regulations (10 CFR part 1021), 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 2004 Power Marketing Program EIS (2004 EIS), 
and the Record of Decision was published in the Federal Register (62 FR 
22934, April 28, 1997). The Marketing Plan falls within the range of 
alternatives considered in the 2004 EIS. This NEPA review identified 
and analyzed environmental effects related to the Marketing Plan.
    Marketable CVP and Washoe Project electrical capacity and energy is 
influenced by available reservoir storage and water releases controlled 
by the U.S. Department of the Interior, Bureau of Reclamation 
(Reclamation). Pursuant to the CVP Improvement Act of 1992 (Pub. L. 
102-575, Title 34) (CVPIA), Reclamation prepared a programmatic EIS 
(PEIS) addressing improvements to fish and wildlife habitat stipulated 
therein, and potential changes in CVP operations and water allocations 
to meet those obligations. Actions based on the PEIS may result in 
modifications to CVP facilities and operations that would affect the 
timing and quantity of electric power generated by the CVP. Such 
changes may, in turn, affect electric power products and services to be 
marketed by Western. The Marketing Plan is designed to accommodate 
these changes. Western is a cooperating agency in Reclamation's PEIS.

Review Under the Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
3501, et seq.), Western has received approval from the Office of 
Management and Budget for the collection of customer information in 
this rule, under control number 1910-0100.

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.

Small Business Regulatory Enforcement Fairness Act

    Western has determined that this rule is exempt from congressional 
notification requirements under 5 U.S.C. 801 because the action is a 
rulemaking of particular applicability relating to services and 
involves matters of procedure.

Responses to Comments Received on the Notice of Proposed Plan (62 
FR 8710, February 26, 1997)

    During the public consultation and comment period, Western received 
26 letters commenting on the Proposed Plan. In addition, 12 customer 
and interested party representatives commented during the April 8 and 
April 24, 1997, public forums. Western reviewed and considered all 
comments received by the end of the public consultation and comment 
period, May 27, 1997, in preparing the Marketing Plan.
    The following is a summary of the comments received during the 
consultation and comment period, and Western's responses to those 
comments. Comments are grouped by subject and paraphrased for brevity. 
Specific comments are used for clarification where necessary.

I. Public Participation and Process Implementation

    Comment: Commentors supported the process Western used in 
developing the Marketing Plan. One comment expressed concern about the 
lack of opportunity for public participation.
    Response: Western provided opportunities for public participation 
in preparing the Marketing Plan, 2004 EIS, and EPAMP, as described in 
this notice.
    Comment: Some commentors said that since the contracts do not 
expire until 2004, Western should delay the Marketing Plan process. 
This delay would allow time to resolve uncertainty about the future of 
the industry, and allow other interests time to make arrangements to 
share power revenues with environmental and clean power goals. Other 
comments supported developing the Marketing Plan on the proposed 
schedule to provide customers with lead time for planning purposes.
    Response: Because electric utility industry restructuring is 
already underway, delaying decisions may foreclose options for Western 
and its customers. To be an active participant in the newly 
restructured industry, Western needs to identify and work with its 
future customers to develop specific products to meet their needs. For 
many of Western's customers, Federal hydropower is a critical component 
of their resource mix, and knowledge of CVP resource availability is 
crucial to planning strategies for

[[Page 34419]]

dealing with utility restructuring. It is important that the Marketing 
Plan is not delayed because it takes time to develop contracts and 
arrange for transmission service. Western recognizes the need for 
flexibility in the changing utility industry and will offer Custom 
Products, such as firming power and ancillary services, to meet 
customers' needs. The Marketing Plan will not impact existing 
arrangements concerning funding of environmental restoration or 
advancement of clean power goals. These items are discussed more 
thoroughly in our responses to other comments.

II. Environmental Issues

    Comment: Commentors stated that there are unresolved environmental 
issues associated with the operation of CVP dams, and that 
environmental protection mechanisms are insufficient or outdated. A 
commentor stated that if a contract extension decision is part of the 
Marketing Plan, new environmental protection mechanisms must be 
developed. Western was urged to create a trust fund(s) in which a 
portion of Western's existing power revenues would be set aside to 
mitigate environmental damage associated with operation of the Federal 
dams and to support the development of energy efficiency and renewable 
energy. Also, questions were raised as to whether Western has complied 
with NEPA in developing the Marketing Plan.
    Response: Western completed the 2004 EIS in accordance with NEPA, 
the Council on Environmental Quality NEPA implementing regulations, and 
DOE's NEPA implementing regulations. The 2004 EIS examined the 
environmental impacts and identified no significant impacts to the 
human environment from marketing power from the CVP and Washoe Project. 
The Marketing Plan falls within the parameters analyzed in the 2004 
EIS. The operation of CVP dams is dictated by other authorized project 
purposes such as flood control, navigation, water supply, and fish and 
wildlife. Environmental issues associated with the operation of CVP 
dams are being addressed by the CVPIA PEIS, including direct and 
indirect impacts on all fish, wildlife, and habitat restoration actions 
and the potential renewal of existing CVP water contracts. Western is a 
cooperating agency in Reclamation's PEIS process.
    CVP power customers contribute significant revenue to the 
Restoration Fund, established under the CVPIA, which is designed to 
mitigate environmental consequences of the operation of Federal dams. 
Western supports renewable energy through its Policy for the Purchase 
of Non-Hydropower Renewable Resources (61 FR 43051, August 20, 1996). 
In accordance with the Energy Policy Act of 1992, Western encourages 
energy efficiency by requiring all firm power customers to prepare and 
keep current integrated resource plans.

III. Products and Services

A. Base Resource
    Comment: Several commentors requested that Western reconsider its 
proposal to market power on an as-available basis. Suggestions were 
made that the Base Resource be further developed, including evaluation 
of purchasing energy, especially in dry years, to provide some minimum 
level of firm power and maximize use of the transmission assets 
available to Western, including the Pacific Intertie. Comments included 
requests for more information on firm availability, pricing, timing of 
commitment to purchase the Base Resource, and reliability of the Base 
Resource.
    Response: CVP generation is expected to vary hourly, daily, 
monthly, and annually, based on hydrological conditions and other 
constraints that govern CVP operations; therefore, Western cannot 
accurately predict future availability. However, Western is willing to 
purchase energy to maintain some firm level of service to all 
customers. The amount of firming and the use of Western's transmission 
resources will be further developed by Western through a collaborative 
process with customers prior to product commitment by a customer. 
Because Western's rates will be determined through a separate public 
process, product pricing is outside the scope of the Marketing Plan. 
However, the costs associated with the hydropower system may be 
discussed during the collaborative process.
    Comment: A commentor stated that the Base Resource concept will 
require a new and much closer working relationship with Reclamation, 
Federal water users, and other stakeholders.
    Response: Western will continue to develop close working 
relationships with Reclamation, Federal water users, and other 
stakeholders.
    Comment: One commentor asked if Western will include reserves or 
other ancillary services in the Base Resource.
    Response: The Base Resource may be used in a manner the customer 
deems most beneficial, within operational constraints. Operating 
reserves and other ancillary services will be consistent with industry 
standards or may be provided with the Base Resource or the Custom 
Product on an as-requested basis. Provision of ancillary services, 
including reserves, will be developed with customer input.
B. Custom Product
    Comment: Commentors suggested that Western develop some 
``standardized'' Custom Products to allow customers to select a more 
firm service, similar to what is currently marketed. A commentor stated 
that negotiating with customers individually for firming the Base 
Resource would be more difficult, less transparent, and would increase 
risk. One commentor questioned whether the design of Custom Products 
would potentially cause cost-shifting among customers.
    Response: Western designed the Marketing Plan to provide maximum 
flexibility to its customers. Development of ``standardized'' Custom 
Products for a customer or group of customers is not precluded by the 
Marketing Plan. The Marketing Plan was designed with this possibility 
in mind. Prior to product commitments, using a collaborative process, 
Western will develop Custom Products that most closely match customer 
needs. Using this collaborative approach will help ensure that 
information about Custom Product options will be available to everyone 
to minimize the risk of inequities. Also, by considering the needs of 
all similarly situated customers, due to economies of scale, Western 
may obtain better prices in the electric utility market when making 
firming purchases or obtaining other related services. Because all 
customers will equitably share in the cost of the Base Resource and 
each customer will pay only for the Custom Products which it 
specifically requests, any potential for cost-shifting is minimal.
    Comment: A commentor suggested that Western needs to consider 
potential ramping rates if a customer chooses to schedule power 
deliveries.
    Response: Under the Marketing Plan, all customers will be required 
to schedule power deliveries. Information on ramping rates applicable 
to the hydropower system will be made available prior to beginning 
service.
    Comment: One commentor stated that preference customers should be 
allowed to help provide the products and services needed to firm the 
Base Resource for other customers wanting a firm Custom Product.
    Response: The Marketing Plan does not preclude Western or customers 
from purchasing products and services from any supplier.

[[Page 34420]]

C. Exchange Program
    Comment: Commentors supported and recommended further development 
of the concept of the Western-managed exchange program.
    Response: Western will complete development of the exchange program 
through a collaborative process with customers.
D. Energy Banking Arrangements
    Comment: A commentor said Western should begin planning now for 
termination of existing banking arrangements with Pacific Gas & 
Electric Company (PG&E) under Contract 14-06-200-2948A. If the existing 
account is ``cashed out,'' the benefits should be shared with all 
customers. Commentors suggested that Western pursue energy banking and 
firming arrangements beyond 2004, even though it may be difficult.
    Response: Since existing banking arrangements will expire on 
December 31, 2004, they are outside the scope of the Marketing Plan. 
Western is willing to explore banking arrangements and other options 
during further development of the exchange program and Custom Products.

IV. Proposed Resource Percentages/Pools

A. Allocation Methodology
    Comment: A commentor requested that Western accommodate the 
seasonal nature of agricultural loads.
    Response: The Base Resource depends on the generation pattern of 
the CVP, which is similar to the pattern of agricultural loads. If the 
Base Resource does not accommodate the seasonal nature of agricultural 
loads, Western will work with customers to develop Custom Products that 
will meet the customers' needs to the extent possible.
    Comment: One commentor stated the Marketing Plan should not affect 
its contractual rights through 2004 to increase its contract rate of 
delivery (CRD) up to 50 MW.
    Response: The Marketing Plan does not affect current contractual 
rights. If necessary, Western will accommodate these CRD increases and 
will effectuate related CRD decreases as provided for in certain 
existing contracts.
    Comment: A suggestion was made that both energy and capacity should 
be used to determine customer resource extensions instead of the 
proposed CRD methodology. A comment further suggested that not using 
energy penalized customers with higher load factors for maintaining 
good load shapes. If rates are to be based on a split between capacity 
and energy, then the allocation should be based on capacity and energy.
    Response: Existing customers' current allocations are based on 
capacity. Western believes that it is equitable to base the existing 
customers' resource allocation percentages on existing capacity 
commitments because, under existing contracts, Western's capacity 
obligation is fixed but the energy obligation is not. Many customer CVP 
energy purchases are based on economics, not on their load shape or 
energy entitlement. Unlike the current allocation methodology, the 
resources available under the Marketing Plan are based on generation 
rather than load. Basing the right to purchase generation output, which 
is limited by the capacity of the plants, on a CRD does not penalize 
customers with high load factors, rather it gives them no greater 
consideration. Allocating the power resources based on a rate design is 
not appropriate because the rate design for power sold under the 
Marketing Plan has not been determined and may be different from 
today's rate design.
B. Allocation Amounts
    Comment: Western was requested to increase the 2005 Resource Pool 
percentage. Another comment requested withholding application of the 
Power Marketing Initiative, particularly during the period from 2005 
through 2014 (when the Sacramento Municipal Utility District (SMUD) 
settlement is in effect).
    Response: Comments received did not provide rationale for changing 
the resource pool percentages. However, Western considered many factors 
in determining the magnitude of the resource pools. Those factors 
included: (1) The loads of preference entities that applied for but did 
not receive power under the 1994 Power Marketing Plan; (2) impacts of 
restructuring and open transmission access; (3) the potential for new 
loads, including those of Native American tribes; and, (4) existing 
customer loads with limited Federal power compared to their needs. 
After careful consideration, Western determined that the combined 
resource pools in 2005 and 2015, totaling up to 6 percent of the Base 
Resource, would be equitable for potential new customers as well as 
existing customers. Withholding application of the Power Marketing 
Initiative (establishment of the resource pools) would potentially 
eliminate the ability of Western to serve new customers that may 
benefit from a Federal power allocation.
    Comment: Some commentors stated that Western should maximize the 
global value of its Base Resource by minimizing both reductions and 
increases in the allocations that Western's current customers receive.
    Response: The Marketing Plan provides for minimal increases or 
reductions in the pro rata amount of the power resources available to 
existing customers. However, due to the expiration of Contract 14-06-
200-2948A with PG&E, and the associated firming arrangements, the 
Sierra Nevada Region may not be able to market power at the same level 
as in the past. Under the Marketing Plan allocation method, each 
allottee will receive a percentage of actual generation. The amount of 
power associated with an allocation percentage will vary, based on 
hydrological conditions and other constraints that govern CVP 
operations. The Marketing Plan attempts to mitigate reductions in 
availability or usability of the power resources for meeting customers' 
loads by offering the Custom Product, which could include a level of 
firming purchases.
    Comment: A comment requested that allocation amounts reflect a 
customer's CRD as opposed to actual load.
    Response: Western has decided that an existing customer's 
allocation percentage will be based on the customer's extension CRD. 
Western will adjust the existing customer's percentage if its actual 
load is less than the extension CRD. This criteria was adopted because 
Western does not believe it is sound business practice to allocate 
power based on a historical CRD that has never been fully used.
    Comment: Commentors requested that temporary allocation increases 
remain with the current recipients.
    Response: Contracts implementing the temporary reallocations 
provide that the original CRD be returned to the original customer.
    Comment: One commentor suggested that the minimum load requirement 
for the resource pools be 500 kW instead of 1 MW.
    Response: To avoid precluding smaller entities from receiving 
allocations from the resource pools, Western has modified the Marketing 
Plan to allow requests to serve loads that are less than 1 MW, but at 
least 500 kW, if they can be aggregated so Western can schedule and 
deliver to a minimum load of 1 MW.
    Comment: A commentor objected to Western's approach regarding 
SMUD's rights under the 1983 Settlement Agreement in the Proposed Plan. 
The commentor urged Western to reach an accommodation with SMUD that 
would provide for SMUD's resource extension to be made on the same 
basis as all other existing customers, and questioned the logical basis 
for the fraction 360/1,152.

[[Page 34421]]

Public participation and joinder in regard to the SMUD settlement were 
also questioned. Further, it was recommended that if SMUD does not 
voluntarily agree to a reasonable accommodation, Western should recoup 
the over-allocation during the second 10-year period. Another commentor 
supported Western's approach.
    Response: Contract DE-MS65-83WP59070 (Settlement Agreement) between 
Western and SMUD, dated April 15, 1983, provides that SMUD has a right 
to purchase 360/1,152 of all power allocated or sold by Western on or 
after January 1, 2005, through December 31, 2014. This Settlement 
Agreement was reached to resolve a lawsuit, United States of America v. 
Sacramento Municipal Utility District, Civil No. S-75-277, United 
States District Court for the Eastern District of California. The 
Marketing Plan is designed to mitigate the impacts of the Settlement 
Agreement on other customers by offering an Optional Purchase, which is 
equal to the additional amount of power allocated to SMUD. Western will 
adjust SMUD's percentage of the available resources after 2014 to put 
it on the same basis as other existing customers. The adjustment will 
include the amount that would have been contributed to the 2005 
Resource Pool by SMUD in absence of the Settlement Agreement. Western 
does not agree that SMUD will receive an over-allocation for the first 
10 years under the Marketing Plan because SMUD's percentage allocation 
is specified in the Settlement Agreement. Therefore, SMUD should not be 
penalized during the second 10 years of the Marketing Plan. The 
fraction 360/1,152 referenced in the Settlement Agreement represents 
SMUD's CRD of 360 MW and Western's maximum simultaneous load level of 
1,152 MW at the time of the settlement.
    Allowing public participation in litigation would severely 
undermine Western's ability to protect the Government's interest. 
Western is not required to join every preference customer or every 
potential preference customer in a lawsuit in which Western is a party. 
Upon proper motion, the court determines when and if joinder of a 
person is needed for just adjudication.
C. Allocations Due to Special Circumstances
    Comment: Commentors requested that CVP power continue to be 
available at cost to long-term customers. If these customers do not 
receive a power allocation under the Marketing Plan, the economic 
consequences would be significant.
    Response: Western will offer the greater portion of the CVP 
resources to existing customers. The economic analyses done for the 
2004 EIS showed that the greatest socioeconomic benefits would be 
expected to occur if Western's existing customers continued to receive 
power from Western.
    Comment: A few commentors stated that Federal hydroelectric power 
should be used to benefit the public. They suggested that Western give 
priority to those who meet certain additional criteria, including, 
demonstrating environmental responsibility in mitigating any damages 
associated with Federal dams; developing and/or integrating solar and 
other renewable energy and energy efficiency into their resource mix; 
supporting educational institutions; and not requiring supplemental 
purchases.
    Response: Western markets power in a manner that will encourage the 
most widespread use at the lowest possible rates consistent with sound 
business principles. Within broad statutory guidelines and operational 
constraints of the CVP, Western has wide discretion as to whom and 
under what terms it will contract for the sale of Federal power, as 
long as preference is accorded to statutorily defined public bodies. 
Western cannot measure the value of the public benefits provided by an 
entity when allocating its power and, therefore, will not base an 
allocation on an entity's mission. Although not specifically addressed 
in the Marketing Plan, Western supports programs for the public good.
    Western supports renewable energy through its Policy for the 
Purchase of Non-Hydropower Renewable Resources, and encourages energy 
efficiency by requiring all firm power customers to prepare and keep 
current integrated resource plans. Further, CVP power customers 
contribute significant revenue to the Restoration Fund, established 
under the CVPIA, which is designed to mitigate environmental 
consequences of the operation of Federal dams.
    Comment: A comment suggested that priority be given to entities 
with longstanding requests.
    Response: Previous requests were considered in determining the size 
of the resource pool. Western receives numerous requests for power and 
does not believe a previous request should be given a higher priority 
over requests by qualified entities that have not applied previously.
    Comment: A commentor suggested Western give higher priority to 
entities that can readily accept an allocation.
    Response: The Marketing Plan includes eligibility criteria 
requiring that all applicants requesting power must be ready, willing, 
and able to receive and use or distribute Federal power.
    Comment: Western was requested to extend the spirit and concept of 
the National Defense Authorization (NDA) Act. Several comments 
requested that the definition of extension CRD be modified so that NDA 
Act power used for economic development is not excluded. By doing so, 
entities receiving allocations of NDA Act power for economic 
development purposes would be eligible for resource extensions under 
the Marketing Plan. One comment stated that the definition of extension 
CRD violates the provisions of the NDA Act because the legislation 
requires that NDA Act power be reserved for allocation for a 10-year 
period (commencing November 30, 1993). This commentor contends that the 
legislation provides for allocations made during this 10-year period to 
extend past December 31, 2004. Commentors requested that NDA Act power 
extend through the completion of economic development. Another 
commentor requested that Western not extend the provisions of the NDA 
Act past December 31, 2004.
    Response: The Proposed Plan is consistent with the NDA Act. 
However, Western has reconsidered its position regarding allocations 
for NDA Act customers. Western has decided to extend the spirit and 
concepts of the NDA Act to those existing customers receiving NDA Act 
power for economic development purposes, provided those customers 
continue to meet the eligibility requirements for an allocation under 
the Marketing Plan. The Marketing Plan has been modified to reflect 
this change.

V. General Criteria and Contract Principles

    Comment: A commentor suggested that, under take-or-pay provisions, 
the resale (remarketing) prohibition should be eliminated. Other 
commentors stated that, in the competitive environment, Western will 
not be able to enforce the resale prohibition, and customers will 
receive an unfair advantage with the ability to ``profiteer'' in 
regional electricity markets.
    Response: Western is not convinced that the prohibition on 
reselling Federal power should be eliminated due to the take-or-pay 
provisions. Customers' loads are expected to be sufficient to use all 
available Western power most of the time. Western realizes that, at 
times, due to the variability of CVP generation,

[[Page 34422]]

some customers may not be able to use their full power allocation. 
Therefore, Western will establish and manage an exchange program. Any 
Western power that cannot be used on a real-time basis must be offered 
to Western or to other preference customers under this program.
    Comment: A comment suggested Western consider marketing a portion 
of CVP capacity to the California Power Exchange or other marketers.
    Response: Western markets power first to preference entities under 
Reclamation laws. However, if Western is unable to market all of its 
power to preference entities, it may be sold to others.
    Comment: Many commentors supported the 20-year contract term, 
citing the additional value of a long-term contract which allows 
customers who purchase Federal power greater stability in planning for 
future resources than would exist with a shorter contract term.
    Other comments objected to a 20-year contract term citing reasons 
for a shorter contract term. One commentor suggested contract terms of 
no more than 5 years or auctioning contracts to qualified bidders.
    Response: The 20-year contract term provides greater resource 
certainty for Western customers in a restructured industry, and greater 
certainty of revenues for project repayment by Western. Shorter 
contract terms degrade the marketability of the resource and create an 
administrative burden. An EIS, which included a significant amount of 
analysis as well as a public involvement process, was conducted on the 
provisions of EPAMP, including a 20-year term. The EPAMP EIS found that 
longer contract terms were positive for the environment, as customers 
were more likely to invest in renewable resources if they had a stable 
foundation of Federal hydropower. Short-term contracts could lead 
customers to develop resources that are cheaper in the short term but 
more environmentally adverse. Future load requirements are not a 
significant consideration as Western is a partial requirements provider 
and is generally not responsible for meeting customer load growth.
    Contract extensions would not preclude any Congressional or 
administrative actions because contracts or rate changes could be 
included as part of a sale or restructuring package. The Marketing Plan 
does not impact or preclude future operational changes at Federal dams 
because Western will market only the available power generation. 
Because Western is required to market power at cost-based rates, 
auctioning contracts is not practical. Power must be sold to preference 
entities first and not just to the highest bidder. Western has included 
the 20-year contract term in the Marketing Plan.

VI. First Preference

    Comment: A comment supported using 20-year average historical 
generation to calculate the maximum entitlement of first preference 
customers (MEFPC), rather than a 5-year average. Other commentors 
stated using 20-year average historical generation to calculate the 
MEFPC is inappropriate because it does not account for generation lost 
due to fishery restoration operations and other environmental factors, 
would unfairly penalize other preference customers, and would exceed 
statutory requirements. A commentor stated that first preference 
customers should not be immune to the vagaries of generation. Some 
comments requested a floor MEFPC be established, based on generation 
prior to CVPIA operations. Using all historic generation before fishery 
restoration was also suggested.
    Response: The New Melones Project provisions of the Flood Control 
Act of 1962 (76 Stat. 1173, 1191-1192) and the Trinity River Division 
(TRD) Act (69 Stat. 719) (Acts) specify that first preference customers 
are entitled to up to 25 percent of the power generated as a result of 
the construction of the New Melones Project and the Trinity River 
Division (first preference projects). Under its discretionary 
authority, Western determines how the entitlements are to be 
calculated. Western believes the most recent 20-year average historical 
generation is consistent with the Acts because it accounts for 
generation resulting from the first preference projects under a variety 
of hydrological conditions, and takes into consideration impacts of 
changing operations such as those contemplated under the CVPIA. The 
Acts do not guarantee a minimum amount of power to the counties of 
origin; therefore, Western does not believe a floor MEFPC is 
appropriate.
    Comment: A commentor requested more information on the calculations 
used to determine the MEFPC.
    Response: The Marketing Plan specifies the data to be used and how 
the MEFPC will be calculated.
    Comment: A commentor questioned why the MEFPC will only be adjusted 
if, upon recalculation, it is 10 percent above or below the currently 
effective MEFPC.
    Response: To eliminate minor or short-term fluctuations, Western 
has decided to adjust only for a 10 percent or greater difference in 
the MEFPC.
    Comment: Comments were received both in favor of and in opposition 
to the first preference customers' full requirements option at the Base 
Resource rate, without the take-or-pay provision. One commentor stated 
that all customers should be treated economically the same.
    Response: The full requirements option will be supplied from the 
same power resources as the Base Resource; therefore, it is reasonable 
to apply the Base Resource rate. It is not appropriate to apply the 
take-or-pay provision to the full requirements option because the first 
preference customers will not have a fixed percentage amount under this 
option. Western will continue to offer the full requirements option to 
the first preference customers.
    Comment: A commentor said he assumed that the load factor referred 
to in the full requirements option is intended to apply only to those 
first preference customers who cannot measure their demand.
    Response: In the future it may be necessary to determine a maximum 
capacity from the MEFPC. This calculation will require use of a load 
factor for each first preference customer. However, it will not be 
necessary to provide a load factor in the contracts, and the Marketing 
Plan now reflects this clarification.
    Comment: Some commentors who opposed the full requirements option 
stated that it is beyond Western's statutory requirements and is unfair 
to the other customers. It was suggested that a daily entitlement be 
established based on actual generation. First preference customers 
should be provided with the Base Resource and should pay the cost of 
creating a Custom Product in the same manner as all other customers.
    Response: The Acts specify that first preference customers are 
entitled to receive up to 25 percent of the additional power generated 
as a result of construction of the first preference projects. Western 
has discretion in how it fulfills the requirements of the Acts. When 
Congress authorized construction of the first preference projects, it 
balanced the concerns of the counties of origin and the benefits the 
first preference projects would have to the entire CVP. Western 
believes that Congress attempted to provide a fair remedy to all 
parties involved. It is within the spirit of the Acts to make the 
maximum amount of the MEFPC available to the first preference

[[Page 34423]]

customers to the extent it can be used to meet their loads. Power 
deliveries under this option would be nearly identical to what they are 
today. Western believes this arrangement will have minimal impact on 
the other customers; therefore, we will continue to offer the full 
requirements option.
    Comment: Comments requested that first preference customers who 
choose the percentage option be allowed to participate in the exchange 
program, using some or all of their MEFPC.
    Response: Under the percentage option, first preference customers 
would be allowed to participate in the exchange program to the same 
extent as the other customers.
    Comment: A commentor suggested that the Marketing Plan should 
provide for first preference customers to receive 25 percent of the 
energy generated from the TRD, exactly as the legislation provides, at 
the cost to produce that energy.
    Western was requested to provide additional options that would 
allow first preference customers to schedule up to 25 percent of the 
energy produced as a result of the first preference projects, at prices 
that reflect the cost to produce first preference project energy. 
Options should provide for first preference customers to call upon 
historic generation that they did not use during times when 25 percent 
of first preference project energy is less than their load. If first 
preference customers are not allowed to call upon historic generation 
that they did not use, Western should allow them to trade or bank some 
of the 25 percent of what is produced by the first preference projects 
in the future.
    Other comments recommended that the Marketing Plan should reflect 
past legal resolution of issues regarding use and pricing of first 
preference power.
    Response: The Acts do not provide for Western to furnish more power 
than can actually be used by the first preference customers within the 
counties of origin. First preference customers are not entitled to 
historic generation they were unable to use. Also, the Acts do not 
provide for energy banking arrangements. With respect to providing the 
energy at the cost to generate power at the first preference projects, 
both Acts state,

* * * contracts for the sale and delivery of the additional electric 
energy available from the Central Valley Project power system as a 
result of the construction of the plants * * *

In Trinity County Public Utilities District vs. Harrington (781 F.2d 
163 (9th Cir. 1986)), the court held that since the first preference 
projects are operationally and financially integrated with the CVP, the 
first preference customers should pay rates based on the operating 
costs of the CVP system.
    Comment: It was requested that a menu of services be offered to the 
first preference customers, coupled with certain first preference 
rights, like the sale of energy at first preference project cost.
    Response: First preference customers are offered two options--the 
full requirements option and the percentage option. Under the 
percentage option, first preference customers may choose to customize 
their allocation with the Custom Product and participate in the 
exchange program. See Western's response above concerning rates for 
first preference customers.
    Comment: One commentor stated that the percentage option could not 
be used by first preference customers to gain greater benefits than 
would be available under the full requirements option, even though they 
are entitled to greater benefits. The commentor suggested that, other 
than a few differences, the percentage option makes first preference 
customers almost equal to other customers.
    Response: The principal benefit granted to first preference 
customers under the Acts is the first right to purchase a portion of 
the additional generation made available to the CVP as a result of the 
construction of the first preference projects, for use in the counties 
of origin. Under the percentage option, the first preference customers' 
allocations will be determined similarly to the other customers. 
However, first preference customers' allocation percentages will be 
based on their actual loads, not on a CRD. First preference customers 
will not be subject to adjustments in their allocation percentages for 
the resource pools. Additionally, first preference customers will have 
the opportunity to adjust their allocation percentages, with a 7-month 
notice to and approval by Western, up to their share of the MEFPC. 
Western believes that both the percentage option and the full 
requirements option provide the benefits required under the Acts.
    Comment: One commentor stated that 12 months of load data is not 
reflective of actual usage, and requested that Western modify the 
factors used in the calculation to determine a first preference 
customer's percentage.
    Response: Western has modified the Marketing Plan to provide for 
the maximum demand during the previous 4 years to be used in 
determining an allocation percentage under the percentage option.
    Comment: A few commentors stated that Western is required under 
both Acts to provide transmission services to first preference 
customers. Additionally, Western was requested to commit to provide 
transmission service with the basic service at the basic rate to the 
first preference customers. One commentor suggested that first 
preference customers should be exempt from Section V.G.
    Response: The TRD Act authorizes Western to provide electric 
transmission facilities as may be necessary to furnish energy to 
Trinity County. Western owns transmission facilities in Trinity County. 
Should additional facilities be required, appropriations or customer 
advancement of funds would be necessary before such facilities could be 
constructed. There is no similar clause in the New Melones Project 
provisions of the Flood Control Act of 1962 with respect to Calaveras 
and Tuolumne Counties. Western will assist in providing transmission 
service to the first preference customers. Although Western is willing 
to assist, all customers are ultimately responsible to provide for the 
delivery of Federal power to their loads. Accordingly, Section V.G, 
requiring customers to obtain their own third-party transmission 
service, is applicable to all customers.
    Western has voluntarily filed an Open Access Tariff consistent with 
FERC Order No. 888. Transmission costs will be identified separately 
from power costs, and all transmission users will bear an equitable 
share of those costs.
    Comment: Comments were received both in favor of and in opposition 
to the provisions of the Proposed Plan relating to the first preference 
customers. Those in favor of the provisions stated they are appropriate 
and encouraging. Those in opposition stated the provisions exceed 
Western's requirements under the Acts and provide the first preference 
customers with better products than those offered to the other 
customers. Some first preference customers indicated dissatisfaction 
with the benefits they are currently receiving under their respective 
Acts in comparison to the sacrifices they made to allow construction of 
the first preference projects.
    Response: To compensate the counties of origin for their 
sacrifices, both Acts require Western to provide the counties of origin 
with the amount of energy they can use, up to 25 percent of the 
additional energy generated by the CVP as a result of the construction 
of the respective first preference projects. Under its discretionary 
authority, Western determines the manner in which this energy is made

[[Page 34424]]

available to first preference customers. Western believes it is 
appropriate to continue to provide these customers with the opportunity 
to choose between the two options in the Marketing Plan. This will 
allow those customers to decide how to make the best use of the 
benefits they are entitled to receive. Whether either of the options 
results in a ``better'' product than that received by other customers 
would depend on many factors outside of Western's control, such as 
future energy prices, and is secondary to meeting the spirit and intent 
of the Acts.
    Comment: A comment requested that Western provide a summary 
supporting the Marketing Plan's compliance with the TRD Act.
    Response: Section 4 of the TRD Act of 1955 states,

    Contracts for the sale and delivery of the additional electric 
energy available from the Central Valley Project power system as a 
result of the construction of the plants herein authorized and their 
integration with that system shall be made in accordance with 
preferences expressed in the Federal reclamation laws: Provided, 
That a first preference, to the extent of 25 per centum of such 
additional energy, shall be given, under Reclamation law, to 
preference customers in Trinity County, California, for use in that 
county, who are ready, able, and willing within 12 months after 
notice of availability by the Secretary, to enter into contracts for 
the energy: Provided further, That Trinity County preference 
customers may exercise their option on the same date in each 
successive fifth year providing written notice of their intention to 
use the energy is given to the Secretary not less than 18 months 
prior to said date.

    In accordance with the TRD Act, Section VI of the Marketing Plan 
provides that Western will calculate and make available to preference 
customers/entities in Trinity County, to the extent they can use it 
within that county, 25 percent of the additional energy made available 
to the CVP as a result of the construction of the TRD. These first 
preference customers have the right to this power before it is made 
available to other preference customers. Both options provide that the 
power be made available to these first preference customers to meet 
their needs, and the amount of power can be increased until it reaches 
the limit set forth in the TRD Act. A first preference entity may 
exercise its rights to use a portion of the MEFPC by providing written 
notice to Western at least 18 months prior to the anniversary date of 
the first preference project located in its county.
    Comment: A commentor supported dividing the MEFPC from the New 
Melones Project between Calaveras and Tuolumne Counties. That commentor 
requested a provision be added to the Marketing Plan, allowing the 
counties of Calaveras and Tuolumne to combine their allocations for the 
purpose of joint load management.
    Response: Western is willing to consider combining allocations for 
the New Melones' counties of origin if it is requested by the affected 
parties. Such an arrangement is an operational procedure and does not 
need to be specified in the Marketing Plan.
    Comment: A comment suggested that Western should share the revenue 
received from sales of unused first preference power with the first 
preference customers.
    Response: Under applicable legislation, there is no basis to share 
revenues with the first preference customers.
    Comment: Some first preference customers stated that they are 
assuming that they will not be charged for scheduling services. Western 
was requested to clarify the phrase ``scheduling arrangements'' 
(Proposed Plan Section V.C).
    Response: The phrase ``scheduling arrangement'' as used in Section 
V.C of the Proposed Plan was included because Western anticipates that 
power deliveries will no longer be determined after the fact, which is 
allowed under Contract 14-06-200-2948A. Schedules will be agreed upon 
prior to delivery. Scheduling is required under both options for the 
first preference customers, as well as for all other customers. Under 
the restructured electric utility industry in California, Western or 
the customer's scheduling agent will be required to provide schedules 
for all power deliveries within the California Independent System 
Operator (ISO) control area. The first preference customers may perform 
their own scheduling or contract with Western or a third party to 
perform scheduling services. If Western is requested to perform 
scheduling services, the cost will be borne by each customer requesting 
such service. This cost will be identified separately from the Base 
Resource rate.
    Comment: Commentors requested that Western clarify the phrase 
``power requirements'' (Proposed Plan Section VI.D.1).
    Response: The reference to ``power requirements'' as used in 
Section VI.D.1 of the Proposed Plan means the capacity and energy 
necessary to serve a first preference customer's load from that first 
preference customer's share of the MEFPC. The statement concerning 
power requirements has been clarified in the Marketing Plan.
    Comment: A commentor requested that Western clarify the statement 
in Section VI.B of the Proposed Plan that Western may purchase power on 
behalf of the first preference customers to compensate for any power 
loss due to recalculation of the MEFPC.
    Response: This provision has been clarified in the Marketing Plan.
    Comment: Comments were received stating that priority should be 
given to first preference entities that are wholly located within the 
counties of origin. Also, if a contract extension is granted to a first 
preference customer or a new contract is executed with a first 
preference entity that is not entirely located within a county of 
origin, it should be for power withdrawable to serve first preference 
customers/entities that are wholly located within that county of 
origin. A comment also requested the definition of a first preference 
customer/entity include the following language,

one which serves and provides a direct and measurable benefit to the 
residents of the counties of Trinity, Calaveras, and Tuolumne.

    Response: The definition of a first preference customer/entity must 
be consistent with the Acts and Reclamation law. Both Acts provide for 
electric service to be made available to entities who qualify for 
preference under Reclamation law and are located in their respective 
counties. Therefore, entities located in Tuolumne, Calaveras, or 
Trinity Counties who are preference entities qualify for first 
preference rights. The Marketing Plan is consistent with the Acts.
    Comment: A commentor said he assumed that Section VI.E of the 
Proposed Plan is applicable only to new first preference customers.
    Response: Section VI.E of the Proposed Plan, regarding applications 
for first preference power, applies only to first preference entities. 
First preference entities are entities who are qualified to use, but 
are not currently using, preference power within a county of origin. 
They are qualified to be first preference customers but are not yet 
customers.
    Comment: One commentor suggested that first preference customers 
had been inappropriately exempted from Section V.B, allocation 
percentage adjustment clause, as referenced in Section VI.J of the 
Proposed Plan.
    Response: Western has determined that Section V.B will be 
applicable to the first preference customers, and the Marketing Plan 
has been so modified.

[[Page 34425]]

VII. Transmission

    Comment: One commentor stated that Western's transmission 
obligations under separate transmission contracts must be honored. 
Another commentor asked how Western plans to deal with the DOE Labs' 
100 MW entitlement on the California-Oregon Transmission Project and 
their capacity entitlement on the Tracy Tie Line.
    Response: The Marketing Plan does not modify Western's existing 
contractual transmission rights or obligations, including DOE's 
entitlements.
    Comment: A commentor expressed concern that the unbundling of 
transmission service from power services would have an adverse impact 
on Western's customers, and Western should not require customers to go 
through a separate process to obtain transmission. It was suggested 
that Western make a ``delivered'' product available, or otherwise use 
transmission assets to firm the Base Resource, particularly in dry 
years. It was further suggested that, if customers use the transmission 
systems of others for delivery of CVP power, they should still be 
responsible for a portion of Western's transmission system costs.
    Response: Western is not a FERC jurisdictional utility, but has 
agreed to comply with the spirit and intent of FERC Order No. 888, to 
the extent it does not conflict with Western's legislative mandates. If 
it is feasible in the restructured electric utility industry, Western 
is willing to evaluate bundled services, including use of its 
transmission access to the Northwest, during further development of the 
Base Resource, Optional Purchase, and Custom Products. All customers 
who use Western's transmission system will share cost responsibility 
for the transmission system.
    Comment: One commentor stated that Western's current Pacific 
Intertie transmission service level does not fully reflect Western's 
ownership of its portion of the Pacific Intertie.
    Response: Western's current level of Pacific Intertie transmission 
is outside the scope of the Marketing Plan.
    Comment: One commentor stated that Western needs to consider its 
products' impacts on other customers, particularly Western's direct-
connect customers who rely on Western's transmission system.
    Response: Western considered the potential impacts of its products 
on all customers, including direct-connect customers. It is Western's 
intent to offer products which are useful and beneficial to all 
customers.
    Comment: One commentor objected to Western's proposal to assess 
transmission losses to customers that are directly connected to 
Western's transmission system.
    Response: Under the Marketing Plan, power will be available as a 
system sale, not from specific points of generation. It is necessary to 
account for the power that is lost between generation and load. 
Therefore, all power deliveries using the CVP transmission system will 
be subject to loss assessments.
    Comment: One commentor requested Western assume a position of 
advocacy on its customers' behalf in regard to access and pricing of 
third-party transmission. Western was urged to reserve sufficient 
capacity on its transmission system to accommodate its customers' 
requirements for wheeling of both CVP and purchased firming power. 
Western was encouraged to explore ways in which its customers will have 
a superior entitlement to schedule capacity on Western's transmission 
system, while avoiding the problem of double-billing for transactions 
utilizing both the Federal and non-Federal systems.
    Response: Access to and pricing of third-party transmission is 
outside the scope of the Marketing Plan. Western will provide 
transmission services as appropriate in conjunction with its power 
sales in a manner consistent with FERC Orders and legislated mandates. 
Use of Western's transmission resources will be determined as the 
products and services to be provided by Western are further developed.

VIII. Pricing and Rates

    Comment: Commentors expressed concerns that, in order to commit to 
a long-term Marketing Plan, a clear idea of prices and availability of 
power is needed. They stated that the bulk power market is often 
trading below Western's current price range, and uncertainties such as 
the Restoration Fund make it even more unattractive to choose Western.
    Response: Western will sell the Base Resource at a cost-based rate, 
and the Custom Product at a pass-through cost. The ratemaking process 
is separate from the Marketing Plan; however, as in all Administrative 
Procedure Act processes, public participation will be encouraged. Costs 
and availability will be more clearly identified by the time 
commitments are required for the Base Resource.
    Western has no control over Restoration Fund costs; however, 
Western is striving to minimize Western components of power costs and 
customize products in an attempt to provide the best possible service 
at the lowest possible rates consistent with sound business principles. 
Western expects its prices to be at or below the bulk market by the 
time the Marketing Plan goes into effect.
    Comment: Although the take-or-pay method was commented upon 
favorably, some commentors stated take-or-pay contracts require details 
on prices and products, and are unrealistic unless they are for short 
terms. A comment was received favoring cost-of-service ratemaking with 
a take-or-pay provision for ``must-run power.''
    Response: The take-or-pay approach is expected to provide adequate 
revenues to ensure project repayment. The Base Resource will be sold at 
a cost-based rate that will be developed in a public process in which 
customers and interested parties may participate. Other products will 
be sold on a pass-through-cost basis. By the time product commitments 
are required, individual customer need and pricing and availability 
information will be more clearly defined.
    Comment: A commentor requested that Western negotiate for firming 
resources on behalf of its entire customer base so that certain 
customers will not be competing in the bulk power market against 
Western.
    Response: The Marketing Plan reflects the option for Western to 
negotiate for firming as part of the Custom Product on behalf of its 
entire customer base, a group of customers, or individual customers, if 
requested by those customers.
    Comment: Western should postpone a decision on Washoe Project cost 
recovery until more definitive information can be provided.
    Response: Western believes all necessary information concerning the 
marketing of Washoe Project power is available and has been considered. 
Western sees no benefit in delaying the decision to market Washoe 
Project power with the CVP resource.

IX. Industry Restructuring

    Comment: A commentor stated that restructuring has changed the 
rules of the game to the point that Western's proposals are 
inconsistent with public interests. Another commentor encouraged 
Western to retain flexibility to accommodate changes in the industry.
    Response: Western believes it is in the public interest to provide 
some resource certainty to its customers and to protect the Federal 
investment in project facilities. The Marketing Plan is designed to be 
flexible enough to respond to changes in CVP operations and the 
industry, and to provide the

[[Page 34426]]

greatest value to customers and the Federal Government.
    Comment: A commentor asked if joining the California ISO will pose 
any problems for Western.
    Response: Whether Western will join the California ISO is a 
separate decision from development of the Marketing Plan. The Marketing 
Plan does not preclude Western's participation in the California ISO.
    Comment: A commentor suggested that Western should recognize the 
new competitive market and help its preference customers wherever 
possible with competition transition charge problems.
    Response: Western designed the Marketing Plan to be flexible to 
respond to changes in the industry and provide the greatest value to 
its customers. Products and services available under the Marketing Plan 
can be customized to meet individual customer's needs in the new 
competitive market.
    Competition transition charges are outside the scope of the 
Marketing Plan.

Responses to Comments Received on the Notice of Public Process on 
Resource Pool Size (64 FR 4646, January 29, 1999)

    During the public consultation and comment period, Western received 
five letters commenting on the Sierra Nevada Region's resource pool 
size. No comments were received during the February 9, 1999, public 
meeting in Folsom, California. Western reviewed and considered all 
comments received by the end of the public consultation and comment 
period, March 1, 1999, in preparation of the Marketing Plan.
    The following is a summary of the comments received during the 
consultation and comment period, and Western's responses to those 
comments.
    Comment: Some comments stated that the proposed sizes of the 
resource pools were adequate to meet the needs of new customers, 
including the fair share needs of eligible Native American tribes.
    Response: Western considered the needs of new customers, including 
Native American tribes, when determining the sizes of the resource 
pools during development of the Marketing Plan. Western concurs with 
this comment.
    Comment: A commentor stated that a larger allocation percentage, 
such as 30 percent, would be necessary for certain Native American 
tribes in Southern California. That commentor also suggested that an 
allocation be set aside for them and dedicated to tribal economic 
development.
    Response: Southern California is outside the primary marketing area 
of the Sierra Nevada Region. The Desert Southwest Customer Service 
Region of Western serves Southern California and will develop its 
marketing program prior to the expiration of its current electric 
service contracts.
    Comment: As Western's Marketing Plan becomes more definitive, it 
would be beneficial for PG&E to review the Marketing Plan in advance to 
assure consistency with any possible post-Contract 14-06-200-2948A 
(integration contract with PG&E) contractual relationship.
    Response: Under the Administrative Procedure Act, Western cannot 
discuss the final Marketing Plan with any entities prior to 
publication.
    Comment: In determining the level of benefits to Native Americans, 
Western should take into account the benefits currently received 
through rural electric cooperatives serving the reservations. Western 
should attempt to fairly distribute the benefits of low-cost Federal 
hydropower, ensuring equity among all eligible tribes and existing 
customers.
    Response: The allocation and eligibility criteria in the Marketing 
Plan were developed to ensure the benefits of Federal power were 
equitably distributed among new customers, including eligible Native 
American tribes, and existing customers.
    Comment: Power could be provided to a utility to serve a tribe; 
however, the tribe would actually hold the allocation. By way of a bill 
crediting system, the Federal power benefits could be passed on to the 
tribe through a credit on its utility bill.
    Response: Western intends to allocate power directly to any 
eligible Native American tribes that apply for power. The Sierra Nevada 
Region will work with tribes to receive power under the California 
direct access rules or other applicable arrangements, which may include 
bill crediting.
    Comment: If a Native American tribe establishes a utility and seeks 
an allocation from the resource pool, that tribal utility should be 
treated as a utility applicant and subject to the same qualifications 
and provisions to which all Federal power customers are subject.
    Response: Native American tribal utility applicants will be treated 
similarly to other utility applicants.

Summary of Revisions to the Proposed Plan

    Western revised the Marketing Plan as a result of the comments 
received during the comment period and public forums. Additionally, 
some changes have been made to more clearly define the intent, but do 
not change the original proposal. The major revisions are summarized as 
follows.
    The definitions of administrator, curtailable power, diversity 
power, load factor, long-term, NDA Act power, peaking, power marketing 
initiative, unbundled, and withdrawable have been deleted. These 
definitions were deleted because they are not necessary terms in the 
final Marketing Plan. The definition of customer was deleted and will 
be used as a generic term to refer to new allottees and/or existing 
customers. A definition for the Optional Purchase was added to assist 
in understanding that product. These modifications appear in Section I, 
and are used throughout the Marketing Plan.
    In the formulas in Section IV.A.1 and IV.A.2, Western will base an 
existing customer's allocation percentage on its extension CRD as of 
December 31, 2003, rather than December 31, 2001. Western will adjust 
an existing customer's percentage on December 31, 2003, if its maximum 
monthly peak load for the previous 3 years is less than its extension 
CRD, rather than basing the existing customer's extension CRD on 104 
percent of its load during the previous 4 years. This modification also 
appears in Appendix A.
    Extension CRD was modified to include NDA Act power used for 
economic development. This modification appears in Section I and 
Appendix A.
    Western has decided not to market unused first preference power on 
a withdrawable basis. Unused first preference power will be included as 
part of the Base Resource and available to all other customers. 
Sections I and III were modified. Section V.F of the Proposed Plan has 
been deleted.
    The commitment date has been changed to December 31, 2000, for the 
Base Resource and Optional Purchase, and to December 31, 2002, for the 
Custom Product. Additionally, Western may extend the commitment dates 
for the Base Resource, Optional Purchase, and Custom Product if Western 
determines it is in the best interest of Western and the customers. 
This modification appears in Sections III and V.
    Unused power resources may be marketed outside the primary 
marketing area. This modification appears in Section III.
    Existing customers must commit to the Optional Purchase for a 10-
year period, from January 1, 2005, through December 31, 2014, rather 
than an annual or greater period. This modification appears in Section 
III.
    The Call for Resource Pool Applications will be published in a

[[Page 34427]]

separate Federal Register notice. This modification appears in Section 
IV.B.2.e.
    Existing customers may apply for a resource pool allocation if 
their extension CRD is not more than 15 percent of their peak load in 
the calendar year prior to the Call for Applications, rather than 
calendar year 1996. This modification appears in Section IV.B.2.g.
    Requests to serve new loads that are less than 1 MW, but at least 
500 kW, will be allowed if they can be aggregated so Western can 
schedule and deliver to a minimum load of 1 MW. This modification 
appears in Section IV.B.2.h.
    Western will base a resource pool allocation on an applicant's peak 
demand during the calendar year prior to publication of the Call for 
Applications. The amount used to determine a resource pool allottee's 
allocation percentage will not be rounded up to the nearest 100 kW. 
This modification appears in Section IV.B.3.b.
    Eligible Native American entities will receive greater 
consideration for an allocation of up to 65 percent of their peak load 
in the calendar year prior to the Call for Applications. This 
modification appears in Section IV.B.3.e.
    First preference customers will be subject to Section V.B, which 
clarifies that allocation percentages provided for in the Marketing 
Plan and the electric service contracts shall be subject to adjustment. 
This modification appears in Sections V.B and VI.K.
    Contracts will include a clause specifying criteria that customers 
must meet on an ongoing basis to be eligible to continue receiving 
electric service from Western. This modification appears in Section 
V.F.
    Although Western may assist, each customer will be responsible for 
obtaining its own delivery arrangements to its load. This modification 
appears in Section V.G.
    Western may reduce or rescind a customer's allocation percentage, 
upon 90-days notice, if Western determines that the customer is not 
using the power to serve its own loads or the allocation amount is 
consistently greater than the customer's maximum peak load. This 
modification appears in Section V.K.
    Contracts may include a clause providing for alternative funding 
arrangements, including net billing, bill crediting, reimbursable 
financing, and advance payment. This modification appears in Section 
V.N.
    The initial recalculation of the MEFPC pertaining to this Marketing 
Plan will be completed by June 1, 2004. This modification appears in 
Section VI.A.
    The commitment date for first preference customers to commit to the 
percentage option has been changed to December 31, 2002. This 
modification appears in Section VI.D.
    Under the full requirements option, if there is more than one first 
preference customer in a county of origin, or a first preference entity 
in that county makes a request for power, Western reserves the right to 
establish a maximum amount of power available to each first preference 
customer from the MEFPC. This modification appears in Section VI.D.1.
    For first preference customers, Western will use the maximum demand 
during the previous 4 years, rather than the last 12 months, in 
determining an allocation percentage under the percentage option. This 
modification appears in Section VI.D.2.
    A first preference customer's request for an increase in its 
allocation percentage under the percentage option must be accompanied 
by justification for the increase. This modification appears in Section 
VI.D.2.c.
    First preference customers will be subject to Section V.L, which 
states that any power not under contract may be allocated at any time, 
at Western's sole discretion, or sold as deemed appropriate by Western. 
This modification appears in Section VI.K.
    Western will provide bundled or unbundled transmission services 
with its power sales, consistent with FERC Orders, legislated mandates, 
or California ISO Agreements. This modification appears in Section VII.
    Appendix A was updated to reflect new customers and changes in CRD.

2004 Power Marketing Plan

    This Marketing Plan addresses: (1) The power to be marketed after 
December 31, 2004, which is the termination date for all Central Valley 
Project (CVP) electric service contracts; (2) the general terms and 
conditions under which the power will be marketed; (3) the resources 
available to existing customers; and (4) the criteria to determine who 
will receive allocations from the resource pools.
    The Western Area Power Administration (Western) will continue a 
collaborative process in implementing the terms set forth in this 
Marketing Plan.
    Within broad statutory guidelines and operational constraints of 
the CVP and the Washoe Project, Western has wide discretion as to whom 
and under what terms it will contract for the sale of Federal power, as 
long as preference is accorded to statutorily defined public bodies. 
Western markets power in a manner that will encourage the most 
widespread use at the lowest possible rates consistent with sound 
business principles. All products and services provided under this 
Marketing Plan will be subject to operational requirements and 
constraints of the CVP and Washoe Project, transmission availability, 
purchase power limitations, and Federal authorities.
I. Acronyms and Definitions
    As used herein, the following acronyms and terms, whether singular 
or plural, shall have the following meanings:
    Allocation: An offer from Western to sell Federal power for a 
certain period of time, that will convert to a right to purchase after 
execution of a contract.
    Allocation Criteria: Conditions applied to all applicants who 
receive an allocation.
    Allottee: An entity receiving an allocation percentage under this 
Marketing Plan.
    Ancillary Services: Those services necessary to support the 
transfer of electricity while maintaining reliable operation of the 
transmission provider's transmission system in accordance with good 
utility practice. Ancillary services are generally described in Federal 
Energy Regulatory Commission (FERC) Order No. 888 (Docket Nos. RM95-8-
000 and RM94-7-001), issued April 24, 1996.
    Base Resource: CVP and Washoe Project power output and existing 
power purchase contracts extending beyond 2004, determined by Western 
to be available for marketing, after meeting the requirements of 
project use and first preference customers, and any adjustments for 
maintenance, reserves, transformation losses, and certain ancillary 
services.
    Capacity: The electrical capability of a generator, transformer, 
transmission circuit or other equipment.
    Central Valley Project (CVP): A multipurpose Federal water 
development project extending from the Cascade Range in northern 
California to the plains along the Kern River, south of the City of 
Bakersfield.
    Contract Principles: Provisions of the electric service contracts, 
including Western's General Power Contract Provisions.
    Contract Rate of Delivery (CRD): The maximum amount of capacity 
made available to a customer for a period specified under a contract.
    Custom Product: A combination of products and services, excluding

[[Page 34428]]

provisions for load growth, which may be made available by Western per 
customer request, using the customer's Base Resource and supplemental 
purchases made by Western.
    Eligibility Criteria: Conditions that must be met to qualify for an 
allocation.
    Energy: Measured in terms of the work it is capable of doing over a 
period of time; electric energy is usually measured in kilowatthours or 
megawatthours.
    Existing Customer: A preference customer with a contract to 
purchase firm power, offered under a previous allocation process or 
marketing plan, that extends through December 31, 2004.
    Extension CRD: An existing customer's CRD exclusive of diversity 
and curtailable power, and peaking/excess capacity, as it may be 
adjusted in accordance with this Marketing Plan.
    Firm: A type of product and/or service that is available to a 
customer at the times it is required.
    First Preference Customer/Entity: A preference customer and/or a 
preference entity (an entity qualified to use, but not using preference 
power) within a county of origin (Trinity, Calaveras, and Tuolumne) as 
specified under the Trinity River Division Act (69 Stat. 719) and the 
New Melones project provisions of the Flood Control Act of 1962 (76 
Stat. 1173, 1191-1192).
    General Power Contract Provisions (GPCP): Standard terms and 
conditions which are included in Western's electric service contracts.
    Integrated Resource Plan (IRP): A process and framework within 
which the costs and benefits of both demand and supply-side resources 
are evaluated to develop the least total cost mix of utility resource 
options.
    Kilowatt (kW): A unit measuring the rate of production of 
electricity; one kilowatt equals one thousand watts.
    Marketing Plan: Western's final 2004 Power Marketing Plan for the 
Sierra Nevada Region.
    Megawatt (MW): A unit measuring the rate of production of 
electricity; one megawatt equals one million watts.
    National Defense Authorization Act (NDA Act): Section 2929 of the 
National Defense Authorization Act, Pub. L. 103-160, 107 Stat. 1547, 
1935 (1993), which provides that, for a 10-year period (starting in 
1993), the CVP electric power allocations to military installations in 
the State of California, which have been closed or approved for 
closure, shall be reserved for sale through long-term contracts to 
preference entities which agree to use such power to promote economic 
development at the military installations closed or approved for 
closure.
    Optional Purchase: An additional increment of power purchased by 
the Sierra Nevada Region at the request of an eligible existing 
customer on a pass-through-cost basis. Such power will be made 
available as a replacement for the Base Resource that is unavailable to 
that existing customer due to the Sacramento Municipal Utility 
District's (SMUD) percentage right of 360/1,152 of the Base Resource 
provided for under the SMUD Settlement Agreement. The Optional Purchase 
will terminate on December 31, 2014.
    Power: Capacity and energy.
    Preference: The requirements of Reclamation law which provide that 
preference in the sale of Federal power be given to certain entities, 
such as municipalities and other public corporations or agencies and 
also to cooperatives and other nonprofit organizations financed in 
whole or in part by loans made pursuant to the Rural Electrification 
Act of 1936 (Reclamation Project Act of 1939, section 9(c), 43 U.S.C. 
485h(c)).
    Primary Marketing Area: The area which generally encompasses 
northern and central California extending from the Cascade Range to the 
Tehachapi Mountains, and west-central Nevada.
    Project Use: Power as defined by Reclamation law and/or used to 
operate CVP and Washoe Project facilities.
    Reclamation Law: Refers to a series of Federal laws with a lineage 
dating back to the turn of the century. Viewed as a whole, those laws 
create the framework under which Western markets power.
    Sierra Nevada Region: The Sierra Nevada Customer Service Region of 
the Western Area Power Administration.
    Washoe Project: A Federal water project located in the Lahontan 
Basin in west-central Nevada and east-central California.
    Western: Western Area Power Administration, United States 
Department of Energy, a Federal power marketing administration 
responsible for marketing and transmitting of Federal power pursuant to 
Reclamation law and the DOE Organization Act (42 U.S.C. 7101-7352).

II. Base Resource

    The Base Resource, as defined in Section I, will include CVP and 
Washoe Project generation supported by certain power purchases. CVP 
generation (energy and capacity) will vary hourly, daily, monthly, and 
annually, because it is subject to hydrological conditions and other 
constraints that may govern CVP operations. CVP generation must be 
adjusted for project use, maintenance, reserves, transformation losses, 
and certain ancillary services before CVP generation is available for 
marketing. The power resources will be further adjusted for 
transmission losses to the point of delivery. The power resources may 
also be adjusted for first preference customers, when first preference 
customers' needs increase, up to the maximum entitlement of first 
preference customers.
    Western will market part of the 3.65 MW and estimated annual energy 
generation of 10,000 MWh available from the Washoe Project as part of 
the Base Resource. The U.S. Department of the Interior, Fish and 
Wildlife Service Lahontan National Fish Hatchery and Marble Bluff Fish 
Facility are project use loads of the Washoe Project and have first 
call on those power resources. The generation available after serving 
the Fish and Wildlife Service needs will be marketed with the CVP power 
resources. The Washoe Project is subject to the same variability and 
constraints as the CVP.
    Western will also include any power available from existing power 
purchase contracts with terms extending beyond 2004 in the Base 
Resource. Currently, Western has a contract with Enron Power Marketing, 
Inc., that has a final termination date of December 31, 2014.
    The adjustments and variables discussed above will influence the 
amount of Base Resource available to customers. During some critically 
dry months, purchases may be required to meet project use and 
obligations to first preference customers, and only a minimal amount of 
Base Resource will be available during such months. The usability of 
the Base Resource for meeting customers' loads will be directly related 
to the amount of firming provided by Western and a customer's ability 
to integrate this power resource into its power resource mix.

III. Products and Services

    Western will market its Base Resource alone or in combination with 
the Optional Purchase and/or Custom Product, which could include 
purchasing some level of firming power on behalf of all customers, a 
group of customers, or individual customers. All costs incurred by 
Western in providing additional services to customers will be paid by 
those customers using the services. The degree to which Western 
continues to purchase power will depend on customer requests and 
Federal authorities. After the effective date of this Marketing Plan, 
Western will determine, in a collaborative process with the customers, 
the best use of Western's power and transmission

[[Page 34429]]

resources to provide the Base Resource, Optional Purchase, and Custom 
Products.
    Each allottee will be allocated a percentage of the Base Resource. 
All customers will be required to commit to the Base Resource no later 
than December 31, 2000.
    Upon request, Western will provide a qualified existing customer 
with the Optional Purchase. Commitments to the Optional Purchase must 
be made by December 31, 2000. Existing customers requesting the 
Optional Purchase must commit to the Optional Purchase at the time a 
commitment is made for the Base Resource, through December 31, 2014.
    Upon request, Western may develop a Custom Product for any 
customer. A Custom Product may include ancillary services, reserves, 
etc., or may include Western purchasing additional resources, including 
firming power, to provide some of these services. Commitments to 
purchase a Custom Product must be made by December 31, 2002, for a 
period of no less than 5 years of service, beginning January 1, 2005. 
Thereafter, the Custom Product will be offered for periods as agreed to 
by Western.
    Western may extend the commitment dates for the Base Resource, 
Optional Purchase, and Custom Product if Western determines it is in 
the best interest of Western and the customers.
    Any unused power resources may be marketed under terms and 
conditions and for periods of time as determined by Western, and may be 
marketed outside the primary marketing area.
    Western will establish and manage an exchange program to allow all 
customers to fully and efficiently use their power allocations. The 
exchange program will be further developed by Western through a 
collaborative process with all customers. Specific criteria for the 
exchange program will be included in electric service contracts. Any 
power under contract that cannot be used on a real-time basis, due to a 
customer's load profile, must be offered under this exchange program to 
Western or other preference customers.

IV. Resource Available to Existing Customers and Resource Pool 
Allocations

    Western will allocate a portion of the Base Resource to existing 
customers and set aside a portion for new allocations. Effective 
January 1, 2015, Western will reduce all customers' allocation 
percentages by up to 2 percent to establish a 2015 Resource Pool. 
Initially, an existing customer, except first preference customers and 
the Sacramento Municipal Utility District (SMUD), will be allocated 96 
percent of its pro rata share of the Base Resource based on the ratio 
of the existing customer's extension CRD to the total existing 
customers' extension CRD. First preference customers are subject to 
specific legislation and are addressed in Section VI. SMUD will have a 
specific allocation through 2014 based on a prior settlement agreement.
    Effective January 1, 2015, Western will recalculate the percentages 
for all existing customers, including SMUD and customers receiving an 
allocation from the 2005 Resource Pool. Western will derive each 
customer's new percentage based on the change in SMUD's percentage 
described later in this section and the reduction for the 2015 Resource 
Pool. The new percentages will be applicable from 2015 through 2024.
A. Resource Available to Existing Customers
    Existing customers, excluding SMUD, will have a right to purchase a 
percentage of the Base Resource based on the ratio of each existing 
customer's extension CRD to the total of all existing customers' 
extension CRD, excluding SMUD, under the terms of this section. Current 
extension CRD are set forth in appendix A. From 2005 through 2014, SMUD 
will have a right to purchase 360/1,152 of the Base Resource, as 
referenced in the Settlement Agreement with SMUD, Contract DE-MS65-
83WP59070, dated April 15, 1983. All other existing customers have a 
right to purchase the Base Resource amount remaining after Western 
adjusts it to accommodate SMUD's rights and the 2005 Resource Pool. 
After 2014, Western will adjust SMUD's right to purchase the Base 
Resource to reflect the ratio of SMUD's extension CRD to the total of 
all existing customers' extension CRD. SMUD's right will also be 
adjusted by 4 percent (2005 Resource Pool adjustment) and up to an 
additional 2 percent to accommodate the 2015 Resource Pool.
    Due to the diversity among existing customers' loads, including 
SMUD's load, existing customers' total extension CRD exceeds the 1,152 
MW referenced in the SMUD Settlement Agreement. This Marketing Plan 
will result in SMUD receiving a proportionately greater share of the 
Base Resource than other existing customers if the total extension CRD 
remains at a level greater than 1,152 MW. Therefore, existing 
customers, excluding SMUD and first preference customers, have the 
right to request the Optional Purchase.
    The following extension formulas are used to determine existing 
customers' purchase rights to the Base Resource. Application of these 
formulas also determines each existing customer's right to the Optional 
Purchase. No allocation percentage will be based on an extension CRD 
greater than an existing customer's load.
    1. For the period 2005 through 2014, existing customers' purchase 
rights to the CVP resource are calculated as follows:

a. SMUD's purchase right = (360/1,152)  x  BR
b. Other existing customers' purchase rights = (A/B)  x  ABR

Where:

A = An individual existing customer's extension CRD. Western may adjust 
``A'', if Western determines that, as of December 31, 2003, the 
extension CRD is greater than the existing customer's maximum monthly 
peak load for the previous 3 years or if the existing customer's 
extension CRD has been changed from the amount set forth in Appendix A 
of this Marketing Plan.
B = The sum of all values for ``A'', excluding SMUD.
BR = Base Resource.
ABR = Adjusted Base Resource = {BR--[(360/1,152)  x  BR]}  x  (100%--
RP%). After 2014, the SMUD adjustment of [(360/1,152)  x  BR] will be 
deleted.
RP% = 2005 Resource Pool percentage.

    2. Existing customers' rights to the Optional Purchase will be 
calculated as follows:

Individual existing customer's Optional Purchase = (A/B)  x  TOP

Where:

TOP = Total Optional Purchase = [(360/1,152)--(361/C)]  x  BR  x  
(100%--RP%).
C = The sum of all existing customers' extension CRD, including SMUD.
B. Resource Pool Allocations
    Western will reserve a portion of the power available after 2004 
for allocation to eligible applicants.
    1. Resource Pool Amount:
    The 2005 Resource Pool consists of up to 4 percent of the power 
resources available after 2004. Western will also establish a 2015 
Resource Pool. The 2015 Resource Pool will consist of up to 2 percent 
of the power resource available after 2014, plus a portion of the 
resource that becomes available from adjusting SMUD's percentage. That 
portion will be equal to what SMUD would have been required to 
contribute to the 2005 Resource Pool. SMUD will also be subject to the 
2015 Resource Pool adjustment of up to 2 percent.

[[Page 34430]]

    Western will, at its discretion, allocate a percentage of the 2005 
Resource Pool to each applicant that meets the eligibility and 
allocation criteria. This allocation percentage will be multiplied by 
the 2005 Resource Pool percentage to determine the applicant's 
percentage of the Base Resource. Allocations from the 2015 Resource 
Pool will be determined through a separate public process conducted 
prior to 2015.
    2. Eligibility Criteria:
    Western will apply the following eligibility criteria to all 
applicants seeking a resource pool allocation under this Marketing 
Plan.
    a. Applicants must meet the preference requirements of Reclamation 
law.
    b. Applicants should be located within Sierra Nevada Region's 
primary marketing area. If the Sierra Nevada Region's power resources 
are not fully subscribed, Western may market its resource outside the 
primary marketing area.
    c. Applicants that require power for their own use must be ready, 
willing, and able to receive and use Federal power. Federal power shall 
not be resold to others.
    d. Applicants that provide retail electric service must be ready, 
willing, and able to receive and use the Federal power to provide 
electric service to their customers, not for resale to others.
    e. Applicants must submit an application in response to the Call 
for Resource Pool Applications under a separate Federal Register 
notice.
    f. Native American applicants must be a Native American tribe as 
defined in the Indian Self Determination Act of 1975 (25 U.S.C. 450b, 
as amended).
    g. Existing customers may apply for a resource pool allocation if 
their extension CRD, set forth in Appendix A, is not more than 15 
percent of their peak load in the calendar year prior to the Call for 
Applications, and not more than 10 MW.
    h. Western will normally not allocate power to applicants with 
loads of less than 1 MW; however, allocations to applicants with loads 
which are at least 500 kW may be considered, provided the loads can be 
aggregated with other allottees' loads to schedule and deliver to a 
minimum load of 1 MW.
    3. Allocation Criteria:
    Western will apply the following allocation criteria to all 
applicants receiving a resource pool allocation under this Marketing 
Plan.
    a. Allocations will be made in amounts as determined solely by 
Western in exercise of its discretion under Reclamation law and 
considered to be in the best interest of the U.S. Government.
    b. Allocations will be based on the applicant's peak demand during 
the calendar year prior to the Call for Applications or the amount 
requested, whichever is less.
    c. An allottee will have the right to purchase power from Western 
only upon the execution of an electric service contract between Western 
and the allottee, and satisfaction of all conditions in that contract.
    d. All customers, including those receiving an allocation from the 
2005 Resource Pool, will be subject to the 2015 Resource Pool 
adjustment.
    e. Eligible Native American entities will receive greater 
consideration for an allocation of up to 65 percent of their peak load 
in the calendar year prior to the Call for Applications.

V. General Criteria and Contract Principles

    Western will initially offer existing customers a contract 
amendment for the right to purchase a percentage of the Base Resource 
after 2004. After allocations are final, resource pool allottees will 
be offered a contract to set forth their allocation percentage. In 
order to finalize the electric service arrangements, new contracts will 
be offered to new and existing customers subsequent to the date product 
commitments are required, as set forth in this Marketing Plan. The 
following criteria and contract principles will apply to all contracts 
executed under this Marketing Plan, except that certain criteria may 
not apply to first preference customers' contracts and 2015 Resource 
Pool allottees' contracts:
    A. Electric service contracts and amendments shall be executed 
within 6 months of a contract offer, unless otherwise agreed to in 
writing by Western.
    B. Allocation percentages provided for in this Marketing Plan and 
the electric service contracts shall be subject to adjustment.
    C. All power supplied by Western will be delivered pursuant to a 
scheduling arrangement.
    D. All power will be provided on a take-or-pay basis. All costs 
associated with the products and services provided, including costs 
associated with ancillary services, Optional Purchases, Custom 
Products, and transmission will be passed on to the customer(s) using 
the product or service.
    E. Contract amendments and contracts shall require a written 
commitment to a percentage of the Base Resource and the Optional 
Purchase on or before December 31, 2000, and the Custom Product on or 
before December 31, 2002. Western may extend the final commitment dates 
for the Base Resource, Custom Product, and Optional Purchase.
    F. Contracts will include a clause specifying criteria that 
customers must meet on a continuous basis to be eligible to receive 
electric service from Western.
    G. Upon request, Western shall provide, or assist each new and 
existing customer in obtaining, transmission arrangements for delivery 
of power marketed under this Marketing Plan; nonetheless, each entity 
is ultimately responsible for obtaining its own delivery arrangements 
to its load. Transmission service over the CVP system will be provided 
in accordance with Section VII of this Marketing Plan.
    H. Contracts shall provide for Western to furnish electric service 
effective January 1, 2005, through December 31, 2024.
    I. Specific products and services may be provided for periods of 
time as agreed to in the electric service contract.
    J. Contracts shall incorporate Western's standard provisions for 
electric service contracts, integrated resource plans, and General 
Power Contract Provisions, as determined by Western.
    K. Contracts will include a clause that allows Western to reduce or 
rescind a customer's allocation percentage, upon 90-days notice, if 
Western determines that (1) the customer is not using this power to 
serve its own loads, except as otherwise specified in Section III; or 
(2) the allocation amounts are consistently greater than the customer's 
maximum peak load.
    L. Any power not under contract may be allocated at any time, at 
Western's sole discretion, or sold as deemed appropriate by Western.
    M. Contracts will include a clause providing for Western to adjust 
the customers' allocation percentage for the 2015 Resource Pool.
    N. Contracts may include a clause providing for alternative funding 
arrangements, including net billing, bill crediting, reimbursable 
financing, and advance payment.

VI. First Preference Entitlement and Allocation

    The Trinity River Division Act and the New Melones Project 
provisions of the Flood Control Act of 1962 (Acts) specify that 
contracts for the sale and delivery of the additional electric energy, 
available from the CVP power system as a result of the construction of 
the plants authorized by these Acts and their integration into the CVP 
system,

[[Page 34431]]

shall be made in accordance with preferences expressed in Federal 
Reclamation laws. These Acts also provide that a first preference of up 
to 25 percent of the additional energy shall be given, under 
Reclamation law, to preference customers in the counties of origin 
(Trinity, Tuolumne, and Calaveras), for use in those counties, who are 
ready, willing, and able to enter into contracts for the energy.
    To meet the requirements of the Acts, Western published the Final 
Withdrawal Procedures (51 FR 7702, March 5, 1986). This Marketing Plan 
supersedes the Final Withdrawal Procedures, or any successor 
procedures, as of January 1, 2005.
    Western will calculate and allocate the maximum entitlements of 
first preference customers (MEFPC). The MEFPC is the maximum amount of 
energy available to first preference customers/entities, in accordance 
with the following:
    A. The MEFPC will be calculated separately for the New Melones 
Project, Calaveras and Tuolumne Counties, and the Trinity River 
Division (TRD), Trinity County (first preference projects). To 
determine the 25 percent of additional energy made available to the CVP 
as a result of the construction of each of these projects, Western will 
use the average of the previous 20 years of historical annual 
generation. The TRD MEFPC includes generation from Trinity, Carr, and 
Spring Creek Powerplants and a portion of the Keswick Powerplant 
generation. The MEFPC will be recalculated every 5 years, with the 
initial recalculation pertaining to this Marketing Plan completed by 
June 1, 2004.
    B. Upon recalculation, if the MEFPC from a first preference project 
is 10 percent above or below the currently effective MEFPC from that 
first preference project, the MEFPC will be adjusted to reflect that 
increase or decrease. Western will notify affected first preference 
customers at least 6 months before making an adjustment to the MEFPC. 
If recalculation reduces the MEFPC to an amount less than the load 
previously served, Western may, upon request and at its discretion, 
make purchases necessary to replace that amount of power no longer 
available. The costs for all such purchases made on behalf of a first 
preference customer will be passed on to that first preference 
customer.
    C. An allocation made to a first preference customer/entity under 
this Marketing Plan will be based on the power requirements of that 
first preference customer/entity. The sum of allocations of first 
preference power, including losses, shall not exceed the MEFPC from 
each first preference project, or a county of origin's share of the 
MEFPC, except as allowed under Section VI.G below.
    D. Western will work with each first preference customer/entity to 
identify its power requirements and the best use of its first 
preference entitlement. Each first preference customer/entity may elect 
one of the product and service options set forth below. A commitment to 
one of these options must be made in writing no later than December 31, 
2002. If a commitment is not made by December 31, 2002, the full 
requirements option will be deemed chosen.
    Under each option, the first preference customer will be 
responsible for transformation and transmission losses to the first 
preference customer delivery point. Transmission losses shall include 
losses for CVP transmission and third-party transmission.
    1. Full Requirements: Western will provide the first preference 
customer with its full power requirements (capacity and energy) up to 
its right to the MEFPC at the Base Resource rate. If there is more than 
one first preference customer in a county of origin, or a first 
preference entity in that county makes a request for power, Western 
reserves the right to establish a maximum amount of power available to 
each first preference customer from the MEFPC. Payment under this 
option will be based on usage.
    2. Percentage: Western will determine the allocation percentage in 
a manner similar to that of the other customers receiving a power 
allocation. The first preference customer's maximum demand during the 
previous 4 years will be used in determining an allocation percentage 
of the power resource under this option. Power will be provided on a 
take-or-pay basis under this option. The following will apply to each 
first preference customer selecting this percentage option.
    a. First preference customers will not be subject to adjustments 
for the resource pool or the SMUD settlement, and will not be eligible 
for the Optional Purchase. Under this option, first preference 
customers are eligible for the Custom Product as defined in Section 
III.
    b. The allocation percentage made available to each first 
preference customer under this Marketing Plan will be applied to the 
power resources which have been adjusted for project use.
    c. First preference customers will have the opportunity to have 
their allocation percentage adjusted, as agreed to by Western. 
Increases, up to a first preference customer's share of the MEFPC, will 
require a written notice 7 months in advance of the first day of the 
month in which the increase is requested to become effective. 
Justification for the increase must accompany the request.
    E. A first preference entity may exercise its right to use a 
portion of the MEFPC by providing written notice to Western at least 18 
months prior to the anniversary date of the first preference project 
located in its county. The anniversary date is the successive fifth 
year anniversary of the date the Secretary of the Interior declared the 
availability of power from the powerplants in the counties of origin. 
New applications for service to begin on January 1, 2005, under this 
Marketing Plan must be received 18 months prior to January 1, 2002 
(i.e., July 1, 2000) for Trinity County and 18 months prior to April 5, 
2002 (i.e., October 5, 2000) for Calaveras and Tuolumne Counties. Other 
anniversary years applicable to this Marketing Plan are 2007, 2012, 
2017, and 2022.
    F. If the request of a first preference customer/entity for power, 
including adjustment for losses, is greater than the remaining MEFPC 
from that county's first preference project, then Western will allocate 
the remaining MEFPC to the first preference customer/entity first 
making a request for a power allocation or a justified increase in its 
allocation percentage.
    G. Power allocated to first preference customers/entities in 
Tuolumne and Calaveras Counties will be subject to the following 
additional conditions:
    1. Tuolumne and Calaveras Counties shall each be entitled to one-
half of the New Melones Project MEFPC.
    2. If first preference customers in either Tuolumne County or 
Calaveras County are not using their county's full one-half share, and 
a first preference customer/entity in the other county requests power 
in an amount exceeding that county's one-half share, then Western will 
allocate the unused power, on a withdrawable basis, to the requesting 
first preference customer/entity. Such power may be withdrawn for use 
by a first preference customer/entity in the county not using its full 
one-half share upon 6-months written notice from Western.
    H. Trinity Public Utilities District is currently the sole 
recipient of the TRD's first preference rights.
    I. Transmission service will be provided in accordance with 
applicable laws and Section VII of this Marketing Plan.

[[Page 34432]]

    J. For planning purposes, first preference customers may be 
required to provide forecasts and other information required by Western 
as set forth in the electric service contract.
    K. The general criteria and contract principles set forth in 
Sections V.A through C, F through L, and N of this Marketing Plan will 
apply to first preference customers.

VII. Transmission Service

    Western will provide bundled or unbundled transmission services as 
appropriate in conjunction with its power sales in a manner consistent 
with FERC Orders, legislated mandates, or California ISO Agreements, as 
appropriate. Western will determine the use of its transmission 
resources concurrently with further development of the products and 
services under this Marketing Plan. Specific terms and conditions for 
transmission will be provided for in future service agreements.

    Dated: June 10, 1999.
Michael S. Hacskaylo,
Administrator.

Appendix A

    This Appendix lists the existing customers' CRD amounts and 
extension percentages as of May 1, 1999. Final percentages will be 
available after December 31, 2003.

----------------------------------------------------------------------------------------------------------------
                                                                                   Extension CRD
                                                                                   (CRD \1\ \2\    Percentage of
                       Existing customers                          CRD \1\ (kW)    less excluded   base resource
                                                                                     types of       (2005-2014)
                                                                                    power) \3\
---------------------------------------------------------------------------------------(kW)---------------------
Air Force--Beale................................................          21,575          21,575         1.42461
Air Force--McClellan \4\........................................          12,000          12,000         0.79237
Air Force--Onizuka \4\..........................................           1,500           1,500         0.09905
Air Force--Travis...............................................          12,651          12,651         0.83535
Air Force--Travis/David Grant Medical Center \4\................           4,000           4,000         0.26412
Air Force--Travis Wherry Housing................................           1,400           1,400         0.09244
Alameda, City of \5\............................................          21,145          21,145         1.39622
Arvin-Edison Water Storage District.............................          30,000          30,000         1.98092
Avenal, City of.................................................             622             622         0.04107
Banta-Carbona Irrigation District...............................           3,700           3,700         0.24431
Bay Area Rapid Transit District.................................           4,000           4,000         0.26412
Biggs, City of..................................................           4,200           4,200         0.27733
Broadview Water District........................................             500             500         0.03302
Byron-Bethany Irrigation District...............................           2,200           2,200         0.14527
Calaveras Public Power Agency...................................           8,000  ..............  ..............
California State University, Sacramento--Nimbus.................              40              40         0.00264
Cawelo Water District...........................................             500             500         0.03302
Corrections--California State Prison--Sacramento................           2,300           2,300         0.15187
Corrections--Deuel Vocational Institute.........................           1,700           1,700         0.11225
Corrections--Northern California Youth Center...................           1,700           1,700         0.11225
Corrections--Sierra Conservation Center.........................           3,000  ..............  ..............
Corrections--Vacaville Medical Facility.........................           1,800           1,800         0.11886
Defense Logistics Agency--Sharpe Facility.......................           4,000           4,000         0.26412
Defense Logistics Agency--Tracy Facility........................           3,800           3,800         0.25092
East Bay Municipal Utility District \5\.........................           1,965           1,965         0.12975
East Contra Costa Irrigation District...........................           2,500           2,500         0.16508
Eastside Power Authority \5\....................................           2,961           2,961         0.19552
Energy--Lawrence Berkeley National Laboratory...................           9,000           9,000         0.59428
Energy--Lawrence Livermore National Laboratory..................          44,711          44,711         2.95229
Energy--Lawrence Livermore, Site 300............................           2,000           2,000         0.13206
Energy--Stanford Linear Accelerator Center......................          21,903          12,903         0.85199
Glenn-Colusa Irrigation District................................           3,343           3,343         0.22074
Gridley, City of................................................           9,400           9,400         0.62069
Healdsburg, City of \5\.........................................           3,241           3,241         0.21401
James Irrigation District \5\...................................             987             987         0.06517
Kern-Tulare Water District \5\..................................             987             987         0.06517
Lassen Municipal Utility District...............................           3,000           3,000         0.19809
Lodi, City of \5\...............................................          13,236          13,236         0.87398
Lompoc, City of \5\.............................................           5,197           5,197         0.34316
Lower Tule River Irrigation District \5\........................           1,965           1,965         0.12975
Merced Irrigation District \4\..................................           5,000           5,000         0.33015
Modesto Irrigation District \5\.................................          10,805          10,805         0.71346
NASA--Ames Research Center......................................          80,000          80,000         5.28245
NASA--Moffett Federal Airfield \4\..............................           5,009           5,009         0.33075
Navy--Naval Weapons Station, Concord \4\........................           2,898           2,898         0.19136
Navy--Naval Radio Station, Dixon................................             915             915         0.06042
Navy--Naval Air Station, Lemoore \4\............................          23,000          23,000         1.51870
Navy--Naval Communications Station, Stockton....................           3,700           3,700         0.24431
Oakland Army Base...............................................           2,275           2,275         0.15022
Oakland, Port of \4\............................................           1,000           1,000         0.06603
Palo Alto, City of..............................................         175,000         175,000        11.55535
Parks & Recreation, California Department of....................             100             100         0.00660
Parks Reserve Forces Training Area..............................             500             500         0.03302
Patterson Water District........................................           2,000           2,000         0.13206
Pittsburg Power Company \4\.....................................           5,000           5,000         0.33015
Plumas-Sierra Rural Electric Cooperative........................          25,000          25,000         1.65076

[[Page 34433]]

 
Provident Irrigation District...................................             750             750         0.04952
Rag Gulch Water District........................................             500             500         0.03302
Reclamation District 2035.......................................           1,600           1,600         0.10565
Redding, City of................................................         116,000         116,000         7.65955
Roseville, City of..............................................          69,000          69,000         4.55611
Sacramento Municipal Utility District \7\.......................         361,000         361,000        31.25000
Sacramento Municipal Utility District...........................         100,000  ..............  ..............
San Francisco, City and County of \4\...........................           2,600           2,600         0.17168
San Juan Water District.........................................           1,000           1,000         0.06603
San Luis Water District.........................................           6,650           6,650         0.43910
Santa Clara Valley Water District \5\...........................             987             987         0.06517
Shasta Lake, City of............................................          11,450          11,450         0.75605
Silicon Valley Power............................................         216,532         136,532         9.01529
Sonoma County Water Agency......................................           1,500           1,500         0.09905
Trinity Public Utilities District...............................          17,000  ..............  ..............
Tuolumne Public Power Agency....................................           7,000  ..............  ..............
Turlock Irrigation District \5\.................................           3,941           3,941         0.26023
Ukiah, City of \5\..............................................           8,773           8,773         0.57929
University of California, Davis.................................          14,682          14,682         0.96946
West Side Irrigation District...................................           2,000           2,000         0.13206
West Stanislaus Irrigation District.............................           5,200           5,200         0.34336
Westlands Water District \5\....................................          21,441          21,441         1.41576
2005 Resource Pool \6\..........................................  ..............  ..............         2.75000
                                                                 -----------------------------------------------
    Total.......................................................       1,584,537       1,360,537      100.00000
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ CRD temporarily laid off and temporarily allocated to other existing customers is reflected in this Appendix
  A, under both CRD and extension CRD, as being returned to the existing customer who received the original
  allocation.
\2\ Western will reduce the extension CRD if Western determines that, as of December 31, 2003, the extension CRD
  is greater than the existing customer's load.
\3\ Exclusions are diversity, curtailable, and first preference power; and peaking and excess capacity.
\4\ These extension CRD could be adjusted as a result of the NDA Act procedures. Also, new NDA Act customers
  could be added through November 30, 2003.
\5\ Westlands Water District has a right to 50 MW through December 31, 2004. Certain existing customers have
  been allocated a portion of the 50 MW, subject to withdrawal for use by Westlands Water District. Allocation
  percentages effective after December 31, 2004, will be adjusted to reflect changes made as a result of
  Westlands Water District's use and withdrawals, in accordance with Section IV.A.1.b.
\6\ The 4 percent 2005 Resource Pool is adjusted for SMUD's non-participation due to the Settlement Agreement.
\7\ 31.25 percent reflects the 360/1,152 ratio in the SMUD Settlement Agreement. After December 31, 2014, SMUD's
  percentage will be based on its extension CRD.

[FR Doc. 99-16018 Filed 6-24-99; 8:45 am]
BILLING CODE 6450-01-P