[Federal Register Volume 64, Number 240 (Wednesday, December 15, 1999)]
[Notices]
[Pages 70011-70013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32411]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Boulder Canyon Project-Base Charge and Rates

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of base charge and rates.

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SUMMARY: Notice is given of the confirmation and approval by the Deputy 
Secretary of the Department of Energy (DOE) placing the Base Charge and 
Rates for the Boulder Canyon Project (BCP) firm power into effect for 
the fifth rate year under the current rate methodology pursuant to Rate 
Schedule BCP-F5 as approved by the Federal Energy Regulatory Commission 
(FERC) on April 19, 1996 (Rate Order No. WAPA-70). The Base Charge will 
provide sufficient revenue to pay all annual costs, including interest 
expense, and repayment of required investment within the allowable 
period.

DATES: The Base Charge will be placed into effect on December 1, 1999, 
and will be in effect through September 30, 2000.

FOR FURTHER INFORMATION CONTACT: Mr. Anthony Montoya, Power Marketing 
Manager, Western Area Power Administration, Desert Southwest Customer 
Service Region, 615 South 43rd Avenue, Phoenix, AZ 85009-5313, (602) 
352-2789, or

SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved the 
existing Base Charge for firm power service on September 19, 1997. The 
existing Base Charge was calculated in accordance with the methodology 
approved under Rate Order WAPA-70. In accordance with Section 13.13 of 
the BCP Implementation Agreement, the rate methodology and calculated 
rates for the first rate year and each fifth fiscal

[[Page 70012]]

year (FY) thereafter shall become effective on an interim basis upon 
approval by the Deputy Secretary of Energy, subject to final approval 
by FERC. The rates for the second, third, and fourth FYS for the BCP-F5 
became effective on a final basis upon approval by the Deputy 
Secretary. The rates for the fifth FY (FY 2000) shall become effective 
on a final basis upon approval by the Deputy Secretary. The FY 2000 
Base Charge represents the charges for the fifth FY since FERC approval 
of the current rate methodology.
    The Procedures for Public Participation in Power and Transmission 
Rate Adjustments and Extensions, 10 CFR part 903, have been followed by 
Western in determining the Base Charge. The FY 2000 Base Charge for BCP 
firm power is based on an Annual Revenue Requirement of $46,145,334. 
The Base Charge consists of an energy dollar of $23,860,434.50, a 
forecasted energy rate of 4.59 mills/kWh, a capacity dollar of 
$22,284,899.50, and a forecasted capacity rate of $0.95 per 
kilowattmonth (kWmonth).
    The following summarizes the steps taken by Western to ensure 
involvement of all interested parties in the determination of the Base 
Charge and Rates:
    1. The proposed rate adjustment was initiated on February 22, 1999, 
when a letter announcing an informal customer meeting was mailed to all 
BCP Contractors. The informal meeting was held on March 9, 1999, in 
Phoenix, Arizona. At this informal meeting, Western explained the 
rationale for the rate adjustment, presented the FY 2000 Base Charge 
and Forecast Capacity and Energy Rates, and answered questions.
    2. A Federal Register notice was published on March 24, 1999 (64 FR 
14227), officially announcing the proposed rates for BCP, initiating 
the public consultation and comment period, and announcing the public 
information forum and public comment forum.
    3. On March 24, 1999, letters were mailed from Western's Desert 
Southwest Regional Office to all BCP Contractors and interested 
parties, transmitting the Federal Register notice of March 24, 1999 (64 
FR 14227), and announcing the times and locations for the two public 
forums.
    4. On April 13, 1999, letters were mailed from Western's Desert 
Southwest Regional Office to all BCP Contractors and interested 
parties, transmitting a package of updated information related to the 
FY 2000 Base Charge and Forecast Capacity and Forecast Energy Rates 
compiled since the March 9, 1999, informal customer meeting.
    5. On April 21, 1999, beginning at 10 a.m., a public information 
forum was held at Western's Desert Southwest Regional Office in 
Phoenix, Arizona. At the public information forum, Western provided 
detailed explanations of the proposed FY 2000 Base Charge and Forecast 
Capacity and Forecast Energy Rates for BCP, identified the issues that 
could change the proposed FY 2000 Base Charge and Forecast Capacity and 
Forecast Energy Rates, and answered questions. A rate information 
handout was provided at the forum.
    6. On May 18, 1999, letters were mailed from Western's Desert 
Southwest Regional Office to all BCP Contractors and interested 
parties, transmitting a package of responses to data requests and 
questions from the April 21, 1999, public information forum.
    7. On June 2, 1999, beginning at 10:30 a.m., a public comment forum 
was held at Western's Desert Southwest Regional Office in Phoenix, 
Arizona. A handout containing information regarding the updated FY 2000 
Base Charge and Forecast Capacity and Forecast Energy Rates was 
provided. After providing this information, Western gave the public an 
opportunity to comment for the record. Three representatives made oral 
comments.
    8. Two comment letters were received during the 90-day consultation 
and comment period. The consultation and comment period ended June 22, 
1999. All formally submitted comments have been considered in 
developing the Base Charge for FY 2000. Written comments were received 
from the following sources:

Irrigation and Electrical Districts Association of Arizona (Arizona)
Metropolitan Water District of Southern California (California)

    The comments and responses, paraphrased for brevity, are presented 
below:

Civil Service Retirement Costs and Post-Retirement Health and Life 
Insurance Benefits

    Comment: Western received comments related to Western's lack of 
authority to collect the unfunded portion of the Civil Service 
Retirement Costs and Post-Retirement Health and Life Insurance Benefits 
in this rate process. Specifically, the Contractors assert that funds 
collected for these costs for the BCP would have to be deposited into 
the Colorado River Dam Fund (CRDF) and could not be transferred to a 
general fund account managed by the Office of Personnel Management. 
Accordingly, the Contractors believe that collection of these costs is 
inappropriate. The Contractors are also concerned that proper tracking 
of these funds is also needed to ensure they are being used only for 
BCP and are not lost in a general fund.
    Response: Under a legal opinion provided by the General Counsel of 
the DOE by memorandum dated July 1, 1998, the Power Marketing 
Administrations (PMAs) have the authority to collect, through the 
rates, the full costs of the Retirement Benefits. In addition, the FERC 
has issued at least two orders approving the inclusion of such costs in 
PMA rates; Western Area Power Administration (Intertie Project), 87 
FERC para. 61,346, at 62,337-62,338 (1999), and Southeastern Power 
Administration, 86 FERC para. 61,195, at 61,681 (1999). Based on the FY 
1999 data currently available, a total of $1.3 million is expected to 
be collected for these retirement costs for FY 2000, which represents 
approximately 3 percent of the BCP revenue requirement. Western has 
previously recovered $1.3 million for Civil Service Retirement Costs 
and Post-Retirement Health and Life Insurance Benefits costs in FY 1998 
and anticipates recovering another $1.3 million in FY 1999. Under the 
provisions of the Boulder Canyon Project Adjustment Act, 43 U.S.C. 618, 
et seq., all receipts from the BCP shall be paid into the CRDF and are 
available for defraying the costs of operation. Western will continue 
to deposit these funds into the CRDF in compliance with these 
authorities.

Visitor Center

    Comment: A Contractor continues to be concerned that the Visitor 
Center net revenues are not yet sufficient to fund the agreed-upon 50 
percent amortization of the Visitor Center investment.
    Response: The Bureau of Reclamation is currently working toward 
providing the detail necessary to show Government and Contractor 
responsibility for repayment of the final cost of the Visitor 
Facilities as required by the Implementation Agreement. Updated final 
estimated cost information was presented at the August 1999 
Coordination Meeting. There has been a dramatic increase in the amount 
of revenue collected in recent years. Revenues collected in excess of 
expenses totaled $900,000 in FY 1996, $2.4 million in FY 1997, and $5.2 
million in FY 1998. Reclamation will continue to research and implement 
new revenue proposals, and carefully monitor expenses, with a goal of 
recovering 50 percent of the Visitor

[[Page 70013]]

Facilities investment with interest. Western will continue to include 
these revenues in the power repayment study as they are received.

Joint Planning Study Costs

    Comment: A Contractor continues to address concern for costs 
incurred under the Joint Planning Agreement (JPA) for future 
transmission and generation project studies, which the contractor 
asserts are being allocated inappropriately to the BCP Contractors. The 
Contractor believes these study costs, in addition to the costs 
required for any transmission upgrades to the system (generator 
addition, transmission interconnection, etc.), should be charged to the 
project sponsors or included in Western's Open Access Tariff (OAT) 
rates. The Contractor also states whether the study costs are charged 
to the project sponsors or included in the OAT rates, the JPA study 
costs to date should be tracked and reimbursed to the BCP Contractors.
    Response: Western agrees that study work which is project specific 
to a new line in Western's system, or an interconnection to Western's 
system, should and will be charged to the entity requesting the 
interconnection or to the Project (Parker-Davis, Intertie, Boulder 
Canyon, Colorado River Storage Project) which is being upgraded. Study 
work charges for the Mead Fault 230-kV duty studies will be charged to 
the projects shown to impact the system causing the upgrade. After 
completion of the contracts with those entities causing the impact, 
Western will be able to move the charges from the BCP, and other 
Projects, to the entities causing the needed upgrade.
    If a project is not interconnecting to Western's system but could 
potentially cause an impact from one or more busses away, Western will 
have to perform studies and participate in study groups to assure our 
needs are considered and met. Often these situations do not enable 
Western to pass along study costs to the project. In these cases the 
costs are applied to those Projects on Western's system that are most 
impacted.
    If studies work is of a general nature, Western reserves the 
authority to assign costs to the Project influenced by the project 
involved. Work on the California Independent System Operator, the 
Nevada Independent Scheduling Administrator, and the Arizona 
Independent Scheduling Administrator is of a general nature. BCP will 
receive charges from work on these efforts since they pertain to the 
use of Hoover in their operations, as well as other transmission and 
generation issues. BCP's participation is 15 percent of the total cost 
of the efforts. Western's efforts in the Western Systems Coordinating 
Council and other reliability forums will also be charged based on the 
distribution formula for general efforts. In recent years, due to 
deregulation and significant systems changes, Western has been required 
to expend an increasing effort to address and protect system 
reliability.
    Finally, the Contractor seems to have misconstrued the nature of 
the JPA. The JPA is a forum to review projects being considered by JPA 
signatories to coordinate and collaborate. Studies are performed on 
upgrades or new initiatives, charged to the appropriate Project, 
presented and discussed in the JPA committee meetings, and finalized in 
the annual JPA meeting before becoming a part of Western's system 
plans. The JPA has also been used as a forum to keep JPA signatories 
and other interested parties aware of activities impacting the systems.
    By Amendment No. 3 to Delegation Order No. 0204-108, published 
November 10, 1993 (58 FR 59716), the Secretary of Energy delegated (1) 
the authority to develop long-term power and transmission rates on a 
nonexclusive basis to the Administrator of Western; (2) the authority 
to confirm, approve, and place such rates into effect on an interim 
basis to the Deputy Secretary of Energy; and (3) the authority to 
confirm, approve, and place into effect on a final basis, to remand, or 
to disapprove such rates to FERC. By subsequent Order effective April 
15, 1999, the Secretary rescinded all delegations of authority to the 
Deputy Secretary, whether contained in Delegation Orders, Departmental 
Directives, or elsewhere, concerning the Department's Power Marketing 
Administrations, including, but not limited to, authority delegated or 
affirmed in Delegation Order No. 0204-108, as amended. However, on 
November 24, 1999, in Delegation Order No. 0204-172 the Secretary 
reinstate the authority delegated to the Deputy Secretary in Amendment 
No. 3 to Delegation Order No. 0204-108, which had been rescinded by his 
April 15, 1999, Order.
    These charges and rates are established pursuant to section 302(a) 
of the DOE Organization Act, 42 U.S.C. 7152(a), through which the power 
marketing functions of the Secretary of the Interior and Reclamation 
under the Reclamation Act of 1902, 43 U.S.C. 371, et seq., as amended 
and supplemented by subsequent enactments, particularly section 9(c) of 
the Reclamation Project Act of 1939, 43 U.S.C. 485h(c), and other acts 
specifically applicable to the project system involved, were 
transferred to and vested in the Secretary.

    Dated: December 3, 1999.
T.J. Glauthier,
Deputy Secretary.
[FR Doc. 99-32411 Filed 12-14-99; 8:45 am]
BILLING CODE 6450-01-P