[Federal Register Volume 65, Number 42 (Thursday, March 2, 2000)]
[Notices]
[Pages 11300-11303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5020]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Provo River Project--Rate Order No. WAPA-87

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Rate Order.

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SUMMARY: Notice is given of the confirmation and approval by the Deputy 
Secretary of the Department of Energy (DOE) of Rate Order No. WAPA-87 
placing a rate formula extension into effect on an interim basis 
beginning on April 1, 2000, for power marketed by the Western Area 
Power Administration (Western) from the Provo River Project (PRP). The 
rate formula will remain in effect on an interim basis until the 
Federal Energy Regulatory Commission (FERC) confirms, approves, and 
places it into effect on a final basis or until it is replaced by 
another rate formula.

DATES: The provisional rate formula extension will be placed into 
effect on an interim basis on April 1, 2000, and will be in effect 
until the FERC approves the rate formula extension or a substitute rate 
formula and places the formula in effect on a final basis for a 5-year 
period ending March 31, 2005, or until superseded.

FOR FURTHER INFORMATION CONTACT: Ms. Carol Loftin, Rates Manager, 
Colorado River Storage Project Management Center, Western Area Power 
Administration, 150 East Social Hall Avenue, Suite 300, Salt Lake City, 
UT 84111-1534, telephone (801) 524-6380, email [email protected].

SUPPLEMENTARY INFORMATION: 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.
    Delegation Order No. 0204-172, effective November 24, 1999, 
reinstates the authority delegated to the Deputy Secretary in Amendment 
No. 3 to Delegation Order No. 0204-108, which authority was rescinded 
in the Secretary's Order of April 15, 1999. Existing DOE procedures for 
public participation in power rate adjustments are located at 10 CFR 
part 903, effective on September 18, 1985 (50 FR 37835).

[[Page 11301]]

DOE procedures have been followed by Western in developing this 
provisional firm power rate formula.
    The Provo River Project was authorized in 1935. Construction on the 
PRP, which includes Deer Creek Dam and Powerplant on the Provo River in 
Utah, began in 1938, but was not completed until 1951. The powerplant, 
authorized on August 20, 1951, was completed and generation began in 
1958. Its maximum operating capacity is 5,300 kilowatts (kW).
    Provo River Project power is now marketed independently from the 
Salt Lake City Area/Integrated Projects pursuant to a marketing plan 
that was approved and published in the Federal Register on November 21, 
1994. This marketing plan allows Western to market the output of the 
PRP to Utah Municipal Power Agency and Utah Associated Municipal Power 
Systems (Customers), located in the Provo River drainage area.
    Contract Nos. 94-SLC-0253 and 94-SLC-0254 (Contracts) require that 
the amount of each annual installment be established in advance by 
Western and submitted to the Customers on or before August 31 of the 
year preceding the appropriate fiscal year (FY). Each FY Western 
estimates Deer Creek Powerplant (DCP) expenses by preparing a power 
repayment study that includes estimates of operation, maintenance, and 
replacement (OM&R) costs for the DCP.
    Each annual installment pays the annual amortized portion of the 
United States investment in the Deer Creek Dam and Reservoir 
hydroelectric facilities with interest, and the associated OM&R costs. 
This repayment schedule does not depend upon the power and energy made 
available for sale or the rate of generation each year, but is a 
contract in which the Customers pay all OM&R expenses of the PRP and, 
in return, receive all of the energy produced by the PRP. Western will 
continue to provide the Customers a revised annual installment by 
August 31 of each year using the same methodology.
    Rate Order No. WAPA-87, confirming, approving, and placing the 
proposed Provo River firm power rate formula extension into effect on 
an interim basis, is issued, and the extension will be promptly 
submitted to FERC for confirmation and approval on a final basis.

    Dated: February 14, 2000
T. J. Glauthier,
Deputy Secretary.

Order Confirming, Approving, and Placing a Rate Formula Extension 
for the Provo River Project Into Effect on an Interim Basis (April 
1, 2000)

    This rate formula extension is established pursuant to the 
Department of Energy (DOE) Organization Act, 42 U.S.C. 7101-7352, 
through which the power marketing functions of the Secretary of the 
Department of the Interior and the Bureau of Reclamation under the 
Reclamation Act of 1902, ch. 1093, 32 Stat. 388, as amended and 
supplemented by subsequent enactments, 9(c) of the Reclamation Project 
Act of 1939, 43 U.S.C. 485h(c), and acts specifically applicable to the 
PRP, were transferred to and vested in the Secretary of Energy 
(Secretary).
    By Amendment No. 3 to Delegation Order No. 0204-108, published 
November 10, 1993 (58 FR 59716), the Secretary delegated (1) the 
authority to develop long-term power and transmission rates on a 
nonexclusive basis to the Administrator of the Western Area Power 
Administration (Western); (2) the authority to confirm, approve, and 
place such rates into effect on an interim basis to the Deputy 
Secretary; and (3) the authority to confirm, approve, and place into 
effect on a final basis, to remand, or to disapprove such rates to the 
Federal Energy Regulatory Commission (FERC).
    By subsequent Order, effective April 15, 1999, the Secretary 
rescinded all delegation 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.
    Delegation Order No. 0204-172, effective November 24, 1999, 
reinstates the authority delegated to the Deputy Secretary in Amendment 
No. 3 to Delegation Order No. 0204-108, which authority was rescinded 
in the Secretary's Order of April 15, 1999. Existing Department of 
Energy procedures for public participation in power rate adjustments 
are located at 10 CFR part 903, effective on September 18, 1985 (50 FR 
37835). Filing requirements and procedures for approving Power 
Marketing Administration rates by FERC are found at 18 CFR part 300.

Acronyms and Definitions

    As used in this rate order, the following acronyms and definitions 
apply:
    CRSP: Colorado River Storage Project.
    Contracts: Contract No. 94-SLC-0254 with Utah Municipal Power 
Agency effective December 22, 1994, and Contract No. 94-SLC-0253 with 
Utah Associated Municipal Power Systems effective January 19, 1995.
    Customers: Utah Associated Municipal Power Systems and Utah 
Municipal Power Agency.
    DCP: Deer Creek Powerplant.
    DOE: Department of Energy.
    DOE Order RA 6120.2: A Department of Energy order dealing with 
power marketing administration financial reporting.
    FERC: Federal Energy Regulatory Commission.
    FY: Fiscal year, October 1 to September 30.
    kW: Kilowatt--the electrical unit of capacity that equals 1,000 
watts.
    NEPA: National Environmental Policy Act of 1969.
    OM&R: Operation, maintenance, and replacement.
    PRP: Provo River Project.
    PRS: Power Repayment Study.
    Reclamation: United States Department of the Interior, Bureau of 
Reclamation.
    SLCA/IP: Salt Lake City Area/Integrated Projects.
    Western: United States Department of Energy, Western Area Power 
Administration.

Effective Date

    This extension will become effective on an interim basis beginning 
April 1, 2000, and will be in effect pending FERC's approval of this or 
a substitute rate formula on a final basis for a 5-year period ending 
March 31, 2005, or until superseded.

Public Notice and Comment

    On February 4, 1999, and again on March 26, 1999, Western met with 
the Customers and notified them of Western's intent to extend the 
present rate formula. This request is for approval of an extension of 
the present methodology used for calculating the annual installment. 
Western also discussed the FY 2000 budget and capital expenditures. 
Western has met with the Customers, and the Customers want to continue 
the present rate formula.

Project History

    Construction of the PRP began in May 1938. The powerplant was 
completed in 1958 and has a generating capacity of

[[Page 11302]]

5,300 kW. Only energy excess to PRP purposes has been available for 
Federal marketing. Between 1963 and 1994, SLCA/IP needed additional 
energy and purchased the available PRP energy at an amount established 
annually to enable the PRP to cover its costs, including OM&R costs and 
repayment expenses. These expenses included $1.6 million of irrigation 
assistance to the water users. PRP's original power investment has been 
repaid, therefore the customers are responsible for only the 
replacement investments of the project.
    PRP power is now marketed independently from the SLCA/IP pursuant 
to a marketing plan approved and published in the Federal Register on 
November 21, 1994. This marketing plan allows Western to market the 
output of the PRP to Utah Municipal Power Agency and Utah Associated 
Municipal Power Systems, located in the Provo River drainage area.

Power Repayment Studies

    The Contracts require that the amount of each annual installment be 
established in advance by Western and submitted to the Customers on or 
before August 31 of the year preceding the appropriate FY. Each FY, 
Western estimates DCP expenses by preparing a PRS that includes 
estimates of OM&R costs for the DCP for the next FY.
    Each annual installment pays the annual amortized portion of the 
United States investment in the Deer Creek Dam and Reservoir 
hydroelectric facilities with interest and the associated OM&R costs. 
This repayment schedule does not depend upon the power and energy made 
available for sale or the rate of generation each year.
    A PRS is prepared each FY to determine if power revenues will be 
sufficient to pay, within the prescribed time periods, all costs 
assigned to be repaid by the PRP power function. Repayment criteria are 
based on law, policies, and authorizing legislation, in particular DOE 
Order RA 6120.2.

Certification of Rate

    Western's Administrator has certified that the PRP firm power rate 
formula placed into effect on an interim basis herein is consistent 
with applicable laws and that the rate is the lowest consistent with 
sound business principles.

Discussion

    According to Reclamation law, Western must establish power rates 
sufficient to recover operation, maintenance, and purchase power 
expenses, and to repay the Federal Government's investment in 
generation and transmission facilities. Rates must also be set to cover 
interest expenses on the unpaid balance of facilities' investments, 
replacements and additions, and certain non-power costs in excess of 
the irrigation users' ability to pay.
    Western prepares an annual PRS that identifies the anticipated 
expenses. In accordance with the Contracts, minor replacements and 
additions are included in the annual expenses. The methodology of 
annual charges satisfies the cost-recovery criteria set forth in DOE 
Order RA 6120.2.

Statement of Revenue and Related Expenses

    The revenue requirements for the PRP are based upon PRS 
calculations for future requirements, which will be adjusted when FY 
actuals are known. The following table provides a summary of revenues 
and expenses for the current 6-year firm power rate formula and also 
the actual revenues and expenses.

                       Provo River Comparison of 6-Year Revenue and Expenses FY 1995-2000
                                                    [$1,000]
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                              Item                                    Actual1        Projected      Difference2
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Total Revenue...................................................           1,743           1,644             99
Expenses:
    O&M.........................................................           1,233           1,158             75
    Transmission................................................             396             185            (89)
    Interest....................................................             144             156            (12)
    Investment Repayment........................................             476             145            (69)
    Prior Year Adjustments......................................             194  ..............            194
                                                                 -----------------------------------------------
Total Expenses..................................................           1,743           1,644            99
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1Amounts for FY 1999 and FY 2000 are estimates taken from the FY 1999 preliminary PRS.
2Reflects estimates to actual revenue requirements.
3The amount projected is the actual amount of transmission costs owed to CRSP. An adjustment to the financial
  statements will be made in the future to reflect these costs.
4The projected replacements were overstated.

    The following table provides a summary of revenue and expense data 
through the 5-year proposed rate methodology approval period.

      Provo River Project 5-Year Projections Revenues and Expenses
                                [$1,000]
------------------------------------------------------------------------
                                                           FY 2001--2005
                                                            Projections
------------------------------------------------------------------------
Total Revenues..........................................           1,463
Costs:
    O&M1................................................           1,151
    Transmission........................................             149
    Interest............................................             124
    Investment Repayment................................              39
                                                         ---------------
Total Costs.............................................          1,463
------------------------------------------------------------------------
1Includes $78,000 in FY 2001 to overhaul generators.

Basis for Rate Development

    Each Customer is billed for electric service calculated every FY, 
payable in 12 equal monthly payments. Every FY, Western estimates PRP 
expenses by preparing a PRS that includes estimates of OM&R costs for 
the DCP. The amount of each monthly payment is established in advance 
by Western and submitted to the Customers on or before August 31 of the 
year preceding the appropriate FY.
    The calculation of the amount of the annual installment and the 
monthly payments includes adjustments to the OM&R charges. These 
adjustments are

[[Page 11303]]

the difference between estimated and actual OM&R expenses. If OM&R 
charges are underestimated, an amount equal to the difference is added 
to the next installment. Conversely, if OM&R charges are overestimated, 
the amount is deducted from the next installment.
    In accordance with the Contracts, minor replacements and additions 
are included in the annual operation and maintenance expenses of the 
DCP. If major replacements and additions exceeding $5,000, but not 
greater than $25,000, in costs are needed, the Customers are given the 
option of financing their individual shares of the cost or of having 
the cost capitalized and amortized over the life of the replacement or 
addition or over the life of the contract. If the Customer chooses the 
latter, the cost is capitalized at the current interest rate prescribed 
by the DOE, pursuant to RA 6120.2 11B ``Basic Policy for Rate 
Adjustment; Interest Rate Formula,'' in the FY in which the replacement 
or addition is made. Such costs are based on prudent and businesslike 
management practices and in accordance with established electric 
industry operation and maintenance practices. If extraordinary 
replacements exceeding $25,000 in costs are needed, Western will 
consult with Reclamation, the water users, and the Customers about 
financing the replacement.
    The rate is not dependent upon the power and energy made available 
for sale. Instead, Customers will pay total PRP annual powerplant 
expenses in return for the total marketable PRP production. Each 
customer pays its proportional share of the OM&R expenses identified in 
the PRS in 12 monthly installments.

Environmental Compliance

    In compliance with NEPA, 42 U.S.C. 4321 et seq.; Council on 
Environmental Quality Regulations 40 CFR parts 1500-1508; and DOE NEPA 
Regulations 10 CFR Part 1021, Western has determined that this action 
is categorically excluded from the preparation of an environmental 
assessment or an environmental impact statement.

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.

Availability of Information

    Information regarding this rate formula extension, including PRSs, 
letters, memorandums, and other supporting material made or kept by 
Western for the purpose of extending provisional rate formulas, is 
available for public review in the Colorado River Storage Project 
Management Center, Western Area Power Administration, 150 East Social 
Hall Avenue, Suite 300, Salt Lake City, UT 84111-1534; and in the 
Corporate Services Office, Western Area Power Administration,12155 West 
Alameda Parkway, Lakewood, CO 80228-2802.

Submission to Federal Energy Regulatory Commission

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

Order

    In view of the foregoing and pursuant to the authority vested in me 
as the Deputy Secretary of Energy, I confirm and approve on an interim 
basis, effective April 1, 2000, an extension of the rate formula for 
the Provo River Project of the Western Area Power Administration. The 
rate formula shall remain in effect on an interim basis, pending the 
Federal Energy Regulatory Commission's confirmation and approval of it 
or a substitute rate on a final basis through March 31, 2005.

    Dated: February 14, 2000.
T.J. Glauthier,
Deputy Secretary.
[FR Doc. 00-5020 Filed 3-1-00; 8:45 am]
BILLING CODE 6450-01-P