[Federal Register Volume 65, Number 217 (Wednesday, November 8, 2000)]
[Notices]
[Pages 66995-66997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28627]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Proposed Salt Lake City Area Integrated Projects Firm Power Rate 
Formula Adder

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rates.

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SUMMARY: The Western Area Power Administration's (Western) Colorado 
River Storage Project (CRSP) Management Center (MC) is proposing a rate 
formula adder to the existing rate for firm long-term sales of Salt 
Lake City Area Integrated Projects (SLCA/IP) power. The SLCA/IP 
consists of the CRSP, Collbran, and Rio Grande Projects which were 
integrated for marketing and ratemaking purposes on October 1, 1987. 
The CRSP described here includes two CRSP participating projects which 
have power facilities, Dolores and Seedskadee Projects.
    In the long term, the existing SLCA/IP composite rate of 17.57 
mills/kilowatthour (kWh) is sufficient to pay for all costs including 
operation, maintenance, replacement, and interest expenses and to repay 
investment and irrigation assistance obligations within the required 
period. CRSP MC staff will continue to monitor the long-term firm power 
rate for the SLCA/IP to determine if a long-term rate adjustment will 
need to be placed into effect.
    The proposed rate formula adder is needed to provide additional 
revenue in the CRSP Basin Fund, a revolving fund in the United States 
Treasury, to pay for near-term purchase power costs and to increase the 
working capital in the CRSP Basin Fund. The proposed rate formula adder 
scheduled to go into effect on February 1, 2001, will remain in effect 
until September 30, 2003, or until superseded by another rate 
adjustment, whichever occurs first. This Federal Register notice 
initiates the formal process for the proposed rate formula adder.

DATES: The consultation and comment period will begin when this Federal 
Register notice is published and will end December 8, 2000. Public 
information forum and public comment forum meeting dates are scheduled 
for these locations:
    1. Public information forum--November 20, 2000, 10:30 a.m., Salt 
Lake City, Utah; Public comment forum--November 20, 2000, 2 p.m., Salt 
Lake City, Utah.
    2. Public information forum--November 21, 2001, 10:30 a.m., 
Phoenix, Arizona; Public comment forum--November 21, 2001, 2 p.m., 
Phoenix, Arizona.

ADDRESSES: The address for the Salt Lake meetings is at the Sheraton 
Hotel (formerly the Hilton), 150 West 500 South, Salt Lake City, Utah. 
The address for the meetings in Phoenix is Western Area Power 
Administration, Desert Southwest Region, 615 South 43rd Avenue, 
Phoenix, Arizona. Written comments may be sent to: Mr. Dave Sabo, CRSP 
Manager, CRSP Management Center, Western Area Power Administration, 
P.O. Box 11606, Salt Lake City, UT 84147-0606, e-mail [email protected]. 
Western should receive written comments by the end of the consultation 
and comment period to be assured they are considered. Oral comments 
will be received at the public comment meetings.

FOR FURTHER INFORMATION CONTACT: Ms. Carol Loftin, Rates Manager, CRSP 
Management Center, Western Area Power Administration, P.O. Box 11606, 
Salt Lake City, UT 84147-0606, telephone (801) 524-6380, e-mail 
[email protected], or visit CRSP MC's home page at: www.wapa.gov/crsp/crsp.htm.

SUPPLEMENTARY INFORMATION: The existing long-term rate for SLCA/IP firm 
power is designed to recover an annual revenue requirement based on 
repaying power investment; paying interest, purchased power, operation, 
maintenance, and replacement expenses; and repaying irrigation 
assistance costs, as required by law.
    The Deputy Secretary of the Department of Energy (DOE) approved the 
existing Rate Schedule SLIP-F6 for SLCA/IP firm power on March 23, 1998 
(Rate Order No. WAPA-78). The Federal Energy Regulatory Commission 
(FERC) confirmed and approved the rate schedule on July 17, 1998, in 
FERC Docket No. EF98-5171-000. The existing Firm Power Rate Schedule 
expires on March 31, 2003. Under Rate Schedule SLIP-F6, the energy rate 
is 8.10 mills/kWh, and the capacity rate is $3.44 per kilowattmonth 
(kWmonth). The composite rate (revenue requirements per kWh usage) is 
17.57 mills/kWh.
    The proposed rate formula adder is needed to provide additional 
revenue to fund near-term purchased power costs and to increase the 
working capital balance in the CRSP Basin Fund. Higher-than-normal 
purchased power expenses have resulted from lower-than-expected 
hydrology conditions, higher-than-normal purchase power prices, and the 
summer test release for endangered fish from Glen Canyon Dam (GCD).
    The rate formula adder will be applied during the next 3 fiscal 
years (FY) from February 1, 2001, through September 30, 2003. The 
following proposed formulas will be used to determine the rate formula 
adder:

(1) BB + ER--PP--O&M = EB
    BB = CRSP Basin Fund balance at the beginning of the FY
    ER = expected revenues for the current FY
    PP = estimated purchase power costs which could include non-
reimbursable purchase power costs
    O&M = operation and maintenance expenses which includes non-
reimbursable expenses, replacements, and transmission expenses
    EB = CRSP Basin Fund balance at the end of the FY
(2) RB--EB = RN
    RB = minimum required balance in the CRSP Basin Fund at the end of 
the FY (FY 2001 = $35 million, FY 2002 = $50 million, FY 2003 = $60 
million)
RN = additional revenue needed

    The RN is divided by the projected energy sales as shown in the 
existing ratesetting study to determine the additional composite rate 
needed.

[[Page 66996]]



                                   Rate Formula Adder Estimated By Fiscal Year
                                                  [$1,000,000]
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                                              FY 2001  February 1,   FY 2002  October 1,    FY 2003  October 1,
                                              2001-  September 30,   2001-  September 30,   2002-  September 30,
                                                      2001                   2002                   2003
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Beginning Balance..........................                  45.2                   35.0                   50.0
Expected Revenue \1\.......................                 140.0                  140.0                  140.0
Expected Costs:
    Purchased Power \2\....................                 108.8                  108.8                  108.8
    OM&R \3\...............................                  79.1                   79.1                   79.1
    Unbudgeted Costs \4\...................                   2.0                    2.0                    2.0
                                            --------------------------------------------------------------------
        Total Costs........................                 189.9                  189.9                  189.9
Ending Balance.............................                  (4.7)                 (14.9)                   0.1
Minimum Required Balance...................                  35.0                   50.0                   60.0
Revenue Needed.............................                  39.7                   64.9                   59.9
Rate Adder Needed: \5\
    Composite (mills/kWh)..................                  11.02                  10.52                   9.70 
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\1\ Current revenue based on FY 1999 Sales and Revenue Report.
\2\ Based on latest 10/20/00 estimate.
\3\ As currently budgeted (2002). Includes budgeted Recovery Implementation Program costs.
\4\ Cost required by recent HR 2348, legislation, Upper Colorado Fish Recovery Program.
\5\ Based on power sales as projected in existing rate PRS (FY 1997).

    Based upon the most recent data available at the time of this 
publication, the proposed rate formula adder for FY 2001 (which is 
proposed to be effective February 1, 2001) is expected to be an 
additional 5.1 mills/kWh for energy and $2.17 per kWmonth for capacity. 
The proposed composite rate adder is 11.02 mills/kWh.
    At the end of FY 2001, an update of the data in the rate formula 
adder will indicate the adder for the following FY. At the end of the 
Winter Season each year, FY data and current projections will be 
reviewed to determine if the FY rate formula adder needs to be revised. 
If needed, a mid-FY revision to the adder would be made at this time. 
The Winter Season is the period from October 1 to March 31. The Summer 
Season is the period from April 1 to September 30. The rate formula 
adder calculations that are updated each FY will provide for an 
increase in the CRSP Basin Fund working capital balance until it 
reaches $60 million by the end of FY 2003. Customers will be notified 
in September of each year as to the next FY rate formula adder. In 
March of each year, the customers will be notified if a mid-FY revision 
is required. The rate formula adder will be charged by adding an 
additional capacity and energy rate to the SLIP-F6 rate. The table 
below displays the existing rate and the estimated rate formula adders 
for the next 3 FYs.

                             Total SLCA/IP Firm Power Rate Estimated By Fiscal Year
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                                  FY 2001  February 1, 2001-        FY 2002  October 1,     FY 2003  October 1,
                                      September 30, 2001           2001-  September 30,    2002-  September 30,
                             ------------------------------------          2002                    2003
                               Existing                          -----------------------------------------------
                                 rate        Adder       Total       Adder       Total       Adder       Total
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Energy rate (mills/kWh).....        8.1         5.1        13.2         4.8        12.9         4.5        12.6
Capacity rate ($/kWmonth)...        3.44        2.17        5.61        2.07        5.51        1.91        5.35
Composite rate (mills/kWh)..       17.57       11.02       28.59       10.52       28.09        9.70       27.27
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    At the public information forums on November 20 and 21, 2000, in 
Salt Lake City and Phoenix, CRSP MC staff will explain in detail the 
rate formula adder and its application for the period of February 1, 
2001, through September 30, 2001, and also provide estimates for the 
following 2 FYs.
    The proposed rate formula adder is highly dependent upon hydrology 
conditions of the Upper Colorado River Basin, volatility of purchased 
power prices, potential of continuing test flows this summer at GCD, 
and the CRSP Basin Fund cash balance. A discussion of these issues 
follows.

Hydrology Conditions

    Water year (WY) 2000 ended on September 30, 2000. The unregulated 
inflow to Lake Powell during the run-off season was 4.35 million acre-
feet (maf) or 56 percent of average.
    Hydrological assumptions are used in preparing estimates for 
generation from the SLCA/IP facilities. This, combined with contractual 
commitments, gives Western its purchased power requirements. Releases 
assumed by Western for the Winter Season 2001 are from the 24-month 
study prepared by the Bureau of Reclamation in October 2000. For the 
Summer Season 2001, Western assumed an amount of water release which, 
when added to the Winter season releases, totaled 8.23 maf from GCD. 
Summer releases were patterned by month using a dry-year pattern. For 
all other SLCA/IP power facilities, the Reclamation 24-month study was 
used.

Purchased Power Prices

    Western may need to purchase electrical power from other utilities 
to support its minimum contractual commitment referred to as 
Sustainable Hydro Power (SHP). Given the water conditions previously 
described, Western developed estimates of the purchased power amounts 
required to

[[Page 66997]]

provide the SHP amounts for each season. For the Winter Season 2001, 
Western included purchased power prices for which Western has already 
contracted. For the Summer Season 2001, Western's estimates of 
purchased power prices were derived from the New York Merchantile 
Exchange's (NYMEX) Palo Verde Electricity futures prices at the time 
the analysis was prepared.

Test Flows

    Test flows at GCD are possible again next summer, as a result of an 
obligation the Bureau of Reclamation has under the conditions of a 
biological opinion (a requirement under the Endangered Species Act). 
Test flows occur in minimum-flow years. The probability of such an 
occurrence in FY 2001 is 34 percent.

CRSP Basin Fund Cash Balance

    The CRSP Basin Fund ended FY 2000 with a balance of about $42.5 
million in cash. The lower-than-normal balance was mainly due to the 
high cost of purchased power prices during July, August, and September 
2000. The need to purchase additional power was compounded by the low 
environmental test flows from GCD.
    Purchase arrangements for energy needed to meet contractual 
obligations have been made for the Winter Season 2001. These purchases 
were at much higher costs than normal and adversely affected the CRSP 
Basin Fund's cash flow. Monthly revenues into the CRSP Basin Fund 
normally run from $10 million to $14 million per month; expenditures 
for purchased power are now at these levels. Any spending on 
transmission, replacements, and operation and maintenance costs will 
result in a negative cash flow during months when purchased energy 
costs are equivalent to or greater than revenue inflows.
    In the event of another year where hydrology conditions are 
significantly below average and where low test flows from GCD are 
required, the CRSP Basin Fund working capital would be insufficient at 
the present rate.

Procedural Requirements

    Since the proposed rate formula adder constitutes a major rate 
adjustment as defined at 10 CFR 903.2, both public information forums 
and public comment forums will be held. However, the consultation and 
comment period has been shortened because of the financial hardship 
faced by the CRSP Basin Fund. After reviewing public comments, Western 
will recommend that the proposed rate formula adder or a revised 
proposed rate formula adder be approved on an interim basis by the DOE 
Deputy Secretary.
    The proposed rate formula adder to the SLCA/IP firm power rates is 
being established pursuant to the Department of Energy Organization 
Act, 42 U.S.C. 7101-7352; the Reclamation Act of 1902, ch. 1093, 32 
Stat. 388, as amended and supplemented by subsequent enactments, 
particularly section 9(c) of the Reclamation Project Act of 1939, 43 
U.S.C. 485h(c); and other acts specifically applicable to the projects 
involved.
    By Amendment No. 3 to Delegation Order No. 0204-108, published 
November 10, 1993 (58 FR 59716), the Secretary of DOE delegated (1) the 
authority to develop long-term power and transmission rates on a 
nonexclusive basis to the Administrator of Western; and (2) the 
authority to confirm, approve, and place into effect on a final basis, 
to remand, or to disapprove such rates to FERC. In Delegation Order No. 
0204-172, effective November 24, 1999, the Secretary of Energy 
delegated the authority to confirm, approve, and place such rates into 
effect on an interim basis to the Deputy Secretary. Existing DOE 
procedures for public participation in power rate adjustments are found 
at 10 CFR part 903.

Availability of Information

    All studies, comments, letters, memorandums, or other documents 
made or kept by Western for developing the proposed rates are and will 
be made available for inspection and copying at the CRSP Management 
Center, located at 150 East Social Hall Avenue, Suite 300, Salt Lake 
City, UT 84111-1534.

Regulatory Procedural Requirements

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 
rates or services applicable to public property.

Environmental Compliance

    In compliance with the National Environmental Policy Act of 1969 
(NEPA) (42 U.S.C. 4321, et seq.); Council on Environmental Quality 
Regulations (40 CFR parts 1500-1508); and DOE NEPA Regulations (10 CFR 
part 1021), Western 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.

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 rates or services 
and involves matters of procedure.

    Dated: October 27, 2000.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 00-28627 Filed 11-7-00; 8:45 am]
BILLING CODE 6450-01-P