[Federal Register Volume 67, Number 44 (Wednesday, March 6, 2002)]
[Notices]
[Pages 10189-10192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5308]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Salt Lake City Area Integrated Projects Firm Power, Colorado 
River Storage Project Transmission, and Ancillary Services Rates

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rate adjustments.

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SUMMARY: The Western Area Power Administration's (Western) Colorado 
River Storage Project Management Center (CRSP MC) is proposing 
adjustments to the Salt Lake City Area Integrated Projects (SLCA/IP) 
firm power, the CRSP transmission, and the ancillary services rates. 
The SLCA/IP consists of the CRSP, Collbran, and Rio Grande projects, 
which were integrated for marketing and ratemaking purposes on October 
1, 1987. Two CRSP participating projects that have power facilities, 
the Dolores and Seedskadee projects, are also integrated with CRSP. The 
current firm power, transmission, and ancillary services rates expire 
March 30, 2003. The current rate is not sufficient to pay all annual 
costs including operating, maintenance, replacement, and interest 
expenses, and to repay investment and irrigation assistance obligations 
within the required period. The proposed rates will provide sufficient 
revenue to pay all annual costs, including operation, maintenance, 
replacement, purchased power, and interest expenses, and to repay 
investment and irrigation assistance obligations within the allowable 
period. A brochure that identifies the reasons for the rate adjustment 
will be available in February 2002. Proposed rates are scheduled to 
become effective on October 1, 2002, the beginning of Federal fiscal 
year (FY) 2003. This Federal Register notice initiates the formal 
process for the proposed rates.

DATES: The consultation and comment period begins today and ends June 
4, 2002. Western representatives will explain the proposed rates at a 
public forum on March 19, 2002, beginning at 10 a.m., Salt Lake City, 
UT. Interested parties can provide oral and written comments at a 
public forum on April 23, 2002, beginning at 10 a.m., at the same 
location.

ADDRESSES: The meetings will be held at Hilton Salt Lake City Center, 
255 South West Temple, Salt Lake City, UT. If you are interested in 
sending comments, address them to: Mr. David Bennion, Acting CRSP 
Manager, CRSP Management Center, Western Area Power Administration, 
P.O. Box 11606, Salt Lake City, UT 84147-0606, e-mail [email protected]. 
Western must receive comments by the end of the consultation and 
comment period to be assured consideration.

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:

Proposed Rate for SLCA/IP Firm Power

    The proposed rate for SLCA/IP firm power is designed to return an 
annual amount of revenue to meet the repayment of power investment, 
payment of interest, purchased power, operation, maintenance and 
replacement expenses, and the repayment of irrigation assistance costs, 
as required by law. A brochure that identifies the reasons for the rate 
adjustment will be available in February 2002.
    The Department of Energy (DOE) Deputy Secretary approved Rate 
Schedule SLIP-F6 for SLCA/IP firm power on March 23, 1998 (Rate Order 
No. WAPA-78, April 6, 1998), and the Federal Energy Regulatory 
Commission (FERC) confirmed and approved the rate schedule on July 17, 
1998, in FERC Docket No. EF98-5171-000. Rate Schedule SLIP-F6 became 
effective on April 1, 1998, for the period ending March 30, 2003. Under 
Rate Schedule SLIP-F6, the energy rate is 8.10 mills/kilowatthour 
(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 would consist of a base rate and a purchase adder 
rate (PAR). The base rate would meet all estimated firm power revenue 
requirements except the cost for purchased power. The proposed base 
rate for SLCA/IP firm power under SLIP-F7, is 8.4 mills/kWh for energy 
and $3.57 per kWmonth for capacity. The proposed composite base rate is 
18.32 mills/kWh.
    The PAR would be established for 2-year periods to meet the cost of 
purchased power based on near-term projections of energy purchases and 
prices. The PAR estimate would be based on current energy pricing 
levels and the Bureau of Reclamation's (Reclamation) current 24-month 
hydrological study.
    Both the firm power base rate and the PAR will apply to all firm 
power customers and become effective October 1, 2002.

Base Rate

    The proposed base rate revenue requirements are based on the FY 
2003 work plans for Western and Reclamation. These work plans form the 
bases for the FY 2003 Congressional budgets for the two agencies. The 
most current work plans will be included in the rate order submission. 
The FY 1999 historical data are the latest available for the rate 
proposal. As FY 2000 and FY 2001 historical data become available, they 
will be incorporated into the final rate-setting study.
    The rate increase results from the increase in net annual revenue 
requirements of $2.9 million per year over the rate-setting period. The 
increased revenue requirements primarily stem from an increase of $25.8 
million in annual operation and maintenance (O&M) costs, which include 
costs for both Western and Reclamation. The purchased power costs of 
$5.4 million per year in the existing rate are no longer included in 
the base rate. Other miscellaneous revenue requirement increases amount 
to $2.1 million. These increases in projected annual expenses are 
offset by an increase in projected revenues amounting to about $13.4 
million per year, most of which are a result of the CRSP merchant 
function activities, CRSP transmission sales, and ancillary services 
sales. Furthermore, integrated projects' revenue requirements, 
interest, and principal payments collectively decreased by about $6.2 
million.

Purchase Adder Rate

    The PAR is computed by reviewing Reclamation's 24-month 
hydrological study for the Upper Colorado River Basin to project 
generation resources. This amount is compared with contractual 
Sustainable Hydro Power (SHP) customer commitments for energy to 
determine purchase requirements. The purchased requirements are

[[Page 10190]]

multiplied by the forecasted future prices during the same time period.
    The estimated purchased power costs based on these projections for 
energy requirements and prices for the two future years are divided by 
the total customer sales commitments (6,007 GWH) to determine the adder 
energy rate.
    At the end of the 2-year period, Western in consultation with the 
SLCA/IP customers, will compare the actual purchased power costs with 
what was projected for the same period. The surplus or deficit amount 
resulting from this comparison will be combined with a recalculation of 
the PAR formula for the following 2 years.
    The following table is a comparison of the current and proposed 
SLCA/IP firm power rate and an example of the PAR. For the PAR example, 
the table assumes purchased power requirements of 514 GWH per year and 
an energy price of 30 mills/kWh. For FY 2003 and FY 2004 the PAR would 
be 2.6 mills/kWh.

               Comparison of Current and Proposed Firm Power Rates and Purchase Adder Rate Example
----------------------------------------------------------------------------------------------------------------
                                                                 Current rate      Proposed rate
                        Rate schedule                           April 1, 1998-   Oct. 1, 2002-  30-   Increase
                                                               30-Mar-03  SLIP-   Sep-07  SLIP-F7
----------------------------------------------------------------------F6----------------------------------------
Base Rate:
    Energy (mills/kWh)......................................               8.1                8.4           0.3
    Capacity ($/kWmonth.....................................               3.44               3.57          0.13
Composite Rate:
    Base Rate...............................................              17.57              18.32          0.75
    PAR Example (mills/kWh).................................             N/A                  2.6         N/A
                                                             ---------------------------------------------------
        Total...............................................              17.57              20.92          3.35
----------------------------------------------------------------------------------------------------------------

Adjustment Clauses Associated With the Proposed Rate for SLCA/IP Firm 
Power

    All adjustment clauses for the proposed rate remain the same as 
those included in the current rate with the exception of the purchased 
resources adjustment. Since all customers have signed the Replacement 
Purchase Options Amendment, it is no longer necessary to include the 
statement that ``contractors who are not receiving service under the 
Replacement Purchase Options Amendment will also receive additional 
firming on a pass-through-cost basis. This adjustment is to ensure that 
Western recovers the purchased power costs and any other associated 
costs for the firming purchases.''

Proposed Rate Formula for CRSP Transmission Services

    A new rate methodology is being proposed that is more consistent 
with the methodology used at other Western regions and other utilities. 
The proposed methodology is an annual fixed charge formula that will be 
used to determine the revenue requirement to be recovered from firm and 
non-firm transmission service. The annual transmission revenue 
requirements include O&M expenses, administrative and general expenses, 
interest expense, and depreciation expense. This revenue requirement is 
offset by appropriate CRSP transmission system revenues. The proposed 
rates apply to current and future CRSP transmission service and include 
the cost for scheduling, system control, and dispatch service. The cost 
of transmission service to provide Western's Firm Electric Service will 
continue to be included in the SLCA/IP firm power rate, consistent with 
existing contracts.

Firm Point-to-Point

    The firm point-to-point rate is based on a test year using an 
annual fixed charge methodology. This test year relies upon the most 
recent historical audited data available. The annual revenue 
requirements are reduced by revenue credits such as non-firm 
transmission and phase shifter revenues. The resultant net annual 
revenue requirement is divided by the capacity reservation needed to 
meet firm power and transmission commitments in kW, plus the total 
network integration loads at system peak, to derive a cost/kilowattyear 
(kWyear). As current FY financial data becomes available, they will be 
incorporated and used as the test year. The proposed rate for firm 
point-to-point CRSP transmission service is $25.96 per kWyear, which 
equates to $2.14 per kWmonth for FY 2003, based on FY 1999 audited 
data. As FY 2000 and FY 2001 audited data become available, these will 
be incorporated and used as the test year. Each year, the formula will 
be recalculated to determine if a revised rate needs to be implemented. 
The rate formula is proposed to be in effect until September 30, 2007. 
The cost/kWyear is calculated using the following formula:

(1) ARR--TRC = NARR
(2) NARR
   ------
   TSTL
Where:

ARR = Annual Revenue Requirements
TRC = Transmission Revenue Credits
NARR = Net Annual Transmission Revenue Requirements
TSTL = CRSP Transmission System Total Load

Non-Firm Point-to-Point

    The proposed rate for non-firm point-to-point CRSP transmission 
service is a mills/kWh rate based on market conditions but never higher 
than the firm point-to-point rate. This rate will remain in effect 
concurrently with the firm point-to-point rate.

Network

    The proposed rate for network transmission, if offered by CRSP MC, 
will be consistent with Western's Tariff, the rate methodology in FERC 
Order No. 888, and will be based on the annual revenue requirements 
then in effect, as determined by the annual fixed charge methodology.
    Western is not currently providing network transmission on its CRSP 
transmission system and only has available transmission capacity on 
isolated portions of the CRSP transmission system.

Adjustment Clauses Associated with the Proposed Rates for Firm and Non-
Firm Transmission Services

Reactive Power
    This provision in Rate Schedules SP-PTP5, SP-NW1, and SP-NFT4 will 
remain the same under the proposed rates for CRSP transmission.
Adjustment for Losses
    The adjustment for losses provision contained in Rate Schedules SP-
PTP5, SP-NW1, and SP-NFT4 will remain the

[[Page 10191]]

same and also include a statement to allow for financial compensation 
to recover losses. The following statement will be added to the 
existing provision: ``If losses are not fully provided by a 
transmission customer, charges for financial compensation may apply.'' 
This provides for compensation to Western for those instances in which 
losses were not adequately provided for in the form of energy.
Adjustment for Industry Restructuring
    The proposed rates for CRSP transmission include a provision to 
pass through electric industry restructuring costs associated with 
providing transmission service. These costs will be passed through to 
each appropriate transmission customer. This provision will be included 
as an adjustment clause in the transmission rate schedules for firm and 
non-firm transmission.

Proposed Rates for Ancillary Services

    On April 1, 1998, the Western Area Upper Colorado (WAUC) control 
area, within which most of the CRSP transmission system lies, operated 
by the CRSP MC, was merged into two other control areas. These control 
areas are the Western Area Colorado Missouri (WACM), operated by 
Western's Rocky Mountain Region (RMR), and the Western Area Lower 
Colorado (WALC), operated by Western's Desert Southwest Region (DSWR). 
The boundary between these control areas is the Shiprock Substation.
    Six ancillary services will be offered by CRSP MC; they are (1) 
scheduling, system control, and dispatch service, (2) reactive supply 
and voltage control service, (3) regulation and frequency response 
service, (4) energy imbalance service, (5) spinning reserve service, 
and (6) supplemental reserve service. The first two, scheduling, system 
control, and dispatch service, and reactive supply and voltage control 
service are required to be purchased by the CRSP transmission customer. 
The remaining four will also be offered either from the control area or 
from the CRSP MC Merchant. The following table summarizes the ancillary 
services available.

                Proposed SLCA/IP Ancillary Services Rates
------------------------------------------------------------------------
                                Ancillary service
   Ancillary service type          description              Rate
------------------------------------------------------------------------
Scheduling, System Control,   Required to schedule  Included in
 and Dispatch.                 the movement of       transmission rate.
                               power through, out
                               of, within, or into
                               a control area.
Reactive Supply and Voltage   Reactive power        DSWR rate schedule--
 Control.                      support provided      DSW-RS1, or RMR
                               from generation       rare schedule--L-
                               facilities that is    AS2 or as
                               necessary to          superseded will
                               maintain              apply.
                               transmission
                               voltages within
                               acceptable limits
                               of the system.
Regulation and Frequency      Providing generation  If available from
 Response.                     to match resources    SLCA/IP resources,
                               and loads on a real-  the firm capacity
                               time continuous       rate will apply. If
                               basis.                unavailable, DSWR
                                                     rate schedule--DSW-
                                                     FR1, or RMR rate
                                                     schedule--L-AS3 or
                                                     as superseded will
                                                     apply.
Energy Imbalance............  Provided when a       Provided through
                               difference occurs     DSWR rate schedule--
                               between the           DSW-EI1 and RMR
                               scheduled and         rate schedule--L-
                               actual delivery of    AS4 or as
                               energy to a load or   superseded, or the
                               from a generation     customer can make
                               resource within a     alternative
                               control area over a   comparable
                               single hour.          arrangements.
Spinning Reserve............  Needed to serve load  Market-based rate.
                               immediately in the
                               event of a system
                               contingency.
Supplement Reserve..........  Needed to serve load  Market-based rate.
                               in the event of a
                               system contingency;
                               however, it is not
                               available
                               immediately to
                               serve load, but
                               rather within a
                               short period of
                               time.
------------------------------------------------------------------------

Scheduling, System Control, and Dispatch

    This is the only service included in the CRSP transmission rate. 
Firm power and transmission customers receive this service at no 
additional charge.

Reactive Supply and Voltage Control

    This ancillary service is not included in the CRSP transmission 
service rate. CRSP transmission customers will be required to purchase 
this service from the WACM or WALC control area operator. The rate 
schedules of DSWR or RMR will apply, according to which control area 
provides this service.

Regulation and Frequency Response

    If the CRSP MC has regulation available for sale, it will charge 
the SLCA/IP firm power capacity rate currently in effect. If regulation 
is unavailable from the CRSP MC, the customer may obtain it from the 
WALC or WACM control areas. Transmission customers serving loads within 
the transmission provider's control area must acquire this ancillary 
service from Western, from a third party, or by self supply.

Energy Imbalance

    This ancillary service is not included in the CRSP transmission 
service rate. Transmission customers serving loads within the 
transmission provider's control area must acquire this ancillary 
service from Western, from a third party, or by self supply. If this 
service is provided by Western, the rate schedules of DSWR or RMR will 
apply, according to which control area provides this service.

Spinning and Supplemental Reserves

    These ancillary services are not included in the CRSP transmission 
service rate. The CRSP MC will charge current market rates for these 
reserves. Transmission customers serving loads within the transmission 
provider's control area must acquire these ancillary services from 
Western, from a third party, or by self supply.

Procedural Requirements

    Since the proposed rates constitute a major rate adjustment as 
defined by the procedures for public participation in general rate 
adjustments, as cited below, Western will hold both public information 
forums and public comment forums. After considering comments, Western 
will recommend proposed rates for interim approval by the DOE Deputy 
Secretary.
    The proposed SLCA/IP firm power, CRSP transmission, and ancillary 
services rates are being established pursuant to the Department of 
Energy Organization Act, 42 U.S.C. 7101-7352;

[[Page 10192]]

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 Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of DOE delegated (1) the authority to develop long-term power 
and transmission rates on a nonexclusive basis to Western's 
Administrator, (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 FERC. Existing DOE 
procedures for public participation in power rate adjustments (10 CFR 
part 903) became effective on September 18, 1985.

Availability of Information

    Interested parties may review and copy all brochures, studies, 
comments, letters, memorandums, or other documents made or kept by 
Western in developing the proposed rates. These documents are at the 
CRSP MC, located at 150 East Social Hall Avenue, Suite 300, Salt Lake 
City, Utah.

Regulatory Prodedural 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. 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 has determined that this action is categorically 
excluded from preparing 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; therefore, this notice requires no clearance by 
the Office of Management and Budget.

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: February 15, 2002.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 02-5308 Filed 3-5-02; 8:45 am]
BILLING CODE 6450-01-P