[Federal Register Volume 67, Number 171 (Wednesday, September 4, 2002)]
[Notices]
[Pages 56553-56555]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-22489]


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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: The Secretary of the Department of Energy (DOE) has approved 
Rate Schedule BCPF6, FY 2003 Base Charge and Rates (Rates) for Boulder 
Canyon Project (BCP) electric service provided by the Western Area 
Power Administration (Western). The Rates will provide sufficient 
revenue to pay all annual costs, including interest expense, and 
investment repayment within the allowable period.

DATES: The Rates will be effective the first day of the first full 
billing period beginning on or after October 1, 2002. These Rates will 
stay in effect through September 30, 2003, or until other Rates replace 
them.

FOR FURTHER INFORMATION CONTACT: Ms. Gloria Jordan, Public Utilities 
Specialist, Western Area Power Administration, P.O. Box 6457, Phoenix, 
AZ 850056457, telephone (602) 3522649, e-mail [email protected].

SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved the 
existing Rate Schedule BCPF6 for BCP electric service on September 18, 
2000 (Rate Order No. WAPA94, 65 FR 60933, October 13, 2000), on an 
interim basis, effective on October 1, 2000, through September 30, 
2005, that allowed for an annual recalculation of the rates. On July 
31, 2001, the Federal Energy Regulatory Commission (FERC) approved Rate 
Order No. WAPA94 on a final basis.
    Under Rate Schedule BCPF6, the existing composite rate, effective 
on October 1, 2001, was 10.32 mills per kilowatthour (mills/kWh), the 
base charge was $48,039,988, the energy rate was 5.33 mills/kWh, and 
the capacity rate was $0.99 per kilowattmonth (kWmonth). The newly 
calculated Rates for BCP electric service to be effective October 1, 
2002, will result in an overall composite rate of 11.16 mills/kWh. This 
is an increase of approximately 8 percent when compared with the 
existing BCP electric service composite rate. The increase is due to an 
increase in the annual revenue requirement and a projected lower water 
year from the previous year that results in reduced energy sales. The 
FY 2003 base charge is increasing to $50,761,729. The increase is due 
mainly to higher operation and maintenance expenses, replacement costs, 
replenishing the working capital fund, and a reduction in revenues from 
reduced tour ticket sales at the Hoover Dam following the September 11, 
2001, terrorist attack. The FY 2003 energy rate of 5.58 mills/kWh is 
approximately a 5-percent increase from the existing energy rate of 
5.33 mills/kWh. The FY 2003 capacity rate of $1.08/kWmonth is 
approximately a 9-percent increase from the existing $0.99/kWmonth 
capacity rate.
    The following summarizes the steps taken by Western to ensure 
involvement of all interested parties in determining the Rates:
    1. On February 13, 2002, a letter was mailed from Western's Desert 
Southwest Customer Service Region to the BCP Contractors and other 
interested parties announcing an informal customer meeting, and public 
information and public comment forums.
    2. A Federal Register (FR) notice was published on February 27, 
2002 (67 FR 8964), announcing the proposed rate adjustment process, 
initiating a public consultation and comment period, announcing public 
information and public comment forums, and presenting procedures for 
public participation.
    3. Discussion of the proposed Rates was initiated at an informal 
BCP Contractor meeting held March 21, 2002, in Phoenix, Arizona. At 
this informal meeting, representatives from Western and the Bureau of 
Reclamation (Reclamation) explained the basis for estimates used to 
calculate the Rates. A question and answer session was held.
    4. At the public information forum held on April 4, 2002, in 
Phoenix, Arizona, Western and Reclamation representatives explained the 
proposed Rates for FY 2003 in greater detail. A question and answer 
session was held.

[[Page 56554]]

    5. A public comment forum was held on April 25, 2002, in Phoenix 
Arizona, to give the public an opportunity to comment for the record. 
Three persons representing customers made oral comments.
    6. Two comment letters were received during the 90-day consultation 
and comment period. The consultation and comment period ended May 28, 
2002. All comments were considered in developing the Rates for FY 2003. 
Written comments were received from: Irrigation & Electrical Districts 
Association of Arizona, Metropolitan Water District of Southern 
California.
    Comments and responses, paraphrased for brevity, are presented 
below.

Civil Service Retirement Costs

    Comment: The Contractors are requesting Western and DOE reexamine 
the issue of including full civil service retirement costs in the BCP 
Rates. The Contractors have expressed that the pending legislation S. 
1612, clearly demonstrates that no authority exists in law for DOE to 
collect these costs.
    Response: Western began collecting the full costs (including the 
Office of Personnel Management funded portion) of the Civil Service 
Retirement System and other post-retirement benefits in the BCP rates 
after the issuance of a legal opinion from the DOE General Counsel 
dated July 1, 1998. The FERC approved the collection of these costs on 
July 31, 2001 (96 FERC ] 61,171). Although pending legislation (S. 
1612, Section 201) has been proposed in Congress addressing full 
funding of Federal retiree costs, Western and DOE believe this 
legislation does not address the recovery of such costs by the Power 
Marketing Administrations through rates. Therefore, at this time, 
Western will continue to include these costs in its rate-setting power 
repayment study.

Non-reimbursable Costs

    Comment: The Contractors expressed concern that the increase in 
security costs and the lost revenues from reduced tourism at the Hoover 
Dam Visitor Center due to the September 11, 2001, terrorist attack, 
should be treated as non-reimbursable.
    Response: A memorandum dated April 4, 2002, from John W. Keys, III, 
Commissioner of Reclamation, established that supplemental 
appropriations received in response to the September 11, 2001, attacks 
for security at Hoover Dam and future expenditures for counter-
terrorism measures should be considered non-reimbursable costs. Other 
costs associated with the security of the facilities and the lost 
revenues due to reduced tourism at Hoover Dam are considered 
reimbursable. Western has not received any appropriations to respond to 
post September 11th security concerns. If Western does, it will make a 
determination at that time with regard to the reimbursability of the 
expenses.

Allocation of Specific Costs

    Comment: A Contractor requested Western provide the cost allocation 
methodology for Hoover-related common facilities at Mead Substation 
such as the Arizona and Nevada switchyard, potable water and fire 
system, Buchanan Boulevard, and any other transmission-related costs.
    Response: Western presented a proposal, at the Engineering and 
Operating Committee (E&OC) meeting held May 15, 2002, for allocating 
future construction costs related to common facilities at Mead 
Substation. Several Contractors provided feedback and suggestions for 
Western to consider prior to proceeding forward. Western will continue 
to work with the Contractors through the E&OC in developing an 
equitable cost allocation methodology for common facilities at Mead 
Substation. Western will present the revisions to the proposed cost 
allocation methodology at the next quarterly E&OC meeting scheduled for 
October 16, 2002. Any resulting change in the costs allocated to BCP 
for the Mead Substation will be addressed in future rate processes.

Uprating Credit Program Discrepancies

    Comment: A Contractor expressed concerns about the discrepancies in 
the administration of the uprating credits that still exist under the 
uprating program. A request was made for Western to hold another 
meeting in mid-June to resolve the outstanding issues.
    Response: Western held a meeting with the Contractors on June 27, 
2002. The outstanding issues were resolved.

BCP Electric Service Rates

    BCP electric service rates are designed to recover an annual 
revenue requirement that includes the operation and maintenance 
expenses, payments to States, visitor services, uprating program, 
replacements, investment repayment, and interest expense. Western's 
power repayment study allocates the projected annual revenue 
requirement for electric service between capacity and energy, 50 
percent to capacity and 50 percent to energy.

Procedural Requirements

    BCP electric service rates are developed under the Department of 
Energy Organization Act (42 U.S.C. 71017352), through which the power 
marketing functions of the Secretary 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, particularly 
section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 
485h(c)), and other acts that specifically apply to the project 
involved, were transferred to and vested in the Secretary of Energy, 
acting by and through Western.
    By Delegation Order No. 00037.00, effective December 6, 2001, the 
Secretary of Energy delegated (1) the authority to develop long-term 
power and transmission rates on a non-exclusive basis to Western's 
Administrator, (2) the authority to confirm, approve, and place such 
rates into effect on a 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 FERC. Existing DOE 
procedures for public participation in electric service rate 
adjustments are located at 10 CFR part 903, effective September 18, 
1985 (50 FR 37835). DOE procedures were followed by Western in 
developing the rate formula approved by FERC on July 31, 2001, at 96 
FERC ] 61,171.
    The Boulder Canyon Project Implementation Agreement Contract No. 
95PAO10616 requires Western, prior to October 1 of each rate year, to 
determine the annual rates for the next fiscal year. The rates for the 
first rate year and each fifth rate year thereafter, shall become 
effective provisionally upon approval by the Deputy Secretary of Energy 
subject to final approval by the FERC. For all other rate years, the 
rates shall become effective on a final basis upon approval by the 
Deputy Secretary of Energy.
    Western will continue to provide the Contractors annual rates by 
October 1 of each year using the same rate-setting formula. The rates 
are reviewed annually and adjusted upward or downward to assure 
sufficient revenues to achieve payment of all costs and financial 
obligations associated with the project. Each fiscal year, Western 
prepares a power repayment study that updates actual revenues and 
expenses and includes future estimates of annual revenues and expenses 
for the BCP including interest and capitalized costs.
    Western's BCP electric service rate-setting formula set forth in 
Rate Order

[[Page 56555]]

No. WAPA70 was approved on April 19, 1996, in Docket No. EF965091000 at 
75 FERC ] 62,050, for the period beginning November 1, 1995, and ending 
September 30, 2000. Rate Order No. WAPA94 extended the existing rate-
setting formula beginning on October 1, 2000, and ending September 30, 
2005. The BCP rate-setting formula includes a base charge, an energy 
rate, and a capacity rate. The rate-setting formula was used to 
determine the BCP FY 2003 Base Charge and Rates.
    Western proposes the FY 2003 base charge of $50,761,729, the energy 
rate of 5.58 mills/kWh, and the capacity rate of $1.08/kWmonth be 
approved on a final basis.
    Consistent with procedures set forth in 10 CFR part 903, Western 
held a consultation and comment period. The notice of the proposed FY 
2003 Rates for electric service was published in the Federal Register 
on February 27, 2002.
    Following review of Western's proposal within DOE, I approve, in 
the absence of a Deputy Secretary, the FY 2003 Rates, on a final basis 
for BCP electric service, under Rate Schedule BCPF6, through September 
30, 2003.

    Dated: August 14, 2002.
Spencer Abraham,
Secretary.
[FR Doc. 02-22489 Filed 9302; 8:45 am]
BILLING CODE 645001P