[Federal Register Volume 68, Number 114 (Friday, June 13, 2003)]
[Notices]
[Pages 35398-35401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14947]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Proposed Rates for Loveland Area Projects Transmission and 
Ancillary Services

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rates.

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SUMMARY: The Western Area Power Administration (Western) is proposing 
rates for Loveland Area Projects (LAP) transmission and ancillary 
services. Current rates have been extended through March 31, 2004. The 
proposed rates, which are formula based, will provide sufficient 
revenue to pay all annual costs, including interest expense, and 
repayment of required investment within the allowable period. Rate 
impacts are detailed in a brochure to be made available to all 
interested parties. The proposed rates are scheduled to go into effect 
on January 1, 2004, and will remain in effect through December 31, 
2008. This Federal Register notice begins the formal process for the 
proposed rates.

DATES: The consultation and comment period begins today and will end 
September 11, 2003. Western will present a detailed explanation of the 
proposed rates at the following public information forums:
    1. July 14, 2003, 9 a.m. MDT, Denver, Colorado.
    2. July 15, 2003, 1 p.m. CDT, Lincoln, Nebraska.
    Western will receive oral and written comments at the following 
public comment forum:
    3. August 6, 2003, 11 a.m. MDT, Denver, Colorado.

ADDRESSES: The public information forums will be held at the following 
locations:
    1. Denver, Radisson Stapleton Plaza Hotel, 3333 Quebec Street, 
Denver, Colorado.
    2. Lincoln, Southeast Community College, 11th and O Street, 
Lincoln, Nebraska.
    The public comment forum will be held at the following location:
    3. Denver, Radisson Stapleton Plaza Hotel, 3333 Quebec, Denver, 
Colorado.
    Written comments should be sent to: Joel K. Bladow, Regional 
Manager, Rocky Mountain Customer Service Region, Western Area Power 
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, e-mail: [email protected]. Official comments received via 
letter and e-mail, as well as other pertinent information, will be 
posted to our Web site located at http://www.wapa.gov/rm/rm.htm after 
the comment period has closed. To assure consideration of written 
comments, Western must receive them by the end of the consultation and 
comment period.

FOR FURTHER INFORMATION CONTACT: Mr. Daniel T. Payton, Rates Manager, 
Rocky Mountain Customer Service Region, Western Area Power 
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, telephone (970) 461-7442, e-mail: [email protected].

SUPPLEMENTARY INFORMATION: 

Proposed Rates for LAP Transmission

    Western does not propose to change the formula-based rate 
methodology for calculating the revenue requirement for Network, Firm, 
and Non-Firm transmission services. Rates for these services will be 
recalculated each year to incorporate the most recent financial and 
load information and will be applicable to all transmission customers.

Proposed Revenue Requirement for Transmission Service

    An annual fixed charge rate methodology is used to determine the 
revenue requirement to be recovered from Network, Firm, and Non-Firm 
transmission services. The annual transmission costs included are 
operation and maintenance expenses, administrative and general 
expenses, interest expense, and depreciation expense. Transmission 
expenses, which increase transmission capacity, are also included in 
the revenue requirement. These expenses are estimated to be $500,000 
for FY 2004.

[[Page 35399]]

Proposed Rate for Network Transmission Service

    The methodology for calculating the Network Transmission Service 
rate is unchanged from Western's previously approved filing with the 
Federal Energy Regulatory Commission (FERC). The current methodology 
derives a network customer's monthly charge by multiplying a customer's 
load ratio share times one-twelfth (\1/12\) of the annual network 
transmission revenue requirement. The proposed revenue requirement for 
Fiscal Year 2004 is decreasing from $40,570,808 to $38,776,237 or 4.4 
percent, based on FY 2002 financial data.

Proposed Rate for Firm Point-to-Point Transmission Service

    The proposed rate for Firm Point-to-Point Transmission Service is 
decreasing from $2.88 per kilowattmonth (kW-month) to $2.68 per kW-
month, or 6.9 percent. The proposed rate for this service is the annual 
revenue requirement for transmission divided by the 12-month coincident 
monthly peak (12-cp) of the LAP transmission system, and divided again 
by 12 months. The 12-cp for the LAP transmission system for Fiscal Year 
2004, is 1,206,771 kW, based on FY 2002 load data.

Proposed Rate for Non-Firm Point-to-Point Transmission Service

    Non-Firm Point-to-Point Transmission Service is available for 
periods ranging from 1 hour to 1 month. The proposed maximum rate is 
3.75 mills/kWh.

Proposed Rates for Ancillary Services

    There is no change in the proposed formula-based rate methodologies 
for calculating revenue requirements for Scheduling, System Control, 
and Dispatch Service, or the Reactive Supply and Voltage Control 
Service from Generation Sources. The rates for Operating Reserves, both 
Supplemental and Spinning, are also unchanged.
    The proposed rates do include changes to the formula-based rate 
methodologies for Regulation and Frequency Response Service and Energy 
Imbalance Service as outlined below. Additionally, a separate rate for 
Regulation and Frequency Response Service for Intermittent Renewable 
Resources has been added.
    Two ancillary service rates, not part of the original portfolio of 
ancillary services filed in 1998, are also being proposed under this 
filing: (1) Unauthorized Use of Transmission and Control Area Resources 
service, and (2) Transmission Losses service.
    The rates for all of these services, as proposed, are applicable to 
all customers within the Western Area Colorado Missouri (WACM) control 
area.

Proposed Rate for Scheduling, System Control, and Dispatch Service

    The rate methodology for calculating the revenue requirement for 
the Scheduling, System Control, and Dispatch Service is unchanged from 
Western's previously approved filing with FERC. However, the charging 
basis for this rate will change from per-schedule-per-day, to per-tag-
per-day. The rate for this service, as proposed, is applicable to those 
operating within the control area with schedules/tags that do not 
include any segment of the Federal transmission system.
    The revenue requirement for this service in Fiscal Year (FY) 2004 
will decrease from $3,970,226 to $3, 796,470, a decrease of 4 percent. 
This, combined with the change in the charging basis from schedule to 
tag, will reduce the rate from $43.09 per schedule per day, to $25.22 
per tag per day.
    Western will continue to apply this rate against the number of 
daily tags submitted for transmission transactions that are off the 
Federal system; i.e., other than LAP or Colorado River Storage Project 
transmission, and charge the transmission provider.

Proposed Rate for Reactive Supply and Voltage Control Service From 
Generation Sources

    The rate methodology for calculating the revenue requirement for 
the Reactive Supply and Voltage Control Service from Generation Sources 
is unchanged from Western's previously approved filing with FERC. The 
rate is applicable to all transmission transactions within WACM. 
Customers agreeing to respond to WACM's request for Reactive Supply and 
Voltage Control Service from Generation Sources will receive a waiver 
from this charge.
    The revenue requirement for this service in FY 2004 is proposed to 
increase from $1,644,071 to $1,682,672, or 2 percent. In addition, the 
percentage of LAP capacity used to provide Reactive Supply and Voltage 
Control Service from Generation Sources is also proposed to increase 
from 2.3 percent to 2.5 percent, resulting in a slight increase in the 
FY 2004 rate, from $0.103/kW-month to $0.108/kW-month, or 4.9%.

Proposed Rate for Regulation and Frequency Response Service

    Western proposes several changes to the rate methodology for 
Regulation and Frequency Response Service. The rate is applicable to 
all transmission transactions with load served within WACM.
    Western is proposing a revised annual operational analysis to more 
accurately determine the amount of capacity needed to meet WACM's 
regulation requirements. The current analysis determined that WACM 
needs 75 megawatts (MW) or regulating capacity. Due to the limited 
availability of hydroelectric capacity, Western has determined that 
purchases must become a substantial part of the revenue requirement for 
regulation. Therefore, Western is proposing a mix of Federal resources 
and non-Federal purchases to provide this capacity. The amount of 
regulation and cost of these purchases will be revised annually to 
accurately reflect the capacity needed to supplement hydroelectric 
resources. The unit cost and revenue requirement for Federal facilities 
will continue to be calculated each year using the existing 
methodology's annual fixed charge rate.
    Using the proposed methodology, the revenue requirement for 
Regulation and Frequency Response Service will increase from $3,727,782 
to $5,031,873, an increase of 35 percent. The current rate for this 
service is $0.164/kW-month, and the proposed rate will be $0.185/kW-
month, an increase of 13 percent.

Proposed Rate for Regulation and Frequency Response Service for 
Intermittent Renewable Resources

    Western supports the installation of renewable sources of energy, 
but recognizes certain operational constraints exist in managing the 
significant fluctuations that are a normal part of their operation. 
These fluctuations require that a rate be developed and implemented 
that will recover the expenses associated with such variation in 
capacity. Therefore, Western is also proposing a rate for the 
regulation requirement associated with intermittent renewable 
resources.
    The rate would be derived from the revenue requirement established 
for load-based Regulation and Frequency Response Service, $5,031,873; 
however, the basis would be a charge per unit of capacity. The rate is 
proposed to be $5.59/kW-month, and would be applied against the amount 
of capacity used.
    An analysis done by Western to measure the variation of 
intermittent renewable resources within WACM indicates that 27 percent 
of the nameplate capacity of those units is required for regulation.
    Western plans to offer resource owners a credit for more closely 
matching generation schedules with

[[Page 35400]]

actual output. Also, Western is proposing additional charges for 
resource owners utilizing more than the 27 percent of nameplate 
capacity.

Proposed Rate for Energy Imbalance Service

    No significant changes are proposed for Energy Imbalance Service, 
but minor modifications are being proposed as a result of public 
feedback since implementation in July 2002. The rate is applicable to 
customers with resources and obligations within WACM. Three 
modifications to the existing rate are being proposed.
    The first proposed modification is the expansion of the minimum 
deviation from 2 MW TO 4 MW.
    The second proposed modification is that the hourly energy 
imbalance will be rounded to the nearest whole number; e.g., 0.4 and 
below will be rounded down to the nearest whole number, and 0.5 and 
above will be rounded up to the nearest whole number.
    The third proposed modification is a reduction of the penalty 
associated with excursions for over or under deliveries outside of the 
bandwidth. The penalty will be reduced from 50 percent to 25 percent.
    Western will continue to use a +/-5 percent bandwidth, the 
application of aggregate control area pricing to under or over 
deliveries within the bandwidth, and LAP average real-time pricing for 
Energy Imbalance Service.

Proposed Rates for Operating Reserves Service--Spinning and 
Supplemental

    This proposed rate is unchanged. Western is only able to meet its 
own internal requirements for reserves, and has no long-term reserves 
available for sale. At a customer's request, Western will purchase and 
pass through the cost of reserves and any activation energy, plus a fee 
for administration. For all reserves purchased, the customer will be 
responsible for purchasing adequate transmission to support the 
purchase.

Proposed Rate for Unauthorized Use of Transmission and Control Area

Resources Service

    This rate, currently approved as a rate for short-term sales by 
Western's Administrator through March 31, 2004, is proposed to be 
included in Western's ancillary services portfolio.
    The proposed rate will be applicable to all transmission customers 
utilizing Western-managed facilities without adequate reservation. The 
charge will be 150 percent of the transmissions service at issue; i.e., 
hourly, daily, weekly, monthly, with a maximum levy of a monthly 
charge.

Proposed Rate for Transmission Losses Service

    This rate was also approved as a rate for short-term sales by 
Western's Administrator through March 31, 2004, and is proposed for 
transition into Western's ancillary service portfolio.
    No significant changes are proposed for this service. The only 
modification will be a pricing change to calculate the cost of the loss 
energy. Currently, the pricing used for this valuation is Palo-Verde 
on- and off-peak daily pricing. Western proposes changing to LAP 
average real-time purchase prices.
    These transmission and ancillary service rates for LAP are 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 Delegation Order No. 00-037.00, approved December 6, 2001, the 
DOE Secretary of Energy delegated (1) the authority to develop 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 (50 FR 37835).

Comparison of Rates and Revenue Requirements

------------------------------------------------------------------------
                                Proposed January
                                    2004 rate           FY 2003 rate
------------------------------------------------------------------------
Transmission:
 Point-to-Point Rates:
    Firm Transmission.......  $2.68/kW-month......  $2.88/kW-month.
    Non-Firm Transmission...  3.75 mills/kWh......  3.75 mills/kWh.
Network Revenue Requirement.  $38,776,237.........  $40,570,808.
Scheduling, System Control,   $25.22/tag/day        $43.09/schedule/day
 and Dispatch Service.         Revenue               Revenue
                               Requirement:          Requirement:
                               $3,796,470.           $3,970,226.
Reactive Supply and Voltage   $0.108/kW-month       $0.103/kW-month
 Control Service from          Revenue               Revenue
 Generation Sources.           Requirement:          Requirement:
                               $1,682,672.           $1,644,071.
Regulation and Frequency      $0.185/kW-month       $0.164/kW-month
 Response Service.             Revenue Requirement   Revenue
                               $5,031,873.           Requirement:
                                                     $3,727,782.
Regulation and Frequency      $5.59/kW-month        No rate developed.
 Response Service for          Revenue
 Intermittent Renewable        Requirement:
 Resources.                    $5,031,873.
Energy Imbalance Service....  Bandwith: +/-5%.....  Bandwith: +/-5%.
                              Minimum Deviation: 4  Minimum Deviation: 2
                               MW.                   MW.
                              Outside Bandwidth     Outside Bandwidth
                               Penalty: 25%.         Penalty: 50%.
                              Pricing: LAP average  Pricing: LAP average
                               real-time purchase/   real-time purchase/
                               sales pricing with    sales pricing with
                               defaults.             defaults.
Operating Reserves Service    None available for    None available for
 (Spinning/Supplemental).      long-term purchase.   long-term purchase.
                               Western will offer    Western will offer
                               to purchase and       to purchase and
                               pass through cost,    pass through cost,
                               plus 10% for          plus 10% for
                               administration.       administration.
Unauthorized Use of           150% of monthly       150% of monthly
 Transmission and Control      demand charge for     demand charge for
 Area Resources Service.       service-at-issue.     service-at-issue.
Transmission Losses Service.  Assessed WACM         Assessed WACM
                               postage-stamp loss    postage-stamp loss
                               rate to all           rate to all
                               scheduled             scheduled
                               transmission          transmission
                               transactions.         transactions.
                              Pricing: LAP average  Pricing: Palo Verde
                               real-time purchase/   daily on-/off-peak
                               sale pricing with     pricing.
                               defaults.
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[[Page 35401]]

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents made or kept by Western in developing the proposed rates are 
available for inspection and copying at the Rocky Mountain Customer 
Service Regional Office, located at 5555 East Crossroads Boulevard, 
Loveland, Colorado. Many of these documents, as well as supporting 
information, are also available on our website at the following 
address: http://www.wapa.gov/rm/rm.htm.

Regulatory Procedure 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 
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; so 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 
rulemaking of particular applicability relating to rates or services 
and involves matters of procedure.

    Dated: May 30, 2003.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 03-14947 Filed 6-12-03; 8:45 am]
BILLING CODE 6450-01-M