[Federal Register Volume 69, Number 233 (Monday, December 6, 2004)]
[Notices]
[Pages 70439-70442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26714]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Western Area Power Administration


Provo River Project Rate Order No. WAPA-116

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of rate order concerning a power rate formula.

-----------------------------------------------------------------------

SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-116, placing a rate formula for the Provo River Project 
(Project) of Western Area Power Administration (Western) into effect on 
an interim basis. The provisional power rate formula will remain in 
effect on an interim basis until the Federal Energy Regulatory 
Commission (Commission) confirms, approves, and places it into effect 
on a final basis, or until the power rate formula is replaced by 
another power rate formula.

DATES: The provisional rate formula extension will be placed into 
effect on an interim basis on April 1, 2005, and will be in effect 
until the Commission confirms, approves, and places the provisional 
rate formula extension in effect on a final basis for 5 years ending 
March 31, 2010, or until superseded.

FOR FURTHER INFORMATION CONTACT: Mr. Bradley S. Warren, CRSP Manager, 
CRSP Management Center, Western Area Power Administration, PO Box 
11606, Salt Lake City, UT 84147-0606, (801) 524-5493, or Ms. Carol 
Loftin, Rates Manager, CRSP Management Center, Western Area Power 
Administration, PO Box 11606, Salt Lake City, UT 84147-0606, (801) 524-
6380, e-mail [email protected].

SUPPLEMENTARY INFORMATION: The Project was authorized in 1935. 
Construction on the Project, which includes Deer Creek Dam and 
Powerplant on the Provo River in Utah, began in 1938 but, because of 
World War II, 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.
    Provo River Project power is now marketed independently from the 
Salt Lake City Area Integrated Projects subsequent 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 
Project to customers of the Utah Municipal Power Agency and the Utah 
Associated Municipal Power Systems (Customers) in the Provo River 
drainage area.
    Contract Nos. 94-SLC-0253 and 94-SLC-0254 between the United States 
and its Customers 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. 
Each fiscal year, Western will estimate the Deer Creek Powerplant (DCP) 
expenses by preparing a power repayment study, which will include 
estimates of operation, maintenance, and replacement 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 operation, 
maintenance, and replacement 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 included in the contract in which the 
Customers pay all operating, maintenance, and replacement expenses of 
the Project and, in return, receive all of the energy produced by the 
Project. Western will continue to provide the Customers a revised 
annual installment by August 31 of each year using the same 
methodology.
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates to Western's Administrator, (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 the Commission. Existing DOE procedures for 
public participation in power rate adjustments (10 CFR part 903) were 
published on September 18, 1985 (50 FR 37835).
    Under Delegation Order Nos. 00-037.00 and 00-001.00A, 10 CFR 903, 
and 18 CFR 300, I hereby confirm, approve, and place Rate Order No. 
WAPA-116 into effect on an interim basis. The extension of the rate 
formula will be promptly submitted to the Commission for confirmation 
and approval on a final basis.

    Dated: November 22, 2004.
Kyle E. McSlarrow,
Deputy Secretary.
    In the matter of: Western Area Power Administration Power Rate 
Formula Extension for the Provo River Project; Order Confirming, 
Approving, and Placing a Rate Formula Extension for the Provo River 
Project Into Effect on an Interim Basis.


[[Page 70440]]


    This rate was established in accordance with section 302 of the 
Department of Energy (DOE) Organization Act (42 U.S.C. 7152). This Act 
transferred to and vested in the Secretary of Energy 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 laws, 
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 Provo 
River Project (PRP).
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates 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 the Commission. Existing DOE procedures for public 
participation in power rate adjustments (10 CFR 903) were published on 
September 18, 1985 (50 FR 37835).

Acronyms and Definitions

    As used in this rate order, the following acronyms and definitions 
apply:
    CRSP: Colorado River Storage Project.
    Commission: Federal Energy Regulatory Commission.
    Contracts: Contract No. 94-SLC-0254 with UMPA effective December 
22, 1994, and Contract No. 94-SLC-0253 with UAMPS effective January 19, 
1995, which were extended to September 30, 2024.
    Customers: UMPA and UAMPS.
    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 and ratemaking 
procedures.
    FY: Fiscal year; October 1 to September 30.
    Interior: United States Department of the Interior.
    kW: Kilowatt--the electrical unit of capacity that equals 1,000 
watts.
    MW: Megawatt--the electrical unit of capacity that equals 1 million 
watts or 1,000 kilowatts.
    NEPA: National Environmental Policy Act of 1969 (42 U.S.C. 4321, et 
seq.).
    OM&R: Operation, Maintenance, and Replacement.
    PRP: Provo River Project.
    PRS: Power repayment study.
    PRWUA: Provo River Water Users Association.
    Reclamation: United States Department of the Interior, Bureau of 
Reclamation.
    SLCA/IP: Salt Lake City Area Integrated Projects. The resources and 
revenue requirements of the Collbran, Dolores, Rio Grande, and 
Seedskadee projects blended together with the CRSP to create the SLCA/
IP resources and rate.
    UAMPS: Utah Associated Municipal Power Systems.
    UMPA: Utah Municipal Power Agency.
    Western: United States Department of Energy, Western Area Power 
Administration.

Effective Date

    This power rate formula will become effective on an interim basis 
beginning April 1, 2005, and will be in effect pending the Commission's 
approval of this or a substitute rate formula on a final basis for 5 
years ending March 31, 2010, or until superseded.

Public Notice and Comment

    Paragraph 903.23(a) of 10 CFR 903 for rate extensions does not 
require either a consultation and comment period, or public information 
or comment forums. This request is for approval of an extension of the 
present methodology used for calculating the annual installment. On 
April 14, 2004, Western met with the Customers and notified them of 
Western's intent to extend the present rate formula. Western also 
discussed the FY 2005 budget and capital expenditures. The Customers 
expressed their desire to continue using the rate formula methodology 
through notifications dated July 20, 2004, and August 26, 2004.

Project Description

    Construction of the PRP began in May 1938, and the powerplant was 
completed in 1958. Presently, it has a generating capacity of 5,300 kW 
of power. 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 for the PRP to cover its costs, including OM&R and repayment 
expenses. These expenses included $1.6 million of irrigation assistance 
to the PRWUA. PRP's original power investment has been repaid.
    PRP power is now marketed independently from the SLCA/IP under a 
marketing plan published in the Federal Register on November 21, 1994. 
This marketing plan allows Western to market the output of the PRP to 
customers of UMPA and UAMPS in the Provo River drainage area.

Power Repayment Studies

    Each fiscal year, Western will estimate DCP expenses by preparing a 
PRS that will include estimates of OM&R costs for the DCP for the next 
fiscal year. The PRS determines if power revenues will be sufficient to 
pay, within the prescribed time periods, all costs assigned to the PRP 
power function. Repayment criteria are based on law, policies including 
DOE Order RA 6120.2, and authorizing legislation.
    Western calculates the annual installment based on 2 years of data. 
The calculation includes the projected costs of the rate installment 
year (future fiscal year) and an adjustment from the last historic 
fiscal year. The adjustment is the surplus or deficit that occurs in 
the last historic year when actual costs and repayment obligations are 
subtracted from actual revenues. This surplus or deficit is combined 
with the projected rate installment year costs to arrive at the rate 
installment. 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. This 
repayment schedule does not depend upon the power and energy made 
available for sale or the rate of generation each year.

Certification of Rates

    Western's Administrator certified that the interim rates for PRP 
power are the lowest possible rates consistent with sound business 
principles. The provisional rates were developed following 
administrative policies and applicable laws.

Statement of Revenue and Related Expenses

    The revenue requirements for the PRP are based on PRS calculations 
for future requirements, which will be adjusted when FY actuals are 
known. The following table summarizes revenues and expenses for the 
current 6-year rate formula and the actual revenues and expenses for 
the same period.

[[Page 70441]]



                       Provo River Comparison of 6-Year Revenues and Expenses FY 1999-2004
                                                    [$1,000]
----------------------------------------------------------------------------------------------------------------
                              Item                                  Actual \1\     Projected \2\    Difference
----------------------------------------------------------------------------------------------------------------
Total Revenues..................................................          $1,857          $1,424            $433
Revenues Distribution:
    O&M.........................................................           1,217           1,046             171
    Transmission................................................             179             179               0
    Interest....................................................             165             153              12
    Investment Repayment........................................             264              46             218
    Surplus Revenues............................................              32               0              32
                                                                 -----------------
        Total Revenues Distribution.............................           1,857           1,424             433
----------------------------------------------------------------------------------------------------------------
\1\ Amounts for FY 2004 are estimates taken from FY 2003 final PRS.
\2\ Taken from FY 1998 final PRS.

    The following table provides a summary of the projected revenues 
and expenses during the provisional rate formula period.

      Provo River Project 6-Year Projections Revenues and Expenses
                               [$1,000]\1\
------------------------------------------------------------------------
                                                           FY 2005-2010
                                                            projections
------------------------------------------------------------------------
Total Revenues \2\......................................          $1,785
Costs:
  O&M...................................................           1,606
  Interest..............................................             133
  Investment Repayment..................................              46
                                                         ---------------
    Total Costs.........................................           1,785
------------------------------------------------------------------------
\1\ Does not include $29,788 per year for transmission expense.
\2\ Although the rate process seeks approval for a 5-year period (FY
  2006-2010), 6 years of data are shown in the above table because FY
  2005 is an estimate.

Basis for Rate Development

    Each Customer is billed for electric service calculated every FY, 
payable in 12 equal monthly payments. Every FY, Western will estimate 
PRP expenses by preparing a PRS which will include estimates of OM&R 
costs for the DCP. The amount of each monthly payment will be 
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 will include adjustments to the OM&R charges. These 
adjustments deal with the difference between estimated and actual OM&R 
expenses. If OM&R charges are underestimated, an amount equal to the 
difference must be added to the next annual installment. Conversely, if 
OM&R charges are overestimated, the amount would be 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, are needed, the Customers will be given the 
option of financing their share of the cost or having the cost 
capitalized and amortized over the life of the replacement or addition, 
or over the life of the contract. If the Customers select the latter, 
the costs will be capitalized at the current interest rate prescribed 
by DOE, under RA 6120.2, Paragraph 11B, ``Basic Policy for Rate 
Adjustment; Interest Rate Formula,'' in the fiscal year in which the 
replacement or addition is made. Such costs will be based on prudent 
and businesslike management practices and following established 
electric industry operation and maintenance practices. If extraordinary 
replacements exceeding $25,000 are needed, the Customers will consult 
with Reclamation, PRWUA, and Western on financing the replacement.
    The rate does not depend upon the power and energy made available 
for sale; instead, the Customers will pay the total PRP's annual 
powerplant expenses in return for the total marketable PRP production. 
Each Customer will pay its proportional share of the OM&R expenses 
identified in the PRS in 12 monthly installments.

Availability of Information

    Information about this rate formula extension is available for 
public review at the Colorado River Storage Project Management Center, 
Western Area Power Administration, 150 East Social Hall Avenue, Suite 
300, Salt Lake City, Utah 84111. Documents are also available at http://www.wapa.gov/crsp/rateanal.htm under CRSP rate adjustment documents 
for the Provo River Project's section.

Regulatory Procedure Requirements

Environmental Compliance

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

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.

Submission to Federal Energy Regulatory Commission

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

Order

    In view of the above and under the authority delegated to me as the 
Deputy Secretary of Energy, I confirm and approve on an interim basis, 
effective April 1, 2005, 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 
Commission's confirmation and approval of it or a substitute rate on a 
final basis through March 31, 2010.

    Dated: November 22, 2004.


[[Page 70442]]


Kyle E. McSlarrow,

Deputy Secretary.

[FR Doc. 04-26714 Filed 12-3-04; 8:45 am]
BILLING CODE 6450-01-P