[Federal Register Volume 70, Number 11 (Tuesday, January 18, 2005)]
[Notices]
[Pages 2858-2859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-909]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Salt Lake City Area Integrated Projects-Rate Order No. WAPA-117

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed power rates.

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SUMMARY: The Western Area Power Administration (Western) is proposing 
adjustments to the Salt Lake City Area Integrated Projects (SLCA/IP) 
firm power rates. The SLCA/IP consists of the Colorado River Storage 
Project (CRSP), Collbran, and Rio Grande projects, which were 
integrated for marketing and ratemaking purposes on October 1, 1987, 
and two participating projects of the CRSP that have power facilities, 
the Dolores and Seedskadee projects. The current rates, under Rate 
Schedule SLIP-F7 expire September 30, 2007, but are not sufficient to 
meet the SLCA/IP revenue requirements. The proposed rates will provide 
sufficient revenue to pay all annual costs, including operation and 
maintenance, and replacements (OM&R), interest expenses, and the 
required repayment of investment within the allowable period. Western 
will prepare a brochure that provides detailed information on the rates 
to all interested parties. The proposed rates, under Rate Schedule 
SLIP-F8, are scheduled to go into effect on October 1, 2005. 
Publication of this Federal Register notice begins the formal process 
for the proposed rates.

DATES: The consultation and comment period begins today and will end 
April 18, 2005. Western will present a detailed explanation of the 
proposed rates at a public information forum to be held on February 23, 
2005, at 1:30 p.m. Western will accept oral and written comments at a 
public comment forum to be held on March 30, 2005, at 1:30 p.m. Western 
will accept written comments any time during the consultation and 
comment period.

ADDRESSES: Send written comments to Bradley S. Warren, CRSP Manager, 
Colorado River Storage Project Management Center, Western Area Power 
Administration, PO Box 11606, Salt Lake City, UT 84147-0606, (801) 524-
5493, e-mail [email protected], or Ms. Carol A. Loftin, Rates Manager, 
Colorado River Storage Project Management Center, Western Area Power 
Administration, PO Box 11606, Salt Lake City, UT 84147-0606, (801) 524-
6380, e-mail [email protected]. Western will post information about the 
rate process on its Web site under the ``FY 2006 SLCA/IP Rate 
Adjustment'' section located at http://www.wapa.gov/crsp/rateanal.htm. 
Western will post official comments received via letter and e-mail to 
its Web site after the close of the comment period. Western must 
receive written comments by the end of the consultation and comment 
period to ensure consideration in Western's decision process. The 
public information forum and public comment forums will be held at the 
Quality Inn Salt Lake City Airport, 1659 West North Temple, in Salt 
Lake City, UT 84116-3196.

FOR FURTHER INFORMATION CONTACT: Ms. Carol A. Loftin, Rates Manager, 
Colorado River Storage Project, Western Area Power Administration, PO 
Box 11606, Salt Lake City, UT 84147-0606, (801) 524-6380, e-mail 
[email protected].

SUPPLEMENTARY INFORMATION: The proposed rates for SLCA/IP firm power 
are designed to return an annual amount of revenue to meet the 
repayment of power investment, payment of interest, purchased power, 
OM&R expenses, and the repayment of irrigation assistance costs as 
required by law.
    The Secretary of Energy approved Rate Schedule SLIP-F7 for firm 
power service on September 12, 2002 (Rate Order No. WAPA-99, 67 FR 
60656, September 26, 2002), and the Federal Energy Regulatory 
Commission (Commission) confirmed and approved the rate schedules on 
November 14, 2003, under FERC Docket No. EF02-5171-000. Rate Schedule 
SLIP-F7 became effective on October 1, 2002, for a 5-year period ending 
September 30, 2007. Under Rate Schedule SLIP-F7, the energy rate is 9.5 
mills per kilowatthour (mills/kWh), and the capacity rate is $4.04 per 
kilowattmonth (kWmonth). The composite rate is 20.72 mills/kWh.

Firm Power Rate

    The proposed rate is expected to become effective October 1, 2005. 
The proposed rate revenue requirements are based on the FY 2006 work 
plans for Western and the Bureau of Reclamation (Reclamation). These 
work plans form the bases for the FY 2006 Congressional budgets for the 
two agencies. The most current work plans will be included in the Rate 
Order submission. The FY 2003 historical data are the latest available 
for the rate proposal. The final ratesetting study will include FY 2004 
data as it becomes available.
    The rate increase results primarily from the decrease in the 
customer contract energy commitments that were reduced on October 1, 
2004, increased purchased power costs from the continued drought in the 
Upper Colorado River region, and an increase in deficits. The increase 
is offset by an increase in projected nonrate related revenues 
amounting to about $4.5 million per year (most of which are from the 
CRSP merchant function activities), the sale of CRSP transmission, and 
ancillary services.
    Traditionally, Western used Reclamation's estimates of ``Average 
Hydrology'' to determine hydro generation and purchase power costs.

[[Page 2859]]

For this proposal, Western will determine purchase power costs by using 
``Median Hydrology'' for the first 5 years of the ratesetting period. 
Western believes that ``Median Hydrology'' is more representative of 
the current hydrology situation than ``Average Hydrology.'' For the 
remainder of the ratesetting period, Western will set the purchase 
power costs at $2 million per year based on anticipated operational 
needs.

                               Comparison of Current and Proposed Firm Power Rates
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                                                                  Current rate      Proposed rate
                                                                 Oct. 1, 2002-      Oct. 1, 2005-
                        Rate schedule                            Sept. 30, 2007     Sept. 30, 2010      Change
                                                                    SLIP-F7            SLIP-F8
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Base Rate:
    Energy: (mills/kWh)......................................               9.5               10.6           1.1
    Capacity: ($kW/month)....................................               4.04               4.50          .46
Composite Rate: (mills/kWh)..................................              20.72              25.77         5.05
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Cost Recovery Charge (CRC)

    In setting its firm power rate, Western forecasts generation 
available from the SLCA/IP units and projects the firming energy 
purchase expense over the ratesetting period. These firming expense 
projections are included in the annual revenue requirement of the firm 
power rate. Over the last several years, both hydropower generation and 
power prices have been highly volatile. This volatility has caused 
actual purchased power expenses to be significantly higher than 
forecast and has resulted in cost recovery issues for the SLCA/IP. To 
adequately recover expenses in times of financial hardship, Western 
proposes to implement a cost recovery mechanism.
    The CRC is an additional charge on all delivered Sustainable 
Hydropower energy deliveries (long-term SLCA/IP hydro capacity with 
energy) that may, at times, be applicable when cost recovery is at risk 
due to low hydropower generation and high power prices. The conditions 
that would trigger the CRC, as well as a more detailed formula 
methodology of how and when the CRC would apply, will be discussed in 
further detail in the Rate Brochure and at the Information Forum.

Legal Authority

    Since the proposed rates constitute a major rate adjustment as 
defined by 10 CFR part 903, Western will hold both a public information 
forum and a public comment forum. After reviewing public comments and 
making possible amendments or adjustments to its proposed rates, 
Western will recommend the Deputy Secretary of Energy approve the 
proposed rates on an interim basis.
    Western is establishing firm electric service rates for SLCA/IP 
under the Department of Energy Organization Act (42 U.S.C. 7152); 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 projects involved.
    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 Department of Energy 
(DOE) procedures for public participation in power rate adjustments (10 
CFR part 903) were published on September 18, 1985 (50 FR 37835).

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents that Western initiates or uses to develop the proposed rates 
are available for inspection and copying at the CRSP Management Center, 
located at 150 Social Hall Avenue, Suite 300, Salt Lake City, Utah. 
Many of these documents and supporting information are also available 
on its Web site under the ``FY 2006 SLCA/IP Rate Adjustment'' section 
located at http://www.wapa.gov/crsp/rateanal.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 of 
particular applicability involving rates or services applicable to 
public property.

Environmental Compliance

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

    Dated: December 22, 2004.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 05-909 Filed 1-14-05; 8:45 am]
BILLING CODE 6450-01-P