[Federal Register Volume 70, Number 165 (Friday, August 26, 2005)]
[Notices]
[Pages 50316-50322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-17000]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Boulder Canyon Project; Rate Order No. WAPA-120

AGENCY: Western Area Power Administration, DOE.

[[Page 50317]]


ACTION: Notice of order concerning existing ratesetting formula and FY 
2006 base charge and rates.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-120 and Rate Schedule BCP-F7, placing the electric 
service ratesetting formula and fiscal year (FY) 2006 base charge and 
rates from the Boulder Canyon Project (BCP) of the Western Area Power 
Administration (Western) into effect on an interim basis. The 
provisional base charge and rates will be in effect until the Federal 
Energy Regulatory Commission (Commission) confirms, approves, and 
places them into effect on a final basis or until they are replaced by 
other rates. The provisional base charge and rates will provide 
sufficient revenue to pay all annual costs, including interest expense, 
and repayment of power investment within the allowable periods.

DATES: Rate Schedule BCP-F7 will be placed into effect on an interim 
basis on the first day of the first full billing period beginning on or 
after October 1, 2005, and will be in effect until the Commission 
confirms, approves, and places the rate schedule in effect on a final 
basis through September 30, 2010, or until the rate schedule is 
superseded.

FOR FURTHER INFORMATION CONTACT: Mr. J. Tyler Carlson, Regional 
Manager, Desert Southwest Customer Service Region, Western Area Power 
Administration, PO Box 6457, Phoenix, AZ 85005-6457, (602) 605-2453, e-
mail [email protected] or Mr. Jack Murray, Rates Team Lead, Desert 
Southwest Customer Service Region, Western Area Power Administration, 
PO Box 6457, Phoenix, AZ 85005-6457, (602) 605-2442, e-mail 
[email protected].

SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved 
existing Rate Schedule BCP-F6 for BCP electric service on September 18, 
2000 (Rate Order No. WAPA-94, October 13, 2000, 65 FR 60932). The 
Commission confirmed and approved the rate schedule on July 31, 2001, 
in FERC Docket No. EF00-5092-000. The existing rate schedule became 
effective October 1, 2000, and expires September 30, 2005.
    The formula for establishing annual rates set forth in Rate 
Schedule BCP--F6, which is effective from October 1, 2000, through 
September 30, 2005, will be superseded by Rate Schedule BCP--F7 for the 
period October 1, 2005, and ending September 30, 2010. The provisional 
base charge and rates for the one year period from October 1, 2005, to 
September 30, 2006, will consist of a base charge of $57,465,018 and an 
energy charge of 7.03 mills/kWh, and a capacity charge of $1.37 per 
kWmonth. This results in an overall composite rate of 14.05 mills/kWh 
on October 1, 2005. The composite rate of 14.05 mills/kWh on October 1, 
2005, represents a decrease of approximately five percent when compared 
with the composite rate of 14.82 mills/kWh during the last year of BCP-
F6 (October 1, 2004-September 30, 2005).\1\
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    \1\ Under Rate schedule BCP-F6, the base charge during the one-
year period (October 1, 2004 through September 30, 2005) was 
$57,654,683. The energy rate during this time was 7.41 mills/kWh. 
The capacity charge during this time was $1.39 per kWmonth. This 
resulted in an overall composite rate of 14.82 mills/kWh for this 
one-year period. See Department of Energy, Western Area Power 
Administration, Boulder Canyon Project-Base Charge and Rates, 
approved by Deputy Secretary McSlarrow, 69 FR 51458, August 19, 
2004.
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    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.
    Under Delegation Order Nos. 00-037.00 and 00-001.00A, 10 CFR part 
903, and 18 CFR part 300, I hereby confirm, approve, and place Rate 
Order No. WAPA-120, the provisional ratesetting formula, and the FY 
2006 proposed BCP electric service base charge and rates into effect on 
an interim basis. The new Rate Schedule BCP-F7 will be promptly 
submitted to the Commission for confirmation and approval on a final 
basis.

    Dated: August 11, 2005.
Clay Sell,
Deputy Secretary.

Department of Energy

Deputy Secretary

[Rate Order No. WAPA-120]

In the matter of: Western Area Power Administration, Rate Adjustment 
for the Boulder Canyon Project; Order Confirming, Approving, and 
Placing the Boulder Canyon Project Electric Service Ratesetting Formula 
and FY 2006 Base Charge and Rates Into Effect on an Interim Basis

    The base charge and rates were 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 project 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 DOE procedures for 
public participation in power rate adjustments (10 CFR part 903) were 
published on September 18, 1985.

Acronyms and Definitions

    As used in this Rate Order, the following acronyms and definitions 
apply:
    Administrator: The Administrator of the Western Area Power 
Administration.
    ARR: Annual Revenue Requirement. It is the annual base charge.
    BC: Base charge. The total charge paid by all Contractors for 
capacity and energy based on the annual revenue requirement. The base 
charge shall be composed of a capacity component and an energy 
component.
    CD: Capacity Dollars. Fifty percent (50%) of the annual revenue 
requirement.
    CO: Carry Over. Revenue surplus or deficit from the previous FY, 
excluding the funds for the working capital balance.
    CS: Capacity Sales.
    Commission: Federal Energy Regulatory Commission.
    Composite Rate: The rate for electric service which is the total 
annual revenue requirement for capacity and energy divided by the total 
annual energy sales. It is expressed in mills/kWh and used for 
comparison purposes.
    Contractor: An entity that has a contract with Western for BCP 
Electric Service.
    Customer: An entity with a contract that is receiving service from 
Western's DSWR.

[[Page 50318]]

    DOE: United States Department of Energy.
    DOE Order RA 6120.2: An order outlining power marketing 
administration financial reporting and ratemaking procedures.
    DSWR: The Desert Southwest Region of Western.
    ED: Energy Dollars. Fifty percent (50%) of the annual base charge.
    ES: Energy Sales.
    FCR: Forecast Capacity Rate. The rate which sets forth the charges 
for capacity. It is expressed in $ per kWmonth.
    FER: Forecast Energy Rate. The rate which sets forth the charges 
for energy. It is expressed in mills/kWh.
    FERC: The Commission (to be used when referencing Commission 
Orders).
    FRN: Federal Register notice.
    FY: Fiscal Year; October 1 to September 30.
    kW: Kilowatt--the electrical unit of capacity that equals 1,000 
watts.
    kWh: Kilowatthour--the electrical unit of energy that equals 1,000 
watts in 1 hour.
    kWmonth: Kilowattmonth--the electrical unit of the monthly amount 
of capacity.
    Mill: A monetary denomination of the United States that equals one 
tenth of a cent or one thousandth of a dollar.
    Mills/kWh: Mills per kilowatthour--the unit of charge for energy.
    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.).
    O&M: Operation and Maintenance.
    OM&R: Operation, Maintenance & Replacement.
    OR: Other Revenues. This is non-power revenue from the visitors' 
services at Hoover Dam.
    Power: Capacity and energy.
    Provisional Rate: A rate which has been confirmed, approved, and 
placed into effect on an interim basis by the Deputy Secretary.
    PRS: Power repayment study.
    PY: Prior Year.
    Ratesetting PRS: The PRS used for the rate adjustment proposal in 
support of the provisional base charge and rates.
    Reclamation: United States Department of the Interior, Bureau of 
Reclamation.
    Reclamation Law: A series of Federal laws. Viewed as a whole, these 
laws create the originating framework under which Western markets 
power.
    Revenue Requirement: The revenue required to recover annual 
expenses, such as O&M, interest, repayment of Federal investments, and 
other assigned costs.
    Supporting Documentation: A compilation of data and documents 
supporting the rate package and the rate proposal.
    TE: Total Expenses. All annual costs such as operation and 
maintenance, payment to states, uprating payments, interest expense, 
and other expenses.
    WSR: Water Sales Revenue. Revenue from sales associated with water 
being diverted from the lower Colorado River above and below Hoover 
Dam.
    Western: United States Department of Energy, Western Area Power 
Administration.

Effective Date

    The new interim ratesetting formula, base charge and rates will 
take effect on the first day of the first full billing period beginning 
on or after October 1, 2005, and will remain in effect until September 
30, 2006, pending approval by the Commission on a final basis.

Public Notice and Comment

    Western followed the Procedures for Public Participation in Power 
and Transmission Rate Adjustments and Extensions, 10 CFR part 903, in 
developing these rates. The steps Western took to involve interested 
parties in the rate process were:
    1. On February 7, 2005, the proposed rate adjustment informal 
process began when Western mailed a notice announcing an informal 
customer meeting to all BCP customers and interested parties. Western 
also announced the public forum dates as well as access to the BCP rate 
adjustment Web site at http://www.wapa.gov/dsw/pwrmkt/BCP/RateAdjust.htm.
    2. On February 18, 2005, a notice (70 FR 8361) was published in the 
Federal Register, announcing the proposed base charge and rates for BCP 
beginning the public consultation and comment period, and announcing 
the public information and public comment forums.
    3. On February 23, 2005, Western mailed the published Federal 
Register notice dated February 18, 2005, to the BCP customers and 
interested parties informing them of the public information forum on 
April 6, 2005, and public comment forum on May 4, 2005, in Phoenix, 
Arizona. Western also announced that the FRN had been posted to the Web 
site.
    4. On March 9, 2005, Western hosted an informal customer meeting in 
Phoenix, Arizona. At this informal meeting, Western explained the 
rationale for the rate adjustment and answered questions.
    5. On March 24, 2005, Western provided the customers with 
information in response to requests at the informal meeting held March 
9, 2005.
    6. On April 6, 2005, Western held the public information forum at 
the DSWR Office in Phoenix, AZ. Western provided detailed explanations 
of the proposed base charge and rates for BCP and answered questions. 
Western provided a copy of the rate presentation, supporting 
documentation, and informational handouts.
    7. On May 4, 2005, Western held a comment forum to give the public 
an opportunity to comment for the record. Five individuals representing 
eleven entities commented at this forum.
    8. Western received seven comment letters during the consultation 
and comment period, which ended May 19, 2005. All formally submitted 
comments have been considered in preparing this Rate Order.

Comments

    Written comments were received from the following organizations: 
Arizona Power Authority, Arizona; Colorado River Commission, Nevada; 
Energy Outfitters, LLC, Arizona; Irrigation & Electrical Districts 
Association of Arizona, Arizona; Metropolitan Water District of 
Southern California, California; Salt River Project, Arizona; Utility 
Resource Services, Arizona.
    Oral comments were made on behalf of the following organizations: 
Aguila Irrigation District, Arizona; Arizona Power Authority, Arizona; 
City of Safford, Arizona; Colorado River Commission, Nevada; Electrical 
District Number 8, Arizona; Harquahala Valley Power District, Arizona; 
Irrigation & Electrical Districts Association of Arizona, Arizona; 
Metropolitan Water District of Southern California, California; 
McMullen Valley Water Conservation District, Arizona; Salt River 
Project, Arizona; Tonopah Irrigation District, Arizona.

Project Description

    The BCP was authorized for construction by the Boulder Canyon 
Project Act. The Project Act provided for a dam to be built in the 
Black Canyon located on the Colorado River on the Arizona-Nevada 
border. The dam was built for the express purposes of (1) controlling 
the flooding in the lower regions of the Colorado River drainage 
system, (2) improving navigation of the Colorado River and its 
tributaries, (3) regulating the Colorado River, while providing storage 
and delivery of the stored water for the reclamation of public lands, 
and (4) generating

[[Page 50319]]

electrical energy as a means of making the BCP a self-supporting and 
financially solvent undertaking. Construction of Hoover Dam, formerly 
known as Boulder Dam, began in 1930. Commercial power generation began 
in 1936 with the first generating unit of the powerplant going into 
service in 1937. The Hoover Powerplant has 19 generating units and an 
installed capacity of 2,074 MW.
    The Hoover Powerplant Act of 1984 sets forth the amounts of Hoover 
power to be sold beginning June 1, 1987, to the 15 Contractors located 
in the states of Arizona, California, and Nevada.

Power Repayment Study--Electric Service Base Charge and Rates

    Western prepares a PRS each FY to determine if revenues will be 
sufficient to repay, within the required time, all costs assigned to 
the BCP. Repayment criteria are based on law, policies including DOE 
Order RA 6120.2, and authorizing legislation.
    When compared to the existing BCP electric service base charge and 
rates under Rate Schedule BCP-F6 the proposed base charge and rates for 
BCP electric service reflect an overall composite rate decrease of 
approximately 5 percent on October 1, 2005. The current composite rate 
under Rate Schedule BCP-F6 is 14.82 mills/kWh. The proposed composite 
rate is 14.05 mills/kWh. The following table compares the current and 
proposed electric service base charge and rates.

                            Comparison of Current and Proposed Base Charge and Rates
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                                                                                                    Difference
                                                                      Current        Proposed        (change)
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Rate Schedule...................................................          BCP-F6          BCP-F7  ..............
Base Charge ($).................................................      57,654,683      57,465,018       (189,665)
Energy (mills/kWh)..............................................            7.41            7.03          (0.38)
Capacity ($/kW month)...........................................            1.39            1.37          (0.02)
Composite Rate (mills/kWh)......................................           14.82           14.05          (0.77)
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    The provisional base charge and rates for electric service are a 
formula calculation based on the annual revenue requirement. There are 
no changes to the existing electric service formula under Rate Schedule 
BCP-F7.
    The proposed ratesetting formula would be effective October 1, 
2005, through September 30, 2010, determining an annual calculation 
using the following formulas:

ARR = TE - PY CO - WSR - OR
BC = ARR
ED = .5 * BC
CD = .5 * BC
FER = ED/ES
FCR = CD/CS

Certification of Rates

    Western's Administrator has certified that the interim base charge 
and rates for BCP electric service are the lowest possible consistent 
with sound business principles. The provisional rates were developed 
following administrative policies and applicable laws.

BCP Electric Service Base Charge and Rates Discussion

    According to Reclamation Law, Western must establish power rates 
sufficient to recover operation, maintenance, purchased power expenses, 
interest expenses, and repayment of power investment and irrigation 
aid.
    The BCP electric service base charge and rates are decreasing in FY 
2006 due to the carryover of $3.4 million of post September 11, 2001, 
security costs that were incorporated into the BCP rates for FY 2005 
prior to direction from Congress for Reclamation not to begin the 
reimbursement process until instructed to do so by Congress. Although 
total annual expenses are increasing from FY 2005 to FY 2006, the $3.4 
million of non-reimbursable security costs is being projected as FY 
2005 year end carryover. The result is an overall decrease of 
approximately $190,000 in the base charge since the existing base 
charge and rates were established.
    The existing base charge and rates for BCP electric service under 
Rate Schedule BCP-F6 expire September 30, 2005. Effective October 1, 
2005, Rate Schedule BCP-F6 will be superseded by the new base charge 
and rates in Rate Schedule BCP-F7. The provisional rates for BCP 
electric service consist of a base charge, a capacity rate, and an 
energy rate. The provisional base charge is $57,465,018, the 
provisional capacity rate is $1.37/kWmonth, and the provisional energy 
rate is 7.03 mills/kWh.

Statement of Revenue and Related Expenses

    The annual revenue requirement for the BCP is based upon the PRS 
calculations for future requirements, which will be adjusted when FY 
actuals are known. The following table provides a summary of the 
revenues and expenses for the existing BCP electric service ratesetting 
formula and also the projected revenue and expenses for the 5-year 
provisional rate approval period.

                                            BCP Revenues and Expenses
                                                    [$1,000]
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                                                                   Existing  (FY   Proposed  (FY
                              Item                                  2001-2005)      2006-2010)      Difference
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Total Revenues..................................................        $317,809        $390,324         $72,515
Revenue Distribution:
    O&M.........................................................         141,448         197,292          55,844
    Payments to States..........................................           3,000           3,000               0
    Other Expense...............................................          42,490          42,998             508
    Uprating Payments...........................................          55,751          65,614           9,863
    Replacements................................................           9,456          21,044          11,588
    Interest Expense............................................          57,792          55,230         (2,562)
    Investment Repayment........................................           9,811           8,583         (1,228)

[[Page 50320]]

 
    Working Capital.............................................               0               0               0
    Prior Year Carryover........................................         (1,939)         (3,437)         (1,498)
                                                                 -----------------
Total Revenue Distribution......................................         317,809         390,324          72,515
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Basis for Rate Development

    The existing base charge and rates for BCP electric service in Rate 
Schedule BCP-F6 expire September 30, 2005. The existing base charge and 
rates are in excess of the amount needed to pay all annual costs, 
including interest expense, and repayment of investment within the 
allowable period. The adjusted base charge and rates reflect increases 
in the overall O&M program costs, increased uprating program payments, 
and replacement costs. However, since $3.4 million for post September 
11, 2001, security costs are being returned to the contractors in the 
form of a carryover in FY 2005, the result is a decrease in the FY 2006 
Base Charge. The provisional base charge and rates will provide 
sufficient revenue to pay all annual costs, including interest expense, 
and repayment of power investment within the allowable periods. The 
provisional base charge and rates will take effect on October 1, 2005, 
to correspond with the start of the Federal FY, and will remain in 
effect through September 30, 2006.

Comments

    The comments and responses regarding the electric service base 
charge and rates, paraphrased for brevity when not affecting the 
meaning of the statement(s), are discussed below. Direct quotes from 
comment letters are used for clarification where necessary.
    The issues discussed are (1) post September 11, 2001, security 
costs, (2) visitor center costs, (3) O&M costs, and (4) rate 
adjustment.
1. Post September 11, 2001, Security Costs
    A. Comment: Contractors request additional clarification regarding 
the use of funds. Under the FY 2005 Base Charge $3.9 million is being 
collected for security costs. Since the FY 2005 security costs have 
been deemed non-reimbursable by Congress, and a decision was made at 
the October 2004 Engineering & Operating Committee meeting that 
$500,000 of the $3.9 million would be used in FY 2005 to cover the 
stainless steel wicket gates, the Contractors' understanding is that 
the remaining $3.4 million would not be expended and would be returned 
in the form of a carryover. The Contractors request assurance that the 
$3.4 million be credited back to them and the projected $4.3 million 
for security costs for FY 2006 will not be included in the FY 2006 Base 
Charge.
    Response: It is the opinion of the Bureau of Reclamation, Lower 
Colorado Dams Area office, that the Area Manager has legal authority, 
under the terms of the Boulder Canyon Project Implementation Agreement, 
and with customer review and concurrence to re-program funds collected 
for necessary maintenance expenditures. The remaining $3.4 million 
collected for security costs in FY 2005 has been shown as carryover in 
FY 2005 which will reduce the FY 2006 revenue requirement. Based on 
information presented in Reclamation's recent report to Congress 
concerning the Reimbursement of Security Costs on Reclamation's 
Facilities, security funding for FY 2006 will remain in the base charge 
until otherwise directed by Congress.
    B. Comment: The Contractors request that detailed data for the 
security costs be separated out in the next 10-year operating plan to 
show the reimbursable and non-reimbursable costs for past years 
beginning in FY 2001 and projections into the future.
    Response: The FY 2007 10-Year Operating Plan will include a 
spreadsheet detailing reimbursable and non-reimbursable security costs 
from FY 2001 through FY 2016.
    C. Comment: An interested party pointed out that we are operating 
under the Omnibus Bill with direct instructions from Congress that for 
FY 2005, and future projections, security costs are deemed non-
reimbursable and until Congress directs otherwise, this rate process 
should proceed on the basis of the current Congressional instructions.
    Response: Reclamation is not ignoring the Omnibus Bill. There are 
two ongoing processes involved in the BCP. The rate process for FY 2005 
went into effect October 1, 2004. All information available at the time 
the rate was being developed indicated that the security costs for FY 
2005 and out-years would be reimbursable. The Omnibus Bill was not 
passed until December 2004 when the rate process for FY 2005 was 
completed. In addition to directing Reclamation to stay the 
reimbursement process, Congress directed Reclamation to provide a 
report by May 1, 2005, to assist Congress in breaking out planned 
reimbursable and non-reimbursable security costs by project and region. 
Reclamation has submitted the report. It is currently being reviewed in 
Washington, D.C. Reclamation will incorporate Congress's findings on 
the report into its decisions for the FY 2006 Base Charge. If the post 
September 11, 2001, security costs are deemed reimbursable, Reclamation 
will include the costs. If these costs are deemed to be non-
reimbursable and Reclamation does not receive the information in time 
to remove them from the FY 2006 Base Charge, Reclamation will not 
expend the funds and they will be returned to the Contractors.
    D. Comment: A customer stated it is not appropriate to put the 
burden of the national post September 11, 2001 security costs on the 
power customers and requested that these costs be removed from the FY 
2006 annual Base Charge. The customer also shared that protecting 
Hoover Dam should be a responsibility of the Federal government, as is 
protecting any other national critical infrastructure.
    Response: The Reimbursement of Security Costs on Reclamation's 
Facilities report to Congress states:

    Reclamation considers the ongoing costs of guards and patrol to 
clearly fall within the definition of project O&M costs. Therefore, 
those costs are subject to reimbursement based on project cost 
allocations. Like equipment maintenance, routine facility security 
activities such as guards and patrol are critical in ensuring the 
uninterrupted supply of Reclamation water and power.
    Beginning in FY 2006, Reclamation's budget assumes that 
increased annual costs associated with facility guard and patrol 
activities are project O&M costs, which will

[[Page 50321]]

be allocated to project purposes and subject to reimbursement.
2. Visitor Center Costs
    A. Comment: The Contractors expressed a concern with new costs 
being passed through to the Contractors for potential future concepts 
for enhancing tourism at Hoover.
    Response: Other than the new exhibit presented in previous 10-year 
plans, no other enhancements have been approved. Future concepts for 
enhancing tourism are considered on a near continuous basis to ensure 
that the visitor facility covers its O&M costs entirely and also 
contributes an appropriate share to the visitor center debt service. 
Any decisions that would require increasing costs to the power 
contractors would be presented in future ten year plans and discussed 
thoroughly before implementation.
    B. Comment: The Contractors encourage Western and Reclamation to 
continue to seek efficiencies in O&M and cost containment with the 
ultimate goal that the visitor center operates in a self-sufficient 
mode. Contractors remain concerned with the continuing imbalance 
between visitor center costs and revenues since the September 11, 2001 
attack and encourage Reclamation to acquire sources of funding other 
than the BCP Contractors.
    Response: Both Western and Reclamation have expended significant 
effort on keeping costs down and increasing efficiency and 
productivity, and will continue their ongoing effort to manage costs. 
One of the goals of the visitor center is to operate in a self-
sufficient mode as identified in the Boulder Canyon Project 
Implementation Plan. Reclamation and Western, along with the power 
contractors, are committed to working toward achieving that goal. Cost 
containment, operating efficiency, and revenue generation are all 
mechanisms employed to achieve the goal.
    C. Comment: The Contractors believe that Congress never intended 
that the visitor center facility would result in such a significant 
drain on resources. They suggested that if the facility could not be 
operated on a businesslike basis, especially since September 11, 2001, 
that perhaps its operations should be turned over to a private 
contractor who will be responsible for generating sufficient revenues 
to make the necessary contributions to repayment of the facility. When 
the O&M costs are greater than the revenue requirement to contribute to 
capital repayment as promised by Reclamation, the Contractors believe 
they would be better off paying the entire repayment burden and 
avoiding the additional drain of operating the facility in its current 
fashion.
    Response: Reclamation agreed to use its best efforts to generate 
enough revenue from the visitor facilities to cover approximately 50 
percent of the capital cost. Reclamation remains committed to that 
goal.
3. O&M Costs
    A. Comment: A Contractor encouraged Reclamation to take a second 
look at its FY 2006 O&M expenses and reduce or defer costs such as 
materials and supplies from FY 2005 to FY 2006 where proper management 
of purchases can lead to these cost increases being lowered rather than 
raised. The Contractor reminded Reclamation of a pledge it made a few 
years ago to the Contractors that it would limit annual cost increases 
to 3 percent or the rate of inflation if higher.
    Response: Over the past few years, Reclamation has improved unit 
availability and dramatically reduced critical items identified in the 
comprehensive power review. Costs to accomplish these items exceeded 
the rate of inflation in 2 of the past 5 years and, overall, the simple 
average of the annual percentage changes is 3.22 percent. The average 
percentage change, considering the compound nature of inflation and 
indexing, suggests an average rate of increase of about 3.1 percent. 
Reclamation anticipates that future year increases can be held to no 
more than the rate of inflation.

------------------------------------------------------------------------
                                                          Percent of
           Fiscal year                Actual O&M         increase from
                                      program \1\         prior year
------------------------------------------------------------------------
2001............................            $34,579   ..................
2002............................            $33,567              (2.9%)
2003............................            $36,507                8.8%
2004............................            $37,398                2.4%
                                      Estimated O&M   ..................
                                        Program \1\
2005............................            $39,962                6.9%
2006............................            $40,324                0.9%
                                  Average Percent of             3.22%
                                                   Change
------------------------------------------------------------------------
\1\ Includes Operations, Maintenance, Post Civil Service Retirement,
  Administrative & General Expenses, Extraordinary Operations and
  Maintenance, Replacements, and Visitor Services (Security costs are
  not included).

4. Rate Adjustment
    A. Comment: A Contractor asks Western to confirm a rate increase 
would not be necessary for FY 2006 since the FY 2005 post September 11, 
2001, security costs have been deemed non-reimbursable.
    Response: The rate adjustment increase is no longer necessary. 
Although total annual expenses increased from FY 2005 to FY 2006, the 
carryover of the $3.4 million in security costs in FY 2005 resulted in 
a decrease for the FY 2006 Base Charge and rates.

Availability of Information

    Information about this rate adjustment, including power repayment 
studies, comments, letters, memorandums, and other supporting material 
made or kept by Western used to develop the provisional base charge and 
rates, is available for public review in the Desert Southwest Customer 
Service Regional Office, Western Area Power Administration, 615 South 
43rd Avenue, Phoenix, Arizona.

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. Western has 
determined that this action does not require a regulatory flexibility 
analysis since it is

[[Page 50322]]

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.); 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; 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 the Federal Energy Regulatory Commission

    The interim ratesetting formula and FY 2006 Base Charge and rates 
herein confirmed, approved, and placed into effect, together with 
supporting documents, will be submitted to the Commission for 
confirmation and final approval.

Order

    In view of the foregoing and under the authority delegated to me, I 
confirm and approve on an interim basis, effective October 1, 2005, 
Rate Schedule BCP-F7, for the Boulder Canyon Project of the Western 
Area Power Administration. The rate schedule shall remain in effect on 
an interim basis, pending the Commission's confirmation and approval of 
it or substitute rates on a final basis through September 30, 2010.

Dated: August 11, 2005.

Clay Sell,

Deputy Secretary.

    Rate Schedule BCP-F7 (Supersedes Schedule BCP-F6)

United States Department of Energy, Western Area Power Administration

Boulder Canyon Project, Arizona, Nevada, Southern California; Schedule 
of Rates for Electric Service

    Effective: The first day of the first full billing period beginning 
on or after October 1, 2005, and remaining in effect through September 
30, 2010, or until superseded.
    Available: In the marketing area serviced by the Boulder Canyon 
Project (BCP).
    Applicable: To power Contractors served by the BCP supplied through 
one meter, at one point of delivery, unless otherwise provided by 
contract.
    Character and Conditions of Service: Alternating current at 60 
hertz, three-phase, delivered and metered at the voltages and points 
established by contract.
    Base Charge: The total charge paid by a Contractor for annual 
capacity and energy based on the annual revenue requirement. The base 
charge shall be composed of an energy component and a capacity 
component:
    Energy Charge: Each Contractor shall be billed monthly an energy 
charge equal to the Rate Year Energy Dollar multiplied by the 
Contractor's firm energy percentage multiplied by the Contractor's 
monthly energy ratio as provided by contract.
    Capacity Charge: Each Contractor shall be billed monthly a capacity 
charge equal to the Rate Year Capacity Dollar divided by 12 multiplied 
by the Contractor's contingent capacity percentage as provided by 
contract.
    Forecast Rates: Energy: Shall be equal to the Rate Year Energy 
Dollar divided by the lesser of the total master schedule energy or 
4,501.001 million kWhs. This rate is to be applied for use of excess 
energy, unauthorized overruns, and water pump energy.
    Capacity: Shall be equal to the Rate Year Capacity Dollar divided 
by 1,951,000 kWs, to be applied for use of unauthorized overruns.
    Calculated Energy Rate: Within 90 days after the end of each rate 
year, a Calculated Energy Rate shall be calculated. If the energy 
deemed delivered is greater than 4,501.001 million kWhs, then the 
Calculated Energy Rate shall be applied to each Contractor's energy 
deemed delivered. A credit or debit shall be established based on the 
difference between the Contractor's Energy Dollar and the Contractor's 
actual energy charge, to be applied the following month calculated or 
as soon as possible thereafter.
    Lower Basin Development Fund Contribution Charge: The contribution 
charge is 4.5 mills/kWh for each kWh measured or scheduled to an 
Arizona purchaser and 2.5 mills/kWh for each kWh measured or scheduled 
to a California or Nevada purchaser, except for purchased power.
    Billing for Unauthorized Overruns: For each billing period in which 
there is a contract violation involving an unauthorized overrun of the 
contractual power obligations, such overrun shall be billed at 10 times 
the Forecast Energy Rate and Forecast Capacity Rate. The contribution 
charge shall be applied also to each kWh of overrun.
    Adjustments: None.

[FR Doc. 05-17000 Filed 8-25-05; 8:45 am]
BILLING CODE 6450-01-P