[Federal Register Volume 70, Number 196 (Wednesday, October 12, 2005)]
[Notices]
[Pages 59335-59337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-20433]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Desert Southwest Customer Service Region-Rate Order No. WAPA-127

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Proposed Network Integration Transmission and 
Ancillary Services Rates.

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SUMMARY: The Western Area Power Administration (Western) is proposing 
revised rate methodologies for network integration transmission service 
(network service) for the Parker-Davis Project (PDP), and the Pacific 
Northwest-Pacific Southwest Intertie Project (Intertie) and for 
ancillary services from the PDP, Boulder Canyon Project (BCP), and part 
of the Colorado River Storage Project (CRSP) located in the Desert 
Southwest Customer Service Region's (DSWR) Balancing Authority and 
Transmission Operations Area (BATO). Current rates, under Rate 
Schedules DSW-SD1, DSW-RS1, DSW-FR1, DSW-EI1, DSW-SPR1, DSW-SUR1, PD-
NTS1, and INT-NTS1, extend through March 31, 2006. The proposed rates 
will provide sufficient revenue to pay all annual costs, including 
interest expense and repayment of required investment within the 
allowable period. Western will prepare a brochure that provides 
detailed information on the rates. The proposed rates, under Rate 
Schedules DSW-SD2, DSW-RS2, DSW-FR2, DSW-EI2, DSW-SPR2, DSW-SUR2, PD-
NTS2, INT-NTS2, WS-NTS1, are scheduled to go into effect on April 1, 
2006, and will remain in effect through March 31, 2011. 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 
January 10, 2006. Western will present a detailed explanation of the 
proposed rates at a public information forum to be held on November 2, 
2005, 1 p.m. MST, Phoenix, AZ. Western will accept oral and written 
comments at the public comment forum. The public comment forum will be 
held on November 29, 2005, 1 p.m. MST, Phoenix, AZ. Western will accept 
written comments any time during the consultation and comment period.

ADDRESSES: Send written comments to Mr. J. Tyler Carlson, Regional 
Manager, Desert Southwest Customer Service Region, Western Area Power 
Administration, P.O. Box 6457, Phoenix, AZ 85005-6457, e-mail 
[email protected]. Western will post information about the rate process 
on its external Web site at http://www.wapa.gov/dsw/dsw.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 they are considered in Western's decision process. The location 
for the Public Information and Public Comment Forums is Desert 
Southwest Regional Office, 615 South 43rd Avenue, Phoenix, AZ.

FOR FURTHER INFORMATION CONTACT: Mr. Jack Murray, Rates Team Lead, 
Desert Southwest Customer Service Region, Western Area Power 
Administration, P.O. Box 6457, Phoenix, AZ 85005-6457; telephone (602) 
605-2442, e-mail [email protected].

SUPPLEMENTARY INFORMATION: The proposed rates for DSWR network service 
for the PDP and the Intertie and ancillary services for the Western 
Area Lower Colorado (WALC) BATO are designed to recover an annual 
revenue requirement that includes investment repayment, interest, 
operation and maintenance expense, and other expenses. The ancillary 
services apply to specified transmission service in the WALC BATO 
including firm point-to-point, non-firm and network services on the 
PDP, the Intertie, the Central Arizona Project (CAP), and the portions 
of the CRSP in WALC. All firm point-to-point and non-firm transmission 
service and network service on the CAP and CRSP are defined under 
existing Rate Orders and are not a part of the proposed rates.
    The Deputy Secretary of Energy approved Rate Schedules DSW-SD1, 
DSW-RS1, DSW-FR1, DSW-EI1, DSW-SPR1, DSW-SUR1, PD-NTS1, and INT-NTS1 
for the DSWR network service for PDP and Intertie and ancillary 
services for the WALC BATO on May 3, 1999 (Rate Order No. WAPA-84, 64 
FR 25323, May 11, 1999), and the Federal Energy Regulatory Commission 
(Commission) confirmed and approved the rate schedules on January 20, 
2000, under FERC Docket No EF99-5041-000, (90 FERC 62,032). Approval 
for Rate Schedules DSW-SD1, DSW-RS1, DSW-FR1, DSW-EI1, DSW-SPR1, DSW-
SUR1, PD-NTS1, and INT-NTS1 covered 5 years beginning on April 1, 1999, 
and ending on March 31, 2004. These rate schedules were extended by a 
series of Rate Orders through March 31, 2006, with the most recent Rate 
Order being Rate Order No. WAPA-121 (70 FR 15622, March 28, 2005). The 
rate schedules were extended to accommodate the DSWR Multi-System 
Transmission Rate (MSTR) process. An MSTR has not been approved. 
However, Rate Schedule WS-NTS1 is structured to allow multi-system 
network service on the DSWR System if and when an MSTR is approved.
    Under Rate Schedules PD-NTS2, INT-NTS2, and WS-NTS1, the 
methodology for calculating the customer's monthly charge is the 
product of the transmission customer's load-ratio share times one-
twelfth of the

[[Page 59336]]

annual transmission revenue requirement. The customer's load-ratio 
share is equal to the network transmission customer's coincidental peak 
(CP), which is the load coincident with the appropriate Project's 
monthly transmission system peak averaged with the previous 11 months 
(12 CP) divided by the resultant value of the appropriate Project's 
average monthly transmission system load at the hour of the system peak 
in each month.
    The monthly hour of the system peak is determined as the hour that 
the sum of the network customers' metered loads is the greatest. The 
system load at the peak hour is determined by adding the point-to-point 
firm transmission reservations to the sum of the network customer's 
metered loads. The point-to-point firm transmission reservations can 
include the Open Access Transmission Tariff (OATT) firm point-to-point 
reservations, the PDP Firm Electric Service (FES) contract rates of 
delivery (CROD), the pre-OATT Firm Transmission Service (FTS) and the 
Salt Lake City Area Integrated Project FES with delivery points on the 
PDP.
    The methodology to determine the network service charges is the 
same for the single system (PDP-NTS2 and INT-NTS2) and the whole system 
(WS-NTS1) services. One complication is that under WS-NTS1, the 
determinants (system load, peak hour, and revenue requirement) apply to 
the combined PDP, Intertie and CAP system (CRSP is excluded from this 
calculation).
    Under Rate Schedule DSW-SD2, Scheduling, Dispatch, and System 
Control Ancillary Service, the rate is calculated as an annual cost of 
all personnel, capital costs (such as the dispatch center building), 
and other expenses incurred in providing the service for DSWR 
customers. These costs are recovered through a rate applied on a per 
tag basis. That rate is determined in two major steps: First, the 
yearly costs associated with capital improvements are determined and 
divided by the number of tags issued during the year; second, the 
average labor cost per tag is determined and added to the capital cost 
per tag. This rate design differs from the previous methodology in two 
ways: (1) The proposed rates are based on tags rather than schedules, 
and (2) the proposed methodology does not differentiate as to new vs. 
existing tags or as to whether or not a tag involves an intra-bus 
transfer.
    Under Schedule DSW-RS2, Reactive Supply and Voltage Control Service 
(Var Support) from generation sources, the rate is determined by 
dividing the revenue requirement for the service by the reservations 
requiring the service. The revenue requirement for the service is one 
minus the power factor (1-PF) times the combined generation revenue 
requirement of the PDP, BCP and CRSP. The previous methodology used the 
factor (1-PF2) to determine the Var Support revenue 
requirement for BCP and PDP, and used an amount for the CRSP Var 
Support revenue requirement supplied by the CRSP Management Center.
    Under Schedule DSW-FR2, Regulation and Frequency Response Service 
(Regulation), the rate is determined using the revenue requirement for 
the service divided by the load in the WALC requiring the service. The 
revenue requirement for the service is the product of the generation 
capacity that is used for regulation and the capacity rate of the 
Project, plus any regulation purchases the transmission provider must 
make. This total is multiplied by a use factor, which takes into 
consideration the customer load in the WALC BATO. The denominator in 
the equation and the load in the BATO requiring the service includes a 
portion of the CRSP load and the DSWR load.
    Regulation is not available from DSWR resources on a long-term 
basis. However, if necessary, DSWR will purchase regulation on the open 
market for a charge that covers the cost of procuring and supplying the 
service. Regulation will be supplied from DSWR resources only on a 
short-term basis, if such resources are available. Under Rate Schedule 
DSW-FR1, Western also indicated that this service would only be 
supplied under short-term sales, but set the charge equal to the 
capacity rate of the Project supplying the service rather than basing 
the charge on a formula as with the proposed rate methodology.
    Non-standard load refers to large, volatile loads (such as those 
associated with certain smelters and arc furnaces), which can require a 
BATO to acquire significant amounts of generation capacity for 
regulation. Such non-standard loads require separate metering of their 
moment-to-moment load values to accurately calculate their effects on 
the system, and will not be covered under the proposed regulation rate.
    For this rate order, DSWR is defining a non-standard load as either 
a single plant or site: (1) With a regulation capacity requirement of 5 
megawatts (MW) or greater on a recurring basis, and (2) whose capacity 
requirement is equal to 10 percent or greater of their average load. 
Regulation for non-standard loads, as determined by Western, must be 
delineated in a service agreement, which recognizes the additional 
burden required to supply this service.
    Rate Schedule DSW-EI2, Energy Imbalance Service, proposes a 
different bandwidth for on-peak and for off-peak, because Western's 
ability to supply this service is different for these two scenarios, 
especially during periods of low water. The bandwidth for on-peak is 
proposed to be plus or minus 1.5 percent of the customer's load with a 
minimum of 5 MW of either over- or under-delivery. The off-peak 
bandwidth is 1.5 percent to a negative 3 percent of a customer's load 
with a minimum of 2 MW of over-delivery and 5 MW of under-delivery.
    The settlement with the customer will be different for excursions 
within the bandwidth than for excursions outside the bandwidth. 
However, in all cases it is at Western's discretion whether to require 
a scheduled return of energy or a financial settlement. If the 
customer's Imbalance Energy is within the bandwidth for either on-peak 
or off-peak, the customer will be either charged or credited 100 
percent of a weighted index price chosen by Western or a scheduled 
return of an equal amount of energy.
    For energy outside the bandwidth during the on-peak hours, the 
methodology proposes 110 percent of a weighted index price for under-
deliveries and 90 percent of the weighted index price for over-
deliveries. For energy outside the bandwidth during the off-peak hours, 
the methodology proposes 110 percent of a weighted index price for 
under-deliveries. However, for over-deliveries in the off-peak hours, 
the methodology proposes the lesser of 60-percent of a weighted index 
price, or a WALC weighted sales price. In lieu of a financial 
settlement for energy outside the bandwidth, an amount of energy 
equivalent to the financial settlement will be scheduled.
    The proposed rate methodology differs from the previous methodology 
in that previously DSWR used the FERC pro-forma methodology to define 
the service. Better metering and data sorting capabilities and the 
drought, which persists in the southwest, have shown that Western is 
disadvantaged when using the FERC pro-forma methodology. Under the 
previous methodology, a 3-percent bandwidth with a 2 MW deviation was 
used, and under-deliveries were assessed 100 mills per kilowatthour 
penalty and over-deliveries were credited at 50 percent of market 
value.
    Under Schedule DSW-SPR2, Operating Reserves-Spinning Reserve 
Service is not available from DSWR

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resources on a long-term firm basis. If a customer cannot self-supply 
or purchase this service from another provider, Western may obtain the 
reserves on the open market for a charge that covers the cost of 
procuring the service. The transmission customer will be responsible 
for the transmission service to get these reserves to their 
destination.
    Under Schedule DSW-SUR2, Operating Reserves-Supplemental Reserve 
Service is not available from DSWR resources on a long-term firm basis. 
If a customer cannot self-supply or purchase this service from another 
provider, at the customer's request, Western may obtain the reserves on 
the open market for a charge that covers the cost of procuring the 
service. The transmission customer will be responsible for the 
transmission service to get these reserves to their destination. 
Spinning and Supplemental Reserve Services were handled in the same way 
in the previous rate methodology as in this proposal.

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 review of public comments, and 
possible amendments or adjustments, Western will recommend the Deputy 
Secretary of Energy approve the proposed rates on an interim basis.
    Western is establishing network service for the PDP and the 
Intertie and ancillary services for the PDP, Intertie, CAP, and the 
part of the CRSP located in the WALC BATO 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.

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 Desert Southwest 
Regional Office, 615 South 43rd Avenue, Phoenix, Arizona. Many of these 
documents and supporting information are also available on DSWR's 
external Web site http://www.wapa.gov/dsw/dsw.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 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 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.

    Dated: September 30, 2005.
Michael S. Hacskaylo,
Administrator.
[FR Doc. 05-20433 Filed 10-11-05; 8:45 am]
BILLING CODE 6450-01-P