[Federal Register Volume 70, Number 227 (Monday, November 28, 2005)]
[Notices]
[Pages 71279-71280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-6572]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Parker-Davis Project, Pacific Northwest-Pacific Southwest 
Intertie Project, and the Central Arizona Project--Rate Order No. WAPA-
114

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of withdrawal of multi-system transmission rate 
proposal.

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SUMMARY: The Western Area Power Administration (Western) initiated a 
formal rate process for the purpose of implementing a multi-system 
transmission rate (MSTR) by a Federal Register notice published on June 
22, 2004. The process was extended by a Federal Register notice on 
March 3, 2005. The purpose of the extension was to allow Western time 
to respond to customer requests to develop a customer choice model. 
Western developed and presented a customer choice methodology in public 
information and public comment forums held March 29, 2005, and April 6, 
2005, respectively. Effective November 28, 2005, Western is withdrawing 
the MSTR proposal for long-term firm transmission service on the 
Parker-Davis Project (P-DP), the Pacific Northwest-Pacific Southwest 
Intertie Project (Intertie), and the Central Arizona Project (CAP). 
Western has considered all comments in its decision to withdraw its 
proposal for the MSTR for long-term firm transmission service. Western 
is, however, studying the conversion of non-firm and short-term firm 
transmission service on the Parker-Davis, Intertie and Central Arizona 
projects to a multi-system service. Customer notification will be 
provided and feedback sought in a separate informal process.

FOR FURTHER INFORMATION CONTACT: Mr. J. Tyler Carlson, Regional 
Manager, Desert Southwest Customer Service Region, Western Area Power 
Administration, P.O. Box 6457, Phoenix, AZ 85005-6457, telephone (602) 
605-2453, e-mail [email protected], or 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: During the consultation and comment period 
for the rate process, Western received comments voicing strong 
opposition to the proposed methodology. No comments were received in 
support of the customer choice methodology.
    The consultation and comment period ended June 1, 2005. All 
formally submitted comments, both written and oral, were considered in 
preparing this notice.

Comments

    Written comments were received from the following organizations: 
Arizona Power Authority, Arizona Public Service Company, K. R. Saline & 
Associates, Robert S. Lynch and Associates, Salt River Project.
    Representatives of the following organizations made oral comments: 
Irrigation & Electrical Districts Association of Arizona, R. W. Beck, 
Salt River Project.
    Western responded to an oral comment received during the Public 
Information Forum in a letter dated May 17, 2005. The letter is posted 
on Western's Web site at http://www.wapa.gov/dsw/pwrmkt/MSTRP/MSTRP.htm. Responses in this notice focus on written comments received 
during the consultation and comment period pertinent to a revised 
customer choice model and Western's authority to develop an MSTR.
    Comment: Western received a comment suggesting it has no legal 
authority to implement an MSTR of any sort if the revenue requirements 
of multiple projects will be combined. Comments also questioned whether 
an MSTR is allowed by DOE Order RA6120.2.
    Response: Under all MSTR approaches presented by Western, each 
power system would remain financially independent for accounting and 
repayment purposes. Each power system would maintain a separate Power 
Repayment Study (PRS) and financial reports. The total MSTR revenue 
collected would be allocated to each power system based on the 
individual power system's percentage of the total MSTR revenue 
requirement.
    Western is not prohibited from implementing such a blended rate by 
either DOE Order RA 6120.2 or project-specific legislation. Western has 
combined the revenue requirements of multiple projects for ratesetting 
purposes in its other regional offices and continues to set rates in 
this manner.
    Comment: A commenter who had asked Western to provide general 
information on the MSTR more than one year ago believes Western has not 
provided this information.
    Response: The specific request had to do with Western's initial 
presentation of a customer choice methodology. The presentation 
consisted mainly of tables and mathematical formulas to explain the 
circular problem with the method. At the commenter's request an 
explanation in words was posted on the Web site in June, 2003 under the 
heading ``Informal Customer Meeting May 23, 2003'' linked with the 
phrase ``Customer Choice Discussion.''
    Comment: A customer commented that the ``customer choice'' model is 
an attempt to lower rates for a small group of ``pancaked'' customers 
at the expense of the majority of Western's firm transmission 
customers.
    Response: Western undertook the design of the proposed ``customer 
choice model'' to address several customers' comments received during 
the initial MSTR consultation and

[[Page 71280]]

comment period. One of the earliest principles stated by Western in the 
initial MSTR development was to eliminate the pancaking of firm 
transmission rates. It was known that any elimination of pancaking of 
rates will result in a revenue loss to a single power system by virtue 
of the pancaked customer no longer having to pay two systems' rates for 
the same reservation. Western's customer choice model took this into 
account and chose a rate which would begin to eliminate pancaking while 
balancing the risk to the other power systems. Western projected 
additional other revenues would be realized in sufficient amounts to 
make up for any losses resulting from MSTR implementation.
    Comment: A comment suggested Western re-open the public process to 
develop a customer choice model that would be supported by a majority 
of customers.
    Response: Over a 2-year period, Western has explored numerous 
options for a multi-system transmission rate. Four options were 
customer choice models using various approaches. In all cases, for 
Western to be able to collect the full revenue requirement, some 
customers will incur increased costs as a result of a firm MSTR 
implementation. In other customer choice models explored by Western, 
varying levels of support were noted. However in no case did a majority 
of customers support the methodologies. Support was dependent upon the 
timing and the extent of potential cost increases.
    Comment: A comment requested Western calculate the magnitude of 
rate decreases if revenue projections materialize without 
implementation of an MSTR.
    Response: During the public process for the customer choice MSTR, 
Western presented a table showing some loss of firm revenues to the 
single system projects due to partial un-pancaking. Western projected 
mitigating this loss of revenues in order to provide for stable single 
system rates. Western's commitment to its customers is to keep rates as 
stable as possible for the foreseeable future. It is not appropriate to 
project a rate decrease given the many variables which may impact the 
rate calculation.
    Comment: A comment suggested that if the MSTR is implemented, the 
return of funds to each single system should be based on the amount of 
transmission revenue lost due to MSTR implementation instead of based 
on the percentage share of total revenue requirement, as proposed by 
Western.
    Response: The method the comment suggested is the methodology 
Western proposed in the initial MSTR presentation which would have had 
all customers converging to an MSTR in the fifth year.
    This methodology resulted in a risk of increased costs to some 
customers. The comments received at that time correctly noted that any 
MSTR method that eliminates pancaking presents a risk of cost 
increases. However, MSTR could help mitigate this risk by freeing up 
additional capacity for sale.
    Comment: Several comments suggested that Western abandon this 
proposal because the risks outweigh the benefits.
    Response: After careful consideration of all comments, Western is 
withdrawing the proposal for a firm point-to-point MSTR rate at this 
time.

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 
Customer Service Regional Office, Western Area Power Administration, 
located at 615 South 43rd Avenue, Phoenix, Arizona. Many of these 
documents and supporting information are also available on Western's 
Web site at http://www.wapa.gov/dsw/pwrmkt/MSTRP/MSTRP.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: November 9, 2005.
Michael S. Hacskaylo,
Administrator.
 [FR Doc. E5-6572 Filed 11-25-05; 8:45 am]
BILLING CODE 6450-01-P