[Federal Register Volume 70, Number 227 (Monday, November 28, 2005)]
[Notices]
[Pages 71273-71279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-6575]


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DEPARTMENT OF ENERGY

Western Area Power Administration

[Rate Order No. WAPA-125]


Loveland Area Projects

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of order concerning power rates.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-125 and Rate Schedule L-F6, placing firm electric 
service rates from the Loveland Area Projects (LAP) of the Western Area 
Power Administration (Western) into effect on an interim basis. The 
provisional 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 rates will provide sufficient revenue to pay all annual 
costs, including interest expenses, and repay power investment and 
irrigation aid, within the allowable periods.

DATES: Rate Schedule L-F6 will be placed into effect on an interim 
basis on the first day of the first full billing period beginning on or 
after January 1, 2006, and will be in effect until the Commission 
confirms, approves, and places the provisional rates into effect on a 
final basis ending December 31, 2010, or until the rate schedule is 
superseded.

FOR FURTHER INFORMATION CONTACT: Mr. Joel K. Bladow, Regional Manager, 
Rocky Mountain Customer Service Region, Western Area Power 
Administration, 5555 East Crossroads Boulevard, Loveland, Colorado, 
80538-8986, (970) 461-7201, or Mr. Daniel T. Payton, Rates Manager, 
Rocky Mountain Customer Service Region, Western Area Power 
Administration, 5555 East Crossroads Boulevard, Loveland, Colorado, 
80538-8986, telephone (970) 461-7442, e-mail [email protected].

SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved 
existing Rate Schedule L-F5 for LAP firm electric service on an interim 
basis on December 24, 2003 (Rate Order No. WAPA-105, 69 FR 644, January 
6, 2004). The Commission confirmed and approved the rate schedule on a 
final basis on December 21, 2004, in FERC Docket No. EF04-5181-000 (109 
FERC 62,228). The existing rate schedule is effective from February 1, 
2004, through December 31, 2008.
    Existing firm electric service Rate Schedule L-F5 is being 
superseded by Rate Schedule L-F6. Under Rate Schedule L-F5, the energy 
charge is 11.95 mills per kilowatthour (mills/kWh) and the capacity 
charge is $3.14 per kilowattmonth (kWmonth). The composite rate is 
23.90 mills/kWh. The provisional rates for LAP firm electric service 
under Rate Schedule L-F6 are being implemented in two steps. The first 
step of the provisional rates for LAP firm electric service consists of 
an energy charge of 13.06 mills/kWh and a capacity charge of $3.43 per 
kWmonth, producing an overall composite rate of 26.12 mills/kWh on 
January 1, 2006. This represents a 9.3 percent increase when compared 
with the existing LAP firm electric service rate under Rate Schedule L-
F5. The second step of the provisional rates for LAP firm electric 
service consists of an energy charge of 13.68 mills/kWh and a capacity 
charge of $3.59 per kWmonth, producing an overall composite rate of 
27.36 mills/kWh on January 1, 2007. This represents an additional 5.2 
percent increase.
    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

[[Page 71274]]

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-125 and the proposed LAP firm electric service rates 
into effect on an interim basis. The new Rate Schedule L-F6 will be 
promptly submitted to the Commission for confirmation and approval on a 
final basis.

    Dated: November 9, 2005.
Clay Sell,
Deputy Secretary.

Order Confirming, Approving, and Placing the Loveland Area Projects 
Firm Electric Service Rates Into Effect on an Interim Basis

    These 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 Western Area Power 
Administration.
    Capacity: The electric capability of a generator, transformer, 
transmission circuit, or other equipment. It is expressed in kW.
    Capacity Charge: The rate which sets forth the charges for 
capacity. It is expressed in dollars per kWmonth.
    Commission: Federal Energy Regulatory Commission.
    Composite Rate: The rate for commercial firm power and is the total 
annual revenue requirement for capacity and energy divided by the total 
annual firm energy sales under contract. It is expressed in mills/kWh 
and used for comparison purposes.
    Criteria: The Post-1989 General Power Marketing and Allocation 
Criteria for the sale of energy with capacity from the Pick-Sloan 
Missouri Basin Program--Western Division and the Fryingpan-Arkansas 
Project.
    Customer: An entity with a contract for and receiving firm electric 
service from Western's Rocky Mountain Region.
    Deficits: Deferred or unrecovered annual expenses.
    DOE Order RA 6120.2: An order outlining power marketing 
administration financial reporting and rate-making procedures.
    Energy: Measured in terms of the work it is capable of doing over a 
period of time. It is expressed in kWh.
    Energy Charge: The rate which sets forth the charges for energy. It 
is expressed in mills per kWh and applied to each kWh delivered to each 
customer.
    FERC: The Commission (to be used when referencing Commission 
Orders).
    Firm: A type of product and/or service that is available at the 
time requested by the customer.
    FRN: Federal Register notice.
    Fry-Ark: Fryingpan-Arkansas Project.
    FY: Fiscal year; October 1 to September 30. kW: Kilowatt--the 
electrical unit of capacity that equals 1,000 watts.
    kWmonth: Kilowattmonth--the electrical unit of the monthly amount 
of capacity.
    kWh: Kilowatthour--the electrical unit of energy that equals 1,000 
watts in 1 hour.
    kilowattyear: Kilowattyear--the electrical unit of the yearly 
amount of capacity.
    LAP: Loveland Area Projects.
    L-F5: Loveland Area Projects existing firm electric service rate 
schedule (expires December 31, 2008, or until superseded).
    L-F6: Loveland Area Projects provisional firm electric service rate 
schedule (effective January 1, 2006).
    M&I: Municipal and industrial water development.
    mills/kWh: Mills per kilowatthour--the unit of charge for energy 
(equals one tenth of a cent or one thousandth of a dollar).
    MOU: Memorandum of Understanding for the Pick-Sloan Missouri Basin 
Program and the Fry-Ark Project. Signatories include Western, 
Reclamation, U.S. Army Corps of Engineers, Mid-West Electric Consumers 
Association, Loveland Area Customers Association, and Western States 
Power Corporation.
    NEPA: National Environmental Policy Act of 1969 (42 U.S.C. 4321, et 
seq.).
    O&M: Operation and Maintenance.
    P-SMBP: The Pick-Sloan Missouri Basin Program.
    P-SMBP--WD: Pick-Sloan Missouri Basin Program--Western Division.
    Power: Capacity and energy.
    Preference: The requirements of Reclamation Law which provide that 
preference in the sale of Federal power shall be given to 
municipalities and other public corporations or agencies and also to 
cooperatives and other nonprofit organizations financed in whole or in 
part by loans made under the Rural Electrification Act of 1936 
(Reclamation Project Act of 1939, section 9(c), 43 U.S.C. 485h(c)).
    Provisional Rates: Rates which have been confirmed, approved, and 
placed into effect on an interim basis by the Deputy Secretary.
    PRS: Power Repayment Study.
    Rate Brochure: A document prepared for public distribution 
explaining the rationale and background of the rate proposal contained 
in this rate order and dated June 2005.
    Ratesetting PRS: The PRS used for the rate adjustment proposal.
    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 in which Western markets power.
    Revenue Requirement: The revenue required to recover annual 
expenses (such as O&M, purchase power, transmission service expenses, 
interest expenses, and deferred expenses) and repay Federal 
investments, and other assigned costs.
    Rocky Mountain Region: The Rocky Mountain Customer Service Region 
of Western.
    Western: United States Department of Energy, Western Area Power 
Administration.

Effective Date

    The new provisional rates will take effect on the first day of the 
first full billing period beginning on or after January 1, 2006, and 
will be in effect until December 31, 2010, pending approval by the 
Commission on a final basis.

[[Page 71275]]

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. The proposed rate adjustment was initiated on April 22, 2005, 
when Western's Rocky Mountain Region mailed a notice announcing an 
informal customer meeting to discuss the proposed firm electric service 
rate adjustment to all LAP preference customers and interested parties. 
The informal meeting was held on May 11, 2005, in Denver, Colorado. At 
this informal meeting, Western explained the rationale for the rate 
adjustment, presented rate designs and methodologies, and answered 
questions.
    2. An FRN was published on June 16, 2005 (70 FR 35079), officially 
announcing proposed LAP rates, initiating the public consultation and 
comment period, and announcing the public information and public 
comment forums.
    3. On July 1, 2005, Western's Rocky Mountain Region mailed letters 
to all LAP preference customers and interested parties transmitting a 
copy of the FRN published on June 16, 2005 (70 FR 35079).
    4. The public information forums were held on July 19, 2005, 
beginning at 10 a.m. MDT, in Denver, Colorado, and again on July 20, 
2005, beginning at 8 a.m. CDT, in Lincoln, Nebraska. Western provided 
detailed explanations of the proposed LAP rates, provided a list of 
issues that could change the proposed rates, and answered questions. A 
rate brochure detailing the proposed rates was provided at the forums.
    5. The public comment forum was held on August 16, 2005, beginning 
at 9 a.m. MDT, in Denver, Colorado. Western gave the public an 
opportunity to comment for the record. No oral comments were made and 
no written comments were received during the comment forum.
    6. Western received four comment letters during the consultation 
and comment period, which ended September 14, 2005. All formally 
submitted comments have been considered in preparing this Rate Order.
    7. Western's Rocky Mountain Region provided a Web site with all of 
the letters, time frames, dates and locations of forums, documents 
discussed at the information meetings, FRNs, and all other information 
about this rate process for customer access. The Web site is located at 
http://www.wapa.gov/rm/Rates/firm_power_rate_adj_2006.htm.

Comments

    Written comments were received from the following organizations: 
East River Electric Power Cooperative, Mid-West Electric Consumers 
Association, Municipal Energy Agency of Nebraska, Valley Electric 
Cooperative, Inc.

Project Descriptions

Loveland Area Projects

    The Post-1989 General Power Marketing and Allocation Criteria, 
published in the Federal Register on January 31, 1986 (51 FR 4012), 
integrated the resources of the P-SMBP--WD and Fry-Ark. This 
operational and contractual integration, known as LAP, allowed an 
increase in marketable resource, simplified contract administration, 
and established a blended rate for LAP power sales.
    However, the P-SMBP--WD and Fry-Ark retain separate financial 
status. For this reason, separate PRSs are prepared annually for each 
project. These PRSs are used to determine the sufficiency of the power 
rate to generate adequate revenue to repay project investment and costs 
during each project's prescribed repayment period. The revenue 
requirement of the Fry-Ark PRS is combined with the P-SMBP--WD revenue 
requirement derived from the P--SMBP PRS, to develop one rate for LAP 
firm electric sales.

Pick-Sloan Missouri Basin Program--Western Division

    The initial stages of the Missouri River Basin Project were 
authorized by Congress in section 9 of the Flood Control Act of 
December 22, 1944, commonly referred to as the 1944 Flood Control Act 
(Pub. L. 78-534, 58 Stat. 877, 891). The Missouri River Basin Project, 
later renamed the Pick-Sloan Missouri Basin Program to honor its two 
principal authors, has been under construction since 1944. The P-SMBP 
encompasses a comprehensive program of flood control, navigation 
improvement, irrigation, M&I water development, and hydroelectric 
production for the entire Missouri River Basin. Multipurpose projects 
have been developed on the Missouri River and its tributaries in 
Colorado, Montana, Nebraska, North Dakota, South Dakota, and Wyoming.
    The Colorado-Big Thompson, Kendrick, Riverton, and Shoshone 
projects were administratively combined with P-SMBP in 1954, followed 
by the North Platte Project in 1959. These projects are known as the 
``Integrated Projects'' of the P-SMBP. The Riverton Project was 
reauthorized as a unit of the P-SMBP in 1970.
    The P-SMBP--WD and the Integrated Projects include 19 powerplants. 
There are six powerplants in the P-SMBP--WD: Glendo, Kortes, and 
Fremont Canyon powerplants on the North Platte River; Boysen and Pilot 
Butte on the Wind River; and Yellowtail powerplant on the Big Horn 
River.
    In the Colorado-Big Thompson Project, there are also six 
powerplants. Green Mountain powerplant on the Blue River is on the West 
Slope of the Rocky Mountains. Marys Lake, Estes, Pole Hill, Flatiron, 
and Big Thompson powerplants are on the East Slope.
    The Kendrick Project has two power production facilities: Alcova 
and Seminoe powerplants. Power production facilities in the Shoshone 
Project are Shoshone, Buffalo Bill, Heart Mountain, and Spirit Mountain 
powerplants. The only production facility in the North Platte Project 
is the Guernsey powerplant.

Fryingpan-Arkansas Project

    The Fry-Ark is a transmountain diversion development in 
southeastern Colorado authorized by the Act of Congress on August 16, 
1962 (Pub. L. 87-590, 76 Stat. 389, as amended by Title XI of the Act 
of Congress on October 27, 1974 (Pub. L. 93-493, 88 Stat. 1486, 1497)). 
The Fry-Ark diverts water from the Fryingpan River and other 
tributaries of the Roaring Fork River in the Colorado River Basin on 
the West Slope of the Rocky Mountains to the Arkansas River on the East 
Slope. The water diverted from the West Slope, together with regulated 
Arkansas River water, provides supplemental irrigation, M&I water 
supplies, and produces hydroelectric power. Flood control, fish and 
wildlife enhancement, and recreation are other important purposes of 
Fry-Ark. The only generating facility in Fry-Ark is the Mt. Elbert 
Pumped-Storage Powerplant on the East Slope.

Power Repayment Studies

    Western prepares a PRS each FY to determine if revenues will be 
sufficient to repay, within the required time, all costs assigned to 
the LAP revenues. Repayment criteria are based on law, policies 
including DOE Order RA 6120.2, and authorizing legislation. To meet 
Cost Recovery Criteria outlined in DOE Order RA 6120.2, a revised study 
and rate adjustment has been developed to demonstrate that sufficient 
revenues will be collected to meet future obligations.
    In the P-SMBP PRS, payments toward irrigation assistance and 
capital debt are necessary before deficits are completely repaid. 
Traditionally, prepayment of irrigation assistance or capital is only

[[Page 71276]]

done in the absence of deficits. However, if all revenue were applied 
toward deficits prior to making any prepayments for irrigation and 
other capital requirements, an extraordinarily large rate increase to 
meet single-year repayment obligations would be required. Once these 
single-year repayment obligations were satisfied, another rate 
adjustment would be necessary to decrease the rates. While repayment of 
capital debt and irrigation assistance prior to complete repayment of 
deficits is not typical, the approach approved within this Rate Order 
is well within the bounds of DOE Order RA 6120.2. Western will repay 
all deficits and also make previously planned payments for irrigation 
assistance and other investments that are due in the years 2013 and 
2014. Prepaying irrigation and capital investments has been part of P-
SMBP repayment plans and approved rate adjustments for the past 20 
years. It is an integral part of the long-term plan for the project and 
has provided rate stability for consumers while meeting Federal 
repayment obligations. Modest irrigation and investment payments for a 
brief period of 2 to 3 years will reduce the single-year revenue 
requirement for irrigation assistance and hold increases to the 
``lowest possible rates to consumers consistent with sound business 
principles,'' as outlined in section 5 of the Flood Control Act of 
1944.
    The provisional rates for LAP will be implemented in two steps. 
First step rates are to become effective on an interim basis on the 
first day of the first full billing period beginning on or after 
January 1, 2006. Second step rates are to become effective on the first 
day of the first full billing period beginning on or after January 1, 
2007. Under Rate Schedule L-F6, the first and second step provisional 
rates for LAP firm electric service will result in a total composite 
rate increase of approximately 14.5 percent. The current composite rate 
under Rate Schedule L-F5 is 23.90 mills/kWh. The provisional composite 
rate is 27.36 mills/kWh.

Existing and Provisional Rates

    A comparison of the existing and provisional rates for LAP firm 
electric service follows:

                     Comparison of Existing and Provisional Rates LAP Firm Electric Service
----------------------------------------------------------------------------------------------------------------
                                                                                 First step        Second step
                                                                                 provisional       provisional
                                                                                  rates and         rates and
                   Firm electric service                     Existing rates    percent change,   percent change,
                                                                               effective Jan.    effective Jan.
                                                                                   1, 2006           1, 2007
----------------------------------------------------------------------------------------------------------------
Rate Schedule.............................................              L-F5              L-F6              L-F6
Composite Rate (mills/kWh)................................             23.90      26.12 (9.3%)      27.36 (5.2%)
Firm Capacity ($/kWmonth).................................             $3.14      $3.43 (9.2%)      $3.59 (5.1%)
Firm Energy (mills/kWh)...................................             11.95      13.06 (9.3%)      13.68 (5.2%)
----------------------------------------------------------------------------------------------------------------

Certification of Rates

    Western's Administrator certified that the provisional rates for 
LAP firm electric service under Rate Schedule L-F6 are the lowest 
possible rates consistent with sound business principles. The 
provisional rates were developed following administrative policies and 
applicable laws.

LAP Firm Electric Service Discussion

    According to Reclamation Law, Western must establish power rates 
sufficient to recover operation, maintenance, and purchase power 
expenses, and repay power investment and irrigation aid.
    The Criteria, published in the Federal Register on January 31, 1986 
(51 FR 4012), operationally and contractually integrated the resources 
of the P-SMBP--WD and Fry-Ark (thereafter referred to as LAP). A 
blended rate was established for the sale of LAP power. The P-SMBP--WD 
portion of the revenue requirements for the LAP firm electric service 
rates was developed from the revenue requirement calculated in the P-
SMBP Ratesetting PRS. The P-SMBP--WD revenue requirement increased 
approximately 17 percent due to increased purchase power costs due to 
extended drought as well as costs associated with increased O&M 
expenses. The adjustment to the P-SMBP revenue requirement is a 
separate formal rate process which is documented in Rate Order No. 
WAPA-126. Rate Order No. WAPA-126 is also scheduled to go into effect 
on the first day of the first full billing period beginning on or after 
January 1, 2006. The revenue requirements for P-SMBP--WD are as 
follows:

            Summary of P-SMBP--WD Revenue Requirements ($000)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Present Revenue Requirement................................      $35,903
(18.06 mills/kWh x 1,988,000,000 kWh)......................
------------------------------------------------------------
                   Provisional Increases
Provisional First Step Increase (Jan 06)...................        3,896
(1.96 mills/kWh x 1,988,000,000 kWh).......................
                                                            ------------
Provisional Second Step Increase (Jan 07)..................        2,127
(1.07 mills/kWh x 1,988,000,000 kWh).......................
    Total Increase.........................................        6,024
    (3.03 mills/kWh x 1,988,000,000 kWh)...................
Provisional Revenue Requirement............................       41,927
(18.06 + 3.03 = 21.09 mills/kWh x 1,988,000,000 kWh).......
------------------------------------------------------------------------

    The Fry-Ark piece of the revenue requirements for the LAP firm 
electric service rates was developed from the revenue requirement 
calculated in the Fry-Ark Ratesetting PRS, which has been updated to 
reflect the most current

[[Page 71277]]

information. The Fry-Ark revenue requirement contains two components. 
The project has an average annual energy generation of 52 gigawatthours 
from flow-through water. The remaining revenue requirement is derived 
from the firm capacity component. This is the procedure used in the 
study to account for the Fry-Ark portion of the energy marketed by LAP. 
The Fry-Ark revenue requirement increased approximately 8 percent also 
due to increased O&M expenses and higher costs associated with 
increased purchase power costs due to extended drought.

             Summary of Fry-Ark Revenue Requirements ($000)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Present Revenue Requirement................................      $12,855
------------------------------------------------------------
                   Provisional Increases
------------------------------------------------------------
Provisional First Step Increase (Jan 06)...................          650
Provisional Second Step Increase (Jan 07)..................          396
                                                            ------------
    Total Increase.........................................        1,046
Provisional Revenue Requirement............................       13,901
------------------------------------------------------------------------

    This table compares the LAP existing revenue requirements to the 
proposed revenue requirements:

               Summary of LAP Revenue Requirements ($000)
------------------------------------------------------------------------
                                                 First step  Second step
                                     Existing     (January     (January
                                                   2006)        2007)
------------------------------------------------------------------------
P-SMBP--WD.......................      $35,903      $39,800      $41,927
Fry-Ark..........................       12,855       13,505       13,901
                                  --------------
    Total LAP....................       48,758       53,305       55,828
------------------------------------------------------------------------

Statement of Revenue and Related Expenses

    The following table provides a summary of projected revenue and 
expense data for the Fry-Ark firm electric service revenue requirement 
through the 5-year provisional rate approval period:

 Fry-Ark Comparison of 5-Year Rate Approval Period (FY 2006-2010) Total
                       Revenue and Expense ($000)
------------------------------------------------------------------------
                                     Existing     Proposed
                                       rate         rate      Difference
------------------------------------------------------------------------
  Total Revenues.................      $71,850      $76,724       $4,747
Revenue Distribution:
Expenses:
O&M..............................       22,095       22,601          506
Purchase Power and Transmission..       21,743       23,399        1,656
Interest \1\.....................       23,939       23,881          -58
                                  --------------
    Total Expenses...............       67,777       69,881        2,104
Principal Payments:
Capitalized Expenses.............            0          374          374
Original Project and Additions...        3,133          940       -2,193
Replacements.....................          940        5,529        4,589
                                  --------------
    Total Principal Payments.....        4,073        6,843        2,770
                                  ==============
    Total Revenue Distribution...       71,850       76,724       4,874
------------------------------------------------------------------------
\1\ Interest expenses decreased due to a lower interest rate being used
  for future replacements and additions in the Ratesetting PRS.

    The summary of P-SMBP--WD revenues and expenses for the 5-year 
provisional rate approval period is included in the P-SMBP Statement of 
Revenue and Related Expenses that is part of Rate Order No. WAPA-126.

Basis for Rate Development

    The P-SMBP PRS calculates the composite rate in mills/kWh for 
future firm power (capacity and energy) sales. In the Fry-Ark PRS, the 
study calculates the capacity charge in dollars per kilowattyear. The 
charge is adjusted until sufficient revenues are generated to meet the 
cost-recovery requirement.
    The proposed LAP firm electric service rate is designed to recover 
50 percent of the revenue requirement from the capacity charge and 50 
percent from the energy charge. The capacity charge is calculated by 
dividing 50 percent of

[[Page 71278]]

the total annual revenue requirement by the number of billing units 
(kWmonth) in a year. The energy charge is calculated by dividing 50 
percent of the total annual revenue requirement by the annual energy 
sales under contract.
    The existing rates for LAP firm electric service in Rate Schedule 
L-F5, which expire on December 31, 2008, no longer provide sufficient 
revenues to pay all annual costs, including interest expense, and repay 
power investment and irrigation aid within the allowable period. The 
adjusted rates reflect increases primarily in purchase power costs, O&M 
costs, and interest expenses. The provisional rates will provide 
sufficient revenue to pay all annual costs, including interest expense, 
and repay power investment and irrigation aid within the allowable 
periods. The provisional rates will take effect on January 1, 2006, and 
will remain in effect through December 31, 2010.

Comments

    The comments and responses applicable to the LAP firm electric 
service rates, paraphrased for brevity when not affecting the meaning 
of the statement(s), are discussed below. Comments that apply to P-SMBP 
only are being answered in Rate Order No. WAPA-126.
    A. Comment: Customers support implementing the two-step rate 
adjustment on a calendar year basis.
    Response: The two-step rate adjustment proposal meets all repayment 
requirements according to DOE Order RA 6120.2, and since the majority 
of the customers support the calendar year implementation, Western will 
implement the first step of the two-step rate adjustment on January 1, 
2006, and the second step of the two-step rate adjustment on January 1, 
2007.
    B. Comment: One commenter noted that working with Western through 
the MOU work group has been beneficial during this process. The MOU 
group has identified an issue regarding personnel costs of the federal 
agencies that merits further attention. The commenter recognized that 
this issue could not be resolved during consideration of the rate 
increase, but the commenter encouraged Western to move forward with its 
investigation into this issue.
    Response: Western, through the MOU process, has agreed to look into 
this issue.
    C. Comment: Customers noted their concern regarding the rate of 
increase in Reclamation's O&M costs.
    Response: Western is actively participating with the customers 
through the MOU group, in which Reclamation also participates, to 
better understand what is driving Reclamation's increases.
    D. Comment: One commenter noted that ongoing drought should be 
viewed as a good opportunity to review cutting discretionary costs 
where possible and look at the rate structure for some of Western's 
less widely used products to determine if they are appropriate and if 
they could be modified to more accurately reflect cost of service 
principles.
    Response: As mentioned above, Western is actively participating 
with the customers through the MOU group to identify and address such 
issues.
    E. Comment: One commenter encouraged Western to continue 
investigating ways to maximize the value of its assets, including 
transmission rights across neighboring systems and high-value 
transmission across constrained paths.
    Response: Western continually looks for ways to increase revenues 
and decrease costs, including maximizing the use of the transmission 
system. However, Western has determined that this particular comment is 
not directly related to the proposed action and is outside the scope of 
the rate process.

Availability of Information

    Information about this rate adjustment, including PRSs, comments, 
letters, memorandums, and other supporting material made or kept by 
Western that was used to develop the provisional rates is available for 
public review in the Rocky Mountain Customer Service Regional Office, 
Western Area Power Administration, 5555 East Crossroads Boulevard, 
Loveland, Colorado.

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 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 provisional 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 January 1, 2006, 
Rate Schedule L-F6 for the Loveland Area Projects 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 
them or substitute rates on a final basis through December 31, 2010.

    Dated: November 9, 2005.
Clay Sell,
Deputy Secretary.

Rate Schedule L-F6 (Supersedes Schedule L-F5)

Loveland Area Projects; Colorado, Kansas, Nebraska, Wyoming

Schedule of Rates for Firm Electric Service

Effective

    First Step: Beginning on the first day of the first full billing 
period on or after January 1, 2006, through December 31, 2006.
    Second Step: Beginning on the first day of the first full billing 
period on or after January 1, 2007, through December 31, 2010.

Available

    Within the marketing area served by the Loveland Area Projects.

[[Page 71279]]

Applicable

    To the wholesale power customers for firm power service supplied 
through one meter at one point of delivery, or as otherwise established 
by contract.

Character

    Alternating current, 60 hertz, three phase, delivered and metered 
at the voltages and points established by contract.

Monthly Rates

First Step:
    Demand Charge: $3.43 per kilowatt (kW) of billing demand.
    Energy Charge: 13.06 mills per kilowatthour (kWh) of use.
    Billing Demand: Unless otherwise specified by contract, the billing 
demand will be the seasonal contract rate of delivery.
Second Step:
    Demand Charge: $3.59 per kW of billing demand.
    Energy Charge: 13.68 mills per kWh of use.
    Billing Demand: Unless otherwise specified by contract, the billing 
demand will be the seasonal contract rate of delivery.

Adjustments

    For Transformer Losses: If delivery is made at transmission voltage 
but metered on the low-voltage side of the substation, the meter 
readings will be increased to compensate for transformer losses as 
provided for in the contract.
    For Power Factor: None. The customer will be required to maintain a 
power factor at all points of measurement between 95-percent lagging 
and 95-percent leading.

 [FR Doc. E5-6575 Filed 11-25-05; 8:45 am]
BILLING CODE 6450-01-P