[Federal Register Volume 70, Number 241 (Friday, December 16, 2005)]
[Notices]
[Pages 74805-74809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-7438]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Parker-Davis Project--Post-2008 Resource Pool Allocation 
Procedures

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of final procedures.

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SUMMARY: The Western Area Power Administration (Western), a Federal 
power marketing agency of the Department of Energy (DOE), announces the 
Parker-Davis Project (P-DP) Post-2008 Resource Pool Allocation 
Procedures, developed under the requirements of the Energy Planning and 
Management Program (EPAMP). EPAMP provides for the establishment of 
project-specific resource pools and power allocations from these pools 
to new preference customers. Western, under EPAMP, is finalizing 
procedures for use in allocating power from the P-DP Post-2008 Resource 
Pool that will become available October 1, 2008. Western originally 
proposed allocation procedures in the October 1, 2004, Federal 
Register. Responses to public comments received on the proposed 
procedures are included in this notice. In accordance with this notice, 
Western plans to announce proposed allocations in the Federal Register 
after April 1, 2006.

DATES: The P-DP Post-2008 Resource Pool Allocation Procedures will 
become effective January 17, 2006.

ADDRESSES: Information regarding the Post-2008 Resource Pool Allocation 
Procedures, including comments, letters, and other supporting documents 
made or kept by Western for the purpose of developing the final 
procedures, is available for public inspection and copying at the 
Desert Southwest Regional Office, Western Area Power Administration, 
located at 615 South 43rd Avenue, Phoenix, AZ 85009. Public comments 
may be viewed at http://www.wapa.gov/dsw/pwrmkt.

SUPPLEMENTARY INFORMATION: Western published a notice of proposed 
allocation procedures in the October 1, 2004, Federal Register (69 FR 
58900), to implement Subpart C--Power Marketing Initiative (PMI) of 
EPAMP's Final Rule, 10 CFR part 905 (60 FR 54151). EPAMP, developed in 
part to implement section 114 of the Energy Policy Act of 1992, became 
effective on November 20, 1995. The goal of EPAMP is to require 
planning and efficient electric energy use by Western's long-term firm 
power customers and to provide a framework for extending Western's firm 
power resource commitments. One aspect of EPAMP is to establish 
project-specific power resource pools when existing resource 
commitments expire and to allocate power from these pools to new 
preference customers. Existing resource commitments for the P-DP expire 
on September 30, 2008. Western published its decision to apply the PMI 
of EPAMP to the P-DP in the Federal Register on May 5, 2003 (68 FR 
23709). This decision created a resource pool of approximately 17 
megawatts (MW) of summer season capacity and 13 MW of winter season 
capacity, based on estimates of current P-DP hydroelectric resource 
availability, for allocation to eligible preference customers for 20 
years beginning October 1, 2008. Western will make allocations to 
preference customers under the final procedures described in this 
notice, the current P-DP Marketing Plan (49 FR 50582, 52 FR 7014, and 
52 FR 28333), and EPAMP. These final Post-2008 Resource Pool Allocation 
Procedures for the P-DP address (1) Eligibility criteria, (2) how 
Western intends to allocate pool resources, and (3) the terms and 
conditions under which Western will allocate the power pool.
    Western held public comment forums regarding the proposed 
procedures between November 30, 2004, and December 2, 2004, to accept 
oral and written comments on the proposed allocation procedures and 
call for applications. The formal comment period ended January 30, 
2005. Western's responses to public comments on the proposed allocation 
procedures are included in this notice.

Response to Comments on the Post-2008 Resource Pool Allocation 
Procedures

Comments and Responses

    Comment: Some comments expressed support for the proposed order of 
priority for use in making allocations,

[[Page 74806]]

specifically the exclusion of existing Firm Electric Service 
contractors from the first priority.
    Response: Western appreciates the support and agrees that this 
order of priority will facilitate the widespread use of hydropower 
resources.
    Comment: Western received comments that subcontractors receiving 
allocations of Boulder Canyon Project power should be considered as 
having a contract with Western or as a member of a parent entity that 
has a contract with Western.
    Response: Western agrees that the definition of ``a member of a 
parent entity that has a contract with Western'' includes the Boulder 
Canyon Project subcontractors (or suballottees). These subcontractors 
receive the benefits of Federal power resources through power contracts 
with Boulder Canyon Project contractors and would not meet the criteria 
to receive first priority consideration.
    Comment: Western received comments that applicants may receive 
standard retail service from electric service providers and have no 
contract with their electric service providers for Federal resources. 
These comments asserted that the status of their electric service 
providers as contractors for Federal resources should not disqualify 
such retail customers from being in the first priority for 
consideration unless the applicants otherwise receive specified 
benefits from federal resources.
    Response: Retail customers of an electric service provider are not 
intended to be included in the definition of ``member of a parent 
entity.'' Therefore, otherwise qualified applicants would not be 
disqualified from being in the first priority for consideration solely 
on the basis of the applicant's retail service provider having a 
contract with Western for Federal resources. To encourage widespread 
use of Federal resources, Western may consider the magnitude of direct 
or indirect benefits from Federal resources received by applicants in 
determining allocations.
    Comment: One comment suggested that resource pool allocations 
should be given to applicants previously unsuccessful in obtaining a 
Federal power allocation.
    Response: In the October 1, 2004, Federal Register notice, Western 
provided an order of priority for use in determining which qualified 
applicants would receive consideration for P-DP resource pool 
allocations. The first order of priority contains those applicants that 
do not have contracts with Western for Federal power resources or are 
not members of parent entities that have a contract with Western for 
Federal power. This category would include those qualified applicants 
within the marketing area that have been previously unsuccessful at 
obtaining a contract with Western for Federal power resources.
    Comment: Comments were received requesting that Western consider 
making allocations to municipalities, that are not utilities, for 
identified end-use loads, such as water, waste water, street lighting, 
and municipal facilities.
    Response: Western's historic practice has been to require 
electrical utility status for municipalities to be eligible to receive 
Federal power under the preference clause. This requirement is 
contained in EPAMP, and utility status will continue as a requirement 
for municipalities to receive a preference allocation. For the P-DP, 
Western will consider making allocations to municipal utilities, other 
than electrical utilities, that are recognized as utilities by their 
applicable legal authorities, are nonprofit in nature, have electrical 
facilities, and are independently governed and financed.
    Comment: Western received comments that applicants should not be 
required to meet utility status before Western determines who will 
receive allocations.
    Response: Western must know prior to publishing proposed 
allocations whether applicants have attained utility status. To 
accommodate applicants that may need more time, Western has decided to 
extend the deadline for attaining utility status to April 1, 2006.
    Comment: Western received a comment that applicants with direct use 
needs such as irrigation districts should not be required to meet 
utility status.
    Response: The October 1, 2004, Federal Register notice stated that 
``qualified applicants that desire to purchase power from Western for 
resale to consumers * * * must have utility status.'' Utility status 
means that the applicant has responsibility to meet load growth, has a 
distribution system, and is ready, willing, and able to purchase power 
from Western on a wholesale basis for resale to retail consumers. 
Electrical districts, as well as certain irrigation districts, resell 
power to retail consumers and, therefore, must meet utility status 
requirements. Irrigation districts desiring power allocations entirely 
for direct use loads, which are owned and controlled by these entities, 
are not required to have utility status as they are not required to 
distribute power to members that are preference entities or to retail 
consumers.
    Comment: A comment suggested that partial requirements customers of 
entities with allocations of Federal resources should receive special 
consideration as compared to full requirements customers of such 
entities.
    Response: Western's consideration of an application for an 
allocation will not differentiate between a partial requirements 
customer and a full requirements customer of an entity that has a 
contract for Federal resources. The amount of any Western power 
allocation could be affected by the magnitude of benefit received from 
the Federal resources, which could be impacted by the applicant's 
status as a partial requirements customer versus as a full requirements 
customer.
    Comment: Comments stated that the future, projected load of 
applicants should be considered when making the determination as to 
which applicants should get an allocation and how much power to 
allocate.
    Response: In the October 1, 2004, Federal Register notice, Western 
stated that it would base allocations made to qualified applicants on 
the actual loads in calendar year 2003. This practice enables Western 
to more accurately determine allocations and the benefits derived from 
those allocations, as opposed to consideration of future projected 
loads, which may or may not be realized. Western will allow applicants 
to provide updated load data if they desire. Applicants may provide the 
most recent 12 months of actual load data, which must be received by 
Western no later than April 1, 2006. In addition, applicants may also 
provide any other updated or new information relevant to their 
applications no later than April 1, 2006.
    Comment: A comment said that any power remaining unallocated or not 
placed under contract should be offered to the contractors that 
contributed the power to the resource pool.
    Response: Resource pool power not placed under contract will be 
offered on a pro rata basis to existing contractors up to the amount 
they contributed to the resource pool. Beyond that, any remaining 
resource pool power will be used as determined by Western.
    Comment: A comment stated that the entire resource pool should be 
allocated to Native American applicants.
    Response: Native American tribal applicants will be considered for 
allocations along with all other eligible applicants.
    Comment: A comment said that the proposed 1-MW minimum allocation 
should be decreased or eliminated.
    Response: The current marketing plan criteria include a 1-MW 
minimum for

[[Page 74807]]

new customer allocations (52 FR 28333, July 29, 1987). This 1-MW 
minimum recognizes that Western does not schedule power to entities in 
quantities of less than 1 MW. Because of this and because small 
customer allocations were rounded to an even megawatt in the May 5, 
2003, Federal Register notice (68 FR 23711), Western will continue the 
1-MW minimum allocation provision.
    Comment: Comments suggested that aggregating or pooling loads of 
different applicants should be allowed to meet the proposed 1-MW 
minimum allocation.
    Response: Applicants will be allowed to aggregate their loads to 
qualify for an allocation of P-DP power provided Western is able to 
schedule power deliveries in 1 MW or greater quantities to the 
aggregated group. Applicants that aggregate loads will be required to 
demonstrate to Western's satisfaction that a contractual aggregated 
arrangement is in place by April 1, 2006. Members of an aggregated 
group must individually and collectively meet preference status and all 
other eligibility requirements. Western does not intend to allocate 
power to aggregated loads that are retail in nature.
    Comment: Some comments supported the provision requiring 
contractors to pay Western in advance for firm electric service.
    Response: Western appreciates support for the contract provision 
requiring contractors to pay their firm electric service bills 1 month 
in advance, unless both parties mutually agree to pay more than 1 month 
in advance.
    Comment: Comments expressed understanding for the requirement to 
reimburse existing contractors that provided advanced funding for 
certain capital items.
    Response: Western appreciates support and recognition of the 
obligation to reimburse existing contractors for any undepreciated 
replacement advances, to the extent existing contractors' allocations 
are reduced to create the resource pool.
    Comment: Comments requested clarification of the transmission 
arrangements necessary to deliver P-DP power allocations from P-DP 
point(s) of delivery to applicants' loads.
    Response: As stated in the October 1, 2004, Federal Register 
notice, each customer is ultimately responsible for arranging third-
party delivery of firm power beyond P-DP point(s) of delivery. Western 
may assist new applicants, upon request, in facilitating third-party 
arrangements for delivery of allocated firm power, which may include 
transmission and/or displacement power delivery arrangements. 
Applicants must have the necessary arrangements for transmission, 
displacement, and/or distribution service in place by April 1, 2008.
    Comment: Western received a comment requesting clarification of the 
transmission and/or distribution requirements of those applicants that 
purchase for resale to consumers versus those that purchase for end use 
purposes.
    Response: All applicants, including those that purchase power from 
Western for end use purposes only, must have the necessary arrangements 
for transmission, displacement and/or distribution service in place by 
April 1, 2008. Applicants that purchase power for resale to consumers 
must have electrical utility status; which means the applicant has the 
responsibility to meet load growth, has a distribution system, and is 
ready, willing and able to purchase Federal power from Western on a 
wholesale basis for resale to retail consumers. To meet this electrical 
utility status requirement, Western will require applicants that 
purchase power for resale to consumers to either own or lease their 
distribution systems. The deadline for attaining utility status has 
been extended to April 1, 2006.
    Comment: Comments were received stating that Western should allow 
bill crediting to accommodate end-use applicants that will not attain 
utility status.
    Response: Under EPAMP, Western reserved the right to provide the 
economic benefits of its resources to Native Americans directly, in the 
event unanticipated obstacles to delivery of hydropower benefits arise. 
Bill crediting is an example of a direct benefit extended to Native 
Americans. Western's flexibility to provide direct economic benefits 
under EPAMP is expressly limited to Native Americans.
    Comment: A comment stated that the San Luis Rey Indian Water 
Authority (Water Authority), as a congressionally recognized tribal 
entity, should have the same preference eligibility as Federally 
recognized tribes.
    Response: As a result of the San Luis Rey Indian Water Rights 
Settlement Act of 1988, the Water Authority was recognized by Congress 
as ``an Indian entity under Federal law with which the United States 
has a trust relationship.'' Because of this and because the tribes that 
comprise the Water Authority are Federally recognized, Western does 
regard the Water Authority as a recognized tribal entity for the 
purposes of this process.
    Comment: A comment suggested that the P-DP marketing area should 
include the City of Page, Arizona.
    Response: The P-DP marketing area was not altered by the decision 
to apply EPAMP to the Post-2008 Resource Pool. The P-DP marketing area 
excludes the portion of the State of Arizona lying in the Upper 
Colorado River Basin, except for that portion in which the Navajo 
Generating Station is located. Navajo Generating Station is included in 
the marketing area as a resource only. The City of Page lies within the 
Upper Colorado River Basin and is, therefore, located outside of the P-
DP marketing area.
    Comment: Comments said contractors should have sufficient notice 
and opportunity to comment, discuss, cure and appeal any decision by 
Western's Administrator to adjust power resource allocations during the 
contract term of the P-DP contract extensions.
    Response: Western addressed these concerns in the revision to the 
General Power Contract Provisions, effective on June 15, 2005.

Final Post-2008 Resource Pool Allocation Procedures

    These final procedures for the P-DP resource pool address (1) 
eligibility criteria, (2) how Western intends to allocate pool 
resources, and (3) the terms and conditions under which Western will 
allocate the power pool.

I. Amount of Pool Resources

    As of October 1, 2008, Western will allocate, as long-term firm 
power to eligible preference entities, approximately 17 MW of summer 
season capacity and 13 MW of winter season capacity, based on estimates 
of current P-DP hydroelectric resource availability. Firm power means 
capacity and associated energy allocated by Western and subject to the 
terms and conditions specified in the Western P-DP electric service 
contract. The associated energy will be a maximum of 3,441 
kilowatthours per kilowatt (kWh/kW) in summer and 1,703 kWh/kW in 
winter, based on current marketing plan criteria. This new resource 
pool includes 0.869 MW of summer withdrawable capacity and 0.619 MW of 
winter withdrawable capacity. Withdrawable power is power reserved for 
United States priority use, but not presently needed. Priority use 
power is capacity and energy required for the development and operation 
of Bureau of Reclamation (Reclamation) projects as required by 
legislation, and irrigation pumping on certain Indian lands. 
Reclamation may submit a request to Western for priority use 
withdrawals, at

[[Page 74808]]

which time Western will substantiate that the power to be withdrawn 
will be used for the purposes specified in the P-DP Marketing Plan 
Criteria (49 FR 50582). Thereafter, upon a 2-year written notice, 
Western may withdraw the necessary amount of power on a pro rata basis, 
which would subsequently reduce each contractor's withdrawable portion 
of its power allocation.

II. General Eligibility Criteria

    Western will apply the following general eligibility criteria to 
applicants seeking a firm power allocation under the Post-2008 Resource 
Pool Allocation Procedures:
    A. Qualified applicants must be preference entities as defined by 
section 9(c) of the Reclamation Project Act of 1939, 43 U.S.C. 485h(c), 
as amended and supplemented.
    B. First consideration will be given to qualified applicants in the 
P-DP marketing area that do not have a contract with Western for 
Federal power resources or are not a member of a parent entity that has 
a contract with Western for Federal power resources.
    C. Qualified applicants, except Native American tribes, must be 
ready, willing and able to receive and distribute or use power from 
Western. Ready, willing, and able means that the potential contractor 
has the facilities needed to receive power or has made the necessary 
arrangements for transmission, displacement, and/or distribution 
service; and the potential contractor's power supply contracts with 
third parties permit the delivery of Western's power (60 FR 54173). 
Applicants must have the necessary arrangements for transmission, 
displacement, and/or distribution service in place by April 1, 2008.
    D. Qualified applicants (including cooperatives, public utility 
districts, public power districts and municipalities) desiring to 
purchase power from Western for resale to consumers must have 
electrical utility status by April 1, 2006. Native American tribes are 
not subject to this requirement. Electrical utility status means the 
applicant has responsibility to meet load growth, has a distribution 
system and is ready, willing, and able to purchase Federal power from 
Western on a wholesale basis for resale to retail consumers. For the P-
DP, Western will consider making allocations to municipal utilities, 
other than electrical utilities, that are recognized as utilities by 
their applicable legal authorities, are nonprofit in nature, have 
electrical facilities, and are independently governed and financed.
    E. A qualified Native American applicant must be an Indian tribe as 
defined in the Indian Self Determination Act of 1975, 25 U.S.C. 450b, 
as amended.

III. General Allocation Criteria

    Western will apply the following general allocation criteria to 
applicants seeking an allocation of firm power under the Post-2008 
Resource Pool Allocation Procedures.
    A. Allocations of firm power will be made in amounts as determined 
solely by Western in exercising its discretion under Federal 
Reclamation Law.
    B. An allottee may begin service to purchase firm power only upon 
the execution of an electric service contract between Western and the 
allottee, and satisfaction of required conditions in that contract.
    C. Firm power will be allocated under these procedures to qualified 
applicants in accordance with preference provisions of section 9(c) of 
the Reclamation Project Act of 1939, in the following order of 
priority:
    1. Preference entities in the P-DP marketing area that do not have 
a contract with Western for Federal power resources or are not a member 
of a parent entity that has a contract with Western for Federal power 
resources.
    2. Preference entities in the P-DP marketing area that have a 
contract with Western for Federal power resources or are a member of a 
parent entity that has a contract with Western for Federal power 
resources.
    3. Preference entities in adjacent Federal marketing areas that do 
not have a contract with Western for Federal power resources or are not 
a member of a parent entity that has a contract with Western for 
Federal power resources.
    D. The P-DP marketing area includes:
     All of the drainage area considered tributary to the 
Colorado River below a point 1 mile downstream from the mouth of the 
Paria River (Lee's Ferry).
     The State of Arizona, excluding that portion lying in the 
Upper Colorado River Basin, except for that portion of the Upper 
Colorado River Basin in which the Navajo Generating Station is located. 
The Navajo Generating Station is included in the power marketing area 
as a resource only.
     That portion of the State of New Mexico lying in the Lower 
Colorado River Basin and the independent Quemada Basin lying north of 
the San Francisco River drainage area.
     Those portions of the State of California lying in the 
Lower Colorado River Basin and in drainage basins of all streams 
draining into the Pacific Ocean south of Calleguas Creek.
     Those parts of the States of California and Nevada in the 
Lahontan Basin including and lying south of the drainages of Mono Lake, 
Adobe Meadows, Owens Lake, Amargosa River, Dry Lakes and all closed 
independent basins or other areas in southern Arizona not tributary to 
the Colorado River.
    For a map of the P-DP marketing area, visit Western's Web site at 
http://www.wapa.gov/dsw/pwrmkt.
    E. Western will base allocations made to qualified applicants on 
the actual loads in calendar year 2003 or the most recent 12 months of 
actual load data, if received by Western no later than April 1, 2006. 
Western will apply current marketing plan criteria and EPAMP criteria 
to these loads, except as stated in this notice.
    F. Western will base allocations made to Native American tribes on 
their actual loads in calendar year 2003 or the most recent 12 months 
of actual load data, if received by Western no later than April 1, 
2006. Western has the right to use estimated load values should actual 
load data not be available. Western will review and adjust, where 
necessary, inaccurate estimates received during the allocation process.
    G. New contractors must execute electric service contracts within 6 
months of receiving a contract offer from Western, unless Western 
agrees otherwise in writing.
    H. The resource pool will be dissolved subsequent to the closing 
date for executing firm power contracts. Firm power not placed under 
contract will be offered on a pro rata basis to existing contractors up 
to the amount they contributed to the resource pool. Beyond that, any 
remaining power will be used as determined by Western.
    I. The minimum allocation shall be 1,000 kilowatts (kW).
    J. Applicants seeking an allocation as an aggregated group must 
demonstrate to Western's satisfaction the existence of a contractual 
aggregation arrangement by April 1, 2006. Members of an aggregated 
group must individually and collectively meet preference status and all 
other eligibility requirements.
    K. If unanticipated obstacles to the delivery of hydropower 
benefits to Native American tribes arise, Western will allow the 
economic benefits of the resource to be directly provided to the 
tribes.

IV. General Contract Principles

    Western will apply the following general contract principles to all 
applicants receiving an allocation of firm power under the Post-2008 
Resource Pool Allocation Procedures.

[[Page 74809]]

    A. Western reserves the right to reduce the withdrawable portion of 
a contractor's contract rate of delivery, upon a 2-year notice of a 
request by Reclamation for additional priority use power needed to 
serve project pumping requirements or irrigation pumping on certain 
Indian lands.
    B. Western, at its discretion and sole determination, reserves the 
right to adjust the contract rate of delivery on 5 years' written 
notice in response to changes in hydrology and river operations. Such 
adjustments will only take place after Western conducts a public 
process.
    C. Each applicant is ultimately responsible for arranging third-
party delivery. Western may assist new applicants, upon request, in 
facilitating third-party transmission and/or displacement arrangements 
for delivery of firm power allocated under these contracts.
    D. The Contractor shall not sell any of the firm electric power or 
energy allocation to any electric utility customer of the Contractor 
for resale by that utility customer. The Contractor may sell the 
electric power and energy allocation to its members on condition that 
said members not sell any of said power and energy to any customer of 
the members for resale by that customer.
    E. Contracts entered into under the Post-2008 Resource Pool 
Allocation Procedures will provide for Western to furnish firm electric 
service effective from October 1, 2008, through September 30, 2028.
    F. Contractors will be required to pay 1 month in advance for firm 
electric service. If both parties mutually agree, payments of more than 
1 month in advance may be allowed.
    G. To the extent existing contractors' power allocations are 
reduced to create the resource pool, new contractors will be required 
to reimburse existing contractors for undepreciated replacement 
advances.
    H. Applicants that aggregate their loads will be required to enter 
into a single firm power contract with Western, with the aggregated 
group entity as the contracting Party.
    I. Contracts entered into as a result of these final procedures 
will incorporate Western's standard provisions for power sales 
contracts, including integrated resource planning, and the General 
Power Contract Provisions.

VI. Review Under the Regulatory Flexibility Act

    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.

VII. Small Business Regulatory Enforcement Fairness Act

    Western has determined 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.

VIII. 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.

IX. Environmental Compliance

    Western has completed an environmental impact statement on EPAMP, 
following the National Environmental Policy Act of 1969 (NEPA). The 
Record of Decision was published in 60 FR 53181, October 12, 1995. 
Western's NEPA review assured all environmental effects related to 
these actions have been analyzed.

    Dated: December 1, 2005.
Michael S. Hacskaylo,
Administrator.
 [FR Doc. E5-7438 Filed 12-15-05; 8:45 am]
BILLING CODE 6450-01-P