[Federal Register Volume 71, Number 156 (Monday, August 14, 2006)]
[Notices]
[Pages 46467-46470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-13247]



[[Page 46467]]

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DEPARTMENT OF ENERGY

Western Area Power Administration


Proposed Amended Navajo Power Marketing Plan

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of public process and call for comments.

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SUMMARY: The Bureau of Reclamation (Reclamation) has requested that 
Western Area Power Administration (Western), a Federal power marketing 
agency of the Department of Energy (DOE), initiate and administer a 
public process to obtain comments on the proposed Amended Navajo Power 
Marketing Plan (Amended Plan). This notice initiates that public 
process.
    The proposed Amended Plan is to provide for the future marketing of 
the United States' entitlement to generation from the Navajo Generating 
Station (Navajo) which is in excess of the pumping requirements of the 
Central Arizona Project (CAP) and certain needs for desalting and 
protective pumping facilities. The proposed Amended Plan was developed 
in consultation with representatives of Reclamation, Western, the 
Governor of Arizona, and the Central Arizona Water Conservation 
District (CAWCD) as required by the Hoover Power Plant Act of 1984 
(Act).
    All interested parties are invited to submit comments to Western 
concerning the proposed Amended Plan. Western will provide all comments 
and related public record documents to Reclamation for its review and 
response prior to the consideration and adoption of the Amended Plan by 
the Secretary of the Interior, in accordance with the Act.

DATES: The comment period begins today and ends November 13, 2006. 
Western will present a detailed explanation of the proposed Amended 
Plan at public information forums. The public information forums dates 
and times are:
    1. September 19, 2006, 1 p.m. MST, Phoenix, AZ.
    2. September 22, 2006, 1 p.m. PDT, Ontario, CA.
    Western will accept oral and written comments on the proposed 
Amended Plan at public comment forums. The public comment forums dates 
and times are:
    1. October 10, 2006, 1 p.m. MST, Phoenix, AZ.
    2. October 11, 2006, 1 p.m. PDT, Ontario, CA.
    Western will accept written comments any time during the comment 
period.

ADDRESSES: The public information forum and the public comment forum 
locations are:
    1. Phoenix--Western Area Power Administration, Desert Southwest 
Regional Office, 615 South 43rd Ave., Phoenix, AZ.
    2. Ontario--Doubletree Hotel Ontario Airport, 222 North Vineyard 
Ave., Ontario, CA.
    Written comments concerning the proposed amendment should be sent 
to Mr. J. Tyler Carlson, Regional Manager, Desert Southwest Region, 
Western Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005-
6457. Written comments may also be faxed to (602) 605-2490, attention: 
Brian Young. Documents associated with this public process may be 
viewed at http://www.wapa.gov/dsw/pwrmkt.
    As access to Western facilities is controlled, any U.S. citizen 
wishing to attend any meeting held at Western must present an official 
form of picture identification, such as a driver's license, U.S. 
passport, U.S. Government ID, or U.S. Military ID, at the time of the 
meeting. Foreign nationals should contact Western at least 45 days in 
advance of the meeting to obtain the necessary form to attend the 
meeting.

FOR FURTHER INFORMATION CONTACT: Mr. Brian Young, Remarketing Program, 
Desert Southwest Region, Western Area Power Administration, P.O. Box 
6457, Phoenix, AZ 85005-6457, telephone (602) 605-2594, e-mail 
[email protected]. The original Navajo Power Marketing Plan dated 
December 1, 1987 (Original Plan) is available for viewing at http://www.wapa.gov/dsw/pwrmkt.

SUPPLEMENTARY INFORMATION: The United States acquired an entitlement to 
24.3 percent of generation available at Navajo for use by CAP pursuant 
to the Colorado River Basin Project Act (43 U.S.C. 1501, et seq.) The 
CAP is a Reclamation multi-purpose water resource development and 
management project in Arizona.
    Section 107(a) of the Act provides that the capacity and energy 
associated with the United States' interest in Navajo which is in 
excess of the pumping requirements of the CAP and any needs for 
desalting and protective pumping facilities (Navajo Surplus Power) 
shall be marketed and exchanged by the Secretary of Energy. 
Furthermore, section 107(c) of the Act provides that in the marketing 
and exchanging of Navajo Surplus Power, the Secretary of the Interior 
shall adopt the plan deemed most acceptable, after consultation with 
the Secretary of Energy, the Governor of Arizona, and CAWCD (or its 
successor in interest to the repayment obligation for the CAP).
    On December 1, 1987, Reclamation, on behalf of the Secretary of the 
Interior, adopted the Original Plan which provided for long-term 
contracts through September 30, 2011. By letter dated July 3, 2006, 
Reclamation requested that Western initiate and administer a public 
process to obtain comments on the proposed Amended Plan to provide for 
the future marketing of Navajo Surplus Power.
    This proposed Amended Plan contains the framework for the sale and 
exchange of Navajo Surplus Power, including an annual process to 
determine the power to be marketed, eligibility criteria, contract 
provisions, ratesetting provisions, and revenue collection and 
distribution criteria. Following consideration of comments received and 
adoption of the Amended Plan by the Secretary of the Interior, the 
Amended Plan will become effective 30 days after publication in the 
Federal Register. The ratesetting provisions in the proposed Amended 
Plan were developed to accomplish the requirements of the Act to market 
and exchange Navajo Surplus Power ``for the purposes of optimizing the 
availability of Navajo surplus and providing financial assistance in 
the timely construction and repayment of construction costs of 
authorized features of the Central Arizona project.'' These provisions 
also provide that ``rates shall not exceed levels that allow for an 
appropriate saving for the contractor.''
    The proposed Amended Plan implements provisions of the Revised 
Stipulation Regarding A Stay of Litigation (Central Arizona Water 
Conservation District v. United States, et al., No. CIV 95-625-TUC-WDB 
(EHC), No. CIV 95-1720-PHX-EHC). The Revised Stipulation requires that 
the Original Plan be amended to provide for the establishment of rates 
for the sale or exchange of Navajo Surplus Power after September 30, 
2011 ``which optimize the availability and use of revenues'' for the 
Lower Colorado River Basin Development Fund in a manner consistent with 
the Act. The Arizona Water Settlements Act, Pub. L. 108-451 amends the 
use of Navajo Surplus Power revenues set forth in 43 U.S.C. 1543(f).
    The Original Plan also contains a provision to collect an 
additional rate component that allows CAWCD to recover an advance of 
funds made to Reclamation for the construction of authorized features 
of the CAP. The repayment of this advance will be satisfied under 
contracts pursuant to the Original Plan. The Original Plan also

[[Page 46468]]

contains specified quantities of capacity and energy to be marketed 
under long-term contracts. This proposed Amended Plan provides for an 
annual determination of capacity and energy resources for marketing as 
Navajo Surplus Power based upon the availability of water for CAP 
pumping, in conjunction with an annual determination of rates and the 
various capacity and energy products to be marketed. Navajo Surplus 
Power under this Amended Plan will be placed under contract for various 
time periods, which may be short-term, annual, or multi-year.

Proposed Amended Navajo Power Marketing Plan

I. Purpose and Scope

    Section 107 of the Hoover Power Plant Act of 1984 requires that a 
power marketing plan be developed to provide for marketing and 
exchanging of Navajo Surplus for the purposes of optimizing the 
availability of Navajo Surplus and providing financial assistance in 
the timely construction and repayment of construction costs of 
authorized features of the Central Arizona Project. The Secretary of 
the Interior adopted the original Navajo Power Marketing Plan on 
December 1, 1987 (Original Plan). The Revised Stipulation entered in 
the Central Arizona Project repayment litigation, Central Arizona Water 
Conservation District v. United States, et al., No. CIV 95-625-TUC-WDB 
(EHC), No. CIV 95-1720-PHX-EHC (Consolidated Action) requires the 
Original Plan be amended. The Revised Stipulation requires the amended 
Navajo Power Marketing Plan provide for the establishment and 
collection of rates for the sale or exchange of Navajo Surplus Power 
that optimize the availability and use of revenues for the Lower 
Colorado River Basin Development Fund while allowing for an appropriate 
saving for the contractor. Satisfying the requirements of the Revised 
Stipulation is necessary for final judgment to be entered in the 
Central Arizona Project litigation. The entry of final judgment in that 
litigation permits the Secretary of the Interior to make a required 
finding under the terms of the Arizona Water Settlements Act.
    A. This Amended Navajo Power Marketing Plan hereinafter called 
``Plan'' shall be applicable to all new or amended contracts for Navajo 
Surplus entered into after this Plan is adopted. The Original Plan 
shall remain in effect for all Navajo Surplus contracts entered into 
before the adoption of this Plan and shall continue until such 
contracts terminate or are amended in accordance with this Plan.
    B. This Plan recognizes the obligation of the United States to use 
its entitlement to electrical capacity and energy from Navajo to 
provide necessary power for the pumping requirements of the Central 
Arizona Project and any such needs for desalting and protective pumping 
facilities as may be required under section 101(b)(2)(B) of the 
Colorado River Basin Salinity Control Act.
    C. This Plan provides that Western, working closely with 
Reclamation and CAWCD, will be the marketing entity responsible for the 
sale and exchange of Navajo Surplus in accordance with applicable 
Federal law, regulations and the Revised Stipulation. Western shall 
market Navajo Surplus directly to, with, or through the Arizona Power 
Authority, and/or other entities having the status of preference 
entities under the Reclamation Project Act of 1939. Western may utilize 
exchange, banking, purchase or sales agreements, or integration with 
other resources to fulfill any purpose of this Plan.
    D. This Plan sets parameters for the establishment of Rates, not 
exceeding levels that allow for an appropriate saving for the 
contractor, that will optimize the availability and use of revenues 
from the sale and exchange of Navajo Surplus to provide financial 
assistance for payment of the operation and maintenance expenses 
associated with Navajo Surplus and for the purposes set forth in 43 
U.S.C. 1543(f), as amended by the Arizona Water Settlements Act, Public 
Law 108-451.
    E. This Plan satisfies the obligation of the United States in 
accordance with the Revised Stipulation, to amend the Original Plan 
``to provide for the establishment and collection of rates for the sale 
or exchange of Navajo Surplus Power after September 30, 2011.''
    F. This Plan specifies that for so long as Navajo operates and 
there is Navajo Surplus, Western shall continue to market Navajo 
Surplus under this Plan with such amendments or revisions as may be 
adopted by the Secretary of the Interior, after consultation with the 
Secretary of Energy, CAWCD, and the Governor of Arizona and as provided 
by law, including the authorities set forth in section II.

II. Authorities

    The authorities under which this Plan is developed are:
    A. Federal Reclamation laws (43 U.S.C. 372 et seq., and all Acts 
amendatory thereof or supplementary thereto); in particular, the 
Colorado River Basin Project Act of 1968 (Pub. L. 90-537), the Colorado 
River Basin Salinity Control Act of 1974 (Pub. L. 93-320), as amended, 
the Hoover Power Plant Act of 1984 (Pub. L. 98-381), and the Arizona 
Water Settlements Act of 2005 (Pub. L. 108-451).
    B. Rules, regulations, and agency agreements of Western and 
Reclamation issued or made pursuant to applicable law.

III. Definitions

    The following terms wherever used herein shall have the following 
meanings:
    A. ``Boulder City Marketing Area'' shall mean the marketing area 
defined in the 1984 Conformed Criteria published in the Federal 
Register (49 FR 50585) on December 28, 1984.
    B. ``Central Arizona Project'' or ``CAP'' shall mean the 
Reclamation multipurpose water resource development and management 
project in Arizona authorized by the Colorado River Basin Project Act, 
as amended (43 U.S.C. 1501 et seq.).
    C. ``CAWCD'' shall mean the Central Arizona Water Conservation 
District.
    D. ``Conformed Criteria'' shall mean the Conformed General 
Consolidated Power Marketing Criteria or Regulations for Boulder City 
Area Projects published in the Federal Register (49 FR 50582) on 
December 29, 1984.
    E. ``Development Fund'' shall mean the Lower Colorado River Basin 
Development Fund established under section 403 of the Colorado River 
Basin Project Act.
    F. ``Exchange'' shall mean any arrangements providing for delivery 
of capacity and energy to Western and return of capacity and energy by 
Western from Navajo within a one year period.
    G. ``Navajo'' shall mean the Navajo Generating Station, the thermal 
generating power plant located near Page, Arizona, and associated 
transmission facilities.
    H. ``Navajo Entitlement'' shall mean the United States' entitlement 
of 24.3 percent of the generation from Navajo.
    I. ``Navajo Surplus'' shall mean capacity and energy associated 
with the Navajo Entitlement which is in excess of the pumping 
requirements of the Central Arizona Project and any such needs for 
desalting and protective pumping facilities as may be required under 
section 101(b)(2)(B) of the Colorado River Basin Salinity Control Act.
    J. ``New Waddell Dam'' or ``New Waddell Reservoir'' shall mean the 
regulatory storage facilities constructed on the Agua Fria River as a 
feature of the CAP.

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    K. ``Original Plan'' shall mean the original Navajo Power Marketing 
Plan adopted on December 1, 1987.
    L. ``Plan'' shall mean this Amended Navajo Power Marketing Plan.
    M. ``Rate(s)'' shall mean the price(s) established by a marketing 
process for various Navajo Surplus capacity or energy products marketed 
under this Plan to optimize the availability and use of revenues for 
the Development Fund.
    N. ``Reclamation'' shall mean the Bureau of Reclamation, United 
States Department of the Interior.
    O. ``Revised Stipulation'' shall mean the Revised Stipulation 
Regarding a Stay of Litigation, Resolution of Issues During the Stay 
and for Ultimate Judgment Upon the Satisfaction of Conditions, filed 
with the United States District Court for the District of Arizona in 
Central Arizona Water Conservation District v. United States, et al., 
No. CIV 95-625-TUC-WDB (EHC), No. CIV 95-1720-PHX-EHC (Consolidated 
Action), and that court's order dated April 28, 2003, and any 
amendments or revisions thereto.
    P. ``Western'' shall mean the Western Area Power Administration, 
United States Department of Energy.

IV. Power To Be Marketed

    A. Reclamation, in consultation with CAWCD, shall annually or more 
frequently, as appropriate, determine the Navajo Surplus available for 
sale and exchange by Western, and the period for which it will be 
available for sale and exchange, taking into consideration among other 
factors, the following:
    1. Existing contractual commitments to deliver Navajo Surplus, 
including new contracts entered into under the first opportunity 
provisions of section IV.G of the Original Plan.
    2. CAP estimated pumping energy requirements in excess of capacity 
and energy supplied to CAWCD from Hoover Dam or New Waddell Dam, based 
on projected CAP water deliveries for that year and successive years.
    3. Estimated capacity and energy needs of the United States for 
desalting and protective pumping facilities, as may be required under 
section 101(b)(2)(B) of the Colorado River Basin Salinity Control Act.
    4. Projected Navajo generation.
    B. Any Navajo Surplus not sold or exchanged in accordance with 
paragraph A of this section may, as determined by Western, in 
cooperation with CAWCD and Reclamation, be sold under appropriate long-
term or short-term arrangements.

V. Optimization

    A. To optimize the availability of Navajo Surplus, CAWCD shall 
utilize, for CAP pumping requirements, Hoover capacity and energy 
scheduled from Hoover Dam in accordance with the terms and conditions 
of CAWCD's contract with the Arizona Power Authority to permit 
additional Navajo capacity and energy to be sold or exchanged by 
Western as Navajo Surplus.
    B. To optimize the availability and use of revenues from the sale 
and exchange of Navajo Surplus:
    1. CAWCD will use seasonal and daily power management. 
Specifically, CAWCD will divert maximum amounts of water from the 
Colorado River in the winter season for storage in the New Waddell 
Reservoir and then serve CAP water demands in the summer season from 
water previously placed in storage. On a daily basis, CAWCD to the 
extent possible will pump off-peak to optimize the on-peak availability 
of Navajo Surplus.
    2. Western, in consultation with Reclamation and CAWCD, shall 
develop capacity and energy products from the Navajo Surplus determined 
to be available under section IV.A for sale or exchange, taking into 
account market prices for standard capacity and energy products.

 VI. Eligibility

    A. Western shall offer Navajo Surplus for sale in the following 
order of priority, in accordance with part IV, section A of the 
Conformed Criteria:
    1. Preference entities within Arizona.
    2. Preference entities within the Boulder City Marketing Area.
    3. Preference entities in adjacent Federal marketing areas.
    4. Non-preference entities in the Boulder City Marketing Area.
    B. In the event a bidding or request for proposal process is 
utilized, after the bids or proposals are received the bidding entities 
will be given first opportunity, in order of priority, to purchase at a 
price which is based on the highest offer.
    C. In the event that a potential contractor fails to place Navajo 
Surplus capacity and energy under contract within a reasonable period, 
as specified by Western and in accordance with the terms and conditions 
offered by Western, the amounts of capacity and energy not placed under 
contract will be reoffered in accordance with the order of priority 
specified in paragraph A of this section.
    D. Arizona entities, regardless of preference status, shall have 
first opportunity for electrical capacity and energy exchange rights as 
necessary to implement this Plan. Western, in consultation with CAWCD 
and Reclamation, may determine that any capacity and energy not 
subscribed to by Arizona entities for exchange may be offered for sale 
in the order of priority stated in paragraph A of this section or may 
be offered to non-Arizona entities for exchange.

VII. Contract Provisions

    A. Western, after consultation with Reclamation and CAWCD, shall 
enter into all power sales and exchange contracts necessary to carry 
out the provisions of this Plan in selling and exchanging Navajo 
Surplus. Navajo Surplus shall be marketed, and exchange rights granted, 
by Western on behalf of the Secretary of the Interior, under contracts 
consistent with this Plan and the Conformed Criteria.
    B. Contracts for the sale or exchange of Navajo Surplus shall 
specify a delivery point on the Navajo or CAP transmission systems as 
may be available. If the contractor cannot take delivery of Navajo 
Surplus into its own system at these delivery points, transmission 
service arrangements to other delivery points will be the obligation of 
the contractor.
    C. CAWCD may be a party to contracts for the sale or exchange of 
Navajo Surplus for the limited purposes of (i) concurring that the 
contracts optimize the financial assistance available for the purposes 
set forth in 43 U.S.C. 1543(f), as amended by the Arizona Water 
Settlements Act, Public Law 108-451, and (ii) affirming any rights and 
obligations of CAWCD under the contracts.
    D. Western and the contractor shall agree upon written metering and 
scheduling instructions prior to any deliveries under this Plan. The 
metering and scheduling instructions shall provide the operating and 
accounting procedures for such deliveries. Metering and scheduling 
instructions are intended to implement terms of the contract, not to 
modify or amend it, and therefore are subordinate to the contract. 
Western and the contractor may modify these instructions, as necessary, 
to reflect changing power system conditions. In the event the 
contractor fails or refuses to execute the initial metering and 
scheduling instructions or any revised instructions Western determines 
to be necessary, Western shall develop and implement temporary 
instructions until acceptable instructions have been developed and 
executed by Western and the contractor.

[[Page 46470]]

VIII. Ratesetting

    A. Rates for Navajo Surplus developed pursuant to section IV.A 
shall be established annually by Reclamation and Western, in 
consultation with CAWCD, through a competitive process that optimizes 
the availability and use of revenues for the Development Fund with 
priority to entities in accordance with section VI.A and that allows 
for an appropriate saving for the contractor, taking into 
consideration, among other factors, prices for comparable capacity and 
energy products.
    B. Rates for Navajo Surplus developed under section IV.B or 
marketed under the first opportunity provision of the Original Plan 
shall be established in the contracts for sale of such Navajo Surplus, 
taking into consideration, among other factors, prices for comparable 
capacity and energy products, and allowing for an appropriate saving 
for the contractor.
    C. Rates developed annually pursuant to this Plan shall not be 
applicable to pre-existing contracts unless provided for in such 
contracts.
    D. Because of the Hoover Power Plant Act of 1984's requirements for 
noncost-based rates, the Rates established pursuant to this Plan are 
not suitable to the required review of Western's rates by the Federal 
Energy Regulatory Commission. All Rates promulgated by the 
Administrator of Western under this Plan shall be a final act of the 
Secretary of Energy and shall be subject to review pursuant to the 
judicial review provided by the Administrative Procedure Act (5 U.S.C. 
553, et seq.).

IX. Revenue Collection and Distribution

    Western shall deposit all revenue collected from the marketing of 
Navajo Surplus under this Plan into the Development Fund, where it will 
be used:
    A. First, to pay all costs of operation and maintenance determined 
to be associated with the sale and exchange of Navajo Surplus, 
including actual costs for services performed by Reclamation and 
Western under this Plan including appropriate administrative expenses 
of Reclamation and Western.
    B. Second, for the purposes set forth in 43 U.S.C. 1543(f), as 
amended by the Arizona Water Settlements Act, Public Law 108-451, 
including crediting funds against the annual CAWCD repayment obligation 
and funding specific Indian water-related activities.

X. Effective Date

    This Plan will become effective 30 days after publication in the 
Federal Register following adoption by the Secretary of the Interior.

XI. Consultation

    This Plan is deemed most acceptable in accordance with section 
107(c) of the Hoover Power Plant Act of 1984 as evidenced by the 
concurrences below from Western (Secretary of Energy), the Governor of 
Arizona, and CAWCD.

Regulatory Procedure Requirements

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.

Environmental Compliance

    In compliance with the National Environmental Policy Act (NEPA) of 
1969 (42 U.S.C. 4321, et seq.); the Council on Environmental Quality 
Regulations for implementing NEPA (40 CFR parts 1500-1508); and DOE 
NEPA Implementing Procedures and Guidelines (10 CFR part 1021), Western 
has determined that this action is categorically excluded from the 
preparation of 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 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.

    Dated: August 1, 2006.
Michael S. Hacskaylo,
Administrator.
 [FR Doc. E6-13247 Filed 8-11-06; 8:45 am]
BILLING CODE 6450-01-P