[Federal Register Volume 71, Number 196 (Wednesday, October 11, 2006)]
[Notices]
[Pages 59770-59771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-16785]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. AD07-1-000]


Billing Procedures for Annual Charges for the Costs for 
Administering Part I of the Federal Power Act; Notice Reporting 
Increase in Municipal Costs for FY 2005 Actual and FY 2006 Estimated 
Hydropower Administrative Annual Charges

October 3, 2006.
    1. Municipal licensees have expressed concerns regarding the 
substantial increases they have observed in their Statement of Annual 
Charges issued on August 4, 2006. Specifically, licensees are concerned 
with the amounts assessed for the current year's Administrative Charge 
and the prior year's Adjustment of FERC Administrative Charge. The 
increase in these charges is primarily attributable to a substantial 
increase in the proportion of direct labor hours staff charged to 
municipal projects in FY 2005. The purpose of this notice is to provide 
licensees with information regarding the Commission's process for 
assessing these charges and how this increase in direct labor 
applicable to municipal projects resulted in the increases observed on 
the August 4, 2004 billing statements.

Components of Administrative Annual Charges

    2. The Federal Power Act requires the Federal Energy Regulatory 
Commission to assess annual charges against licensees to reimburse the 
United States for the costs of administration of the Commission's 
hydropower regulatory program.\1\ The Omnibus Budget Reconciliation Act 
of 1986 provided FERC with the authority to ``assess and collect fees 
and annual charges in any fiscal year in amounts equal to all of the 
costs incurred by the Commission in that fiscal year.'' \2\ Each fiscal 
year the Commission estimates the total costs of its operations for the 
current year. These estimates are the basis for the current year's 
Administrative Charge which is reflected on the annual billing 
statements as such. In addition, the Commission determines the actual 
operating costs for the prior fiscal year, and the prior year's 
Administrative Charge is adjusted either upward or downward for the 
difference between the prior year's actual costs and the prior year's 
estimates. These adjustments to the prior year's costs are then 
reflected as the Adjustment to FERC Administrative Charge on the annual 
billing statements.
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    \1\ 16 U.S.C 794-823b.
    \2\ Pub. L. 99-509 Sec.  3401, 100 Stat. 1874, 1890-91 (1986) 
(codified at 42 U.S.C. 7178).
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Allocation Methodology for Hydropower Projects

    3. The total costs for the hydropower regulatory program consist of 
both direct and indirect costs. Once the Commission calculates 
estimated and actual program costs, it allocates these costs based on 
direct time charged by Commission staff to designated time and labor 
codes for municipal and non-municipal projects.\3\ Annually the 
Commission allocates current year estimated costs and prior year actual 
costs based on the direct labor proportions of staff time recorded 
against municipal and non-municipal projects in the prior fiscal year. 
Applying this methodology allows the Commission to utilize credible 
historical information for the allocation of current year estimated 
costs and provides the relevant data needed to appropriately affect the 
prior year downward or upward adjustment when allocating the prior 
year's actual costs.
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    \3\ The Commission has implemented within its time and 
attendance system designated codes which segregate staff hours spent 
on municipal projects from staff hours spent on non-municipal 
projects. In calculating direct labor proportions, the Commission 
aggregates the hours recorded against municipal and non-municipal 
time codes. The number of hours charged to municipal codes is 
divided by this aggregate total to derive the municipal proportion 
used to allocate hydropower program costs. The number of hours 
charged to non-municipal projects is treated similarly to derive the 
non-municipal proportion.
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    4. With regard to the August 4, 2006 statements, the Commission 
allocated the cost bases for the current year's Administrative Charge 
and the prior year's Adjustment to FERC

[[Page 59771]]

Administrative Charge using FY 2005 direct labor proportions. In FY 
2005, Commission staff spent 25% of the total hours charged to 
licensing of hydropower projects on municipal projects. Conversely, 75% 
of the total hours charged to project licensing were attributable to 
work on non-municipal projects.

Impact of FY 2005 Direct Labor Allocation

    5. The significant increase in municipal project costs for the FY 
2006 Administrative Charge and the FY 2005 Adjustment to FERC 
Administrative Charge was the result of more direct time charged to 
hydropower municipal time and labor codes in FY 2005 then in FY 2004. 
Since the Commission used the FY 2005 municipal allocation of 25% to 
allocate its FY 2006 Administrative Annual Charges, licensees will 
likely notice an increase to their current year Administrative Charge 
when compared to previous years. Additionally, since the Commission 
used the FY 2004 municipal allocation of 11% to allocate its FY 2005 
Administrative Charge, the FY 2005 Adjustment to FERC Administrative 
Charge reflects both a significant adjustment resulting from a 14% 
increase in the proportion of direct labor allocated and a minor upward 
adjustment related to the difference in actual and estimated costs 
previously assessed in FY 2005.

Review of Hydropower Program Costs

    6. After calculating the annual charges, the Commission reviewed 
the total FY 2005 and FY 2006 hydropower costs and the applicable time 
and labor categories for the hydropower program which clearly 
differentiates between municipal and non-municipal activities. Overall, 
total costs for the hydropower program were found to have only small 
increases between the fiscal years. There were no new programs added in 
the hydropower area in FY 2005 or FY 2006 that would have contributed 
to this increase, thus the small increase in total hydropower program 
costs. However, since there was more direct time charged to municipal 
time and labor codes in FY 2005 than in FY 2004, municipal licensees 
received a larger proportion of the total hydropower program costs.
    7. The Commission's hydropower program workload depends on how many 
hydropower applications or inspections are pending before the 
Commission in any given year. The Commission can not predict with exact 
certainty which licensees will file each year. In addition, the 
complexity of the projects under review and the length of time it takes 
to process a hydropower application could impact the workload 
proportions. hydropower program workload is cyclical, so in some years 
there may be more municipal projects pending versus non-municipal 
projects. While this increase does represent a large swing between 
municipal and non-municipal direct-labor hours, our review did show a 
history of cyclical fluctuations in this split.
    8. For questions concerning this notice or any other annual charges 
issues, please direct inquiries via e-mail to [email protected] or 
call Troy Cole at (202) 502-6161.

Magalie R. Salas,
Secretary.
 [FR Doc. E6-16785 Filed 10-10-06; 8:45 am]
BILLING CODE 6717-01-P