[Federal Register Volume 72, Number 79 (Wednesday, April 25, 2007)]
[Notices]
[Pages 20528-20533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-7870]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Notice of Proposed Final Resource Adequacy Plan for Transactions 
in the California Independent System Operator Corporation's Balancing 
Authority Area

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed final resource adequacy plan.

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SUMMARY: The Western Area Power Administration (Western) is conducting 
a public process to propose a Final Resource Adequacy (RA) Plan for 
transactions in the California Independent System Operator 
Corporation's (CAISO) Balancing Authority Area. Pending the development 
of this Final RA Plan, Western has established interim RA Plans to 
facilitate its transactions in the CAISO Balancing Authority Area. 
Western is developing this proposed Final RA Plan as a Local Regulatory 
Authority (LRA). The Final RA Plan implemented by Western will be 
submitted to the CAISO and will be utilized by Western when Western is 
acting as a Load Serving Entity (LSE) in the CAISO Balancing Authority 
Area.
    Western's Current RA Plan became effective on September 30, 2006, 
and will remain in effect until superseded by the Final RA Plan 
developed in this process.

DATES: The consultation and comment period will begin on the date of 
publication of this Federal Register notice and will end on May 25, 
2007. Western will present a detailed explanation of the proposed Final 
RA Plan at a public information forum on May 2, 2007, 1:30 p.m. PDT, 
Rancho Cordova, CA. Western will hold a public comment forum on May 9, 
2007, 1:30 p.m. PDT, Rancho Cordova, CA. At the public comment forum, 
the public may provide oral and written comments. In addition, the 
public may submit written comments to Western at any time during the 
comment period. Western must receive all comments by the close of the 
comment period to ensure they are considered. After the Administrator 
approves the Final RA Plan, it is anticipated that it will go into 
effect on July 17, 2007.

ADDRESSES: Western will hold the public information and comment forums 
at the Marriott, 11211 Point East Drive, Rancho Cordova, CA. Written 
comments can be mailed, faxed, or e-mailed to Ms. Sonja A. Anderson, 
Acting Power Marketing Manager, Sierra Nevada Region, Western Area 
Power Administration, 114 Parkshore Drive, Folsom, CA 95630-4710, fax 
(916) 985-1931, e-mail [email protected]. Oral comments must be 
presented at the public comment forum which will be held on May 9, 
2007.

FOR FURTHER INFORMATION CONTACT: Ms. Jeanne Haas, Contracts and Energy 
Services Manager, Sierra Nevada Customer Service Region, Western Area 
Power Administration, 114 Parkshore Drive, Folsom, CA 95630-4710, 
telephone (916) 353-4438, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Authorities

    Western is developing this proposed Final RA Plan in accordance 
with its power marketing authorities, which includes the Act of June 
17, 1902 (32 Stat. 388), the Act of August 26, 1937 (50 Stat. 844), the 
Act of August 4, 1939 (53 Stat. 1187), and the Department of Energy 
Organization Act of August 4, 1977 (91 Stat. 565), including all acts 
amendatory and/or supplementary to the above listed.

Background

    On February 9, 2006, the CAISO filed its comprehensive Market 
Redesign Technology Upgrade (MRTU) Tariff with the Federal Energy 
Regulatory Commission (Commission).\1\ Under the MRTU Tariff, the CAISO 
proposed to end the current ``must offer'' structure and transition to 
a capacity-based system. In this capacity-based system, the California 
Public Utilities Commission (CPUC) and other LRAs establish procurement 
requirements for all LSEs within their jurisdiction to obtain 
sufficient resources to meet their load with an adequate reserve margin 
and to ensure appropriate resources will be made available to the CAISO 
in the Day-Ahead Market, the Hour-Ahead

[[Page 20529]]

Scheduling Process, and Real-Time Market.\2\
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    \1\ FERC Docket ER06-615 (2006).
    \2\ See Article V, Section 40 of the CAISO's Tariff.
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    On March 13, 2006, the CAISO filed its Interim Reliability 
Requirements Program (IRRP). On May 12, 2006, the Commission issued an 
order accepting certain modifications under the IRRP in Docket No. 
ER06-723-000.\3\ The modifications established under the IRRP are 
intended to implement RA programs developed by the CPUC and other LRAs 
for LSEs under their respective jurisdictions. Section 40 of the IRRP 
and the MRTU Tariff provide the guidelines for RA. The IRRP adjusts the 
CAISO's existing operations to incorporate RA programs implemented by 
the CPUC and other LRAs for the period between June 2006 and the 
implementation of MRTU.\4\
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    \3\ 115 FERC ] 61,172 (2006).
    \4\ Id. at paragraph 6.
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    In the Commission's September 21, 2006, decision in Docket No. ER-
06-615-000, which in large part accepted and affirmed the CAISO's 
proposed MRTU Tariff, the Commission summarized the CAISO's RA program 
as follows:

    Resource adequacy is the availability of an adequate supply of 
generation or demand responsive resources to support safe and 
reliable operation of the transmission grid. Until June 2006, the 
CAISO market did not require load serving entities to procure 
sufficient generation capacity to serve their customers. The lack of 
this requirement jeopardized reliability and made it difficult to 
ensure that wholesale prices would remain just and reasonable. Under 
MRTU, load serving entities under the authority of the California 
Public Utilities Commission will be required to obey its requirement 
to maintain a level of capacity above load-serving entities' 
forecasted customer needs (currently 15-17 percent). They will also 
have to demonstrate a year in advance that they have procured 
resources to cover 90 percent of their summer (May through 
September) peak period needs. Other load serving entities that are 
CAISO members and serve customers in the CAISO control are required 
to comply with the planning reserve margin for capacity that is set 
by their Local Regulatory Authority. If the Local Regulatory 
Authority does not establish such a margin, the default margin will 
be 15 percent. These resource adequacy requirements will help ensure 
sufficient supply, enhance reliability, protect against price 
volatility, and reduce the opportunities to game the market that 
exist when electricity supplies are insufficient to meet customers' 
needs.\5\

    \5\ 116 FERC ] 61,274 (2006) at paragraph 10.

In Paragraph 1116 of the same decision, the Commission concluded that 
meeting the MRTU RA requirements is a reasonable condition of 
participation in the CAISO markets and required that each LSE serving 
load within the CAISO-controlled grid maintain adequate resources and 
not ``lean on'' others to the detriment of its customers and grid 
reliability as a whole. Under the current schedule, the MRTU is not 
expected to be implemented before February 2008.
    Under both the IRRP and MRTU Tariffs, Western is an LRA. To ensure 
non-discriminatory treatment for transactions in the CAISO Balancing 
Authority Area, Western, as an LRA, established an interim RA Plan 
comprised of an Initial RA Plan and its Current RA Plan. Western's 
Current RA Plan can be found at http://www.wapa.gov/sn/marketing/racapacity.asp. However, due to the short time frame between the 
acceptance of the CAISO's IRRP and its effective date, Western was 
unable to conduct a public process before implementing its interim RA 
Plans.\6\
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    \6\ The Commission accepted the filing on May 12, 2006, with an 
effective date of May 12, 2006.
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    Under this notice, Western is initiating a public process to 
develop its Final RA Plan. As part of this process, Western is 
soliciting input from its customers and interested parties. The 
schedule for this process is outlined above. The Final RA Plan will be 
applicable under both the IRRP and MRTU Tariff.

Acronyms and Definitions

    As used throughout the remainder of this notice, the following 
acronyms and definitions when used with initial capitalization, whether 
singular or plural, will have the following meanings:
    Administrator: The Administrator of the Western Area Power 
Administration.
    Applicable Reliability Criteria: As defined by the CAISO Tariff: 
The reliability standards established by NERC, WECC, and Local 
Reliability Criteria as amended from time to time, including any 
requirements of the NRC.
    Balancing Authority: As defined by NERC: The responsible entity 
that integrates resource plans ahead of time, maintains load-
interchange-generation balance within a Balancing Authority Area, and 
supports Interconnection frequency in real time.
    Balancing Authority Area: The collection of generation, 
transmission, and loads within the metered boundaries of the Balancing 
Authority. The Balancing Authority maintains load-resource balance 
within this area.
    CAISO/ISO: The California Independent System Operator Corporation.
    Capacity: The electrical capability of a generator, transformer, 
transmission circuit, or other equipment.
    Commission: The Federal Energy Regulatory Commission.
    Current RA Plan: That plan submitted by Western, acting as its own 
LRA, to the CAISO in September 2006.
    CVP: The Central Valley Project--The multipurpose Federal water and 
power project extending from the Cascade Range in northern California 
to the plains along the Kern River south of the city of Bakersfield, 
California.
    Demand Forecast: An estimate of Capacity required to meet a load 
over a designated period of time.
    DOE: United States Department of Energy.
    Energy: Measured in terms of the work it is capable of doing over a 
period of time; electric energy is usually measured in kilowatthours or 
megawatthours.
    Final RA Plan: The plan that Western, acting as its own LRA, will 
submit to the CAISO after this process.
    First Preference Customer: A customer wholly located in Trinity, 
Calaveras, or Tuolumne counties, California, as specified under the 
Trinity River Division Act (69 Stat. 719) and the New Melones 
provisions of the Flood Control Act of 1962 (76 Stat. 1173, 1191-1192).
    Full Load Service Customers: The subset of Western's Preference 
customers that has contracted with Western to provide Portfolio 
Management services and meet their total projected loads.
    Initial RA Plan: That plan submitted by Western, acting as its own 
LRA, to the CAISO on May 19, 2006.
    LD Contract: Liquidated Damages Contract--Firm liquidated damages 
contracts are those transactions utilizing or consistent with Service 
Schedule C of the Western Systems Power Pool Agreement or the Firm 
Liquidated Damages product of the Edison Electric Institute pro forma 
agreement, or any other similar firm Energy contract that does not 
require the seller to source the Energy from a particular unit and 
specifies a delivery point internal to the CAISO Balancing Authority 
Area.
    Local Capacity Area: As defined by the CAISO Tariff: Transmission 
constrained area as defined in the study referenced in Section 40.3.1.
    Local Capacity Area Resources: As defined by the CAISO Tariff: RA 
Capacity from a Generating Unit listed in the technical study or 
Participating Load that is located within a Local Capacity Area capable 
of contributing toward the amount of capacity required in a particular 
Local Capacity Area.

[[Page 20530]]

    LRA: Local Regulatory Authority--The Federal, state or local 
governmental authority responsible for the regulation or oversight of a 
utility.
    LSE: Load-Serving Entity--As defined by the CAISO Tariff: Any 
entity (or the duly designated agent of such an entity, including; 
e.g., a Scheduling Coordinator), including a load aggregator or power 
marketer; (i) Serving End Users within the ISO Control Area and (ii) 
that has been granted authority or has an obligation pursuant to 
California State or local law, regulation, or franchise to sell 
electric energy to End Users located within the ISO Control Area, or 
(iii) is a Federal Power Marketing Authority that serves retail Load.
    Planning Reserve Margin: As defined by the CAISO Tariff: A Planning 
Reserve Margin shall be that quantity or percentage of capacity in 
megawatts (MW) that exceeds the Demand Forecast as set forth in Section 
40.3 as provided for in Section 40.4 of this ISO Tariff.
    Power: Capacity and energy.
    Preference: The requirements of Reclamation Law which provide that 
preference in the sale of Federal power be given to certain entities, 
such as municipalities and other public corporations or agencies and 
also to cooperatives and other nonprofit organizations financed in 
whole or in part by loans made pursuant to the Rural Electrification 
Act of 1936 (Reclamation Project Act of 1939, Section 9(c), 43 U.S.C. 
485h(c)).
    Project Use: The power used to operate CVP or Washoe Project 
facilities in accordance with authorized purposes and pursuant to 
Reclamation Law.
    Qualifying Capacity: As defined by the CAISO Tariff: The maximum 
capacity of an RA Resource. The criteria for calculating Qualifying 
Capacity from RA Resources may be established by the CPUC or other 
applicable Local Regulatory Authority and provided to the CAISO, or 
default provisions in Section 40.13 of this ISO Tariff.
    RA: Resource Adequacy--As defined by the CAISO Tariff: The program 
that ensures that adequate physical generating capacity dedicated to 
serving all load requirements is available to meet peak demand and 
planning and operating reserves, at or deliverable to locations and at 
times as may be necessary to ensure local area reliability and system 
reliability.
    RA Capacity: Resource Adequacy Capacity--As defined by the CAISO 
Tariff: The generation capacity of an RA Resource listed on an RA Plan 
and a Supply Plan.
    RA Plan: Resource Adequacy Plan--As defined by the CAISO Tariff: A 
submission by a Scheduling Coordinator for a Load-Serving Entity 
serving Load in the ISO Control Area in order to satisfy the 
requirements of Section 40 of this ISO Tariff.
    RA Resource: As defined by the CAISO Tariff: A resource that is 
required to offer RA Capacity. The criteria for determining the types 
of resources that are eligible to provide Qualifying Capacity may be 
established by the CPUC, other applicable Local Regulatory Authority 
and provided to the CAISO, or the default provision in Section 40.13 of 
this ISO Tariff.
    Reclamation: United States Department of Interior, the Bureau of 
Reclamation.
    SC: Scheduling Coordinator--As defined by the CAISO Tariff: An 
entity certified by the ISO for the purposes of undertaking the 
functions specified in Section 4.5.3 of the ISO Tariff.
    Western: United States Department of Energy, the Western Area Power 
Administration.

Development of RA Plans

    As described above, the CAISO has established guidelines for RA and 
RA Capacity, which LSEs must meet for transactions in the CAISO 
Balancing Authority Area. Both the IRRP and MRTU Tariff acknowledge 
that Western, as an LRA, may establish its own RA Plan.\7\
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    \7\ See, e.g., Section 40.4 of MRTU Tariff, Section 40.5 of IRRP 
Tariff.
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    Western understands that the California State Legislature enacted 
Assembly Bill (AB) 380 to require the CPUC, in consultation with the 
CAISO, to establish RA requirements for all LSEs under the CPUC's 
jurisdiction.\8\ AB 380 requires LSEs subject to the CPUC's 
jurisdiction to procure adequate resources to meet their peak demands, 
planning, and operating reserves.\9\ The State requires LSEs subject to 
the CPUC's jurisdiction to demonstrate that they have acquired 
sufficient capacity to serve their forecasted retail customer load and 
a 15-17 percent margin. As a Federal agency, Western is not subject to 
the State's jurisdiction.
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    \8\ 115 FERC ] 61,172 at paragraph 4.
    \9\ Id.
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    Western has reviewed these guidelines, the Commission's decisions, 
and considered Federal and industry standards and guidelines related to 
reliable operations of power systems. Western prepared both an Initial 
RA Plan and a Current RA Plan based on the guidelines and direction 
provided by the Commission, the IRRP, and the MRTU Tariff, which 
conform to Western's practices from an operational, contractual, and 
statutory framework. There are several distinct factors related 
specifically to the way that Western conducts its business that 
influenced Western's preparation of its RA Plans. Both the Initial RA 
Plan and the Current RA Plan contain detailed information on the 
factors that went into Western's development of those RA Plans. As 
stated in the Summary section of this Federal Register notice, the 
Current RA Plan will remain in effect until superseded by the Final RA 
Plan developed in this process. Western provides as part of this 
Federal Register notice, the pertinent factors that influenced 
Western's preparation of its Initial RA Plan and its Current RA Plan.
    The United States CVP hydro facilities are operated by Reclamation. 
The CVP Act, as amended, integrates the various CVP facilities. The CVP 
is operated primarily to meet authorized project purposes that have a 
higher priority than power generation, such as irrigation and flood 
control. These purposes are determined by Federal law. Western's 
flexibility to modify generation schedules and ancillary service 
availability is limited by these and other related constraints. 
Congress authorized the Pacific Northwest-Southwest Alternating Current 
Intertie (PACI) to firm the CVP and authorized the California-Oregon 
Transmission Project (COTP) to support the DOE Laboratories and other 
Federal uses in the State of California.\10\ Western imports power into 
its sub Balancing Authority Area over the PACI, COTP, and other Federal 
transmission facilities. In northern California, Western markets power 
from a dozen Federal dams including those in the Federal CVP under its 
2004 Power Marketing Plan (Marketing Plan). Under the Marketing Plan, 
Western executed the majority of its power sales contracts with its 
statutory preference and First Preference Customers in late 1999 and 
early 2000. In northern California, Western has established a contract-
based sub Balancing Authority Area within the Sacramento Municipal 
Utility District (SMUD) Balancing Authority Area. Unlike many LSEs 
Western serves a diverse group of customers in northern California, 
including large municipal utilities such as SMUD, the City of Redding, 
and the City of Santa Clara, as well as smaller irrigation districts, 
Native American Indian Tribes, and Federal and State agencies. These 
customers are located within the CAISO Balancing Authority

[[Page 20531]]

Area, the Turlock Irrigation District Balancing Authority Area, the 
SMUD Balancing Authority Area, and Western's own sub Balancing 
Authority Area. Many of Western's customers are wholesale customers who 
are LSEs for their own customers. Other Western customers receive power 
from both Western and another utility, such as the Pacific Gas and 
Electric Company (PG&E). Under Western's Marketing Plan, and from a 
contractual standpoint, Western serves its loads in the CAISO Balancing 
Authority Area from its sub Balancing Authority Area. The statutes and 
Marketing Plan referenced above are not within the scope of this public 
process, and reference to the statutes and Marketing Plan are only 
being included as a background for the development of Western's RA 
Plans. Within this framework, Western developed its RA Plans. Western 
refers interested parties to the Current RA Plan for a more thorough 
analysis of the background for the development of Western's Current RA 
Plan.
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    \10\ Pub. L. No. 88-552, 78 Stat. 756 (1964), as amended; Pub. 
L. No. 98-360, 98 Stat. 403 (1984), as amended, 50 Stat. 844 (1937), 
as amended.
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    Although not specifically stated in Western's Current RA Plan, 
Western has procured its RA Capacity under both the Initial RA Plan and 
the Current RA Plan from qualifying resources either inside or outside 
of the CAISO Balancing Authority Area. These RA Capacity purchases meet 
CAISO Tariff, Section 40, requirements. Western will include in its 
Final RA Plan a statement that Western may continue to procure its RA 
Capacity using qualifying resources either inside or outside the CAISO 
Balancing Authority Area that meet CAISO Tariff, Section 40, 
requirements. For imports, Western will reserve firm transmission to 
the tie point on Western's transmission system to assure delivery 
compliance. Western believes this proposed addition to the Current RA 
Plan is consistent with the CAISO's proposed guidelines for meeting RA 
Capacity requirements.
    In addition, Western proposes to use LD Contracts to meet its RA 
Capacity requirements. By allowing LD Contracts to be used, this gives 
Western a second option to meet its RA Capacity requirements. Western 
is unable to use the CVP hydroelectric facilities in the SMUD Balancing 
Authority Area to meet RA Capacity requirements because, in contrast to 
other utilities and non-jurisdictional LSEs in California, Western must 
follow Federal directives in its marketing and operations. The CVP 
hydroelectric facilities are owned by Reclamation and operated 
primarily to meet authorized project purposes that have a higher 
priority than power generation. Western's flexibility to modify 
generation schedules and ancillary service availability is limited by 
these and other related constraints.
    The customers that are located in the CAISO Balancing Authority 
Area for which the RA Capacity will be procured include Western's Full 
Load Service Customers, Western's four First Preference Customers, the 
National Aeronautics and Space Administration Ames (NASA Ames) Research 
Center, and a subset of Reclamation's Project Use Customers. 
Collectively, these loads are projected to have a monthly peak demand 
of between 280 MW and 350 MW during the October 2006 through December 
2007 period. The RA Capacity procured meets the collective requirements 
of this pool of customers. The table below shows the monthly amounts of 
RA Capacity that have been procured for the period October 2006 through 
December 2007.

  Table 1.--RA Capacity Procured and Suppliers for October 2006 Through
                              December 2007
------------------------------------------------------------------------
                                      RA capacity
               Month                     (MW)             Supplier
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                                  2006
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October...........................              15  PG&E.
November..........................              15  PG&E.
December..........................              15  PG&E.
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                                  2007
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January...........................              16  PG&E.
February..........................              16  PG&E.
March.............................              16  PG&E.
April.............................              16  PG&E.
May...............................              16  Coral Power (Coral).
June..............................              36  Coral.
July..............................              36  Coral.
August............................              36  Coral.
September.........................              36  Coral.
October...........................              16  PG&E.
November..........................              16  PG&E.
December..........................              16  PG&E.
------------------------------------------------------------------------

    If, as a result of this process, Western's procurement of RA 
Capacity is modified, such modification will be reflected in the Final 
RA Plan that Western will supply to the CAISO.

Western's RA Plans

Initial RA Plan

    The CAISO, under Section 40 of both the IRRP and the MRTU Tariff, 
established the guidelines for RA for LSEs for transactions in the 
CAISO Balancing Authority Area. The Commission's May 12, 2006, IRRP 
Order accepted the CAISO proposal to utilize the CPUC's default 
criteria of 15-17 percent RA Capacity for entities subject to the 
CPUC's jurisdiction. In that same Order, the Commission acknowledged 
that other LRAs may develop their own RA Plans.\11\ The CAISO required 
a filing by May 22, 2006, for the June 2006 RA Capacity.
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    \11\ 115 FERC ] 61,172 at paragraph 53.
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    Western reviewed these guidelines, the Commission's decisions, and 
considered Federal and industry standards and guidelines related to 
reliable operations of power systems. Based on these criteria, Western, 
as a CPUC non-jurisdictional LRA, prepared an Initial RA Plan for 
Western's transactions in the CAISO Balancing Authority Area and 
submitted it to the CAISO on May 19, 2006. The RA Capacity standards in 
the Initial RA Plan were as follows:
    For purposes of this LRA Plan, Western will phase in its Planning 
Reserve Margin requirements, as defined in the CAISO Tariff, as 
follows:

------------------------------------------------------------------------
                                                               Planning
                                                               reserve
                       Operative date                           margin
                                                              (percent)
------------------------------------------------------------------------
October 1, 2006............................................            5
February 1, 2007...........................................           10
June 1, 2007...............................................           15
------------------------------------------------------------------------

    For its month-ahead showing, Western will demonstrate that it is 
prepared to meet 100 percent of its forecasted monthly coincident peak 
load.
    Consistent with its Initial RA Plan, Western issued a Request for 
Proposal (RFP) for RA Capacity and procured sufficient capacity on 
August 29, 2006, to meet its 5-percent requirement for October through 
December 2006.

Current RA Plan

    In its September 21, 2006, decision, the Commission stated:

    Other Load serving entities that are CAISO members and serve 
customers in the CAISO control area are required to comply with the 
planning reserve margin for capacity that is set by their LRA. If 
the LRA does not establish such a margin, the default margin will be 
15 percent.\12\
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    \12\ 116 FERC ] 61,274 at para. 10.

After reviewing the Commission's September 21, 2006, decision, Western 
revised its Initial RA Plan in September 2006 to modify its Planning 
Reserve Margin. In its Current RA Plan, Western opted to provide 10-
percent RA Capacity June through September and 5-percent RA Capacity in 
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all other months.

    The Current RA Plan provides as follows:


[[Page 20532]]


    Consistent with the CAISO Tariff, Western will make a year-ahead 
showing that it has a minimum of 90 percent of the capacity required 
to meet its forecasted monthly coincident peak load in the CAISO 
Control Area, as determined by Western, plus its Planning Reserve 
Margin. Under the CAISO IRRP approach, the Planning Reserve Margin 
is a percentage of firm capacity over the demand forecast available 
to the CAISO to meet reserve requirements. Western has determined 
that for the purposes of this LRA Plan, it will provide capacity to 
the CAISO consistent with the CAISO's planning reserve criteria as 
follows:

------------------------------------------------------------------------
                                                               Planning
                                                               reserve
                      Operative months                         capacity
                                                              (percent)
------------------------------------------------------------------------
June-September.............................................           10
January-May & October-December.............................            5
------------------------------------------------------------------------

    For its month-ahead showing, Western will demonstrate that it is 
prepared to meet 100 percent of its forecasted monthly coincident 
peak load.
    Western has further determined that it will conduct a public 
process to provide its customers and other interested parties the 
opportunity to provide input to Western with regard to the amount 
and character of RA Capacity it will provide in the future.

    Consistent with the Current RA Plan, Western issued an RFP for RA 
Capacity and procured sufficient capacity on September 28, 2006, to 
meet the above requirement for calendar year (CY) 2007.
    Other notable provisions of Western's Current RA Plan are:
    1. Western has designated CVP hydroelectric facilities in the SMUD 
Balancing Authority Area as a system resource, with 100 percent of 
forecasted capacity considered to be Qualifying Capacity. The amount of 
Qualifying Capacity for each month is determined utilizing Western's 
rolling 12-month forecast at a 50-percent probability of exceedance for 
the appropriate month. Imports of CVP generation into the CAISO 
Balancing Authority Area are firm, backed by operating reserves as 
required by the Western Electricity Coordinating Council (WECC) and the 
North American Electric Reliability Council (NERC) standards. Western 
will not make CVP capacity available to the CAISO for scheduling in the 
Day-Ahead or Real-Time markets for RA purposes due to specific Federal 
statutes, regulations, and policies which Western must follow in its 
marketing and operations processes.
    2. Western has designated 100 percent of its contract deliveries 
(existing and future LD Contracts) as Qualifying Capacity.

Proposed Final RA Plan

    Western proposes that beginning in 2008 and beyond, Western will 
continue to follow the procedures and standards identified in the 
Current RA Plan. However, Western proposes the following two 
modifications to the Current RA Plan:
    1. Western will procure RA Capacity from qualifying resources 
either inside or outside of the CAISO Balancing Authority Area. In 
order to qualify, a resource must meet CAISO Tariff, Section 40, 
requirements, and for imports, Western will reserve firm transmission 
to the tie point on Western's transmission system to assure delivery 
compliance.
    2. Western is proposing that it may opt to designate some of its 
contract deliveries (existing and future LD Contracts) as RA Capacity. 
These contracts are backed by reserves in the originating Balancing 
Authority Area and are, therefore, considered firm. Western has 
existing firm transmission rights on the PACI and COTP for contracts 
originating in the Northwest, and the remaining contracts have delivery 
points in North Path 15 (NP15), which are firmed by the CAISO or self 
provided by the supplier under CAISO Tariff guidelines.
    Western, as an LRA, will file its Final RA Plan with the CAISO. 
When Western acts as an LSE for transactions in the CAISO Balancing 
Authority Area, Western will comply with its Final RA Plan.

Request for Comments

    The Final RA Plan adopts Western's Current RA Plan with the 
addition of the two items described above. Western seeks input from 
interested stakeholders on the Current RA Plan as it will be 
incorporated into the Final RA Plan. Western's Current RA Plan can be 
found at: http://www.wapa.gov/sn/marketing/racapacity.asp. You may also 
request a copy of the Current RA Plan by (1) Mailing a request to Ms. 
Jeanne Haas at 114 Parkshore Drive, Folsom, CA 95630; (2) e-mailing a 
request to [email protected]; or (3) telephoning a request to Ms. Jeanne 
Haas at (916) 353-4438.
    As part of this proceeding, Western requests comments on its 
proposed Final RA Plan. The comments must be within the scope of this 
proceeding. Western is asking for specific comments on the following:

Types of Resources for RA Capacity

    An LRA has discretion on the type of resource to use to provide RA 
Capacity. Section 40 of the CAISO Tariff allows an LRA to provide its 
own criteria for determining qualifying resource types and the 
Qualifying Capacity from such resources.
    In addition, Section 40 of the MRTU Tariff has an additional 
requirement not prescribed in the IRRP Tariff. Under the MRTU Tariff, 
LRAs must also consider Local Capacity Area Resources requirements 
(Local RAR) to be made available to the CAISO. The CAISO has stated in 
Section 40.3.1 of the MRTU Tariff that the CAISO will collaborate with 
the CPUC, LRAs within the CAISO Balancing Authority Area, and other 
market participants to establish the parameters, assumptions, and other 
criteria to be used and described in the technical study that permit 
compliance with Applicable Reliability Criteria.
    For Local RAR requirements, Western has completed an analysis of 
its loads and concluded that a minimal amount of Western CAISO loads 
may be subject to additional charges associated with this requirement. 
Given the size of these loads and the limited exposure to costs, 
Western is not anticipating the need to procure local RA Capacity 
associated with this requirement. Western will continue to monitor the 
Local RAR process as new information becomes available to determine if 
this approach needs to be revisited.
    In its May 12, 2006, Order in Docket No. ER06-723-000, the 
Commission stated ``WAPA, as an LRA, can determine the extent to which 
liquidated damages contracts count toward its RA requirements.'' \13\ 
Western, as an LRA, has submitted both an Initial RA Plan and its 
Current RA Plan with its own standards for meeting its Qualifying 
Capacity requirements including its RA Capacity standards, which have 
been provided to the CAISO.
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    \13\ 115 FERC ] 61,172 at para. 98.
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    Congress authorized the construction of both the PACI and the COTP 
so Western could import power from the Pacific Northwest. Currently, 
Western imports this power into its sub Balancing Authority Area. 
Included in the power Western imports are LD Contracts. Western further 
notes that LD contracts are backed by reserves in the originating 
Balancing Authority Area and are, therefore, considered firm. Western 
has existing transmission rights on the PACI and the COTP for the 
contracts originating in the Northwest, and the remaining contracts 
have delivery points in NP15, which are firmed by the CAISO or self 
provided by the supplier under CAISO Tariff guidelines.

[[Page 20533]]

    Western proposes to include the following as RA Capacity resources:
    1. LD Contracts with firm transmission to a tie point if it is an 
import.
    2. RA Capacity procured from qualifying resources either inside or 
outside the CAISO Balancing Authority Area. In order to qualify, a 
resource must meet CAISO Tariff, Section 40, requirements, and for 
imports, Western will reserve firm transmission to the tie point on 
Western's system to assure delivery compliance.
    Western requests comments on the inclusion of these resources, if 
other resources should be included, or whether certain resources listed 
above should be excluded. After considering the comments received 
during this process, Western will establish a final list of types of 
resources which, as an LRA, Western will include as part of its Final 
RA Plan.
    As part of this proceeding, Western requests comments on the types 
of RA Capacity, including Local RAR that Western should be procuring on 
behalf of its loads in the CAISO Balancing Authority Area.

Amount of RA Capacity To Be Procured

    Section 40 of both the IRRP and the MRTU Tariff allow an LRA to 
establish its own criteria for the establishment of its Planning 
Reserve Margins. Western is committed to meeting operating reserve 
requirements consistent with WECC and NERC standards. Within Western's 
sub Balancing Authority Area, Western has sufficient resources to 
reliably operate and balance the loads and resources consistent with 
prudent utility practice. Western's loads on the CAISO's transmission 
grid, for which Western is the LSE, are less than 1 percent (peak 
demand estimate of 350 MW) of the overall demand of the CAISO 
transmission grid (CAISO's 2007 Summer Assessment estimated at 47,000 
MW). Western has procured RA Capacity consistent with the standards 
identified in the Current RA Plan through 2007, which is 10 percent 
June through September and 5 percent in all other months, based on 
projected monthly peak customer loads.
    Western proposes that beginning in 2008 and beyond, Western will 
continue to procure RA Capacity in the same manner as is identified in 
the Current RA Plan (10 percent June through September and 5 percent in 
all other months). This proceeding will determine Western's standards 
for meeting the CAISO's RA Capacity requirements in Section 40 of the 
IRRP and MRTU Tariff in the future. Once this process has concluded, 
Western will review its Current RA Plan and, based on the comments 
received, may make modifications before submitting a Final RA Plan to 
address future procurement of RA Capacity.
    As part of this proceeding, Western requests comments on the amount 
(monthly percentage) of RA Capacity it should procure in the future.

Allocation of Costs for RA Capacity

    Under Western's current methodology, Western is allocating the 
monthly costs associated with its procurements of RA Capacity on a load 
ratio share basis to the loads in the CAISO Balancing Authority Area 
for which the RA Capacity was procured. These customers include 
Western's Full Load Service Customers, Western's four First Preference 
Customers, the NASA Ames Research Center, and a subset of Reclamation's 
Project Use Customers. Under the current allocation methodology, all of 
these loads are allocated a respective share of RA Capacity costs based 
on their projected load levels in the months that are covered by the 
current procurements. Western believes it is appropriate to allocate 
these costs to these customers since Western, as the LSE, incurs these 
charges to schedule with the CAISO on behalf of these customers.
    Western proposes that beginning in 2008 and beyond, Western will 
continue to allocate the monthly costs associated with its procurements 
of RA Capacity on a load ratio share basis to the loads that are 
receiving the benefits of those procurements.
    As part of this proceeding, Western requests comments on whether to 
maintain the existing methodology for allocating costs among customers 
for RA Capacity costs or to implement a new methodology. Western 
requests that comments to change the methodology contain reasons for 
the change.
    Western will address all comments within the scope of these 
proceedings in its Federal Register notice implementing a Final RA 
Plan. The Federal Register notice will be published prior to the 
effective date of the Final RA Plan.
    Normally, the final plan would be effective 30 days after 
Administrator approval. In this instance, after the Administrator 
approves the Final RA Plan, Western anticipates the effective date of 
the Final RA Plan will be July 17, 2007. Western's Final RA Plan must 
be in place by this date to align Western's procurement process with 
the CAISO's required annual showing for CY 2008 by September 30, 2007. 
This allows Western to be competitive in the RA Capacity market.
    On the effective date, the Final RA Plan will replace the Current 
RA Plan. As discussed in the body of this notice, the Final RA Plan may 
differ from the CPUC's or other LRA's RA Plan. Western's Final RA Plan 
is being developed by Western as an LRA and is intended to only apply 
to Western, acting as an LSE in the CAISO Balancing Authority Area. It 
is not meant to apply to other LSEs in the CAISO Balancing Authority 
Area. Those LSEs are subject to the authority of the CPUC or other LRAs 
and, as such, are outside of Western's jurisdiction.

Availability of Information

    All studies, comments, letters, memorandums, or other documents 
made or kept by Western for developing the final plan, will be made 
available for inspection and copying at Western's Sierra Nevada Region 
Office, located at 114 Parkshore Drive, Folsom, CA 95630-4710.

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 through 1508); and 
the Integrated DOE NEPA Implementing Procedures (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.

    Dated: April 18, 2007.
Timothy J. Meeks,
Administrator.
 [FR Doc. E7-7870 Filed 4-24-07; 8:45 am]
BILLING CODE 6450-01-P