[Federal Register Volume 73, Number 156 (Tuesday, August 12, 2008)]
[Notices]
[Pages 46902-46903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-18575]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Boulder Canyon Project

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Base Charge and Rates.

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SUMMARY: The Deputy Secretary of Energy approved the Fiscal Year (FY) 
2009 Base Charge and Rates (Rates) for Boulder Canyon Project (BCP) 
electric service provided by the Western Area Power Administration 
(Western). The Rates will provide sufficient revenue to pay all annual 
costs, including interest expense, and repay investments within the 
allowable period.

DATES: The Rates will be effective the first day of the first full 
billing period beginning on or after October 1, 2008. These Rates will 
stay in effect through September 30, 2009, or until superseded by other 
rates.

FOR FURTHER INFORMATION CONTACT: Mr. Jack Murray, Rates Manager, Desert 
Southwest Customer Service Region, Western Area Power Administration, 
P.O. Box 6457, Phoenix, AZ 85005-6457, (602) 605-2442, e-mail 
[email protected].

SUPPLEMENTARY INFORMATION: Rate Schedule BCP-F7, Rate Order No. WAPA-
120, effective October 1, 2005, through September 30, 2010, allows for 
an annual recalculation of the rates.\1\
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    \1\ WAPA-120 was approved by the Deputy Secretary of Energy on 
August 11, 2005 (70 FR ] 71280), and confirmed and approved by the 
Federal Energy Regulatory Commission (FERC) on a final basis on 
August 26, 2005, in Docket No. EF05-5091-000 (115 FERC ] 61362).
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    Under Rate Schedule BCP-F7, the existing composite rate, effective 
on October 1, 2007, was 17.64 mills per kilowatthour (mills/kWh). The 
base charge was $66,975,283, the energy rate was 8.82 mills/kWh, and 
the capacity rate was $1.63 per kilowattmonth (kWmonth). The re-
calculated rates for BCP electric service, to be effective October 1, 
2008, will result in an overall composite rate of 18.62 mills/kWh. The 
proposed rates were calculated using the FY 2009 Final Ten-Year 
Operating Plan. This resulted in an increase of approximately 5.56 
percent when compared with the existing BCP electric service composite 
rate. The increase is due to a decrease in the projected energy sales 
and an increase in the annual revenue requirement. The FY 2009 base 
charge is increasing to $70,213,497. The major contributing factor to 
the base charge increase is the increase in annual expenses. The FY 
2009 energy rate of 9.31 mills/kWh is approximately a 5.56 percent 
increase from the existing energy rate of 8.82 mills/kWh. The increase 
in the energy rate is due to a decrease in the projected energy sales 
resulting from a decrease in projected water releases. The FY 2009 
capacity rate of $1.73/kWmonth reflects an increase of approximately 
6.13 percent compared to the existing capacity rate of $1.63/kWmonth. 
The increase in the capacity rate is due to dropping lake elevations. 
Another factor contributing to the increase in both the energy and 
capacity rates is the increase in the annual revenue requirement.
    The following summarizes the steps taken by Western to ensure 
involvement of all Interested Parties in determining the Rates:
    1. A Federal Register notice was published on February 1, 2008 (73 
FR 6177), announcing the proposed rate adjustment process, initiating a 
public consultation and comment period, announcing public information 
and public comment forums, and presenting procedures for public 
participation.
    2. On February 4, 2008, a letter was mailed from Western's Desert 
Southwest Customer Service Region to the BCP Contractors and other 
Interested Parties announcing an informal customer meeting and public 
information and comment forums.
    3. Discussion of the proposed Rates was initiated at an informal 
BCP Contractor meeting held March 12, 2008, in Phoenix, Arizona. At 
this informal meeting, representatives from Western and the Bureau of 
Reclamation (Reclamation) explained the basis for estimates used to 
calculate the Rates and held a question and answer session.
    4. At the public information forum held on April 2, 2008, in 
Phoenix, Arizona, Western and Reclamation representatives explained the 
proposed Rates for FY 2009 in greater detail and held a question and 
answer session.
    5. A public comment forum held on April 23, 2008, in Phoenix, 
Arizona, provided the public an opportunity to comment for the record. 
Three individuals commented at this forum.
    6. Western received one comment letter during the 90-day 
consultation and comment period. The consultation and comment period 
ended May 1, 2008. All comments were considered in developing the Rates 
for FY 2009. Written comments were received from:
    Irrigation & Electrical Districts Association of Arizona, Phoenix, 
Arizona.
    Comments and responses, paraphrased for brevity when not affecting 
the meaning of the statements, are presented below.

Rates Stability

    Comment: BCP Contractors expressed concern that the composite rate 
has increased from 8.93 mills/kWh in 2000 to 18.53 mills/kWh in 2009. 
The BCP Contractors further suggested that since major projects at 
Hoover which resulted in increased spending are complete and Lake Mead 
water levels continue to be low, Western and Reclamation should 
postpone expenditures where possible and strive to structure budgets in 
such a way to levelize or reduce rates.
    Response: Western and Reclamation appreciate the BCP Contractors' 
concern over reduced generation and increased spending. Much of the 
increased spending is aimed toward maintaining the reliability of the 
Hoover resource and achieving maximum energy and capacity even as Lake 
Mead water levels decline. However, Western and Reclamation will 
continue to partner with the Hoover Contractors, through the 
Engineering and Operating Committee and the Technical Review Committee, 
to seek ways to structure budgets in such a way to minimize cost 
increases while maintaining the safe and reliable operation of the 
project.

Security Costs Legislation

    Comment: An Interested Party made a statement with regard to Senate 
Bill S. 2739. Section 513 of that bill contains post-September 11, 
2001, security cost legislation which specifies the amount of security 
costs which will be considered non-reimbursable. The Interested Party 
requested that Western and Reclamation adjust their budgets to account 
for the legislation.
    Response: The President of The United States signed Senate Bill 
S.2739 into law on May 8, 2008 (Pub. L. 110-229). Reclamation will 
determine if any reimbursable costs in Section 513 will be deemed non-
reimbursable under this new law. If the determination is made prior to 
the finalization of the rate package, Western will implement 
appropriate changes, if necessary to the FY 2009 Rates. If the 
determination is made after the rate package is finalized, then any 
security costs deemed non-reimbursable will roll into carry over, 
reducing FY 2010 Rates.

[[Page 46903]]

Hydrology

    Comment: An Interested Party sought assurance that Western, in its 
base charge and rates calculation, take into account the new 
Reclamation 24-month study. The revised study should show equalization 
releases from Lake Powell beginning in May and continuing through 
September. The end result could be increased efficiencies and a 
reduction in the per-unit cost for capacity charged to customers.
    Response: Western will utilize the final master schedule which 
includes the most current 24-month study prior to submitting the rate 
package for approval. The final master schedule is normally completed 
in early June and will have the most up to date information available 
at that time.

BCP Electric Service Rates

    BCP electric service rates are designed to recover an annual 
revenue requirement that includes operation and maintenance expenses, 
payments to states, visitor services, the uprating program, 
replacements, investment repayment, and interest expense. Western's 
Power Repayment Study (PRS) allocates the projected annual revenue 
requirement for electric service equally between capacity and energy.

Availability of Information

    Information about this base charge and rate adjustment, including 
power repayment studies, comments, letters, memorandums, and other 
supporting material developed or maintained by Western that was used to 
develop the FY 2009 BCP Rates, is available for public review in the 
Desert Southwest Customer Service Regional Office, Western Area Power 
Administration, 615 South 43rd Avenue, Phoenix, Arizona. The 
information is also available on Western's Web site at http://www.wapa.gov/dsw/pwrmkt/BCP/RateAdjust.htm.

Ratemaking Procedure Requirements

    BCP electric service rates are developed under the Department of 
Energy Organization Act (42 U.S.C. 7101-7352), through which the power 
marketing functions of the Secretary of the Interior and Reclamation 
under the Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as amended 
and supplemented by subsequent enactments, particularly section 9(c) of 
the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)), and other acts 
that specifically apply to the project involved, were transferred to 
and vested in the Secretary of Energy, acting by and through Western.
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop long-term 
power and transmission rates on a non-exclusive basis to Western's 
Administrator, (2) the authority to confirm, approve, and place such 
rates into effect on an interim basis to the Deputy Secretary of 
Energy, and (3) the authority to confirm, approve, and place into 
effect on a final basis, to remand or to disapprove such rates to FERC. 
Existing DOE procedures for public participation in electric service 
rate adjustments are located at 10 CFR part 903, effective September 
18, 1985 (50 FR 37835), and 18 CFR part 300. DOE procedures were 
followed by Western in developing the rate formula approved by FERC on 
June 22, 2006, at 115 FERC ] 61362.\2\
    The Boulder Canyon Project Implementation Agreement requires that, 
prior to October 1 of each rate year, Western determine the annual 
rates for the next fiscal year. The rates for the first rate year, and 
each fifth rate year thereafter, will become effective provisionally 
upon approval by the Deputy Secretary of Energy subject to final 
approval by FERC. For all other rate years, the rates will become 
effective on a final basis upon approval by the Deputy Secretary of 
Energy.
    Western will continue to provide annual rates to the BCP 
Contractors by October 1 of each year using the same ratesetting 
formula. The rates are reviewed annually and adjusted upward or 
downward to assure sufficient revenues are collected to achieve payment 
of all costs and financial obligations associated with the project. 
Each fiscal year, Western prepares a PRS for the BCP to update actual 
revenues and expenses including interest, estimates of future revenues, 
expenses, and capitalized costs.
    The BCP ratesetting formula includes a base charge, an energy rate, 
and a capacity rate. The ratesetting formula was used to determine the 
BCP FY 2009 Rates.
    Western proposes a FY 2009 base charge of $70,213,497, an energy 
rate of 9.31 mills/kWh, and a capacity rate of $1.73/kWmonth be 
approved on a final basis.
    Consistent with procedures set forth in 10 CFR part 903 and 18 CFR 
part 300, Western held a consultation and comment period. The notice of 
the proposed FY 2009 Rates for electric service was published in the 
Federal Register on February 1, 2008 (73 FR 6177).
    Under Delegation Order Nos. 00-037.00 and 00-001.00B, and in 
compliance with 10 CFR part 903 and 18 CFR part 300, I hereby approve 
the FY 2009 Rates for BCP Electric Service on a final basis under Rate 
Schedule BCP-F7 through September 30, 2009.

    Dated: August 1, 2008.
Jeffrey F. Kupfer,
Acting Deputy Secretary.
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    \2\ The existing ratesetting formula was established in Rate 
Order No. WAPA-70 on April 19, 1996, in Docket No. EF96-5091-000 at 
75 FERC ] 62050, for the period beginning November 1, 1995, and 
ending September 30, 2000. Rate Order No. WAPA-94, extending the 
existing ratesetting formula beginning on October 1, 2000, and 
ending September 30, 2005, was approved on July 31, 2001, in Docket 
No. EF00-5092-000 at 96 FERC ] 61171. Rate Order No. WAPA-120, 
extending the existing ratesetting formula for another five-year 
period beginning on October 1, 2005, and ending September 30, 2010, 
was approved on June 22, 2006, in Docket No. EF05-5091-000 at 115 
FERC ] 61362.
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[FR Doc. E8-18575 Filed 8-11-08; 8:45 am]
BILLING CODE 6450-01-P