[Federal Register Volume 74, Number 133 (Tuesday, July 14, 2009)]
[Notices]
[Pages 34012-34014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16690]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Pick-Sloan Missouri Basin Program--Eastern Division--Rate Order 
No. WAPA-147

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Proposed Power Rates.

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SUMMARY: The Western Area Power Administration (Western) is proposing 
revised rates for Pick-Sloan Missouri Basin Program--Eastern Division 
(P-SMBP--ED) firm electric and firm peaking power service. Current 
rates, under Rate Schedules P-SED-F10 and P-SED-FP10, extend through 
December 31, 2013, but are not sufficient to meet the P-SMBP--ED 
revenue requirements. The proposed rates will provide sufficient 
revenue to pay all annual costs, including interest expense, and repay 
investments within the allowable periods. Western will prepare and make 
available a brochure that provides detailed information on the proposed 
rates. The proposed rates, under Rate Schedules P-SED-F11 and P-SED-
FP11, would go into effect on January 1, 2010, and would remain in 
effect through December 31, 2014, or until superseded. Publication of 
this Federal Register notice begins the formal process for the proposed 
rate adjustment.

DATES: The consultation and comment period begins today and will end 
October 13, 2009. Western will present a detailed explanation of the 
proposed rates at public information forums. Public information forum 
dates are:
    1. August 18, 2009, 9 a.m. to 10:30 a.m. MDT, Northglenn, Colorado.
    2. August 19, 2009, 9 a.m. to 10:30 a.m. CDT, Sioux Falls, South 
Dakota.
    Western will accept oral and written comments at public comment 
forums. Public comment forums will be held on the following dates:
    1. August 18, 2009, 11 a.m. to no later than 12 noon MDT, 
Northglenn, Colorado.
    2. August 19, 2009, 11 a.m. to no later than 12 noon CDT, Sioux 
Falls, South Dakota.
    Western will accept written comments any time during the 
consultation and comment period.

ADDRESSES: Written comments and/or requests to be informed of Federal 
Energy Regulatory Commission (FERC) actions concerning the rates 
submitted by Western to FERC for approval should be sent to Mr. Robert 
J. Harris, Regional Manager, Upper Great Plains Region, Western Area 
Power Administration, 2900 4th Avenue North, Billings, MT 59101-1266, 
or e-mail at [email protected]. Western will post information about 
the rate process on its Web site at http://www.wapa.gov/ugp/rates/2010firmrateadjust. Western will post comments received via letter and 
e-mail to its Web site after the close of the comment period. Written 
comments must be received by the end of the consultation and comment 
period to be considered by Western in its decision process.
    Public information and comment forum locations are:
    1. Northglenn--Ramada Plaza Hotel, 10 East 120th Avenue, 
Northglenn, Colorado.
    2. Sioux Falls--Holiday Inn, 100 West 8th Street, Sioux Falls, 
South Dakota.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Cady-Hoffman, Rates Manager, 
Upper Great Plains Region, Western Area Power Administration, 2900 4th 
Avenue North, Billings, MT 59101-1266, telephone (406) 247-7439, e-mail 
[email protected].

SUPPLEMENTARY INFORMATION: The proposed rates for P-SMBP--ED firm 
electric and firm peaking service are designed to recover an annual 
revenue requirement that includes investment repayment, interest, 
purchase power, operation and maintenance, and other expenses.
    The Acting Deputy Secretary of Energy approved existing Rate 
Schedules P-SED-F10 and P-SED-FP10 for firm electric and firm peaking 
service on an interim basis on January 8, 2009 (74 FR, 3022, January 
16, 2009), for a 5-year period beginning on February 1, 2009, and 
ending December 31, 2013, or until superseded. FERC confirmed and 
approved those Rate Schedules on a final basis on April 28, 2009.\1\ 
Under Rate Schedule P-SED-F10 effective February 1, 2009, the composite 
rate is 29.34 mills per kilowatthour (mills/kWh), the firm energy rate 
is 16.71 mills/kWh, and the firm capacity rate is $6.80 per 
kilowattmonth (kWmonth). The projected revenue requirement for firm 
electric service is allocated equally between capacity and energy. 
Under Rate Schedule P-SED-FP10 effective February 1, 2009, the firm 
peaking capacity rate is $6.20/kWmonth. These Rate Schedules are 
formula-based, providing for an increase in the Drought Adder rate 
component of up to 2 mills/kWh without a formal public process.
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    \1\ FERC confirmed and approved Rate Order No. WAPA-140 on April 
28, 2009, in Docket No. EF09-5031-000. See United States Department 
of Energy, Western Area Power Administration, Pick-Sloan Missouri 
Basin Program, 127 FERC ]62075 (April 28, 2009).
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    This proposed rate adjustment reflects a rate increase based on the 
P-SMBP Fiscal Year 2008 Power Repayment Study (PRS). The PRS sets the 
total annual P-SMBP--ED revenue requirement for 2010 for firm electric 
and firm peaking power service at $320.2 million, or a 13.1 percent 
increase for a composite rate of 33.25 mills/kWh. The current rates, 
including a 2 mills/kWh increase provided for under the Drought Adder 
formula rate component, are not sufficient to meet the P-SMBP--ED 
revenue requirements. Given the need for a Base rate component increase 
and the size of the Drought Adder rate component increase, Western is 
required to initiate a formal public process.\2\ Western has prepared 
the proposed rate schedules for firm electric service (P-SED-F11) and 
firm peaking service (P-SED-FP11) for consideration and comment during 
this public process. A comparison of the existing revenue requirement 
and rates and the proposed revenue requirement and rates under P-SED-
F11 and P-SED-FP11 is listed in Table 1.
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    \2\ Under the current Rate Schedules, Western had the option of 
increasing the Drought Adder rate component by up to 2 mills/kWh 
outside of a formal public process and only initiating the formal 
public process for the Base rate component increase and the 
incremental increase of the Drought Adder rate component above 2 
mills/kWh. Instead, Western has opted to initiate the formal public 
process for this rate increase.

[[Page 34013]]



Table 1--P-SMBP--ED Firm Electric and Firm Peaking Power Service Revenue
                          Requirement and Rates
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                               Existing rates
    Firm electric service      as of Feb. 1,    Proposed rates   Percent
                                    2009         Jan. 1, 2010    change
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Firm and Firm Peaking         $283.0 million.  $320.2 million.      13.1
 Revenue Requirement.
Composite Rate..............  29.34 mills/kWh  33.25 mills/kWh      13.3
Firm Capacity Rate..........  $6.80/kWmonth..  $7.65/kWmonth..      12.5
Firm Energy Rate............  16.71 mills/kWh  19.05 mills/kWh      14.0
Firm Peaking Capacity Rate..  $6.20/kWmonth..  $6.90/kWmonth..      11.3
Firm Peaking Energy Rate \1\  16.71 mills/kWh  19.05 mills/kWh     14.0
------------------------------------------------------------------------
\1\ Firm peaking energy is normally returned. This will be assessed in
  the event firm peaking energy is not returned.

    Under Rate Schedule P-SED-F11, Western is proposing to continue to 
identify its firm electric service revenue requirement using Base and 
Drought Adder rate components and provide for an annual increase in the 
Drought Adder rate component of up to 2 mills/kWh. The Base rate 
component is a revenue requirement that includes annual operation and 
maintenance expenses, investment repayment and associated interest, 
normal timing power purchases, and transmission costs. Western's normal 
timing power purchases are due to operational constraints (e.g., 
management of endangered species habitat, water quality, navigation, 
etc.) and are not associated with the current drought. The Drought 
Adder rate component is a formula-based revenue requirement that 
includes costs attributable to the past and present drought conditions. 
The Drought Adder rate component includes costs associated with future 
non-timing purchases of additional power to firm obligations not 
covered with available system generation due to the drought, previously 
incurred deficits due to purchased power debt that resulted from non-
timing power purchases made during this drought, and the interest 
associated with the previously incurred and future drought debt. The 
Drought Adder rate component is designed to repay Western's drought 
debt within 10 years from the time the debt was incurred, using 
balloon-payment methodology. For example, the drought debt incurred by 
Western in 2008 will be repaid by 2018.
    The annual revenue requirement calculation will continue to be 
summarized by the following formula: Annual Revenue Requirement = Base 
Revenue Requirement + Drought Adder Revenue Requirement. Under this 
proposal, effective January 1, 2010, the P-SMBP--ED annual revenue 
requirement equals $332.8 million and is comprised of a Base revenue 
requirement of $166.0 million plus a Drought Adder revenue requirement 
of $166.8 million. Both the Base and Drought Adder rate components 
recover portions of the firm power revenue requirement, firm peaking 
power, and associated 5 percent discount revenue necessary to equal the 
P-SMBP--ED revenue requirement. A comparison of the current and 
proposed rate components is listed in Table 2.

                                 Table 2--Summary of P-SMBP--ED Rate Components
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                                    Existing rates as of February 1, 2009      Proposed rates January 1, 2010
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                                                   Drought                                Drought
                                     Base rate    Adder rate     Total      Base rate    Adder rate     Total
                                     component    component                 component    component
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Firm Capacity Rate (/kWmonth).....        $3.80        $3.00        $6.80        $3.80        $3.85        $7.65
Firm Energy Rate (mills/kWh)......         9.27         7.44        16.71         9.53         9.52        19.05
Firm Peaking Capacity Rate (/             $3.40        $2.80        $6.20        $3.45        $3.45        $6.90
 kWmonth).........................
Firm Peaking Energy Rate (mills/           9.27         7.44        16.71         9.53         9.52       19.05
 kWh)\1\..........................
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\1\Firm peaking energy is normally returned. This will be assessed in the event firm peaking energy is not
  returned.

    As set forth in Table 2 above, under proposed Rate Schedule P-SED-
FP11, the firm peaking capacity rate will increase to $6.90/kWmonth, or 
an 11.3 percent increase for the proposed January 1, 2010, rate 
adjustment. Peaking energy is either returned to Western or paid for in 
accordance with the terms of the contract between Western and the 
peaking power customer.
    Continuing to identify the firm electric service revenue 
requirement using Base and Drought Adder rate components will assist 
Western in the presentation of the impacts of the drought within the 
Pick-Sloan Program, demonstrate repayment of the drought related costs 
in the PRS, and allow Western to be more responsive to changes in 
drought related expenses. Western will continue to charge and bill its 
customers firm electric service rates for energy and capacity, which 
are the sum of the Base and Drought Adder rate components.
    Western reviews its firm electric service rates annually. Western 
will review the Base rate component after the annual PRS is completed, 
generally in the first quarter of the calendar year. If an adjustment 
to the Base rate component is necessary, Western will initiate a public 
process pursuant to 10 CFR part 903 prior to making an adjustment.
    In accordance with the original implementation of the Drought Adder 
rate component, Western will continue to review the Drought Adder rate 
component each September to determine if drought costs differ from 
those projected in the PRS, and, if so, whether an adjustment, either 
incremental or decremental, to the Drought Adder rate component is 
necessary. Western will notify customers by letter in October of the 
planned incremental or decremental adjustment and implement the 
adjustment in the January billing cycle. Although decremental 
adjustments to the Drought Adder rate component will occur as drought 
costs are repaid, the adjustments cannot result in a negative Drought 
Adder rate component. To give customers advance notice, Western will

[[Page 34014]]

conduct a preliminary review of the Drought Adder rate component in 
early summer and notify customers by letter of the estimated change to 
the Drought Adder rate component for the following January, with the 
final Drought Adder rate component adjustment verified with 
notification in the October letter to the customers. Implementing the 
Drought Adder rate component adjustment on January 1 of each year will 
help keep the drought deficits from escalating as quickly, will lower 
the interest expense due to drought deficits, will demonstrate 
responsible deficit management, and will provide prompt drought deficit 
repayments.
    As a part of the current and proposed rate schedules, Western 
provides for a formula-based adjustment of the Drought Adder rate 
component of up to 2 mills/kWh. The 2 mills/kWh cap is intended to 
place a limit on the amount the Drought Adder formula can be adjusted 
relative to associated drought costs without having to go through a 
public process to recover costs attributable to the Drought Adder 
formula rate for any 1-year cycle.

Legal Authority

    Since the proposed rates constitute a major rate adjustment as 
defined by 10 CFR part 903, Western will hold public information forums 
and public comment forums. Western will review all timely public 
comments and make amendments or adjustments to the proposal as 
appropriate. Proposed rates will be forwarded to the Deputy Secretary 
of Energy for approval on an interim basis.
    Western is establishing firm electric service and peaking rates for 
P-SMBP--ED under the Department of Energy Organization Act (42 U.S.C. 
7152); the Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as amended 
and supplemented by subsequent laws, particularly section 9(c) of the 
Reclamation Project Act of 1939 (43 U.S.C. 485h(c)); section 5 of the 
Flood Control Act of 1944 (16 U.S.C. 825s); and other acts that 
specifically apply to the projects involved.
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates 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 power rate adjustments (10 CFR part 903) were 
published on September 18, 1985.

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents that Western initiates or uses to develop the proposed rates 
are available for inspection and copying at the Upper Great Plains 
Regional Office, located at 2900 4th Avenue North, Billings, Montana. 
Many of these documents and supporting information are also available 
on Western's Web site under the ``2010 Firm Rate Adjustment'' section 
located at http://www.wapa.gov/ugp/rates/2010firmrateadjust.

Ratemaking Procedure Requirements

Environmental Compliance

    In compliance with the National Environmental Policy Act (NEPA) of 
1969 (42 U.S.C. 4321-4347), Council on Environmental Quality 
Regulations (40 CFR parts 1500-1508), and DOE NEPA Regulations (10 CFR 
part 1021), Western is in the process of determining whether an 
environmental assessment or an environmental impact statement should be 
prepared or if this action can be categorically excluded from those 
requirements.

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: June 29, 2009.
Timothy J. Meeks,
Administrator.
[FR Doc. E9-16690 Filed 7-13-09; 8:45 am]
BILLING CODE 6450-01-P