[Federal Register Volume 74, Number 242 (Friday, December 18, 2009)]
[Notices]
[Pages 67191-67197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30147]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Loveland Area Projects--Rate Order No. WAPA-146

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of order concerning firm electric rates.

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SUMMARY: The Deputy Secretary of Energy has confirmed and approved Rate 
Order No. WAPA-146 and Rate Schedule L-F9, placing firm electric 
service rates from the Loveland Area Projects (LAP) of the Western Area 
Power Administration (Western) into effect on an interim basis. The 
provisional rates will be in effect until the Federal Energy Regulatory 
Commission (FERC) confirms, approves, and places them into effect on a 
final basis or until they are replaced by other rates. The provisional 
rates will provide sufficient revenue to pay all annual costs, 
including interest expense, and repay investments and irrigation aid 
within the allowable periods.

DATES: Rate Schedule L-F9 will be placed into effect on an interim 
basis on the first day of the first full billing period beginning on or 
after January 1, 2010, and will remain in effect until FERC confirms, 
approves, and places the rate schedule into effect on a final basis 
ending December 31, 2014, or until the rate schedule is superseded.

FOR FURTHER INFORMATION CONTACT: Mr. Bradley S. Warren, Regional 
Manager, Rocky Mountain Customer Service Region, Western Area Power 
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, telephone (970) 461-7201, or Mrs. Sheila D. Cook, Rates Manager, 
Rocky Mountain Customer Service Region, Western Area Power 
Administration, 5555 East Crossroads Boulevard, Loveland, CO 80538-
8986, telephone (970) 461-7211, e-mail [email protected].

SUPPLEMENTARY INFORMATION: The Acting Deputy Secretary of Energy 
approved existing Rate Schedule L-F8 for firm electric service on an 
interim basis on January 8, 2009 (74 FR 3015, January 16, 2009), for a 
5-year period beginning on February 1, 2009, and ending December 31, 
2013.\1\ Under Rate Schedule L-F8, the composite rate is 37.24 mills 
per kilowatthour (mills/kWh), the firm energy rate is 18.62 mills/kWh, 
and the firm capacity rate is $4.88 per kilowattmonth (kWmonth). This 
Rate Schedule is 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 WAPA-142 on June 26, 
2009, in Docket No. EF09-5181. See United States Department of 
Energy, Western Area Power Administration, Loveland Area Projects, 
127 FERC ] 62,245.
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    The current rate, including a 2 mills/kWh increase provided for 
under the Drought Adder rate component, is not sufficient to meet the 
LAP revenue requirement. As a result, the LAP firm electric service 
rates must be increased mostly due to the financial impacts of the 
drought. The drought is causing a decrease in hydro-power generation, 
leading to an increase in purchase power expenses and a decrease in 
revenue from non-firm energy sales. Additional increases are being 
driven by slight increases in operation and maintenance costs, as well 
as the inclusion of additional transmission costs associated with the 
wheeling of Mt. Elbert generation in the Fryingpan-Arkansas Power 
Repayment Study.
    Rate Schedule L-F8 is being superseded by Rate Schedule L-F9. Under 
Rate Schedule L-F9, the provisional rates for firm electric service 
will result in a composite rate of 41.42 mills/kWh. The firm energy 
rate will be 20.71 mills/kWh (a Base component of 12.54 mills/kWh and a 
Drought Adder component of 8.17 mills/kWh) and the capacity rate will 
be $5.43/kWmonth (a Base component of $3.29/kWmonth and a Drought Adder 
component of $2.14/kWmonth). This is an 11.2 percent increase when 
compared to the LAP firm electric rates under Rate Schedule L-F8.
    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 the Administrator of Western; (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 Department of Energy 
procedures for public participation in power rate adjustments (10 CFR 
part 903) were published on September 18, 1985.
    Under Delegation Order Nos. 00-037.00 and 00-001.00C, 10 CFR part 
903, and 18 CFR part 300, I hereby confirm, approve, and place Rate 
Order No. WAPA-146, the proposed LAP firm electric service rates, into 
effect on an interim basis.
    The new Rate Schedule L-F9 will be promptly submitted to FERC for 
confirmation and approval on a final basis.


[[Page 67192]]


    Dated: December 14, 2009.
Daniel B. Poneman,
Deputy Secretary.

Department of Energy Deputy Secretary

 [Rate Order No. WAPA-146]

In the matter of: Western Area Power Administration Rate Adjustment for 
the Loveland Area Projects; Order Confirming, Approving, and Placing 
the Loveland Area Projects Firm Electric Service Rates Into Effect on 
an Interim Basis

    These rates for the Loveland Area Projects were established in 
accordance with section 302 of the Department of Energy (DOE) 
Organization Act (42 U.S.C. 7152). This Act transferred to and vested 
in the Secretary of Energy the power marketing functions of the 
Secretary of the Department of the Interior and the Bureau of 
Reclamation under 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 project 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 the Administrator of Western; (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 the Federal Energy Regulatory Commission. 
Existing DOE procedures for public participation in power rate 
adjustments (10 CFR part 903) were published on September 18, 1985.

Acronyms and Definitions

    As used in this Rate Order, the following acronyms and definitions 
apply:
Administrator: The Administrator of the Western Area Power 
Administration.
Base: Revenue requirement component of the firm electric service 
rate including annual operation and maintenance expenses, investment 
repayment and associated interest, normal timing power purchases, 
and transmission costs.
Capacity: The electric capability of a generator, transformer, 
transmission circuit, or other equipment. It is expressed in 
kilowatts.
Capacity Rate: The rate which sets forth the charges for capacity. 
It is expressed in dollars per kilowattmonth and applied to each 
kilowatt of the Contract Rate of Delivery (CROD).
Composite Rate: The rate for commercial firm power which is the 
total annual revenue requirement for capacity and energy divided by 
the total annual energy sales. It is expressed in mills per 
kilowatthour and used for comparison purposes.
Criteria: The Post-1989 General Power Marketing and Allocation 
Criteria for the sale of energy with capacity from the Pick-Sloan 
Missouri Basin Program--Western Division and the Fryingpan-Arkansas 
Project.
Customer: An entity with a contract that is receiving firm electric 
service from Western's Rocky Mountain Region.
Deficits: Deferred or unrecovered annual and/or interest expenses.
DOE: The United States Department of Energy.
DOE Order RA 6120.2: An order outlining power marketing 
administration financial reporting and rate-making procedures.
Drought Adder: Formula-based revenue requirement component including 
costs associated with the drought.
Energy: Power produced or delivered over a period of time. It is 
expressed in kilowatthours.
Energy Rate: The rate which sets forth the charges for energy. It is 
expressed in mills per kilowatthour and applied to each kilowatthour 
delivered to each Customer.
FERC: The Federal Energy Regulatory Commission.
Firm: A type of product and/or service always available at the time 
requested by a Customer.
FRN: Federal Register notice.
Fry-Ark: Fryingpan-Arkansas Project.
FY: Fiscal year; October 1 to September 30.
kW: Kilowatt--the electrical unit of capacity that equals 1,000 
watts.
kWh: Kilowatthour--the electrical unit of energy that equals 1,000 
watts in 1 hour.
kWmonth: Kilowattmonth--the electrical unit of the monthly amount of 
capacity.
LAP: Loveland Area Projects.
L-F8: Loveland Area Projects existing firm electric service rate 
schedule (expires December 31, 2013, or until superseded).
L-F9: Loveland Area Projects provisional firm electric service rate 
schedule to be effective January 1, 2010 (to expire December 31, 
2014, or when superseded).
M&I: Municipal and Industrial water development.
mills/kWh: Mills per kilowatthour--the unit of charge for energy 
(equal to one tenth of a cent or one thousandth of a dollar).
MW: Megawatt--the electrical unit of capacity that equals 1 million 
watts or 1,000 kilowatts.
Non-timing Power Purchases: Power purchases that are not related to 
operational constraints such as management of endangered species, 
species habitat, water quality, navigation, and control area 
purposes.
O&M: Operation and Maintenance.
P-SMBP: The Pick-Sloan Missouri Basin Program.
P-SMBP--ED: Pick-Sloan Missouri Basin Program--Eastern Division.
P-SMBP--WD: Pick-Sloan Missouri Basin Program--Western Division.
Power: Capacity and energy.
Power Factor: The ratio of real to apparent power at any given point 
and time in an electrical circuit. Generally, it is expressed as a 
percentage.
Preference: The provisions of Reclamation Law which require Western 
to first make Federal power available to certain entities. For 
example, section 9(c) of the Reclamation Project Act of 1939 (43 
U.S.C. 485h(c)) states that preference in the sale of Federal power 
shall be given to municipalities and other public corporations or 
agencies and also to cooperatives and other nonprofit organizations 
financed in whole or in part by loans made under the Rural 
Electrification Act of 1936.
Provisional Rate: A rate which has been confirmed, approved and 
placed into effect on an interim basis by the Deputy Secretary of 
Energy.
PRS: Power Repayment Study.
Rate Brochure: An August 2009 document explaining the rationale and 
background for the rate proposal contained in this Rate Order.
Ratesetting PRS: The PRS used for the rate adjustment period.
Reclamation: The United States Department of the Interior, Bureau of 
Reclamation.
Reclamation Law: A series of Federal laws that contain the framework 
under which Western markets power.
Regions: Western's Rocky Mountain Region and Upper Great Plains 
Region.
Revenue Requirement: The revenue required to recover annual expenses 
(such as O&M, purchase power, transmission service expenses, 
interest and deferred expenses) and repay Federal investments and 
other assigned costs.
Rocky Mountain Region: The Rocky Mountain Customer Service Region of 
the Western Area Power Administration.
Upper Great Plains Region: The Upper Great Plains Customer Service 
Region of the Western Area Power Administration.
Western: The United States Department of Energy, Western Area Power 
Administration.

Effective Date

    The provisional rates will take effect on the first day of the 
first full billing period beginning on or after January 1, 2010, and 
will remain in effect until December 31, 2014, pending approval by FERC 
on a final basis.

Public Notice and Comment

    Western followed the Procedures for Public Participation in Power 
and Transmission Rate Adjustments and Extensions, 10 CFR part 903, in 
developing these rates. The steps Western took to involve interested 
parties in the rate process were as follows:
    1. The proposed rate adjustment process began March 17, 2009, when 
Western's Rocky Mountain Region mailed a notice announcing informal 
meetings to all LAP preference Customers and interested parties.

[[Page 67193]]

    2. The informal meetings were held on April 15, 2009, in Sioux 
Falls, South Dakota, and on April 16, 2009, in Northglenn, Colorado. At 
these informal meetings, Western explained the rationale for the rate 
adjustment, presented rate designs and methodologies, and answered 
questions.
    3. A Federal Register notice, published on July 14, 2009 (74 FR 
34009), announced the proposed rates for LAP, began the public 
consultation and comment period, and announced the public information 
and public comment forums.
    4. On July 14, 2009, Western mailed letters to all LAP preference 
Customers and interested parties transmitting the FRN published on July 
14, 2009.
    5. On August 18, 2009, at 9 a.m. (MDT), Western held a public 
information forum at the Ramada Plaza Hotel in Northglenn, Colorado. 
Western provided updates to the proposed firm electric service rates 
for LAP and P-SMBP--ED. Western also answered questions and gave notice 
that more information was available in the Rate Brochure.
    6. On August 18, 2009, at 11 a.m. (MDT), following the public 
information forum, a public comment forum was held. The comment forum 
gave the public an opportunity to comment for the record. No oral or 
written comments were received at this forum.
    7. Western provided a Website with all of the letters, time frames, 
dates and locations of forums, documents discussed at the information 
meetings, FRNs, Rate Brochure, and all other information about this 
rate process. The Web site is located at http://www.wapa.gov/rm/ratesRM/2010/default.htm.
    8. Western received one comment letter and no oral comments during 
the consultation and comment period, which ended October 13, 2009. All 
formally submitted comments have been considered in preparing this Rate 
Order.

Comments

    Written comments were received from the following organization:
    Mid-West Electric Consumers Association

Project Descriptions

Loveland Area Projects

    The Post-1989 General Power Marketing and Allocation Criteria, 
published in the Federal Register on January 31, 1986 (51 FR 4012), 
integrated the resources of the P-SMBP--WD and Fry-Ark. This 
operational and contractual integration, known as LAP, allowed an 
increase in marketable resource, simplified contract administration, 
and established a blended rate for LAP power sales. The Rocky Mountain 
Region markets LAP power in northeastern Colorado, east of the 
Continental Divide in Wyoming, west of the 101st meridian in Nebraska, 
and most of Kansas.
    The P-SMBP--WD and Fry-Ark retain separate financial status. For 
this reason, separate PRSs are prepared annually for each project. 
These PRSs are used to determine the sufficiency of the firm electric 
service rate to generate adequate revenue to repay project investment 
and costs during each project's prescribed repayment period. The 
revenue requirement of the Fry-Ark PRS is combined with the P-SMBP--WD 
revenue requirement, derived from the P-SMBP PRS, to develop one rate 
for LAP firm electric sales.

Pick-Sloan Missouri Basin Program--Western Division

    The P-SMBP was authorized by Congress in Section 9 of the Flood 
Control Act of December 22, 1944, commonly referred to as the Flood 
Control Act of 1944. This multipurpose program provides flood control, 
irrigation, navigation, recreation, preservation and enhancement of 
fish and wildlife, and power generation. Multipurpose projects have 
been developed on the Missouri River and its tributaries in Colorado, 
Montana, Nebraska, North Dakota, South Dakota, and Wyoming.
    In addition to the multipurpose water projects authorized by 
Section 9 of the Flood Control Act of 1944, certain other existing 
projects have been integrated with the P-SMBP for power marketing, 
operation, and repayment purposes. The Colorado-Big Thompson, Kendrick, 
and Shoshone Projects were combined with the P-SMBP in 1954, followed 
by the North Platte Project in 1959. These projects are referred to as 
the ``Integrated Projects'' of the P-SMBP.
    The Flood Control Act of 1944 also authorized the inclusion of the 
Fort Peck Project with the P-SMBP for operation and repayment purposes. 
The Riverton Project was integrated with the P-SMBP in 1954, and in 
1970 was reauthorized as a unit of P-SMBP.
    The P-SMBP is administered by two regions. The Rocky Mountain 
Region, with a regional office in Loveland, Colorado, markets the 
Western Division power of P-SMBP through LAP. The Upper Great Plains 
Region, with a regional office in Billings, Montana, markets power from 
the Eastern Division of P-SMBP. Eastern Division power is marketed in 
western Iowa, western Minnesota, Montana, east of the Continental 
Divide, North Dakota, South Dakota, and the eastern two-thirds of 
Nebraska. P-SMBP power is marketed to approximately 54 firm power 
Customers by the Rocky Mountain Region and approximately 300 firm power 
Customers by the Upper Great Plains Region.

Fryingpan-Arkansas Project

    Fry-Ark is a trans-mountain diversion development in southeastern 
Colorado authorized by the Act of Congress on August 16, 1962 (Pub. L. 
87-590, 76 Stat. 389, as amended by Title XI of the Act of Congress on 
October 27, 1974 (Pub. L. 93-493, 88 Stat. 1486, 1497)). The Fry-Ark 
diverts water from the Fryingpan River and other tributaries of the 
Roaring Fork River in the Colorado River Basin on the West Slope of the 
Rocky Mountains to the Arkansas River on the East Slope. The water 
diverted from the West Slope, together with regulated Arkansas River 
water, provides supplemental irrigation and M&I water supplies, and 
produces hydroelectric power. Flood control, fish and wildlife 
enhancement, and recreation are other important purposes of Fry-Ark. 
The only generating facility in Fry-Ark is the Mt. Elbert Pumped-
Storage powerplant on the East Slope.

Power Repayment Studies--Firm Electric Service Rate

    Western prepares PRSs each FY to determine if revenues will be 
sufficient to repay, within the required time, all costs assigned to 
the LAP. Repayment criteria are based on Western's applicable laws and 
legislation, as well as policies including DOE Order RA 6120.2. To meet 
Cost Recovery Criteria outlined in DOE Order RA 6120.2, revised studies 
and rate adjustments have been developed to demonstrate that sufficient 
revenues will be collected under the proposed rates to meet future 
obligations.

Existing and Provisional Rates

    A comparison of the existing and provisional rates for LAP firm 
electric service follows:

[[Page 67194]]



                 Table 1--Comparison of Existing and Provisional Rates LAP Firm Electric Service
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                                                            Existing rate
                  Firm electric service                      (February 1,     Provisional rate   Percent change
                                                             2009)  L-F8            L-F9
----------------------------------------------------------------------------------------------------------------
LAP Revenue Requirement (million).......................             $75.9              $84.5               11.2
LAP Composite Rate (mills/kWh)..........................              37.24              41.42              11.2
Firm Energy Rate (mills/kWh)............................              18.62              20.71              11.2
Firm Capacity Rate ($/kWmonth)..........................              $4.88              $5.43              11.2
----------------------------------------------------------------------------------------------------------------

Certification of Rates

    Western's Administrator certified that the provisional rates for 
LAP firm electric service under Rate Schedule L-F9 are the lowest 
possible rates consistent with sound business principles. The 
provisional rates were developed following administrative policies and 
applicable laws.

LAP Firm Electric Service Rate Discussion

    According to Reclamation Law, Western must establish power rates 
sufficient to recover O&M, purchased power and interest expenses, and 
repay power investment and irrigation aid.
    The Criteria, published in the Federal Register on January 31, 1986 
(51 FR 4012), operationally and contractually integrated the resources 
of the P-SMBP--WD and Fry-Ark (thereafter referred to as LAP). A 
blended rate was established for the sale of LAP firm electric service. 
The P-SMBP--WD portion of the revenue requirement for LAP firm electric 
service rates was developed from the revenue requirement calculated in 
the P-SMBP Ratesetting PRS. The P-SMBP--WD revenue requirement 
increased approximately 13 percent from the previous revenue 
requirement due to the financial impact of the drought, increased 
annual expenses, increased investments, and increased interest expenses 
associated with deficits. The revenue requirements for P-SMBP--WD are 
as follows:

       Table 2--Summary of P-SMBP--WD Revenue Requirements ($000)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Current Revenue Requirement (Feb 09):
    (30.89 mills/kWh x 1,988,000,000 kWh).............           $61,409
Provisional Increase:
    Base: 0.25 mills/kWh x 1,988,000,000 kWh..........               497
    Drought Adder: 3.66 mills/kWh x 1,988,000,000 kWh.             7,276
                                                       -----------------
                                                                   7,773
                                                       =================
Provisional Revenue Requirement:
    (30.89 + 3.91 = 34.80 mills/kWh x 1,988,000,000               69,182
     kWh).............................................
------------------------------------------------------------------------

    The adjustment to the P-SMBP--ED revenue requirement is a separate 
formal rate process which is documented in Rate Order No. WAPA-147. 
Rate Order No. WAPA-147 is also scheduled to go into effect on the 
first day of the first full billing period on or after January 1, 2010.

Fry-Ark

    The Fry-Ark portion of the revenue requirement for LAP firm 
electric service rates was developed from the revenue requirement 
calculated in the Fry-Ark Ratesetting PRS. The Fry-Ark revenue 
requirement increased approximately 5 percent due to increased 
transmission expenses and the financial impact of the drought. The 
revenue requirements for Fry-Ark are as follows:

         Table 3--Summary of Fry-Ark Revenue Requirements ($000)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Current Revenue Requirement (Feb 09):.................           $14,545
Provisional Increase:
    Base..............................................               773
    Drought Adder.....................................                10
                                                       -----------------
                                                                     783
                                                       =================
Provisional Revenue Requirement.......................            15,328
------------------------------------------------------------------------

    The following table compares LAP existing revenue requirements to 
the proposed revenue requirements:

           Table 4--Summary of LAP Revenue Requirements ($000)
------------------------------------------------------------------------
                                                  Existing
                                                 (February   Provisional
                                                   2009)
------------------------------------------------------------------------
P-SMBP--WD....................................      $61,409      $69,182
Fry-Ark.......................................       14,545       15,328
                                               -------------------------

[[Page 67195]]

 
    Total LAP.................................       75,954       84,510
------------------------------------------------------------------------

    Under Rate Schedule L-F9, Western will continue to identify its 
firm electric service revenue requirement using Base and Drought Adder 
components. The Base component is a fixed revenue requirement for each 
project that includes annual O&M expenses, investment repayment and 
associated interest, normal timing power purchases, and transmission 
costs. Normal timing power purchases are purchases due to operational 
constraints (e.g., management of endangered species habitat, water 
quality, navigation, control area purposes, etc.) and are not 
associated with drought conditions in the Regions. The Base component 
cannot be adjusted by Western without a public process.
    The Drought Adder component for each project is a formula-based 
revenue requirement that includes costs attributable to the drought 
conditions in the Regions. The Drought Adder component includes costs 
associated with future non-timing power purchases to meet firm electric 
service contractual 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 the drought, and the interest associated with the previously 
incurred and future drought debt. The Drought Adder component is 
designed to repay the 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 FY 2008 will be repaid by FY 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 
provisional rate, the LAP annual revenue requirement is $84.5 million 
and is comprised of a Base revenue requirement of $51.2 million plus a 
Drought Adder revenue requirement of $33.3 million.
    A comparison of the current and proposed rate components are listed 
in the following table:

                                       Table 5--Summary of LAP Components
----------------------------------------------------------------------------------------------------------------
                                                      Existing rates L-F8             Provisional rates L-F9
                                               -----------------------------------------------------------------
                                                            Drought                          Drought
                                                   Base      adder      Total       Base      adder      Total
----------------------------------------------------------------------------------------------------------------
Firm Capacity ($/kW-month)....................      $3.21      $1.67      $4.88      $3.29      $2.14      $5.43
Firm Energy (mills/kWh).......................      12.23       6.39      18.62      12.54       8.17      20.71
----------------------------------------------------------------------------------------------------------------

    Continuing to identify the firm electric service revenue 
requirement using Base and Drought Adder components will assist Western 
in presenting the effects of the drought within the Regions, 
demonstrating repayment of the drought related costs, and allow Western 
to be more responsive to changes in drought related expenses. Western 
will continue to charge and bill Customers firm electric service rates 
for energy and capacity, which are the sum of the Base and Drought 
Adder components.
    Western reviews its firm electric service rates annually. Western 
will review the Base rate component after the annual PRSs are complete, 
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 
component, Western will review the Drought Adder component each 
September to determine if drought costs differ from those projected in 
the PRSs. If drought costs differ, Western will determine whether an 
adjustment to the Drought Adder component is necessary. Western will 
notify Customers by letter each October of the planned incremental or 
decremental adjustment and implement the adjustment in the following 
January billing cycle. Although decremental adjustments to the Drought 
Adder 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 conduct a preliminary review of the 
Drought Adder in early summer and notify Customers by letter of any 
estimated change to the Drought Adder for the following January. 
Western will verify final Drought Adder rate component adjustment by 
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.
    Western's current and provisional rate schedules provide 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 initiating a public process to recover costs 
attributable to the Drought Adder formula rate for any one-year cycle.

Statement of Revenue and Related Expenses

    The following table provides a summary of projected revenue and 
expense data for the Fry-Ark firm electric service revenue requirement 
through the 5-year provisional rate approval period:

   Table 6--Fry-Ark Comparison of 5-Year Rate Approval Period (FY 2010-2014) Total Revenue and Expense ($000)
----------------------------------------------------------------------------------------------------------------
                                                              Existing rate   Provisional rate     Difference
----------------------------------------------------------------------------------------------------------------
Total Revenues............................................           $78,983           $84,897            $5,914
Revenue Distribution:

[[Page 67196]]

 
Expenses:
    O&M \1\...............................................           $28,868           $25,307           $-3,561
    Purchase Power........................................             1,398             1,077              -321
    Transmission..........................................            20,027            20,671               644
    Interest \2\..........................................            21,383            20,243            -1,140
                                                           -----------------------------------------------------
        Total Expenses....................................            71,676            67,298            -4,378
----------------------------------------------------------------------------------------------------------------
Principal Payments:
    Capitalized Expenses (deficits).......................                 0                 0                 0
    Original Project and Additions \3\....................             1,762            14,214            12,452
    Replacements \3\......................................             5,545             3,385            -2,160
                                                           -----------------------------------------------------
        Total Principal Payments..........................             7,307            17,599            10,292
        Total Revenue Distribution........................            78,983            84,897             5,914
----------------------------------------------------------------------------------------------------------------
\1\ The decrease in O&M expense is due to changes reflected in Reclamation's FY 2010 work plan.
\2\ The decrease in interest expense is primarily due to a increased repayment over the 5-year period.
\3\ The difference in principal payments is due to increased revenue being available for repayment during the 5-
  year period.

    The summary of P-SMBP--WD revenues and expenses for the 5-year 
provisional rate approval period is included in the P-SMBP Statement of 
Revenue and Related Expenses that is part of Rate Order No. WAPA-147.

Basis for Rate Development

    The existing rates for LAP firm electric service in Rate Schedule 
L-F8, which expire December 31, 2013, no longer provide sufficient 
revenues to pay all annual costs, including interest expense, and repay 
investments and irrigation aid within the allowable period. The 
adjusted rates reflect increases due to the financial impact of the 
drought, increased annual expenses, increased investments, and 
increased interest expense associated with investments and drought 
deficits. The provisional rates will provide sufficient revenue to pay 
all annual costs, including interest expenses, and repay investments 
and irrigation aid within the allowable periods. The provisional rates 
will take effect on the first day of the first full billing period 
beginning on or after January 1, 2010, and will remain in effect on an 
interim basis, pending FERC's confirmation and approval of them or 
substitute rates on a final basis, through December 31, 2014.

Comments

    The comment and response below regarding the firm electric service 
rates is paraphrased for brevity when not affecting the meaning of the 
statement(s).
    Comment: One Customer representative recognized the impacts that 
the extended drought has had on the current financial status of the P-
SMBP and stated that the repayment of Federal investment through 
Federal power rates is taken very seriously by the Customers. This 
Customer representative also stated that, while recent forecasts of 
Pick-Sloan generation suggest improved revenues over those projected 
when Western began this public process, the customer representative 
does not think it would be appropriate for Western to attempt to adjust 
its proposed rate in the middle of this public process. The customer 
representative noted that, should generation and revenues witness a 
dramatic improvement, Western has the capability to adjust the Drought 
Adder up to 2 mills without going through a full public process.
    Response: Western acknowledges the financial impact of the extended 
drought and the need for a firm power rate increase, as well. Western 
recognizes the Firm Power Customers' serious commitment to power 
repayment. Western agrees that it would not be appropriate to adjust 
the proposed rate in the middle of this public process, but recognizes 
that it has the ability to make subsequent changes to the rate through 
the Drought Adder in the event of changes in forecast generation and 
revenues.

Availability of Information

    Information about this rate adjustment, including the PRSs, 
comments, letters, memorandums and other supporting materials, that was 
used to develop the provisional rates is available for public review in 
the Rocky Mountain Regional Office, Western Area Power Administration, 
5555 E. Crossroads Boulevard, Loveland, Colorado.

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 has determined that this action is categorically 
excluded from preparing 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.

Submission to the Federal Energy Regulatory Commission

    The Provisional Rates herein confirmed, approved, and placed into 
effect, together with supporting documents, will be submitted to FERC 
for confirmation and final approval.

Order

    In view of the foregoing and under the authority delegated to me, I 
confirm and approve on an interim basis, effective on the first full 
billing period on or after January 1, 2010, Rate Schedule L-F9 for the 
Loveland Area Projects of the Western Area Power Administration. The 
rate schedule shall remain in effect on an interim basis, pending 
FERC's confirmation and approval of them or substitute rates on a final 
basis through December 31, 2014.


[[Page 67197]]


Dated: December 14, 2009.

Daniel B. Poneman
Deputy Secretary
Rate Schedule L-F9
(Supersedes Rate Schedule L-F8)
Effective January 1, 2010

United States Department of Energy Western Area Power Administration

Loveland Area Projects Colorado, Kansas, Nebraska, Wyoming

Schedule of Rates For Firm Electric Service

(Approved Under Rate Order No. WAPA-146)

    Effective:
    The first day of the first full billing period beginning on or 
after January 1, 2010, through December 31, 2014.
    Available:
    Within the marketing area served by the Loveland Area Projects.
    Applicable:
    To the wholesale power Customers for firm electric service supplied 
through one meter at one point of delivery, or as otherwise established 
by contract.
    Character:
    Alternating current, 60 hertz, three phase, delivered and metered 
at the voltages and points established by contract.
    Monthly Rates:
    Capacity Charge: $5.43 per kilowatt of billing capacity.
    Energy Charge: 20.71 mills per kilowatthour (kWh) of monthly 
entitlement.
    Billing Capacity: Unless otherwise specified by contract, the 
billing capacity will be the seasonal contract rate of delivery.
    Charge Components:
    Base: A fixed revenue requirement that includes operation and 
maintenance expense, investment repayment and associated interest, 
normal timing power purchases (purchases due to operational 
constraints, not associated with drought), and transmission costs. The 
Base revenue requirement is $51.2 million.
[GRAPHIC] [TIFF OMITTED] TN18DE09.423

    Drought Adder: A formula-based revenue requirement that includes 
future purchase power expense in excess of timing purchases, previous 
purchase power drought deficits, and interest on the purchase power 
drought deficits. For the period beginning on or after the first day of 
the first full billing period beginning on or after January 1, 2010, 
the Drought Adder revenue requirement is $33.3 million.
[GRAPHIC] [TIFF OMITTED] TN18DE09.424

    Process:
    Any proposed change to the Base component will require a public 
process. The Drought Adder component may be adjusted annually using the 
above formulas for any costs attributed to drought of less than or 
equal to the equivalent of 2 mills/kWh to the LAP composite rate. Any 
planned incremental adjustment to the Drought Adder component greater 
than the equivalent of 2 mills/kWh to the LAP composite rate will 
require a public process.
    Adjustments:
    For Drought Adder: Adjustments pursuant to the Drought Adder 
component will be documented in a revision to this rate schedule.
    For Transformer Losses: If delivery is made at transmission voltage 
but metered on the low-voltage side of the substation, the meter 
readings will be increased to compensate for transformer losses as 
provided for in the contract.
    For Power Factor: None. The Customer will be required to maintain a 
power factor at all points of measurement between 95-percent lagging 
and 95-percent leading.

[FR Doc. E9-30147 Filed 12-17-09; 8:45 am]
BILLING CODE 6450-01-P