[Federal Register Volume 74, Number 242 (Friday, December 18, 2009)]
[Notices]
[Pages 67197-67204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30149]


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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 Order Concerning Firm Power Rates.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-147 and Rate Schedules P-SED-F11 and P-SED-FP11, placing 
firm power and firm peaking power rates from the Pick-Sloan Missouri 
Basin Program--Eastern Division (P-SMBP--ED) 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 power investments and irrigation 
aid within the allowable periods.

DATES: Rate Schedules P-SED-F11 and P-SED-FP11 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 schedules in effect 
on a final basis ending December 31, 2014, or until the rate schedules 
are superseded.

FOR FURTHER INFORMATION CONTACT: Mr. Robert J. Harris, Regional 
Manager, Upper Great Plains Region, Western Area Power Administration, 
2900 4th

[[Page 67198]]

Avenue North, Billings, MT 59101-1266, telephone (406) 247-7405, e-mail 
[email protected], or Ms. Linda Cady-Hoffman, Rates Manager, Upper Great 
Plains Region, Western Area Power Administration, 2900 4th Avenue 
North, Billings, MT 59101-1266, (406) 247-7439, e-mail [email protected].

SUPPLEMENTARY INFORMATION: The Acting Deputy Secretary of Energy 
approved existing Rate Schedules P-SED-F10 and P-SED-FP10 for P-SMBP--
ED firm and firm peaking electric service, respectively, 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.\1\
---------------------------------------------------------------------------

    \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 ] 62,075.
---------------------------------------------------------------------------

    Under Rate Schedule P-SED-F10, 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). Under 
Rate Schedule P-SED-FP10, the firm peaking capacity rate is $6.20/
kWmonth. These Rate Schedules are formula based with Base and Drought 
Adder components and provide for an up to 2 mills/kWh increase in the 
Drought Adder component.
    The current rate adjustment reflects a rate increase based on the 
P-SMBP Final Fiscal Year (FY) 2008 Power Repayment Study (PRS). The PRS 
sets the total annual P-SMBP--ED revenue requirement for 2010 for firm 
and firm peaking electric service at $320.2 million, or a 13.1 percent 
increase. The current rates, including the 2 mills/kWh increase 
provided for under the Drought Adder formula rate component, are not 
sufficient to meet the P-SMBP--ED revenue requirements.
    The P-SMBP--ED revenue requirement increase is mainly attributed to 
the financial impacts of the drought. A decrease in hydro-power 
generation has caused purchase power expenses to increase and revenue 
from non-firm energy sales to decrease. There has been an increase in 
both the price and volume of purchase power needed to meet contractual 
commitments to Western's Customers. The purchase price of power is set 
by supply and demand on the open market.
    The existing firm electric service Rate Schedules P-SED-F10 and P-
SED-FP10 are being superseded by Rate Schedules P-SED-F11 and P-SED-
FP11, respectively. Under Rate Schedule P-SED-F11, the provisional 
rates for firm electric services will result in a combined composite 
rate of 33.25 mills/kWh. The energy rate will be 19.05 mills/kWh (a 
Base component of 9.53 mills/kWh and a Drought Adder component of 9.52 
mills/kWh), and the capacity rate will be $7.65/kWmonth (a Base 
component of $3.80/kWmonth and a Drought Adder component of $3.85/
kWmonth). Under Rate Schedule P-SED-FP11, the provisional rates for 
firm peaking electric services consist of a capacity charge of $6.90/
kWmonth (a Base component of $3.45/kWmonth and a Drought Adder 
component of $3.45/kWmonth) and an energy charge of 19.05 mills/kWh (a 
Base component of 9.53 mills/kWh and a Drought Adder component of 9.52 
mills/kWh).
    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 (DOE) 
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-147, the proposed P-SMBP--ED firm power, and firm 
peaking power rates into effect on an interim basis.
    The new Rate Schedules P-SED-F11 and P-SED-FP11 will be promptly 
submitted to FERC for confirmation and approval on a final basis.

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

Department of Energy Deputy Secretary

    In the matter of: Western Area Power Administration Rate Adjustment 
for the Pick-Sloan Missouri Basin Program--Eastern Division; Rate Order 
No. WAPA-147; Order Confirming, Approving, and Placing the Pick-Sloan 
Missouri Basin Program--Eastern Division Firm Power and Firm Peaking 
Power Service Rates into Effect on an Interim Basis.
    The firm and firm peaking electric service rates for the Pick-Sloan 
Missouri Basin Program--Eastern Division 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)) and 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 
(FERC). 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 power 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 Charge: The rate which sets forth the charges for 
capacity. It is expressed in dollars per kilowattmonth.
    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.
    CROD: Contract Rate of Delivery. The maximum amount of capacity 
and energy allocated to a preference Customer for a period specified 
under a contract.
    Customer: An entity with a contract that is receiving service 
from Western's Upper Great Plains Region.
    Deficits: Deferred or unrecovered annual and/or interest 
expenses.
    DOE: United States Department of Energy.
    DOE Order RA 6120.2: An order outlining power marketing 
administration financial reporting and rate-making procedures.

[[Page 67199]]

    Drought Adder: Formula-based revenue requirement component 
including costs associated with the drought.
    Energy: Measured in terms of the work it is capable of doing 
over a period of time. It is expressed in kilowatthours.
    Energy Charge: 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: Federal Energy Regulatory Commission.
    Firm: A type of product and/or service available at the time 
requested by the 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.
    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.
    NEPA: National Environmental Policy Act of 1969 (42 U.S.C. 4321-
4347 (2003)).
    Non-timing Power Purchases: Power purchases that are not related 
to operational constraints such as management of endangered species, 
species habitat, water quality, navigation, control area purposes, 
etc.
    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: A July 2009 document explaining the rationale and 
background for the rate proposal contained in this Rate Order.
    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.
    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.
    RMR: The Rocky Mountain Customer Service Region of the Western 
Area Power Administration.
    UGPR: 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 new 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:
    1. The proposed rate adjustment process began March 17, 2009, when 
Western's UGPR mailed a notice announcing informal Customer meetings to 
all P-SMBP-ED preference Customers and interested parties. 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.
    2. A Federal Register notice, published on July 14, 2009 (74 FR 
34012), announced the proposed rates for P-SMBP-ED, began a public 
consultation and comment period and announced the public information 
and public comment forums.
    3. On July 14, 2009, Western mailed letters to all P-SMBP-ED 
preference Customers and interested parties transmitting the FRN 
published on July 14, 2009.
    4. 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 power rates for the P-
SMBP, which encompasses the P-SMBP-ED and LAP rates. Western also 
answered questions and gave notice that more information was available 
in the rate brochure.
    5. On August 18, 2009, at 11 a.m. (MDT), following the public 
information forum, at the same location, 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.
    6. On August 19, 2009, at 9 a.m. (CDT), Western held a public 
information forum at the Holiday Inn in Sioux Falls, South Dakota. 
Western provided updates to the proposed firm power rates for the P-
SMBP-ED. Western also answered questions and gave notice that more 
information was available in the rate brochure.
    7. On August 19, 2009, at 11 a.m. (CDT), following the public 
information forum, and at the same location, a public comment forum was 
held. The comment forum gave the public an opportunity to comment for 
the record. Two oral comments and two exhibits were received at this 
forum.
    8. Western provided a website which contains 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 for easy Customer access. The Web site is 
located at http://www.wapa.gov/ugp/rates/2010FirmRateAdjust.
    9. During the consultation and comment period, which ended October 
13, 2009, Western received one comment letter.
    All comments received have been considered in preparing this Rate 
Order.

Comments

    Written comment was received from the following organization: Mid-
West Electric Consumers Association, Colorado.
    Two representatives of the following organization made oral 
comments and submitted exhibits: Rosebud Sioux Tribe's Utilities 
Commission, South Dakota.

Project Description

    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

[[Page 67200]]

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 UGPR, with a 
regional office in Billings, Montana, markets power from the Eastern 
Division of P-SMBP, and the RMR, with a regional office in Loveland, 
Colorado, markets the Western Division power of P-SMBP. The UGPR 
markets power in western Iowa, western Minnesota, Montana east of the 
Continental Divide, North Dakota, South Dakota, and the eastern two-
thirds of Nebraska. The RMR markets P-SMBP--WD power, which in 
combination with Fry-Ark power is known as 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 power is marketed 
to approximately 300 firm power Customers by the UGPR and approximately 
54 firm power Customers by the RMR.

Power Repayment Study--Firm Power Rate

    Western prepares a PRS each FY to determine if revenues will be 
sufficient to repay, within the required time, all costs assigned to 
the P-SMBP. 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, a revised 
study and rate adjustment has been developed to demonstrate that 
sufficient revenues will be collected under proposed rates to meet 
future obligations.

Existing and Provisional Rates

Eastern Division

    Under Rate Schedule P-SED-F10, the composite rate is 29.34 mills/
kWh, the firm energy rate is 16.71 mills/kWh, and the firm capacity 
rate is $6.80/kWmonth. For Rate Schedule P-SED-FP10 the firm peaking 
capacity rate is $6.20/kWmonth. These Rate Schedules are formula based 
with Base and Drought Adder components and provide for up to a 2 mills/
kWh increase in the Drought Adder component.
    The current rate adjustment reflects a rate increase based on the 
P-SMBP FY 2008 PRS. The PRS sets the total annual P-SMBP--ED revenue 
requirement for FY 2010 for firm and firm peaking electric service at 
$320.2 million, or a 13.1 percent increase.
    A comparison of the existing and provisional firm power and firm 
peaking power rates follow:

    Table 1--Comparison of Existing and Provisional Rates Pick-Sloan Missouri Basin Program--Eastern Division
----------------------------------------------------------------------------------------------------------------
                                                                  Current rates    Provisional rates
                     Firm electric service                     --------------------------------------   Percent
                                                                 P-SED-F10/P-SED-   P-SED-F11/P-SED-    change
-----------------------------------------------------------------------FP10---------------FP11------------------
Rate Schedules:
    Firm and Firm Peaking Revenue Requirement (million).......            $283.0             $320.2         13.1
    Composite Rate (mills/kWh)................................              29.34              33.25        13.3
    Firm Capacity Rate (/kWmonth).............................              $6.80              $7.65        12.5
    Firm Energy Rate (mills/kWh)..............................              16.71              19.05        14.0
    Firm Peaking Capacity Rate (/kWmonth).....................              $6.20              $6.90        11.3
    Firm Peaking Energy Rate (mills/kWh) \1\..................              16.71              19.05        14.0
----------------------------------------------------------------------------------------------------------------
\1\ Firm Peaking Energy is normally returned. This rate will be assessed in the event Firm Peaking Energy is not
  returned.

Western Division

    The LAP rate is designed to recover the P-SMBP--WD revenue 
requirement for the P-SMBP and the revenue requirement for Fry-Ark. The 
adjustment to the LAP rate is a separate formal rate process which is 
documented in Rate Order No. WAPA-146. Rate Order No. WAPA-146 is also 
scheduled to go into effect on the first day of the first full billing 
period on or after January 1, 2010.

Certification of Rates

    Western's Administrator certified that the provisional rates for P-
SMBP--ED firm power and firm peaking power rates under Rate Schedules 
P-SED-F11 and P-SED-FP11 are the lowest possible rates consistent with 
sound business principles. The provisional rates were developed 
following administrative policies and applicable laws.

P-SMBP--ED Firm Power Rate Discussion

    Western is required to establish power rates sufficient to recover 
operation, maintenance, purchased power and interest expenses, and 
repay power investment and irrigation aid.
    The P-SMBP-ED firm power and firm peaking power rates must be 
increased due to the financial impact of the drought, increased annual 
expenses, increased investments, and increased interest expenses 
associated with debt.
    Under Rate Schedule P-SED-F11, Western will continue identifying 
its firm electric service revenue requirement using Base and Drought 
Adder components. The Base component is a fixed revenue requirement 
that includes annual O&M 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 drought. The 
Base component cannot be adjusted by Western without a public process.
    The Drought Adder component is a formula-based revenue requirement 
that includes costs attributable to drought conditions within the P-
SMBP. The Drought Adder component includes costs associated with future 
non-timing power purchases to meet firm power 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

[[Page 67201]]

purchases made during this drought, and the interest associated with 
drought debt. The Drought Adder 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 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 P-SMBP-ED annual revenue requirement equals 
$332.8 million and is comprised of a Base revenue requirement of $166 
million plus a Drought Adder revenue requirement of $166.8 million. 
Both the Base and Drought Adder 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 are listed in 
Table 2.

                                 Table 2--Summary of P-SMBP--ED Rate Components
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                                            Existing rates P-SED-F10/P-SED-   Provisional rates P-SED-F11/P-SED-
                                         ----------------FP10--------------------------------FP11---------------
                                                        Drought                             Drought
                                             Base        adder       Total       Base        adder       Total
                                           component   component               component   component
----------------------------------------------------------------------------------------------------------------
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 (/kWmonth)...       $3.40       $2.80       $6.20       $3.45       $3.45       $6.90
Firm Peaking Energy Rate (mills/kWh) \1\        9.27        7.44       16.71        9.53        9.52       19.05
----------------------------------------------------------------------------------------------------------------
\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, provisional Rate Schedule P-SED-F11 
has a firm capacity rate of $7.65/kWmonth and a firm energy rate of 
19.05 mills/kWh. Under Rate Schedule P-SED-FP11, the firm peaking 
capacity rate will increase to $6.90/kWmonth, or an 11 percent 
increase. 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 components will assist Western 
in presenting the effects of the drought within the P-SMBP, 
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 component after the annual PRS is completed, 
generally in the first quarter of the calendar year. If an adjustment 
to the Base 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 continue to review the Drought Adder component 
each September to determine if drought costs differ from those 
projected in the PRS. If drought costs differ, Western will determine 
if 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 January 
billing cycle. Although decremental adjustments to the Drought Adder 
component will occur as drought costs are repaid, the adjustments 
cannot result in a negative Drought Adder component. To give Customers 
advance notice, Western will conduct a preliminary review of the 
Drought Adder component in early summer and notify Customers by letter 
of the estimated change to the Drought Adder component for the 
following January. Western will verify the final Drought Adder 
component adjustment by notification in the October letter to the 
Customers. Implementing the Drought Adder 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 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 3 provides a summary of projected revenue and 
expense data for the total P-SMBP, including both the Eastern and 
Western Divisions, firm electric service revenue requirement through 
the 5-year rate approval period.
    The firm power rates for both divisions have been developed with 
the following revenues and expenses for the P-SMBP:

                Table 3--Total P-SMBP Firm Power Comparison of 5-Year Rate Period (FY 2010-2014)
                                          [Total revenues and expenses]
----------------------------------------------------------------------------------------------------------------
                                                                   Current rate     Provisional     Difference
                                                                      ($000)        rate ($000)       ($000)
----------------------------------------------------------------------------------------------------------------
Total Revenues..................................................      $2,417,497      $2,625,336        $207,839
 
                      Revenue Distribution
Expenses:

[[Page 67202]]

 
    O&M.........................................................         859,559         904,884          45,325
    Purchased Power.............................................         431,180         440,038           8,858
    Interest....................................................         639,356         650,671          11,315
    Transmission................................................          65,963          65,853           (110)
                                                                 -----------------------------------------------
        Total Expenses..........................................       1,996,058       2,061,446          65,388
                                                                 ===============================================
Principal Payments:
Capitalized Expenses (Deficits) \1\.............................         351,517         483,252         131,735
    Original Project and Additions \1\..........................           1,546          10,414           8,868
    Replacements \1\............................................           2,704           4,825           2,121
    Irrigation Aid..............................................          65,672          65,399           (273)
                                                                 -----------------------------------------------
        Total Principal Payments................................         421,439         563,890         142,451
                                                                 ===============================================
            Total Revenue Distribution..........................       2,417,497       2,625,336        207,839
----------------------------------------------------------------------------------------------------------------
\1\ Due to the deficit or near deficit conditions between 1999 and 2008, revenues generated in the cost
  evaluation period are applied toward repayment of deficits rather than repayment of project additions and
  replacements. All deficits are projected to be repaid by 2017.

Basis for Rate Development

    The existing rates for P-SMBP--ED firm power in Rate Schedule P-
SED-F10, which expire December 31, 2013, no longer provide sufficient 
revenues to pay all annual costs, including interest expense, and repay 
investment 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 expense, and repay power investment and 
irrigation aid within the allowable periods. The provisional rates will 
take effect on the first full billing period 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 comments and responses below regarding the firm and firm 
peaking electric service rates are paraphrased for brevity when not 
affecting the meaning of the statement(s). Direct quotes from comment 
letters are used for clarification when necessary.
    A. 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 Customer's 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.
    B. Comment: Two comments indicated that rates were increased 22 
percent last year by their electric co-op serving the majority of 
Rosebud Sioux Tribe (Tribe) members. The concern is that an additional 
rate increase will have a big impact on Tribal members. One commenter 
stated the co-op will disconnect Tribal member's power even in winter 
months, which can be life-threatening. The LIEAP (Low Income Energy 
Assistance Program) has fluctuated up and down. Rosebud Sioux Tribe 
Utilities Commission appreciates the efforts of Western, but cannot 
afford another rate increase. A position paper was submitted to Western 
along with a resolution passed by the Tribal council supporting the 
position.
    The position paper states that the Rosebud Sioux Tribe, which is 
located within Todd County and known to be one of the 10 poorest 
counties in the nation with an unemployment rate above 80 percent, 
opposes and cannot support the proposed firm electric 2010 rate 
adjustment. The position paper further states that a rate increase 
would directly affect Tribal members who have signed up for the Tribal 
Bill Crediting Program by decreasing the amount of credit on monthly 
electric bills.
    Response: Western acknowledges the financial impacts of a firm 
power rate increase and the poverty level which the Tribe continues to 
endure. The criteria for formulating a base rate is directly related to 
Western's costs and is not determined by the end-users' ability to pay. 
Western is only a partial power supplier to the co-op and may not be 
the sole reason for a co-op rate increase. Western believes that as 
water returns to the Missouri River Basin and repayment obligations are 
met, the Drought Adder component of the rate will be reduced.
    The Bill Crediting Program mentioned is not directly related to 
this rate adjustment. The Tribal benefit from the Bill Crediting 
Program is derived from the difference between Western's composite rate 
and the supplemental power supplier's composite rate. While this rate 
adjustment will increase Western's composite rate, it is likely that 
the composite rates for the supplemental power suppliers will

[[Page 67203]]

increase over time, and off-set the impact of this rate increase.
    C. Comment: One commenter acknowledged that Western is working with 
Basin Electric on an interconnection agreement for a 100-MW wind farm 
at Wessington Springs or Winner. The commenter hopes Western looks at 
the transmission capacity and considers the proposed Tribal wind farms. 
The Rosebud Sioux Tribe was the recipient of a $1.5 million grant from 
the Department of Energy for renewable energy on Tribal homelands and 
hopes Western will support their economic efforts.
    Response: This comment is not directly related to the proposed firm 
power rate action. As set forth in the American Recovery and 
Reinvestment Act of 2009, Western is actively evaluating transmission 
proposals to support renewable energy.

Availability of Information

    Information about this rate adjustment, including the PRS, 
comments, letters, memorandums, and other supporting materials that was 
used to develop the provisional rates is available for public review in 
the Upper Great Plains Regional Office, Western Area Power 
Administration, 2900 4th Avenue North, Billings, Montana.

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 Schedules P-SED-F11 
and P-SED-FP11 for the Pick-Sloan Missouri Basin Program--Eastern 
Division Project of the Western Area Power Administration. These rate 
schedules 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.

Dated: December 14, 2009.

Daniel B. Poneman,
Deputy Secretary of Energy.

Rate Schedule P-SED-F11
(Supersedes Schedule P-SED-F10)
January 1, 2010

United States Department of Energy Western Area Power Administration

Pick-Sloan Missouri Basin Program--Eastern Division Montana, North 
Dakota, South Dakota, Minnesota, Iowa, Nebraska

Schedule of Rates for Firm Power Service (Approved Under Rate Order No. 
WAPA-147)

    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 Eastern Division 
of the Pick-Sloan Missouri Basin Program.
    Applicable: To the power and energy delivered to Customers as firm 
power service.
    Character: Alternating current, 60 hertz, three phase, delivered 
and metered at the voltages and points established by contract.
    Monthly Rate:
    Capacity Charge: $7.65 for each kilowatt per month (kWmo) of 
billing capacity.
    Energy Charge: 19.05 mills for each kilowatthour (kWh) for all 
energy delivered as firm power service.
    Billing Capacity: The billing capacity will be as defined by the 
power sales contract.
    Charge Components:
    Base: A fixed revenue requirement that includes operation and 
maintenance expense, investments and replacements, interest on 
investments and replacements, normal timing purchase power (purchases 
due to operational constraints, not associated with drought), and 
transmission costs.
[GRAPHIC] [TIFF OMITTED] TN18DE09.427

    Drought Adder: A formula-based revenue requirement that includes 
future purchase power above timing purchases, previous purchase power 
drought deficits, and interest on the purchase power drought deficits.
[GRAPHIC] [TIFF OMITTED] TN18DE09.428

    Process: Any proposed change to the Base component will require a 
public process.
    The Drought Adder 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 Power Repayment Study composite rate. 
Any planned incremental adjustment to the Drought Adder greater than 
the equivalent of 2

[[Page 67204]]

mills/kWh to the PRS composite rate will require a public process.
    Adjustments:
    For Character and Conditions of Service: Customers who receive 
deliveries at transmission voltage may in some instances be eligible to 
receive a 5-percent discount on capacity and energy charges when 
facilities are provided by the Customer that results in a sufficient 
savings to Western to justify the discount. The determination of 
eligibility for receipt of the voltage discount shall be exclusively 
vested in Western.
    For Billing of Unauthorized Overruns: For each billing period in 
which there is a contract violation involving an unauthorized overrun 
of the contractual firm power and/or energy obligations, such overrun 
shall be billed at 10 times the above rate.
    For Power Factor: None. The Customer will be required to maintain a 
power factor at the point of delivery between 95-percent lagging and 
95-percent leading.

Rate Schedule P-SED-FP11
(Supersedes Schedule P-SED-FP10)
January 1, 2010

United States Department of Energy Western Area Power Administration

Pick-Sloan Missouri Basin Program--Eastern Division Montana, North 
Dakota, South Dakota, Minnesota, Iowa, Nebraska

Schedule of Rates for Firm Peaking Power Service (Approved Under Rate 
Order No. WAPA-147)

    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 Eastern Division 
of the Pick-Sloan Missouri Basin Program, to our Customers with 
generating resources enabling them to use firm peaking power service.
    Applicable: To the power sold to Customers as firm peaking power 
service.
    Character: Alternating current, 60 hertz, three phase, delivered 
and metered at the voltages and points established by contract.
    Monthly Rate:
    Capacity Charge: $6.90 for each kilowatt per month (kWmo) of the 
effective contract rate of delivery for peaking power or the maximum 
amount scheduled, whichever is greater.
    Energy Charge: 19.05 mills for each kilowatthour (kWh) for all 
energy scheduled for delivery without return.
    Charge Components:
    Base: A fixed revenue requirement that includes operation and 
maintenance expense, investment and replacements, normal timing 
purchase power (purchases due to operational constraints, not 
associated with drought), and transmission costs.
[GRAPHIC] [TIFF OMITTED] TN18DE09.425

    Drought Adder: A formula-based revenue requirement that includes 
future purchase power above timing purchases, previous purchase power 
drought deficits, and interest on the purchase power drought deficits.
[GRAPHIC] [TIFF OMITTED] TN18DE09.426

    Process: Any proposed change to the Base component will require a 
public process.
    The Drought Adder may be adjusted annually using the above formula 
for any costs attributed to drought of less than or equal to the 
equivalent of 2 mills/kWh to the Power Repayment Study composite rate. 
Any planned incremental adjustment to the Drought Adder greater than 
the equivalent of 2 mills/kWh to the PRS composite rate will require a 
public process.
    Billing Capacity: The billing capacity will be the greater of (1) 
the highest 30-minute integrated capacity measured during the month up 
to, but not in excess of, the delivery obligation under the power sales 
contract, or (2) the contract rate of delivery.
    Adjustments:
    Billing for Unauthorized Overruns: For each billing period in which 
there is a contract violation involving an unauthorized overrun of the 
contractual obligation for peaking capacity and/or energy, such overrun 
shall be billed at 10 times the above rate.

[FR Doc. E9-30149 Filed 12-17-09; 8:45 am]
BILLING CODE 6450-01-P