[Federal Register Volume 75, Number 184 (Thursday, September 23, 2010)]
[Notices]
[Pages 57912-57915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23807]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Boulder Canyon Project-Rate Order No. WAPA-150

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Extension of Existing Rate-setting Formula and 
Approval of FY 2011 Base Charge and Rates.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-150 and Rate Schedule BCP-F8 extending on an interim 
basis the existing Boulder Canyon Project (BCP) rate-setting formula 
and approving the base charge and rates for FY 2011. The existing 
Electric Service Rate Schedule, BCP-F7, expires September 30, 2010. The 
Electric Service Rate Schedule contains a rate-setting formula that is 
recalculated annually based on updated financial and load data. The 
existing rate-setting formula is being extended under Rate Order No. 
WAPA-150 and Rate Schedule BCP-F8.

DATES: Rate Schedule BCP-F8 will be placed into effect on an interim 
basis on the first day of the first full billing period beginning on 
October 1, 2010, and will be in effect until the Federal Energy 
Regulatory Commission (FERC) confirms, approves, and places the rate 
schedule in effect on a final basis up to September 30, 2015, or until 
the rate schedule is superseded.

FOR FURTHER INFORMATION CONTACT: Mr. Jack Murray, Rates Manager, Desert 
Southwest Customer Service Region, Western Area Power Administration, 
P.O. Box 6457, Phoenix, AZ 85005-

[[Page 57913]]

6457, (602) 605-2442, e-mail [email protected].

SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved on 
an interim basis existing Electric Rate Schedule BCP-120 for BCP 
electric service on August 11, 2005 (Rate Order No. WAPA-120, 70 FR 
50316 (August 26, 2005)). FERC confirmed and approved the rate schedule 
on June 22, 2006, in FERC Docket No. EF05-5091-000 (115 FERC ] 61,362). 
The rate schedule became effective on October 1, 2005, and expires 
September 30, 2010.
    The existing base charge and rates for BCP electric service under 
Rate Schedule BCP-F7 expire September 30, 2010. Effective October 1, 
2010, Rate Schedule BCP-F7 will be superseded by the new base charge 
and rates in Rate Schedule BCP-F8. Under the existing formula, the 
rates for BCP electric service consist of a base charge, a capacity 
rate, and an energy rate. The provisional base charge is $75,182,522, 
the provisional capacity rate is $1.90 per kilowattmonth (kWmonth), and 
the provisional energy rate is 9.86 mills/kWh.
    The adjusted base charge and rates reflect increases in the overall 
O&M program costs, visitor services, uprating program principal 
payments, replacement costs, and investment principal and interest 
payments. In addition to the annual expenses increasing, the offset of 
other revenues is decreasing. The new base charge and rates will 
provide sufficient revenue to pay all annual costs, including interest 
expense, and repayment of power investment within the allowable 
periods.
    Western's existing rate-setting formula for electric service 
requires recalculation of the base charge and rates annually to ensure 
sufficient recovery of project expenses, including interest, and 
capital requirements up to September 30, 2015.
    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. Under Delegation Order No. 00-037.00 10 
CFR part 903, and 18 CFR part 300, I hereby approve Rate Order No. 
WAPA-150, which extends the existing rate-setting formula on an interim 
basis up to September 30, 2015 and approve the FY 2011 proposed BCP 
electric service base charge and rates. Rate Order No. WAPA-150 will be 
submitted to the FERC for confirmation and approval on a final basis.

    Dated: September 16, 2010.
Daniel B. Poneman,
Deputy Secretary.

Department of Energy

Deputy Secretary

    In the matter of: Western Area Power Administration Rate 
Extension for the Boulder Canyon Project; Rate Order No. WAPA-150; 
Electric Service Rate Schedule Order Confirming and Approving an 
Extension of the Boulder Canyon Project Electric Service Rate-
Setting Formula and FY 2011 Base Charge and Rates Rate Schedule

    The extension of the existing rate-setting formula and the approval 
of base charge and rates for FY 2011 were conducted 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 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 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 the Federal Energy Regulatory Commission 
(FERC). Existing DOE procedures for public participation in electric 
service rate adjustments are located at 10 CFR part 903, effective 
September 18, 1985 (50 FR 37835), and 18 CFR part 300. Western followed 
the DOE procedures in developing the rate formula approved by FERC on 
June 22, 2006, at 115 FERC 61362.

Background

    On June 22, 2006, in Docket No. EF05-5091-000 at 115 FERC ] 61,362, 
FERC issued an order confirming, approving and placing into effect on a 
final basis the Electric Service Rate Schedule BCP-F7 for the Boulder 
Canyon Project (BCP). The Electric Service Rate Schedule, Rate Order 
No. WAPA-120, was approved for 5 years beginning October 1, 2005, 
through September 30, 2010. With this interim approval, the existing 
rate-setting formula will be extended up to September 30, 2015 under 
Rate Order No. WAPA-150.
    In addition, new base charge and rates will take effect on the 
first day of the first full billing period beginning on or after 
October 1, 2010, and will remain in effect until September 30, 2011. 
When compared to the existing BCP electric service base charge and 
rates under Rate Schedule BCP-F7, the proposed base charge and rates 
for BCP electric service reflect an overall composite rate increase of 
approximately 4.20 percent effective October 1, 2010. The existing 
composite rate under Rate Schedule BCP-F7 is 18.93 mills per 
kilowatthour (mills/kWh). The proposed composite rate under Rate 
Schedule BCP-F8 is 19.73 mills/kWh.

BCP Electric Service Base Charge and Rates

    BCP electric service rates are designed to recover an annual 
revenue requirement that includes operation and maintenance expenses, 
payments to states, visitor services, the uprating program, 
replacements, investment repayment and interest expense. Western's 
Power Repayment Study (PRS) allocates the projected annual revenue 
requirement for electric service equally between capacity and energy. 
The existing formula for developing electric service rates would 
sufficiently recover all project expenses (including interest) and 
capital requirements up to September 30, 2015.
    The BCP electric service base charge and rates are increasing in FY 
2011 due to the increase of $5 million in annual expenses from FY 2010 
to FY 2011. In addition to the annual expense increase, other revenues, 
which act as an offset to total expenses, are also decreasing $2.5 
million. A projected carryover at the end of FY 2010 results in 
mitigating the increase in the base charge to $4.5 million in FY 2011.
    The existing base charge and rates for BCP electric service under 
Rate Schedule BCP-F7 expire September 30, 2010. As stated above, Rate 
Schedule BCP-F7 will be superseded by the new base charge and rates in 
Rate Schedule BCP-F8, effective October 1, 2010. Under the existing 
formula, the rates for BCP electric service consist of a base charge, a 
capacity rate, and an energy rate. The provisional base charge is 
$75,182,522, the provisional capacity

[[Page 57914]]

rate is $1.90 per kilowattmonth (kWmonth), and the provisional energy 
rate is 9.86 mills/kWh.
    The adjusted base charge and rates reflect increases in the overall 
O&M program costs, visitor services, uprating program principal 
payments, replacement costs, and investment principal and interest 
payments. In addition to the annual expenses increasing, the offset of 
other revenues is decreasing. The new base charge and rates will 
provide sufficient revenue to pay all annual costs, including interest 
expense, and repayment of power investment within the allowable 
periods.
    Western followed the Procedures for Public Participation in Power 
and Transmission Rate Adjustments and Extensions set forth in 10 CFR 
part 903.23(a)(2) in extending the BCP rate-setting formula and setting 
the new base charge and rates for FY 2011. The steps Western took to 
involve interested parties in the rate process were:
    1. On February 2, 2010, Western published a notice in the Federal 
Register announcing the proposed base charge and rates for BCP, 
beginning the public consultation and comment period, and announcing 
the public information and public comment forums. (75 FR 5315) Western 
also announced the public forum dates as well as access to the BCP rate 
adjustment Web site at http://www.wapa.gov/dsw/pwrmkt/BCP/RateAdjust.htm.
    2. On March 10, 2010, Western hosted an informal customer meeting 
in Phoenix, Arizona. At this informal meeting, Western explained the 
rationale for the rate adjustment and answered questions.
    3. On April 7, 2010, Western held a public information forum at the 
Desert Southwest Regional Office in Phoenix, Arizona. Western provided 
detailed explanations of the proposed base charge and rates for BCP and 
answered questions. Western provided a copy of the rate presentation, 
supporting documentation, and informational handouts.
    4. On April 22, 2010, Western held a comment forum to give the 
public an opportunity to comment for the record. Three individuals 
representing entities commented at this forum.
    5. Western received one comment letter during the consultation and 
comment period, which ended May 3, 2010. All comments have been 
considered in preparing this Rate Order.

Comments

    Written comments were received from the following organization:

Irrigation & Electrical Districts Association of Arizona, Arizona.

    Oral comments were made on behalf of the following organizations:

Arizona Municipal Power Users Association, Arizona.
Irrigation & Electrical Districts Association of Arizona, Arizona.
Metropolitan Water District of Southern California, California.

    The comments and responses regarding the electric service base 
charge and rates, paraphrased for brevity when not affecting the 
meaning of the statement(s), are discussed below. Direct quotes from 
comment letters are used for clarification where necessary.
    Comment: A commenter stated that he objects to a 3 percent indexing 
factor used by the Federal Agencies for increasing their annual 
expenses when the Consumer Price Index (CPI) current year was less than 
1 percent and the projected CPI for next year is flat, showing no 
increase. It was expressed that under these circumstances a 3-percent 
increase in expected expenditures is unrealistic.
    Response: Reclamation and Western are sensitive to increased costs 
to the customers. Although Western's and Reclamation's budgets are not 
explicitly tied to the CPI or any other inflation index, both agencies 
are conscious of these factors and work diligently to adhere to the 
mandate of maintaining the lowest rates possible to the customer while 
using sound business principles. Both agencies continue to provide 
transparency in development of their annual budgets during the annual 
Technical Review Committee process, the Engineering and Operating 
Committee meetings and in the annual rate processes. Budgets are 
estimated as conservatively as possible, taking into consideration any 
increases in labor costs approved by Congress for the upcoming year. 
All budgets are ultimately approved in close coordination with BCP 
Contractors, to ensure all annual costs are covered while maintaining a 
safe and reliable resource.
    Comment: A commenter stated that the Bureau of Reclamation's post 
September 11, 2001, security costs be adjusted upward or downward with 
regard to the CPI. Since the CPI applicable to this budget declined, a 
corresponding decline in the security costs should be reflected in this 
budget.
    Response: As stated in the notes for the Boulder Canyon Project 
FY2011 Final Ten Year Operating Plan under Administrative and General 
Expense (A&GE), an adjustment for the projected security non-
reimbursable costs has been incorporated into the final total for the 
``Post 9/11 Security contract.'' Per the Reclamation Directives & 
Standards (D&S) for Reimbursability of Security Costs, establishing 
provisions for the reimbursability of Reclamation security costs, under 
authority of the Reclamation Act of June 17, 1902 (32 Stat. 388; 43 
U.S.C. 391) and acts amendatory thereof and supplementary thereto; 
Section 513 of the Consolidated Natural Resources Act of 2008 (Pub. L. 
110-229), the projected FY2011 non-reimbursable security projected 
reduction in expense, utilizing the CPI as indicated in the D&S, and 
totaling $275,000 ($239,000 reducing A&GE and $36,000 reducing Visitor 
Services total) was factored into the FY2011 projected expenditures, 
per the ``Report to Congress'' and based upon the reimbursability 
ceiling for Reclamation. The D&S can be viewed at http://www.usbr.gov/recman/sle/sle05-01.pdf.
    Comment: A commenter asked for an explanation of a notation made by 
the Bureau of Reclamation regarding the total water scheduling account 
being two and one half years in arrears. What impact does this 
statement have on the Hoover rate? Why is this account in arrears? What 
is being done about it?
    Response: After discussions between Reclamation Water Operations, 
Power Office and Financial Management, Reclamation notes that the 
account itself is not two and one half years in arrears, and the 
reference will be removed from the notes under Operations summary 
spreadsheets in the Ten Year Operating Plan. It has no impact on the 
Hoover rates.
    Comment: A commenter encouraged Western to file comments in FERC 
Docket No. RM10-11-000, Notice of Inquiry into the Integration of 
Variable Energy Resources, similar to those filed by the Bureau of 
Reclamation since integration could increase costs to the BCP.
    Response: Any costs to the BCP associated with the integration of 
variable energy resources are speculative at this point, and therefore 
are not included in these proposed base charge and rates.

Availability of Information

    Information about this extension and adjustment of electric service 
base charge and rates, including power repayment studies, comments, 
letters, memoranda, and other supporting material made or kept by 
Western used to develop the provisional base charge and rates, is 
available for public review in the Desert Southwest Customer Service 
Regional Office, Western Area

[[Page 57915]]

Power Administration, 615 South 43rd Avenue, Phoenix, Arizona.

Order

    In view of the foregoing and under the authority delegated to me, I 
hereby confirm and approve on an interim basis, effective October 1, 
2010, Rate Schedule BCP-F8, for the Boulder Canyon Project of the 
Western Area Power Administration. The rate schedule shall remain in 
effect on an interim basis, pending FERC confirmation and approval of 
it or substitute rates on a final basis up to September 30, 2015.

Dated: September 16, 2010.

Daniel B. Poneman, Deputy Secretary.

United States Department of Energy

Western Area Power Administration

Boulder Canyon Project, Arizona, Nevada, Southern California

Schedule of Rates for Electric Service

Effective

    The first day of the first full billing period beginning on or 
after October 1, 2010, and remaining in effect through September 30, 
2015, or until superseded.

Available

    In the marketing area serviced by the Boulder Canyon Project (BCP).

Applicable

    To power Contractors served by the BCP supplied through one meter, 
at one point of delivery, unless otherwise provided by contract.

Character and Conditions of Service

    Alternating current at 60 hertz, three-phase, delivered and metered 
at the voltages and points established by contract.

Base Charge

    The total charge paid by a Contractor for annual capacity and 
energy based on the annual revenue requirement. The base charge shall 
be composed of an energy component and a capacity component:
    Energy Charge: Each Contractor shall be billed monthly an energy 
charge equal to the Rate Year Energy Dollar multiplied by the 
Contractor's firm energy percentage multiplied by the Contractor's 
monthly energy ratio as provided by contract.
    Capacity Charge: Each Contractor shall be billed monthly a capacity 
charge equal to the Rate Year Capacity Dollar divided by 12 multiplied 
by the Contractor's contingent capacity percentage as provided by 
contract.

Forecast Rates

    Energy: Shall be equal to the Rate Year Energy Dollar divided by 
the lesser of the total master schedule energy or 4,501.001 million 
kWhs. This rate is to be applied for use of excess energy, unauthorized 
overruns, and water pump energy.
    Capacity: Shall be equal to the Rate Year Capacity Dollar divided 
by 1,951,000 kWs, to be applied for use of unauthorized overruns.

Calculated Energy Rate

    Within 90 days after the end of each rate year, a Calculated Energy 
Rate shall be calculated. If the energy deemed delivered is greater 
than 4,501.001 million kWhs, then the Calculated Energy Rate shall be 
applied to each Contractor's energy deemed delivered. A credit or debit 
shall be established based on the difference between the Contractor's 
Energy Dollar and the Contractor's actual energy charge, to be applied 
the following month calculated or as soon as possible thereafter.

Lower Basin Development Fund Contribution Charge

    The contribution charge is 4.5 mills/kWh for each kWh measured or 
scheduled to an Arizona purchaser and 2.5 mills/kWh for each kWh 
measured or scheduled to a California or Nevada purchaser, except for 
purchased power.

Billing for Unauthorized Overruns

    For each billing period in which there is a contract violation 
involving an unauthorized overrun of the contractual power obligations, 
such overrun shall be billed at 10 times the Forecast Energy Rate and 
Forecast Capacity Rate. The contribution charge shall be applied also 
to each kWh of overrun.

Adjustments

    None.
[FR Doc. 2010-23807 Filed 9-22-10; 8:45 am]
BILLING CODE 6450-01-P