[Federal Register Volume 76, Number 31 (Tuesday, February 15, 2011)]
[Notices]
[Pages 8730-8734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3361]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Desert Southwest Customer Service Region-Rate Order No. WAPA-151

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rates.

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SUMMARY: The Western Area Power Administration (Western) is proposing 
to update its formula rates for the WALC Balancing Authority Ancillary 
Services as well as the formula rates for NITS on the P-DP and Intertie 
projects. Current formula rates, under Rate Schedules DSW-SD2, DSW-RS2, 
DSW-FR2, DSW-SPR2, DSW-SUR2, DSW-EI2 and PD-NTS2, and INT-NTS2 are set 
to expire June 30, 2011. Western is also proposing to add a new rate 
schedule, Rate Schedule DSW-GI1, for Generator Imbalance (GI) Service. 
Western is proposing these rates to meet evolving and expanding 
transmission system and ancillary services requirements. Western has 
prepared a brochure that provides detailed information on the proposed 
rates to all interested parties. The proposed rates, under Rate 
Schedules-DSW-SD3, DSW-RS3, DSW-FR3, DSW-SPR3, DSW-SUR3, DSW-EI3, DSW-
GI1, PD-NTS3, and INT-NTS3 would go into effect on October 1, 2011, and 
would remain in effect through September 30, 2016, or until 
superseded.\1\ The new rate schedule for GI Service, under Rate 
Schedule DSW-GI1, would go into effect and coincide with the other 
ancillary service rates in this rate order. Publication of this Federal 
Register notice begins the formal process for the proposed formula 
rates.
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    \1\ Since the current rates will expire prior to the anticipated 
completion of this ratemaking process, those rates are being 
extended for a two year period in WAPA Order 152.

DATES: The consultation and comment period begins today and will end 
May 16, 2011. Western will present a detailed explanation of the 
proposed formula rates at a public information forum. The public 
information forum date is March 10, 2011, 1 p.m. to 3 p.m. MST, 
Phoenix, Arizona. Western will accept oral and written comments at a 
public comment forum. The public comment forum date is April 6, 2011, 1 
p.m. to 3 p.m. MST, Phoenix, Arizona. Western will accept written 
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comments any time during the consultation and comment period.

ADDRESSES: Written comments should be sent to Mr. Darrick Moe, Regional 
Manager, Desert Southwest Customer Service Region, Western Area Power 
Administration, 615 South 43rd Avenue, Phoenix, AZ 85009, e-mail 
[email protected]. Western will post information, including written comments 
and the rate brochure to its Web site at http://www.wapa.gov/dsw/pwrmkt/ANCSRV/ANCSRV.htm. Western must receive written comments by the 
end of the consultation and comment period to ensure they are 
considered in Western's decision process. The public information forum 
and public comment forum location is the Desert Southwest Customer 
Service Regional Office, 615 South 43rd Avenue, Phoenix, Arizona.

FOR FURTHER INFORMATION CONTACT: Mr. Jack Murray, Rates Manager, Desert 
Southwest Customer Service Region, Western Area Power Administration, 
615 South 43rd Avenue, Phoenix, AZ 85009, telephone (602) 605-2442, e-
mail [email protected].

SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved the 
current Rate Schedules under Rate Order WAPA-No. 127 for ancillary 
services rates through June 30, 2011.\2\ The current rate schedules 
contain formula-based rates that are recalculated annually. The 
proposed rates continue the formula-based approach and will be 
recalculated annually using updated financial and load information. The 
proposed formula-based rates would, if adopted, go into effect October 
1, 2011, and remain in effect through September 30, 2016. Rates 
effective October 1, 2011, are preliminary and are subject to change 
upon publication of final formula rates. NITS would remain project-
specific as provided under Rate Order No. WAPA-127 with no changes 
proposed to the existing formula rates.
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    \2\ FERC confirmed and approved Rate Order No. WAPA-127 on 
November 21, 2006, in Docket No., EF06-5191-000 See United States 
Department of Energy, Western Area Power Administration, 117 FERC ] 
62,172.
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Proposed Formula Rate for Scheduling, System Control and Dispatch 
Service

    The proposed formula for Scheduling, System Control and Dispatch 
(SSCD) Service, Rate Schedule DSW-SD3, is as follows:
[GRAPHIC] [TIFF OMITTED] TN15FE11.040


[[Page 8731]]


    The numerator (revenue requirement) would primarily capture costs 
for scheduling and will not include costs for system control and 
dispatch. Those costs would be captured in other rates. This proposal 
would not change the current methodology. The denominator would be the 
total for the year of daily tags which result in a schedule. This is a 
proposed change from the current methodology in that WALC currently 
counts tags at the time of creation and any subsequent modifications 
where WALC is listed as a transmission provider and as a balancing 
authority. Western is proposing the change because it believes that 
counting tags that result in a schedule, rather than all tags, is a 
more appropriate measure of the cost of providing the service and will 
result in minimal change to the rate.
    Western is also proposing a change in the implementation of this 
rate. As the SSCD Service is one that the transmission providers must 
obtain from the balancing authority, Western would allocate the cost of 
each tag equally among all transmission providers listed on the tag 
that are inside the WALC Balancing Authority. Western would charge all 
non-Federal transmission providers for their allocated costs. Any 
Federal transmission segment would be exempt from billing, as costs for 
these schedules are included in the transmission service. Currently, 
the last transmission provider inside WALC is charged for the entire 
cost of the tag unless one of the transmission segments is Federal 
transmission. In that case, no charge is assessed. See the following 
table for the comparison of rates:

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                                         Existing rate schedule DSW-
            Class of service                         SD2                   Proposed rate schedule DSW-SD3I
                                         Effective date 07/01/2006.  Effective date 10/01/2011
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Scheduling, System Control and Dispatch  $26.85....................  $26.32.
 Service.                                Maximum cost per Tag......  Maximum cost per Schedule.
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Proposed Formula Rate for Reactive Supply and Voltage Control From 
Generation Sources (VAR) Service

    No changes are proposed for the proposed formula for calculating 
the revenue requirement for Reactive Supply and Voltage Control from 
Generation Sources (VAR) service, Rate Schedule DSW-RS3:
[GRAPHIC] [TIFF OMITTED] TN15FE11.041

    The numerator would continue to capture the percentage of annual 
generation costs which are used for this service. That percentage is 
based on the nameplate power factor for the generating units. The 
annual generation costs would continue to be multiplied by the 
complement of the power factor. For example, if the power factor is 98 
percent, the numerator would include 2 percent of the annual plant 
costs. This proposal would not change the current methodology. The 
denominator would continue to be a measure of the loads requiring this 
service. Western uses long-term firm transmission reservation data for 
both Colorado River Storage Project (CRSP) and P-DP, and subtracts for 
those customers that provide VAR to the balancing authority. This 
process represents no change for WALC. See the following table for the 
comparison of rates:

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                                           Existing rate schedule
            Class of service                       DSW-RS2                  Proposed rate schedule DSW-RS3
                                         Effective date 07/01/2006.  Effective date 10/01/2011
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Reactive Supply and Voltage Control      $0.058/kW-month...........  $0.058/kW-month.
 Service.
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Proposed Formula Rate for Regulation and Frequency Response Service

    The proposed formula for Regulation and Frequency Response Service 
would have four (4) components:
    (1) Load-based Assessment.

[[Page 8732]]

[GRAPHIC] [TIFF OMITTED] TN15FE11.042

    The existing rate for regulation service is an energy-based rate. 
Under DSW-RS3, Western is proposing a minor change in that the 
regulation charge will be capacity (load) based. The resulting change 
would better reflect the service being provided. The rate would apply 
to all entities' auxiliary load (total less Federal entitlements) plus 
the nameplate capacity of intermittent resources serving load in the 
WALC Balancing Authority. Restricting regulation service to 
intermittent resources serving load inside WALC would be a change from 
the current methodology. Western intends to retain the existing 
requirement for providing regulation service for non-conforming loads. 
A non-conforming load is defined as a single plant or site with a 
regulation capacity requirement of 5 megawatts (MW) or greater on a 
recurring basis and whose capacity requirement is equal to 10 percent 
or greater of its average load. Regulation service for non-conforming 
loads, as determined by Western, would continue to be delineated in a 
service agreement and charged an amount which includes the cost to 
procure the service and the additional amount required to monitor and 
supply the service.
    The revenue requirement would include the following components: 
Plant, operation and maintenance costs, purchases of a regulation 
product, purchases of power in support of the units' ability to 
regulate, purchases of transmission for regulating units that are 
trapped geographically inside another balancing authority, and 
purchases of transmission required to relocate energy due to 
regulation/load following.
    Annual costs for regulation in WALC would be determined by 
multiplying the forecast capacity rate of the Boulder Canyon Project by 
the amount of capacity required for regulation in WALC. The revenue 
requirement for regulation would also include the cost of regulating 
capacity set aside for WALC by the CRSP. The capacity required for 
regulation would be subject to re-evaluation every year.
    (2) Exporting Intermittent Resource Requirement. An entity that 
exports the output from an intermittent resource to another balancing 
authority would be required under this proposal to dynamically meter or 
dynamically schedule that resource out of WALC to another balancing 
authority. An intermittent resource is a generator that is not able to 
dispatch and cannot store its fuel source, and therefore, cannot 
respond to changes in system demand or to transmission security 
constraints.
    (3) Self-Provision Assessment. WALC's existing Rate Schedule for 
regulation service does not contain a self-provision assessment. 
Western allows entities with automatic or manual generation control to 
self-provide regulation service for all or a portion of their loads. 
Typically, entities with generation control are known as Sub-Balancing 
Authorities (SBA) and should meet all of the following criteria: (a) 
Have a well-defined boundary, with WALC-approved revenue-quality 
metering, accurate as defined by NERC, to include MW flow data 
availability at 6-second or smaller intervals; (b) have Automatic 
Generation Control (AGC) capability; and (c) demonstrate Regulation 
Service capability. Western proposes that self-provision be measured by 
use of the entity's 1-minute average Area Control Error (ACE). The 
assessment would be calculated every hour and the value of ACE would be 
used to calculate the Regulation Service charges as follows:
    a. If the entity's 1-minute average ACE is <= 0.5 percent of the 
entity's hourly average load, no Regulation Service charges would be 
assessed by WALC.
    b. If the entity's 1-minute average ACE is >= 1.5 percent of the 
entity's hourly average load, WALC would assess Regulation Service 
charges to the entity's entire load, using the Load-based rate.
    c. If the entity's 1-minute average ACE is > 0.5 percent of the 
entity's hourly average load, but < 1.5 percent of the entity's hourly 
average load, WALC would assess Regulation Service charges based on 
linear interpolation of zero charge and full charge, using the Load-
based rate.
    (4) Other Self- or Third-party Supply. Western may allow an entity 
to supply some or all of its required regulation or contract with a 
third party to do so, even without well-defined boundary metering. WALC 
will evaluate the entity's metering, telecommunications and regulating 
resource, as well as the required level of regulation, and determine 
whether the entity qualifies to Self-supply under this provision. This 
is a new provision under the proposed formula rate.
    See the following table for the comparison of rates:

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                                         Existing rate schedule DSW-
            Class of service                         FR2                    Proposed rate schedule DSW-FR3
                                         Effective date 07/01/2006.  Effective date 10/01/2011
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Regulation and Frequency Response        0.2481 mills/kWh..........  $0.2255/mWh.
 Service.
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Proposed Rate for Energy Imbalance Service

    Western proposes to implement a penalty and bandwidth structure 
with 3 deviation bands very similar to FERC Order 890 guidelines with 
adjustments for WALC operating conditions. WALC would continue to treat 
peak-hour and non-peak hour imbalances differently. The peak-hour 
structure would be very similar to the FERC model. For off-peak hour 
imbalances, WALC is proposing to keep the existing imbalance and 
penalty structure.
    (1) On-Peak Hours  0 percent to 1.5 percent of metered 
load (0 to 4 MW minimum) with no penalty within bandwidth;
    (2) On-Peak Hours  1.5 percent to 7.5 percent of 
metered load (4 to 10 MW minimum) with 110 percent return for under-
deliveries and 90 percent return for over-deliveries.
    (3) On-Peak Hours > 7.5 percent of metered load (> 10 MW minimum) 
with

[[Page 8733]]

125 percent return for under-deliveries and 75 percent for over-
deliveries.
    Because of WALC Balancing Authority operating constraints in the 
Off-peak hours, WALC proposes to continue using a 2-bandwidth structure 
in those hours but with an expanded bandwidth for over-delivery.
    (1) Off-Peak Hours -3 percent to >=7.5 percent of metered load (2 
MW Minimum for over-deliveries; 5 MW minimum for under-deliveries) with 
110 percent return for under-delivery, 60 percent return for over-
delivery.
    Financial settlements for imbalances will be calculated using the 
Dow Jones Palo Verde average monthly index or an index identified on 
the OASIS at the beginning of each fiscal year. While the pro-forma 
model states a preference for financial settlement of imbalances, 
settlement in energy is a practice that is long-accepted and preferred 
by many entities throughout WALC. At Western's discretion, settlement 
in energy may be accepted in lieu of financial settlement.
    See the following table comparing the existing with the proposed 
Energy Imbalance structure:

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                                           Existing rate schedule
        Energy imbalance service                  DSW-EI2                  Proposed rate schedule DSW-EI3
Class of service                         Effective date 07/01/2006  ffective date 10/01/2011
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On-Peak Hours..........................   0 to 1.5%;     0% to 1.5%; Min: 0 to 4 MW.
                                          Min: 0 to 5 MW.
Energy within Bandwidth................  100% return..............  100% return.
On-Peak Hours..........................  N/A......................   1.5% to 7.5%; Min: 4 to 10 MW.
Under Deliveries.......................  .........................  110% return.
Over Deliveries........................  .........................  90% return.
On-Peak Hours..........................  N/A......................  >7.5% Min: >10 MW.
Under Deliveries.......................  .........................  125% return.
Over Deliveries........................  .........................  75% return.
Off-Peak Hours.........................  -3% to +1.5%.............  -3% to >= 7.5%.
                                         Min: 2 MW Over Deliveries  Min: 2 MW Over Deliveries.
                                         Min: 5 MW Unver            Min: 5 MW Unver Deliveries.
                                          Deliveries.
Energy within Bandwidth................  100% return..............  100% return.
Energy outside Bandwidth
Under Deliveries.......................  110% return..............  110% return.
Over Deliveries........................  60% return...............  60% return.
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Proposed Rate for Generator Imbalance Service

    Western is proposing a new Generator Imbalance Service Formula 
Rate, Rate Schedule DSW-GI1. This service will be provided to the 
following customers:
    (1) Multi-party generators whose output is shared by several 
entities. If the operator of the generator prefers, the generator's 
output will be allocated among the unit participants and included in 
the Energy Imbalance calculations for those participants.
    (2) Intermittent resources serving load within WALC.
    A solely-owned non-intermittent resource will be included in the 
entity's Energy Imbalance calculation.
    Western has marketed the maximum amount of capacity from its 
projects, leaving little flexibility for additional balancing authority 
services. Consequently, Western will not regulate for the difference 
between the output of an intermittent generator located within WALC and 
a delivery schedule from that generator serving load located outside 
WALC. Intermittent generators serving load outside WALC will be 
required to dynamically meter or dynamically schedule their generation 
to another Balancing Authority. An intermittent resource is a generator 
that is not dispatchable and cannot store its fuel source and, 
therefore, cannot respond to changes in system demand or to 
transmission security constraints.
    The formula rate for Generator Imbalance Service will be identical 
to that for Energy Imbalance Service, with the following exceptions:
    (1) Bandwidths will be calculated as a percentage of metered 
generation, since there is no load.
    (2) Intermittent resources are exempt from the outer bandwidth. All 
deviations greater than 1.5 percent of metered generation in the on-
peak hours will be subject only to a 10 percent penalty.
    In any hour, Western may charge a customer a penalty for either 
Generator Imbalance under Rate Schedule DSW-GI1 or Energy Imbalance 
under Rate Schedule DSW-EI3, but not both, unless the imbalances 
aggravate rather than offset each other.
    See the following table for the proposed Generator Imbalance 
structure:

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         Generator imbalance service                            Proposed rate schedule  DSW-GI1
Class of service                              Effective date 10/01/2011
---------------------------------------------
Over Deliveries.............................  90% return.
On-Peak Hours...............................  > 7.5%, Min: >10 MW.
Under Deliveries............................  125% return.
Over Deliveries.............................  75% return.
Off-Peak Hours..............................  -3% to = 7.5%.
                                              Min: 2 MW Over Deliveries.

[[Page 8734]]

 
                                              Min: 5 MW Under Deliveries.
Energy within Bandwidth.....................  100% return.
Energy outside Bandwidth....................  ..................................................................
Under Deliveries............................  100% return.
Over Deliveries.............................  60% return.
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Proposed Formula Rates for Operating Reserves Service--Spinning and 
Supplemental

    Western's WALC Balancing Authority would continue to offer these 
services only on a pass-through basis. This proposal would not change 
the current methodology for the WALC Balancing Authority. See the 
following table comparing the existing with the proposed Operating 
Reserves structure:

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                                        Existing rate schedule DSW-
           Class of service                    SPR2 DSW-SUR2           Proposed rate schedules DSW-SPR3 DSW-SUR3
                                       Effective date 07/01/2006....  Effective date 10/01/2011
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Operating Reserve--Spinning Reserve    None available on long-term    No change.
 Service.                               basis; market price, if
                                        available, on short term
                                        basis, or on request.
                                        Western will procure at cost
                                        plus 10% administrative
                                        charge.
Operating Reserve--Supplemental        None available on long-term    No change.
 Reserve Service.                       basis; market price, if
                                        available, on short term
                                        basis, or on request.
                                        Western will procure at cost
                                        plus 10% administrative
                                        charge.
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Legal Authority

    Because the proposed rates constitute a major rate adjustment as 
defined by 10 CFR part 903, Western will hold both a public information 
forum and a public comment forum. After review of public comments, 
Western will take further action on the Proposed Rates consistent with 
10 CFR part 903.
    Western is proposing ancillary service rates for the Desert 
Southwest Customer Service Region in accordance with section 302 of the 
Department of Energy (DOE) Organization Act (42 U.S.C. 7152). This 
section transferred to and vested in the Secretary of Energy, the power 
marketing functions of the Secretary of the Department of 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 projects 
involved.
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop power and 
transmission rates to Western's Administrator; (2) the authority to 
confirm, approve, and place such rates into effect on an interim basis 
to the Deputy Secretary of Energy; and (3) the authority to confirm, 
approve, and place into effect on a final basis, to remand, or to 
disapprove such rates to the FERC. Existing DOE procedures for public 
participation in power rate adjustments (10 CFR part 903) were 
published on September 18, 1985 (50 FR 37835).
    After review of public comments, and possible amendments or 
adjustments, Western will recommend the Deputy Secretary of Energy 
approve the proposed rates on an interim basis.

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents that Western initiates or uses to develop the proposed rates 
are available for inspection and copying at the Desert Southwest 
Customer Service Regional Office, located at 615 South 43rd Avenue, 
Phoenix, Arizona. Many of these documents and supporting information 
are also available on its Web site located at http://www.wapa.gov/dsw/pwrmkt/ANCSRV/ANCSRV.htm.

Ratemaking Procedure Requirements

Environmental Compliance

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

Determination Under Executive Order 12866

    Western has an exemption from centralized regulatory review under 
Executive Order 12866 accordingly, no clearance of this notice by the 
Office of Management and Budget is required.

    Dated: February 3, 2011.
Timothy J. Meeks,
Administrator.
[FR Doc. 2011-3361 Filed 2-14-11; 8:45 am]
BILLING CODE 6450-01-P