[Federal Register Volume 77, Number 115 (Thursday, June 14, 2012)]
[Notices]
[Pages 35671-35676]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14572]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Conformed Power Marketing Criteria or Regulations for the Boulder 
Canyon Project

AGENCY: Western Area Power Administration, DOE.

ACTION: Conformance of power marketing criteria in accordance with the 
Hoover Power Allocation Act of 2011.

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SUMMARY: The Western Area Power Administration (Western), a Federal 
power marketing agency of the Department of Energy (DOE), is modifying 
Part C of its Conformed General Consolidated Power Marketing Criteria 
or Regulations for Boulder City Area Projects (1984 Conformed Criteria) 
published in the Federal Register on December 28, 1984, as required by 
the Hoover Power Allocation Act of 2011 (HPAA) described herein. This 
modification will result in the conformance of the 1984 Conformed 
Criteria to the HPAA. The 2012 Conformed General Consolidated Power 
Marketing Criteria or Regulations for Boulder City Area Projects (2012 
Conformed Criteria) will provide the basis for marketing the long-term 
hydroelectric resources of the Boulder Canyon Project (BCP) beyond 
September 30, 2017, when Western's current electric service contracts 
expire. Additional power marketing criteria for new allocations will be 
established by Western through a subsequent public process. This 
Federal Register notice (FRN) is not a call for applications. A call 
for applications from those interested in an allocation of BCP power 
will be provided for in a future notice.

DATES: The 2012 Conformed Criteria will become effective July 16, 2012.

ADDRESSES: Information regarding the 2012 Conformed Criteria is 
available for public inspection at the Desert Southwest Customer 
Service Regional Office, Western Area Power Administration, 615 South 
43rd Avenue, Phoenix, AZ 85005 or at its Web site: http://www.wapa.gov/dsw/pwrmkt.

[[Page 35672]]


FOR FURTHER INFORMATION CONTACT: Mr. Mike Simonton, Public Utilities 
Specialist, Desert Southwest Region, Western Area Power Administration, 
P.O. Box 6457, Phoenix, AZ 85005, telephone (602) 605-2675, email 
[email protected].

SUPPLEMENTARY INFORMATION: 
    The BCP was authorized by the Boulder Canyon Project Act of 1928 
(Act) (43 U.S.C. 617). Under Section 5 of the Act, the Secretary of the 
Interior marketed the capacity and energy from the BCP under electric 
service contracts effective through May 31, 1987. On December 28, 1984, 
Western published the 1984 Conformed Criteria (49 FR 50582) to 
implement applicable provisions of the Hoover Power Plant Act of 1984 
(43 U.S.C. 619) for the marketing of BCP power through September 30, 
2017. On December 20, 2011, Congress enacted the Hoover Power 
Allocation Act of 2011 (Pub. L. 112-72), which provides direction and 
guidance in several key aspects of marketing BCP power after the 
existing contracts expire in 2017.
    Section 2(f) of the HPAA provides that Subdivision C of the 1984 
Conformed Criteria shall be deemed to have been modified to conform to 
the HPAA, and the Secretary of Energy shall cause to be included in the 
Federal Register notice conforming the text of the regulations to such 
modifications. This FRN conforms the text of the 1984 Conformed 
Criteria, as appropriate, to the HPAA.

Description of Revisions to Subdivision C of the 1984 Conformed 
Criteria Required by the Enactment of HPAA

Part 1. General

Section A--Purpose and Scope
    A reference to HPAA has been integrated into the purpose and scope 
section.
Section B--Authorities
    The HPAA has been added to the listed authorities.
Section C--Contractual Information
    The section has been updated to incorporate the following 
provisions of HPAA:
    (1) Section 2(d)(2)(E) that requires each contract offered pursuant 
to Schedule D shall include a provision requiring the new allottee to 
pay a proportionate share of its State's respective contribution 
(determined in accordance with each State's applicable funding 
agreement) to the cost of the Lower Colorado River Multi-Species 
Conservation Program (MSCP) (as defined in Section 9401 of the Omnibus 
Public Land Management Act of 2009 (Pub. L. 111-11; 123 Stat.1327)), 
and to execute the Boulder Canyon Project Implementation Agreement 
Contract No. 95-PAO-10616 (Implementation Agreement).
    (2) Section 2(g)(1)(A) that requires each contract offered shall 
expire on September 30, 2067.
    (3) Section 2(g)(2)(A) that prescribes the contract offered to the 
Metropolitan Water District of Southern California (MWD) will not 
restrict use of capacity and energy, provided that to the extent 
practicable and consistent with sound water management and conservation 
practice, MWD shall allocate such capacity and energy to pump available 
Colorado River water prior to using such capacity and energy to pump 
California State project water.
    (4) Section 2(g)(4) that requires each contract offered shall (i) 
authorize and require Western to collect from new allottees a pro rata 
share of Hoover Dam repayable advances paid for by contractors prior to 
October 1, 2017, and remit such amounts to the contractors that paid 
such advances in proportion to the amounts paid by such contractors as 
specified in Section 6.4 of the Implementation Agreement; (ii) permit 
transactions with an independent system operator; and (iii) contain the 
same material terms included in Section 5.6 of the current BCP firm 
electric service power sales contracts in existence on December 20, 
2011, the date of enactment of the HPAA.

Part VI. Boulder Canyon Project

    Part VI of the 1984 Conformed Criteria is replaced in its entirety 
in order to conform to and facilitate the following provisions of 
Section 2 of the HPAA:
    (1) Section 2(a) that provides for contract offers to existing 
Schedule A contractors in predefined contract quantities for delivery 
commencing October 1, 2017.
    (2) Section 2(b) that provides for contract offers to existing 
Schedule B contractors in predefined contract quantities for delivery 
commencing October 1, 2017.
    (3) Section 2(c) that provides for excess energy provisions for 
deliveries commencing October 1, 2017.
    (4) Section 2(d)(2) that provides for the following:
    (i) The creation of a resource pool equal to 5 percent of BCP's 
full rated capacity of 2,074,000 kilowatts, and associated firm energy, 
as depicted in Schedule D. Western shall offer prescribed portions of 
Schedule D contingent capacity and firm energy to entities not 
receiving contingent capacity and firm energy under Schedule A and/or 
Schedule B for deliveries commencing October 1, 2017.
    (ii) Additional guidance related to the disposition of contingent 
capacity and firm energy to existing contractors and potential new 
allottees as described in the 2012 Conformed Criteria.
    (iii) Guidance related to the disposition Schedule D contingent 
capacity and firm energy that is not allocated and contracted for prior 
to October 1, 2017, as described in the 2012 Conformed Criteria.
    (5) Section 2(i) that provides guidance in the event any existing 
contractor fails to accept an offered contract as described in the 2012 
Conformed Criteria.
    (6) Section 2(j) that provides guidance regarding Western's 
obligations in the event water is not available to produce the 
contingent capacity and firm energy set forth in Schedule A, Schedule 
B, and Schedule D, as described in the 2012 Conformed Criteria.

Regulatory Procedure 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.

Environmental Compliance

    In accordance with the DOE National Environmental Policy Act 
Implementing Procedures (10 CFR 1021), Western has determined that 
these actions fit within a class of action B4.1 Contracts, policies, 
and marketing and allocation plans for electric power, in Appendix B to 
Subpart D to Part 1021--Categorical Exclusions Applicable to Specific 
Agency Actions.

Revised 2012 Conformed Criteria

    Part I and Part VI of Section C of the 1984 Conformed Criteria are 
amended to read as follows:

C. Conformed General Consolidated Power Marketing Criteria or 
Regulations for Desert Southwest Region Projects

Part I. General

    Section A. Purpose and Scope. In accordance with Federal power 
marketing authorities in Reclamation Law and the Department of 
Energy Organization Act of 1977, Western has developed and, pursuant 
to the Hoover Power Allocation Act of 2011 (Pub. L. 112-72) (HPAA), 
has modified the Conformed General Consolidated Power Marketing 
Criteria or Regulations for Boulder City Area Projects (1984 
Conformed Criteria) published in the Federal Register (49 FR 50582) 
on December 28, 1984. These 2012 Conformed Criteria establish 
general marketing principles for power generated at

[[Page 35673]]

Federal projects under the marketing jurisdiction of Western's 
Desert Southwest Regional Office (DSW). This document will serve as 
new general power marketing criteria for the Boulder Canyon Project 
(BCP) resource. Western may establish additional power marketing 
criteria, as deemed necessary and appropriate as determined by 
Western, in a subsequent public process. The power marketing 
criteria for the Parker-Davis Project (PDP) and Central Arizona 
Project (CAP) remain unchanged with the implementation of the 2012 
Conformed Criteria. The establishment of these 2012 Conformed 
Criteria shall serve as conformance of the 1984 Conformed Criteria 
pursuant to Section 2 (f) of the HPAA.
    Section B. Authorities. Federal power in the Desert Southwest 
Region is marketed in accordance with the power marketing 
authorities in Federal Reclamation Law (Act of June 17, 1902, (32 
Stat. 388), and all acts amendatory thereof or supplementary 
thereto); the Department of Energy Organization Act of 1977 (91 
Stat. 565); and in particular, those acts and amendments enabling 
the Boulder Canyon Project (45 Stat. 1057); Hoover Power Plant Act 
of 1984 (Pub. L. 98-381); Hoover Power Allocation Act of 2011 (Pub. 
L. 112-72); Parker-Davis Project (49 Stat. 1028, 1039; 68 Stat. 
143); and the Colorado River Basin Project (82 Stat. 885).
    Section C. Contractual Information. Power contracts will be 
implemented as existing contracts terminate. The existing BCP 
contracts terminate on September 30, 2017.
    Western will offer power contracts to each contractor containing 
the terms and conditions and any special provisions that may be 
applicable to the power marketed under the 2012 Conformed Criteria. 
The contracts will identify the amounts of capacity and energy to be 
delivered, the point(s) of delivery, and the maximum rate of 
delivery at each point of delivery. The contracts will be prepared 
and modified as necessary. Western shall endeavor to maintain 
similar, if not identical, contractual terms and conditions and any 
special provisions amongst all BCP contractors.
    Each long-term power service contract entered into or amended 
shall contain provisions requiring the contractor to develop and 
implement energy conservation measures as demonstrated in integrated 
resource planning documents.
    The PDP, CAP, and BCP projects shall be operationally integrated 
to improve the efficiency of the Federal system in accordance with: 
the operational constraints of the Colorado River, hydro-project 
power plants, as may be imposed by the Secretary of the Interior or 
authorized representatives; applicable laws; the general terms, 
conditions, and principles contained in these 2012 Conformed 
Criteria; and the General Power Contract Provisions in effect.
    Long-term contracts for BCP power will commence on October 1, 
2017, and terminate on September 30, 2067.
    Contingent capacity is capacity that is normally available, 
except during either forced or planned outages, or unit de-ratings 
that affect power plant capability. All BCP capacity shall be 
marketed by Western as contingent capacity to the contractors.
    Western's obligations to deliver BCP power to the contractors 
will be subject to availability of the water needed to produce such 
contingent capacity and firm energy. In the event that water is not 
available to produce the contingent capacity and firm energy set 
forth in Schedule A, Schedule B, and Schedule D, Western shall 
adjust the contingent capacity and firm energy offered under those 
schedules in the same proportion as those contractors' allocations 
of Schedule A, Schedule B, and Schedule D contingent capacity and 
firm energy bears to the full rated contingent capacity and firm 
energy obligations.
    Contracts for BCP power will allow for reductions in capacity 
due to generating unit outages or available capacity reductions 
caused by forced outages, planned or unplanned maintenance 
activities, or reservoir drawdown. These reductions will also be 
applied on a proportionate basis as previously described.
    Each BCP contractor will be required to contractually agree to 
supply its own reserves for power that meet or exceed the Western 
Electricity Coordinating Council's minimum reserve requirements.
    Each contract for BCP power will contain a provision by which 
any dispute or disagreement as to interpretation or performance of 
the provisions of the Hoover Power Allocation Act of 2011, or of 
applicable regulations or of the contract may be determined by 
arbitration or court proceedings.
    The contract offer to the Metropolitan Water District of 
Southern California for BCP capacity and energy will not restrict 
the use to which capacity and energy contracted for by the 
Metropolitan Water District of Southern California may be placed 
within the State of California; provided, that to the extent 
practicable and consistent with sound water management and 
conservation practice, the Metropolitan Water District of Southern 
California shall allocate such capacity and energy to pump available 
Colorado River water prior to using such capacity and energy to pump 
California State water project water.
    Contracts offered shall contain the same material terms included 
in Section 5.6 of those long-term contracts for purchases from the 
Hoover Power Plant that were made in accordance with the Hoover 
Power Plant Act of 1984 and are in existence as of December 20, 
2011, the enactment date of the Hoover Power Allocation Act of 2011. 
These provisions outline the use of generation by the contractor. 
Within the constraints of river operation, each BCP power contractor 
is permitted to schedule loaded and unloaded synchronized 
generation, the sum of which cannot exceed the amount of contingent 
capacity reserved for the individual contractor. To the extent that 
energy entitlements are not exceeded, such previously scheduled 
unloaded synchronized generation may be used for regulation, 
ramping, and spinning reserves through the use of a dynamic signal. 
These functions will be deployed by Western and the Bureau of 
Reclamation (Reclamation), in cooperation with the BCP power 
contractors, and implemented by contract through written operating 
or scheduling instructions. Energy used for the purpose of supplying 
unloaded synchronized generation to BCP power contractors will be 
accounted for on a monthly basis, and will be supplied by the 
individual contractors through reductions in energy deliveries, in 
subsequent months, or as otherwise mutually agreed by Western and 
the contractor, as specified in the power contracts.
    Whenever actual generation in any year is less than the firm 
commitments (4,527.001 million kilowatt-hours (kWh)), such 
deficiency shall be borne by the holders of contracts in the ratio 
that the sum of the quantities of firm energy to which each 
contractor is entitled, to the total firm commitments. Upon an 
individual contractor's request, Western will purchase energy, if 
necessary, specifically for the purpose of fulfilling the energy 
obligations resulting from Schedule A, Schedule B, and Schedule D 
allocations. Any costs incurred as a result of the contractor's 
request for firming energy shall be borne solely by the requesting 
contractor and will be reimbursed in the year in which the costs 
were incurred.
    The individual projects will remain financially segregated for 
the purposes of accounting and project repayment. The Desert 
Southwest Region rate schedules for each individual project will be 
developed to satisfy cost recovery criteria for each project. In 
general, the cost recovery criteria will include components such as 
operation and maintenance, replacements, betterments, amortization 
of long-term debt with interest, and other financial obligations of 
the project. Until the end of the repayment period for the CAP, BCP 
and PDP will provide for surplus revenues by including the 
equivalent of 4\1/2\ mills per kWh in the rates charged to 
contractors in Arizona and by including the equivalent of 2\1/2\ 
mills per kWh in the rates charged to contractors in California and 
Nevada. After the repayment period of the CAP, the equivalent of 
2\1/2\ mills per kWh shall be included in the rates charged to all 
contractors in Arizona, Nevada, and California.
    In order to allow Reclamation to comply with required minimum 
water releases and to allow Western to receive purchased energy 
during offpeak load hours, all power contractors may be required to 
schedule a minimum rate of delivery during such offpeak load hours. 
The percentage of energy to be taken by the contractors at the 
minimum scheduled rate of delivery shall be established on a 
seasonal basis, and may be increased or decreased as conditions 
dictate. The monthly minimum rate of delivery for each power 
contractor will be computed by dividing the number of kilowatt-hours 
to be taken during the month by a contractor at the minimum rate of 
delivery, by the number of offpeak load hours in the month. The 
number of kilowatt-hours to be taken during offpeak load hours at 
the minimum rate of delivery will not exceed 25 percent of the 
contractor's monthly energy entitlement. Offpeak load hours will be 
defined in the contracts based on individual system characteristics.
    No contractor shall sell for profit any of its allocated 
capacity and energy to any customer of the contractor for resale by 
that customer.

[[Page 35674]]

    Contracts for BCP power shall permit transactions with an 
independent system operator.
    Contract offers shall contain a provision requiring the new 
allottee to execute the Boulder Canyon Project Implementation 
Agreement Contract No. 95-PAO-10616 (Implementation Agreement).
    Any new allottees or existing contractors with an increased 
allocation shall be required to pay a pro rata share of Hoover Dam 
repayable advances paid for by contractors prior to October 1, 2017. 
Western shall collect such payments from new allottees or existing 
contractors with an increased allocation and remit such amounts to 
the contractors that paid such advances in proportion to the amounts 
paid by such contractors as specified in Section 6.4 of the 
Implementation Agreement.
    Contract offers shall contain a provision requiring the new 
allottee to pay a proportionate share of its State's respective 
contribution (determined in accordance with each State's applicable 
funding agreement) to the cost of the Lower Colorado River Multi-
Species Conservation Program (as defined in Section 9401 of the 
Omnibus Public Land Management Act of 2009 (Pub. L. 111-11; 123 
Stat. 1327)).

    Parts II through V remain unchanged.

Part VI. Boulder Canyon Project

    Section A. Schedule A Long-Term Contingent Power. Electric 
service contracts for long-term contingent capacity and firm energy 
under new terms and conditions will be offered to existing Boulder 
Canyon Project contractors in the following amounts:
[GRAPHIC] [TIFF OMITTED] TN14JN12.000

    Section B. Schedule B Long-Term Contingent Power. Electric 
service contracts for long-term contingent capacity and firm energy 
under new terms and conditions will be offered to existing Boulder 
Canyon Project contractors in the following amounts:

[[Page 35675]]

[GRAPHIC] [TIFF OMITTED] TN14JN12.001

    Contracts for the amounts of capacity and associated energy for 
the States of Arizona and Nevada resulting from Schedule B shall be 
offered to the Arizona Power Authority and the Colorado River 
Commission of Nevada respectively, as the agency specified by State 
law as the agent of such State for purchasing power from the Boulder 
Canyon Project.
    Section C. Energy in Excess of Firm Commitments. Energy 
generated in any year of operation in excess of 4,501.001 million 
kilowatt-hours shall be delivered in the following order:

                        Schedule C--Excess Energy
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                        Priority of excess energy
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A. First: The first 200 million kWh for use within the State of Arizona;
 Provided, That in the event excess energy in the amount of 200 million
 kWh is not generated during any year of operation, Arizona shall
 accumulate a first right to delivery of excess energy subsequently
 generated in an amount not to exceed 600 million kWh, inclusive of the
 current year's 200 million kWh. Said first right of delivery shall
 accrue at a rate of 200 million kWh per year for each year excess
 energy in the amount of 200 million kWh is not generated, less amounts
 of excess energy delivered.
B. Second: Meeting Hoover Dam contractual obligations under Section A
 (Schedule A), Section B (Schedule B), and Section D (Schedule D), not
 to exceed 26 million kWh in each year of operation.
C. Third: Meeting the energy requirements of the States of Arizona,
 California, and Nevada; such available excess energy to be divided
 equally among the three States.
------------------------------------------------------------------------

    Section D. Schedule D Long-term Contingent Power. A resource 
pool of contingent capacity and associated firm energy is created 
for allocation by Western to eligible entities. Western shall offer 
Schedule D contingent capacity and firm energy to entities not 
receiving contingent capacity and firm energy under Section A 
(Schedule A) or Section B (Schedule B) (referred to herein as ``New 
Allottees'') for delivery commencing October 1, 2017.
    Electric service contracts for long-term contingent capacity and 
firm energy under new terms and conditions will be offered to 
eligible entities in the following amounts:

[[Page 35676]]

[GRAPHIC] [TIFF OMITTED] TN14JN12.002

    In the case of resources committed to New Entities Allocated by 
State referred to in Schedule D, the following is prescribed:
    A. Western is allocating 11.1 percent of the total Schedule D 
contingent capacity and firm energy to the Arizona Power Authority 
for allocation to New Allottees in the State of Arizona, for 
delivery commencing October 1, 2017, for use in the Boulder City 
Area marketing area.
    B. Western is allocating 11.1 percent of the total Schedule D 
contingent capacity and firm energy to the Colorado River Commission 
of Nevada for allocation to New Allottees in the State of Nevada, 
for delivery commencing October 1, 2017, for use in the Boulder City 
Area marketing area.
    C. Western shall allocate 11.1 percent of the total Schedule D 
contingent capacity and firm energy to New Allottees within the 
State of California, for delivery commencing October 1, 2017, for 
use in the Boulder City Area marketing area.
    Section E. General Marketing Criteria. Western is establishing 
the following general marketing criteria to be used in the 
allocation of Schedule D contingent capacity and firm energy:

A. General Eligibility Criteria

    Western will apply the following general eligibility criteria to 
applicants seeking a power allocation:
    (1) All qualified applicants must be eligible to enter into 
contracts under Section 5 of the Boulder Canyon Project Act (43 
U.S.C. 617d) or be Federally recognized Indian tribes.
    (2) All qualified applicants must be located within the 
established Boulder City Area marketing area.

B. General Allocation Criteria

    Western will apply the following general allocation criteria to 
applicants seeking an allocation of the 11.1 percent of Schedule D 
contingent capacity and firm energy to New Entities Allocated by 
State and the remaining 66.7 percent of Schedule D contingent 
capacity and firm energy:
    (1) In the case of Arizona and Nevada, Schedule D contingent 
capacity and firm energy for New Allottees other than federally 
recognized Indian tribes shall be offered through the Arizona Power 
Authority and the Colorado River Commission of Nevada, respectively. 
Schedule D contingent capacity and firm energy allocated to 
federally recognized Indian tribes shall be contracted for directly 
with Western.
    (2) Western shall prescribe additional marketing criteria 
developed pursuant to a public process.
    Section F. Contract Offer Schedule. In the event that contract 
offers for Schedule A, Schedule B, or Schedule D are not accepted by 
existing contractors or new allottees, the following shall determine 
the distribution of the associated contingent capacity and firm 
energy:

A. Schedule A and Schedule B

    If any existing contractor fails to accept an offered contract, 
Western shall offer the contingent capacity and firm energy thus 
available first to other entities in the same State listed in 
Schedule A and Schedule B, second to other entities listed in 
Schedule A and Schedule B, third to other entities in the same State 
that receive contingent capacity and firm energy under Schedule D, 
and last to other entities that receive contingent capacity and firm 
energy under Schedule D.

B. Schedule D--66.7 Percent Allocated by Western

    Any of the 66.7 percent of Schedule D contingent capacity and 
firm energy that is to be allocated by Western that is not allocated 
and placed under contract by October 1, 2017, shall be returned to 
those contractors shown in Schedule A and Schedule B in the same 
proportion as those contracts' allocations of Schedule A and 
Schedule B contingent capacity and firm energy.

C. Schedule D--33.3 Percent Allocated by State

    Any of the 33.3 percent of Schedule D contingent capacity and 
firm energy that is to be distributed within the States of Arizona, 
Nevada, and California that is not allocated and placed under 
contract by October 1, 2017, shall be returned to the Schedule A and 
Schedule B contractors within the State in which the Schedule D 
contingent capacity and firm energy were to be distributed, in the 
same proportion as those contractors' allocations of Schedule A and 
Schedule B contingent capacity and firm energy.

    Parts VII through VIII remain unchanged.

    Dated: June 7, 2012.
Anthony H. Montoya,
Acting Administrator.
[FR Doc. 2012-14572 Filed 6-13-12; 8:45 am]
BILLING CODE 6450-01-P