[Federal Register Volume 77, Number 156 (Monday, August 13, 2012)]
[Notices]
[Pages 48151-48152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19769]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Boulder Canyon Project

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Base Charge and Rates.

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SUMMARY: In this notice, the Deputy Secretary of Energy (Deputy 
Secretary) approves the Fiscal Year (FY) 2013 Base Charge and Rates for 
Boulder Canyon Project (BCP) electric service provided by the Western 
Area Power Administration (Western). The Base Charge will provide 
sufficient revenue to pay all annual costs, including interest expense, 
and repay investments within the allowable period.

DATES: The revised Base Charge and Rates will be effective the first 
day of the first full billing period beginning on or after October 1, 
2012, and will stay in effect through September 30, 2013, or until 
superseded.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 85005-6457, (602) 605-2442, email 
[email protected].

SUPPLEMENTARY INFORMATION: Hoover Dam, authorized by the Boulder Canyon 
Project Act (45 Stat. 1057, December 21, 1928), sits on the Colorado 
River along the Arizona and Nevada border. Hoover Dam power plant has 
nineteen (19) generating units (two for plant use) and an installed 
capacity of 2,078,800 kilowatts (kW) (4,800 kW for plant use). High-
voltage transmission lines and substations connect BCP power to 
consumers in southern Nevada, Arizona, and southern California. BCP 
electric service rates are adjusted annually using an existing rate 
formula established on April 19, 1996. The rate formula requires the 
BCP Contractors to pay a Base Charge (expressed in dollars), rather 
than a rate, for their power. The Base Charge is calculated to generate 
sufficient revenue to cover all annual costs and to repay investment 
obligations within allowable time periods. The Base Charge is allocated 
to each BCP Contractor in proportion to their allocation of Hoover 
power. A BCP composite power rate, expressed in mills per kilowatt-hour 
(mills/kWh), can be inferred by dividing the Base Charge by energy 
sales in the year; however, the rate is not used to determine 
customers' bills.
    Rate Schedule BCP-F8, Rate Order No. WAPA-150, effective October 1, 
2010, through September 30, 2015, allows for an annual recalculation of 
the Base Charge and Rates.\1\ This notice sets forth the recalculation 
for FY 2013. Under Rate Schedule BCP-F8, the existing composite rate, 
effective on October 1, 2011, is 21.12 mills/kWh. The Base Charge is 
$84,536,772, the energy rate was 10.56 mills/kWh, and the capacity rate 
is $1.84 per kilowatt-month (kW-month).
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    \1\ FERC confirmed and approved Rate Order No. WAPA-150 on 
December 9, 2010, in Docket No. EF10-7-000, See United States 
Department of Energy, Western Area Power Administration, Boulder 
Canyon Project, 133 FERC ] 62,229 (December 9, 2010).
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    The recalculated Base Charge for BCP electric service, effective 
October 1, 2012, is $82,379,637, a 2.55-percent decrease from the FY 
2012 Base Charge. The decrease is due to a decrease in the annual 
revenue requirement, driven primarily by decreases in FY 2011 annual 
operation and maintenance expenses and replacement costs, and increases 
in the other non-power revenues. The decrease in FY 2011 expenses 
resulted in additional carryover in FY 2012 and FY 2013, which reduced 
the FY 2013 Base Charge. The FY 2013 composite rate of 21.28 mills/kWh 
is an increase of approximately 1 percent compared to the FY 2012 BCP 
composite rate. The FY 2013 energy rate of 10.64 mills/kWh reflects an 
increase of approximately 1 percent compared to the existing energy 
rate of 10.56 mills/kWh. Energy sales are decreasing compared with FY 
2012 due to deteriorating hydrological conditions in FY 2013. The FY 
2013 capacity rate of $1.96/kW-month reflects an increase of 
approximately 7 percent compared to the existing capacity rate of 
$1.84/kW-month. Capacity sales are decreasing compared with FY 2012, 
due to a forecast of poor hydrology in FY 2013 compared to FY 2012. 
Although the revenue requirement for FY 2013 is decreasing, the 
decrease in energy sales results in an increase to the composite and 
energy rates, and the decrease in capacity sales results in an increase 
to the capacity rate. The proposed rates were calculated using 
Western's FY 2012 Final Master Schedule which provides the FY 2013 
projections for energy and capacity sales.
    The following summarizes the steps taken by Western to ensure 
involvement of all interested parties in determining the Base Charge 
and Rates:
    1. A Federal Register notice was published on January 18, 2012 (77 
FR 2533), announcing the proposed rate adjustment process, initiating a 
public consultation and comment period, announcing public information 
and public comment forums, and presenting procedures for public 
participation.
    2. Discussion of the proposal was initiated at an informal BCP 
Contractor meeting held March 7, 2012, in Phoenix, Arizona. At this 
informal meeting, representatives from Western and the Bureau of 
Reclamation (Reclamation) explained the basis for estimates used to 
calculate the Base Charge and Rates and held a question and answer 
session.
    3. At the public information forum held on March 28, 2012, in 
Phoenix, Arizona, Western and Reclamation representatives explained the 
proposed Base Charge and Rates for FY 2013 in greater detail and held a 
question and answer session.
    4. A public comment forum held on April 11, 2012, in Phoenix, 
Arizona, provided the public an opportunity to comment for the record. 
One individual commented at this forum.
    5. Western received three comment letters during the 90-day 
consultation and comment period. The consultation and comment period 
ended April 17, 2012. Western responds to comments received in this 
Federal Register notice. The written comments were received from the 
following interested parties representing various customers of the BCP 
Contractors:
     Arizona Westside Irrigation & Electrical Districts, 
Phoenix, Arizona.

[[Page 48152]]

     Irrigation & Electrical Districts Association of Arizona, 
Phoenix, Arizona.
     Ryley Carlock & Applewhite Attorneys, Phoenix, Arizona.
    Comments and responses, paraphrased for brevity when not affecting 
the meaning of the statements, are presented below.

Rate Impacting Issues

    Comment: Commenters expressed their belief that Hoover rates should 
be insulated from initiatives they consider of questionable economic 
merit for Western customers, such as an Energy Imbalance Market (EIM). 
The commenters emphasized that they strongly oppose any expenditures 
collected through the FY 2013 rates for the study, design, 
implementation or operation of, or Western's participation in, an EIM.
    Response: Western is evaluating whether to participate in an EIM 
based on the possible range of costs, benefits, risks, and market 
alternatives, but has not included any direct costs in the proposed BCP 
FY 2013 Base Charge and Rates that relate to design and implementation 
or operation of, or Western's participation in, an EIM. Costs that may 
be incurred in the future will be addressed during base charge and 
rates calculations at that time.

Future Rates

    Comment: Commenters expressed a concern that extraneous costs may 
result from Secretary Chu's March 16, 2012, memorandum concerning new 
roles for Power Marketing Administrations and creep into future Hoover 
power rates.
    Response: No specific action has been taken as a result of the 
memorandum from Secretary Chu and no direct costs, as mentioned in the 
above response, are included in the FY 2013 Base Charge and Rates.

BCP Electric Service Rates

    BCP Base Charge and the resulting calculated Rates for electric 
service 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.

Availability of Information

    Information about this Base Charge and Rate adjustment, including 
PRS, comments, letters, memorandums, and other supporting material 
developed or maintained by Western used to develop the FY 2013 BCP Base 
Charge and Rates is available for public review at the Desert Southwest 
Customer Service Regional Office, Western Area Power Administration, 
615 South 43rd Avenue, Phoenix, AZ 85005. The information is also 
available on Western's Web site at www.wapa.gov/dsw/pwrmkt/BCP/RateAdjust.htm.

Ratemaking Procedure Requirements

    BCP electric service rates are developed under the Department of 
Energy Organization Act (42 U.S.C. 7101-7352), through which the power 
marketing functions of the Secretary of the Interior and Reclamation 
under the Reclamation Act of 1902 (ch. 1093, 32 Stat. 388), as amended 
and supplemented by subsequent enactments, 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, were transferred to 
and vested in the Secretary of Energy, acting by and through Western.
    By Delegation Order No. 00-037.00, effective December 6, 2001, the 
Secretary of Energy delegated: (1) The authority to develop long-term 
power and transmission rates on a non-exclusive basis to Western's 
Administrator; (2) the authority to confirm, approve, and place such 
rates into effect on an interim basis to the Deputy Secretary; 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 Department of Energy 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. Department of Energy procedures were followed by 
Western in developing the rate formula approved by FERC on December 9, 
2010, at 133 FERC ] 62,229.\2\
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    \2\ The existing rate-setting formula was established in Rate 
Order No. WAPA-70 on April 19, 1996, in Docket No. EF96-5091-000, at 
75 FERC ] 62,050, for the period beginning November 1, 1995, and 
ending September 30, 2000. Rate Order No. WAPA-94, extending the 
existing rate-setting formula beginning on October 1, 2000, and 
ending September 30, 2005, was approved on July 31, 2001, in Docket 
No. EF00-5092-000, at 96 FERC ] 61,171. Rate Order No. WAPA-120, 
extending the existing rate-setting formula for another five-year 
period beginning on October 1, 2005, and ending September 30, 2010, 
was approved on June 22, 2006, in Docket No. EF05-5091-000 at 115 
FERC ] 61,362. WAPA-150, extending the existing rate-setting formula 
for another five-year period beginning on October 1, 2010, was 
approved on December 9, 2010, in Docket No. EF10-7-000 at 133 FERC ] 
62,229.
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    The Boulder Canyon Project Implementation Agreement requires that 
Western determine the annual base charge and rates for the next fiscal 
year before October 1 of each rate year. The rates for the first rate 
year, and each fifth rate year thereafter, become effective 
provisionally upon approval by the Deputy Secretary and subject to 
final approval by FERC. For all other rate years, the rates become 
effective on a final basis upon approval by the Deputy Secretary. 
Because FY 2013 is an interim year, these rates become effective on a 
final basis upon approval by the Deputy Secretary.
    Western will continue to provide annual rates to the BCP 
Contractors by October 1 of each year using the same rate-setting 
formula. The rates are reviewed annually and adjusted upward or 
downward to assure sufficient revenues are collected to achieve payment 
of all costs and financial obligations associated with the project. 
Each fiscal year, Western prepares a PRS for the BCP to update actual 
revenues and expenses including interest, estimates of future revenues, 
expenses, and capitalized costs.
    The BCP rate-setting formula includes a base charge, an energy 
rate, and a capacity rate. The rate-setting formula was used to 
determine the BCP FY 2013 Base Charge and Rates.
    Western proposed a FY 2013 Base Charge of $82,379,637, an energy 
rate of 10.64 mills/kWh, and a capacity rate of $1.96/kW-month.
    Consistent with procedures set forth in 10 CFR part 903 and 18 CFR 
part 300, Western held a consultation and comment period. The notice of 
the proposed FY 2013 Base Charge and Rates for electric service was 
published in the Federal Register on January 18, 2012 (77 FR 2533).
    Under Delegation Order Nos. 00-037.00 and 00-001.00C, and in 
compliance with 10 CFR part 903 and 18 CFR part 300, I hereby approve 
the FY 2013 Base Charge and Rates for BCP Electric Service on a final 
basis under Rate Schedule BCP-F8 through September 30, 2013.

    Issued in Washington, DC, on August 3, 2012.
Daniel B. Poneman,
Deputy Secretary of Energy.
[FR Doc. 2012-19769 Filed 8-10-12; 8:45 am]
BILLING CODE 6450-01-P