[Federal Register Volume 78, Number 154 (Friday, August 9, 2013)]
[Notices]
[Pages 48670-48672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19305]


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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) 2014 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, 
2013, and will stay in effect through September 30, 2014, 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superseded.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. The Hoover Dam powerplant 
has 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 its 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 2014. Under Rate Schedule BCP-F8, the existing composite rate, 
effective on October 1, 2012, is 21.28 mills/kWh. The current Base 
Charge is $82,379,637, the energy rate is 10.64 mills/kWh, and the 
capacity rate is $1.96 per kilowatt-month (kW-month).
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    \1\ FERC confirmed and approved Rate Schedule BCP-F8 on a final 
basis 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, 2013, is $76,108,019, a 7.61-percent decrease from the FY 
2013 Base Charge. The major contributing factor to the decrease is the 
lower than expected costs in several categories. Expenses for operation 
and maintenance expenses, the uprating program, the visitor center, and 
replacement costs were less than projected. Other factors for the 
decrease are additional carryover from FY 2011 into FY 2012 and higher 
than projected FY 2012 Other Revenues from the Hoover Dam Visitor 
Center and Ancillary Services, which are used to offset costs to be 
recovered from power customers. The FY 2012 results allowed additional 
funds to be carried into FY 2013 and FY 2014, which enables the FY 2014 
Base Charge to be reduced from the current level. The FY 2014 composite 
rate of 20.18 mills/kWh is a decrease of approximately 5 percent 
compared to the FY 2013 BCP composite rate of 21.28 mills/kWh. The FY 
2014 energy rate of 10.09 mills/kWh is a decrease of approximately 5 
percent compared to the existing energy rate of 10.64 mills/kWh. The FY 
2014 capacity rate of $1.87/kW-month is a decrease of approximately 4.5 
percent compared to the existing capacity rate of $1.96/kW-month. FY 
2014 Energy and Capacity sales have decreased compared with FY 2013, 
due to a forecast of continued reduction in hydrological conditions 
resulting in lower lake elevation. Although the energy and capacity 
sales for FY 2014 are decreasing, the significant decrease in the 
revenue requirement for FY 2014 results in a decrease to the composite 
and energy and capacity rates. The proposed rates were calculated using 
Western's FY 2013 Final Master Schedule, which provides the FY 2014 
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 February 4, 2013 (78 
FR 7775), announcing the proposed rate adjustment process, initiating a 
public consultation and comment period, announcing public information 
and

[[Page 48671]]

public comment forums, and presenting procedures for public 
participation.
    2. Discussion of the proposal was initiated at an informal BCP 
Contractor meeting held March 6, 2013, in Phoenix, Arizona. At this 
informal meeting, representatives from Western and the Bureau of 
Reclamation (Reclamation) explained the basis for the 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 27, 2013, in 
Phoenix, Arizona, Western and Reclamation representatives explained the 
proposed Base Charge and Rates for FY 2014 in greater detail and held a 
question and answer session.
    4. A public comment forum held on April 10, 2013, in Phoenix, 
Arizona, provided the public with an opportunity to comment for the 
record. Two individuals commented at this forum.
    5. Western received one comment letter during the 90-day 
consultation and comment period. The consultation and comment period 
ended May 6, 2013. Western responded to comments received in this 
Federal Register notice. The written comments were received from the 
following interested party representing various customers of the BCP 
Contractors:
     Irrigation & Electrical Districts Association of Arizona, 
Phoenix, Arizona.
    Comments and responses, paraphrased for brevity when not affecting 
the meaning of the statements, are presented below.

Rate Impacting Issues

    Comment: A Commenter expressed concern over cost increases for 
Western's headquarters administrative and general expenses. The 
commenter further expressed that this expense is becoming a larger and 
larger impact to all power rates on projects administered by Western.
    Response: In addition to standard inflation, other cost increases 
address compliance requirements such as cyber security and North 
American Electric Reliability Corporation requirements, and 
programmatic support in the areas of safety, physical security, and 
technology replacements and upgrades. Western's indirect costs since 
2008 average approximately 10 percent, demonstrating that Western 
manages its costs to ensure the lowest possible rates consistent with 
sound business principles. Western will continue to reduce costs 
through process improvements and by centralizing functions where 
Western-wide economies of scale can be achieved. The resulting costs, 
when allocated to the individual power systems, have a lower rate 
impact overall than if each region performed the functions separately.

Visitor Center

    Comment: A Commenter requested in the final rate calculation and 
rate order that the Visitor Center costs be broken down to isolate 
annual costs and capital costs. The commenter further explained that 
because there is a proposal to repay the remaining Visitor Center costs 
through non-federal contributions, the breakdown would be helpful to 
explain to financial partners as well as others what the Visitor Center 
represents as a separate business unit within the project.
    Response: Reclamation provided the detail breakdown of the Visitor 
Center financial analysis at the May 15, 2013 BCP Engineering and 
Operating Committee meeting and it has also been posted on Western's 
Web site at www.wapa.gov/dsw/pwrmkt/BCP/RateAdjust.htm.

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 
the PRS, comments, letters, memorandums, and other supporting material 
developed or maintained by Western and used to develop the FY 2014 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 
Schedule BCP-F5 (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 
Schedule BCP-F6 (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 Schedule BCP-F7 (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. Rate Schedule BCP-F8 (Rate Order 
No. 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 (BCPIA) 
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 2014 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. In accordance with 10 CFR part 904, effective June 1, 1987

[[Page 48672]]

(57 FR 43154), and the BCPIA, 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, operating 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 2014 Base Charge and Rates.
    Western proposed a FY 2014 Base Charge of $76,108,019, an energy 
rate of 10.09 mills/kWh, and a capacity rate of $1.87/kW-month.
    Consistent with procedures set forth in 10 CFR part 903 and 904 and 
18 CFR part 300, Western held a consultation and comment period. The 
notice of the proposed FY 2014 Base Charge and Rates for electric 
service was published in the Federal Register on February 4, 2013 (78 
FR 7775).
    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 2014 Base Charge and Rates for BCP Electric Service on a final 
basis under Rate Schedule BCP-F8 through September 30, 2014.

    Issued in Washington, DC, on August 2, 2013.
Daniel B. Poneman,
Deputy Secretary of Energy.
[FR Doc. 2013-19305 Filed 8-8-13; 8:45 am]
BILLING CODE 6450-01-P