[Federal Register Volume 79, Number 92 (Tuesday, May 13, 2014)]
[Notices]
[Pages 27298-27302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-11026]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Loveland Area Projects, Colorado River Storage Project, Pacific 
Northwest-Pacific Southwest Intertie Project, Central Arizona Project, 
and Parker-Davis Project--Rate Order No. WAPA-163

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Order Concerning Formula Rates for Western Area Power 
Administration (Western) Transmission Projects to use under the 
WestConnect Point-to-Point Regional Transmission Service Participation 
Agreement (PA).

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-163 and Rate Schedule WC-8, placing new hourly, non-
firm, point-to-point transmission service formula rates for the 
Loveland Area Projects (LAP), Colorado River Storage Project (CRSP), 
Pacific Northwest-Pacific Southwest Intertie Project (INT), Central 
Arizona Project (CAP), and Parker-Davis Project (P-DP) in use under 
WestConnect's PA into effect on an interim basis.

DATES: The provisional rates under Rate Schedule WC-8 will be placed 
into effect on an interim basis on the first day of the first full 
billing period beginning on or after June 1, 2014.

FOR FURTHER INFORMATION CONTACT: Ms. Lynn C. Jeka, CRSP Manager, 
Colorado River Storage Project Management Center, 150 East Social Hall 
Avenue, Suite 300, Salt Lake City, UT 84111-1580, telephone (801) 524-
6372; or Mr. Thomas Hackett, Rates Team Lead, Colorado River Storage 
Project Management Center, 150 East Social Hall Avenue, Suite 300, Salt 
Lake City, UT 84111-1580, telephone (801) 524-5503; or email 
[email protected].

SUPPLEMENTARY INFORMATION: WestConnect consists of a group of electric 
utilities currently providing transmission service in the Western 
Interconnection. Its members are a mixture of investor- and consumer-
owned utilities and Western. The WestConnect membership encompasses an 
interconnected grid stretching from western Nebraska to southern 
California and from Wyoming to the United States-Mexico border. In June 
2009, Western began participating in the WestConnect Pricing Experiment 
(Experiment), which offered potential customers the option of 
scheduling a single transaction for hourly, non-firm, point-to-point 
transmission service over multiple transmission providers' systems at a 
single rate. The original term of the Experiment was 2 years and 
expired on June 30, 2011. In 2011, WestConnect filed with the Federal 
Energy Regulatory Commission (FERC) to extend the term of the 
Experiment for 2 additional years, until June 30, 2013.
    To participate in the Experiment, Western converted its ``all-
hours,'' non-firm, point-to-point, formula transmission rates into on-
peak and off-peak rates, similar to other Experiment participants. 
Western established these on-peak and off-peak rates for the Experiment 
on an annual basis using the authority granted to Western's 
Administrator in Delegation Order No. 00-037.00 and Delegation Order 
No. 00-037.00A to set rates for short-term sales.
    On April 16, 2013, WestConnect submitted to FERC an Amended and 
Restated PA that offers the coordinated hourly, non-firm, point-to-
point transmission service on a permanent basis, effective July 1, 
2013. On June 28, 2013, FERC issued an order conditionally accepting 
the PA and regional tariffs. In its order, FERC stated it was approving 
the proposal based on voluntary participation, and any customer that 
does not want to take service under the WestConnect Tariff provision 
may continue to take service under standard tariff provisions.
    Since the PA is now offering this coordinated, hourly, non-firm, 
point-to-point transmission service on a permanent basis, Western 
proposed to establish a permanent rate schedule for hourly, non-firm, 
point-to-point transmission for on-peak and off-peak hours for the 
WestConnect transmission product (78 FR 66695, Nov. 6, 2013).
    By Delegation Order No. 00-037.00A, effective October 25, 2013, 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. Existing Department of Energy procedures 
for public participation in power rate adjustments (10 CFR part 903) 
were published on September 18, 1985.
    Under Delegation Order Nos. 00-037.00A and 00-001.00E and in 
compliance with 10 CFR part 903 and 18 CFR part 300, I hereby confirm, 
approve, and place Rate Order No. WAPA-163, the provisional formula 
rates for hourly, non-firm, point-to-point transmission service, into 
effect on an interim basis. The new Rate Schedule WC-8 will be promptly 
submitted to

[[Page 27299]]

FERC for confirmation and approval on a final basis. The interim rates 
will be in effect until FERC confirms, approves, and places the rate 
schedule in effect on a final basis through May 31, 2019, unless 
Western withdraws from the WestConnect PA, and posts notice of such 
withdrawal on the Open Access Same-Time Information System (OASIS), 
prior to May 31, 2019.

    Dated: May 6, 2014.
Daniel B. Poneman,
Deputy Secretary.

DEPARTMENT OF ENERGY

DEPUTY SECRETARY

In the matter of:


Western Area Power Administration)
Rate Adjustment for the)
Loveland Area Projects)
Colorado River Storage Project)
Pacific Northwest-Pacific Southwest Intertie Project)
Central Arizona Project)
Parker-Davis Project)
Rate Order No. WAPA-163
    ORDER CONFIRMING, APPROVING, AND PLACING THE WESTERN AREA POWER 
ADMINISTRATION'S TRANSMISSION SERVICE FORMULA RATES FOR USE UNDER THE 
WESTCONNECT PARTICIPATION AGREEMENT INTO EFFECT ON AN INTERIM BASIS
    These transmission service formula rates are established pursuant 
to 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 (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. 00-037.00A, effective October 25, 2013, the 
Secretary of Energy delegated: (1) the authority to develop power and 
transmission rates to Western Area Power Administration's (Western) 
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 power rate adjustments (10 CFR part 903) 
were published on September 18, 1985.

Acronyms/Terms and Definitions

As used in this Rate Order, the following acronyms/terms and 
definitions apply:

Experiment:.......................  WestConnect's Pricing Experiment
                                     offers customers the option of
                                     purchasing point-to-point
                                     transmission service across
                                     multiple Transmission Providers'
                                     systems at a single regional rate,
                                     as an alternative to point-to-point
                                     service with pancaked rates
                                     currently offered under the
                                     individual open access transmission
                                     tariffs.
Formula Rates:....................  Formula rates use a series of
                                     calculations to produce an annual
                                     revenue requirement. This is the
                                     transmission owner's FERC-approved,
                                     filed rate, which can change from
                                     year to year. This obviates the
                                     need for transmission owners to
                                     file traditional rate cases at set
                                     intervals and prevents regulatory
                                     lag.
Open Access Same-Time Information   An electronic posting system that
 System (OASIS):.                    the TransmissionProvider maintains
                                     for transmission access data that
                                     allows all transmission customers
                                     to view the data simultaneously.
Provisional Formula Rate:.........  A formula rate which has been
                                     confirmed, approved, and placed
                                     into effect on an interim basis by
                                     the Deputy Secretary.
Tariff:...........................  Western Area Power Administration's
                                     Open Access Transmission Service
                                     Tariff.
Transmission Provider:............  An entity that administers a
                                     transmission tariff and provides
                                     transmission service to
                                     Transmission Customers under
                                     applicable transmission service
                                     agreements.
WestConnect PA:...................  WestConnect's Point-to-Point
                                     Regional Transmission Service
                                     Participation Agreement.
 

Effective Date

    The Provisional Formula Rates will take effect on the first day of 
the first full billing period beginning on or after June 1, 2014.

Public Notice and Comment

    Western has followed the Procedures for Public Participation in 
Power and Transmission Rate Adjustments and Extensions, 10 CFR part 
903, in the development of these formula rates and rate schedule. The 
steps Western took to involve interested parties in the rate process 
were:

1. Western published a Federal Register notice on November 6, 2013 (78 
FR 66695), officially announcing the proposed formula transmission 
rates, initiating the public comment period that ended December 6, 
2013, and outlining procedures for public participation.
2. On November 15, 2013, Western emailed a copy of the published 
Federal Register notice to Loveland Area Projects (LAP), Colorado River 
Storage Project (CRSP), Pacific Northwest-Pacific Southwest Intertie 
Project (INT), Central Arizona Project (CAP), and Parker-Davis Project 
(P-DP) transmission customers and interested parties. Additionally, the 
link to Western's Web site was provided, which contains the WestConnect 
Rate Conversion Table.
3. Written comments were received from the Arizona Municipal Power 
Users' Association, Phoenix, Arizona, and the Irrigation & Electrical 
Districts Association of Arizona, Phoenix, Arizona, during the 
consultation-and-comment period. These comments are addressed below.

All comments received have been considered in the preparation of this 
Rate Order.

Description

    WestConnect consists of a group of electric utilities currently 
providing transmission service in the Western Interconnection. Its 
members are a mixture of investor- and consumer-owned utilities and 
Western. The WestConnect membership encompasses an interconnected grid 
stretching from western Nebraska to southern California and from 
Wyoming to the United States-Mexico border. Western began participating 
in the Experiment in June 2009, which offered potential customers the 
option of scheduling a single transaction for hourly, non-firm, point-
to-point transmission service over multiple transmission providers' 
systems at a single rate. The original term of the Experiment was 2 
years and expired on June 30, 2011. In 2011, WestConnect filed with 
FERC to extend the term of the Experiment for 2 additional years, until 
June 30, 2013.

[[Page 27300]]

    To participate in the Experiment, Western had to convert its ``all-
hours,'' non-firm, point-to-point formula transmission rates into on-
peak and off-peak rates similar to other Experiment participants. 
Western's FERC-approved Tariff transmission rate designs for all 
regions yield an ``all-hours'' transmission rate that does not make a 
rate distinction between on-peak and off-peak, but rather spreads the 
annual revenue requirements over all hours of the year. Western 
established on-peak and off-peak rates for the Experiment using the 
authority granted to Western's Administrator in Delegation Order No. 
00-037.00 and, subsequently, Delegation Order No. 00-037.00A to set 
rates for short-term sales.
    On April 16, 2013, WestConnect submitted to FERC an Amended and 
Restated PA that offers the coordinated hourly, non-firm, point-to-
point transmission service at a single rate on a permanent basis, 
effective July 1, 2013. On June 28, 2013, FERC issued an order 
conditionally accepting the PA and regional tariffs. In its order, FERC 
stated it was approving the proposal based on voluntary participation 
and any customer that does not want to take service under the 
WestConnect tariff provision may continue to take service under 
standard tariff provisions.

Formula Rate for Transmission Service under WestConnect PA

    Since the PA is now offering a coordinated, hourly, non-firm, 
point-to-point transmission service on a permanent basis, Western 
established a permanent rate schedule (Rate Schedule WC-8) for hourly, 
non-firm, point-to-point transmission for on-peak and off-peak hours 
for the WestConnect transmission product. The single rate schedule with 
separate project rates, which applies to the applicable Western 
Transmission Projects, is effective June 1, 2014. The interim rates 
will be in effect until FERC confirms, approves, and places the rate 
schedule in effect on a final basis through May 31, 2019, unless 
Western withdraws from the WestConnect PA, and posts notice of such 
withdrawal on the OASIS, prior to May 31, 2019. Rate Schedule WC-8 
establishes a conversion factor that is applied to the existing 
Transmission Provider's non-firm transmission service formula rates, 
which have been established under separate rate schedules and under 
separate rate orders (Rate Schedule SP-NFT6 under No. WAPA-161; L-NFPT1 
under No. WAPA-155; INT-NFT3 under No. WAPA-157; CAP-NFT2 under No. 
WAPA-158; and PD-NFT7 under No. WAPA-138) in order to convert Western's 
``all-hours'' transmission rates to on-peak and off-peak transmission 
rates.

Certification of Rates

    Western's Administrator certified that the Provisional Formula 
Rates for transmission service under WestConnect's PA in Rate Schedule 
WC-8 are the lowest possible rates consistent with sound business 
principles. The Provisional Formula Rates were developed following 
administrative policies and applicable laws.

Comments

    Western received two comment letters during the public 
consultation-and-comment period. The comments expressed in these 
letters have been paraphrased, where appropriate, without compromising 
the meaning of the comments.
Comment: A commenter expressed concern about the fact that only 8 of 18 
WestConnect participants are part of the WestConnect PA, and the lack 
of participation should caution Western's continued participation.
Response: It is accurate that of the 18 members of WestConnect, only 8, 
including Western, have executed the PA. However, those eight entities 
have been participating since the inception of the Experiment in July 
2009, and these are the only WestConnect members operating contiguous 
transmission systems that create a rate pancake for customers that may 
want or need to move across multiple systems.

    Additionally, the PA executed by Western and the other entities 
allows Western to withdraw at any time due to the occurrence or 
material risk of adverse regulatory action, such as subjecting its 
rates to review under the Federal Power Act (FPA), or to withdraw in 
90-days by written notice for any reason. Therefore, Western has 
determined its continued participation is warranted at this time.

Comment: A commenter noted the pending litigation in the Court of 
Appeals for the District of Columbia regarding FERC Order 1000 and 
surmised that the outcome of the litigation will determine the level of 
risk Western and other non-jurisdictional utilities might have in 
dealing with WestConnect. Thus, the commenter stated Western should 
wait until the outcome of the pending litigation to make a decision 
about making rates used for the WestConnect PA a permanent offering.
Response: The litigation referred to by the commenter generally 
concerns the authority of FERC to mandate regional planning and 
mandatory cost allocation under FERC Order 1000. It has no relevance to 
WestConnect's PA and the efforts to reduce transmission rate pancaking. 
A transmission provider choosing to participate in the WestConnect 
transmission pricing methodology does not increase its risk of 
ultimately falling under the requirements of FERC Order 1000. Further, 
prior to beginning the Experiment, the participants sought a 
declaratory order from FERC confirming that the proposal was structured 
in such a way that the rates, revenue requirements, and costs of non-
jurisdictional participants would not become subject to FERC review. In 
response, on September 18, 2008, FERC issued a declaratory order 
agreeing that participation by the non-jurisdictional participants in 
the proposal would not subject their rates, revenue requirements, or 
costs to review under FPA sections 205 or 206.\1\ Also, the June 2013 
approval by FERC of the WestConnect PA specifically acknowledged it is 
based on voluntary participation and that customers not wishing to take 
service under the WestConnect tariff could continue to take service 
under each Transmission Provider's standard tariff provisions. 
Therefore, the pending litigation referenced by the commenter provides 
no basis for Western to delay this rate process.
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    \1\ Docket No. EL08-68 (124 FERC ] 62,240).
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Comment: A commenter stated the proposed rate filing would result in 
cross-subsidization among the projects.
Response: It is not accurate to assume there will be cross-subsidies 
among the projects simply by virtue of the development of Rate Schedule 
WC-8. Although Western is publishing a single rate schedule for 
WestConnect transactions, the rate schedule points back to the 
transmission rate schedule for each individual project. The rates for 
each of Western's transmission projects will continue to be developed 
individually in a public process, just as they are now, and will 
continue to maintain separate rate schedules. Revenues from one project 
will not in any way be transferred to or used to cover the costs of 
another project as a result of Western establishing Rate Schedule WC-8. 
The rate order will take Western's publically-developed, non-firm, 
point-to-point transmission rates and convert these into on-peak and 
off-peak rates only for purposes of the PA. This effort does not set a 
single rate across multiple Western projects, nor will it change in any 
way how Western's

[[Page 27301]]

existing formula transmission rates are structured for any of the 
projects. For WestConnect transactions crossing multiple transmission 
systems, all are electronically tagged in such a way that each project 
gets the appropriate share of revenue from each transaction based on 
the pricing of all the transmission providers in a given transaction. 
This ensures that revenues are assigned to the appropriate project.
Comment: Comments were received questioning Western's use of a ``minor 
rate adjustment'' process, including Western's failure to hold public 
information and/or comment forums.
Response: The administrative processes followed by Western in 
establishing power and transmission rates are set out in 10 CFR part 
903. Section 903.2(f) defines a ``minor rate adjustment'' as one that 
will (1) produce less than 1 percent change in the annual revenues of 
the power system, or (2) is for a power system which has either annual 
sales normally less than 100 million kilowatt-hours or an installed 
capacity of less than 20,000 kilowatts. Western began participating in 
the WestConnect Experiment upon its inception in July 2009 and notified 
customers and interested parties. The pricing experiment uses segments 
of five Western transmission systems (CAP, CRSP, INT, LAP, and P-DP). 
Since that time, the total Western revenues received from WestConnect 
transactions consistently meet the less than 1 percent change in annual 
revenues threshold. Western followed the requirements of a minor rate 
adjustment by allowing for a 30-day consultation-and-comment period, as 
outlined in 10 CFR part 903.14.
Comment: Comments were received questioning Western's use of formula 
rates in this effort.
Response: The rate-setting regulation followed by Western, 10 CFR part 
903, in effect since 1985, allows for the use of formula rates. Section 
903.2(m) specifically excludes a change in the monetary charge pursuant 
to a formula stated in a rate schedule or contract from the definition 
of a rate adjustment. Any and all of Western's existing formula rates 
have been established in formal public processes following the 
requirements of 10 CFR part 903. Therefore, Western's use of formula 
rates in this instance is authorized and appropriate.

Availability of Information

    All documents related to this action are available for inspection 
and copying at the following Western locations: Desert Southwest 
Regional Office, 615 South 43rd Avenue, Phoenix, Arizona; Rocky 
Mountain Regional Office, 5555 East Crossroads Boulevard, Loveland, 
Colorado; and Colorado River Storage Project Management Center, 150 
East Social Hall Avenue, Suite 300, Salt Lake City, Utah. These 
documents are also available on Western's Web site at http://www.wapa.gov/dsw/pwrmkt/WestConnect/Default.htm.

Ratemaking Procedure Requirements

Environmental Compliance

    In compliance with the National Environmental Policy Act of 1969 
(NEPA) (42 U.S.C. 4321, et seq.), the Council on Environmental Quality 
Regulations for implementing NEPA (40 CFR parts 1500-1508), and DOE 
NEPA Implementing Procedures and Guidelines (10 CFR part 1021), Western 
has determined this action is categorically excluded from preparing an 
environmental assessment or an environmental impact statement.

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.

Submission to the Federal Energy Regulatory Commission

    The Provisional Formula Rates herein confirmed, approved, and 
placed into effect on an interim basis, together with supporting 
documents, will be submitted to FERC for confirmation and final 
approval.

ORDER

    In view of the foregoing and under the authority delegated to me, I 
confirm and approve on an interim basis, effective on the first full 
billing period on or after June 1, 2014, formula rates, under Rate 
Schedule WC-8, for use under WestConnect's Point-to-Point Regional 
Transmission Service. This rate schedule shall remain in effect on an 
interim basis, pending FERC's confirmation and approval of it or 
substitute formula rates on a final basis through May 31, 2019, unless 
Western withdraws from the WestConnect PA, and posts notice of such 
withdrawal on the OASIS, prior to May 31, 2019.

Dated: May 6, 2014.

Daniel B. Poneman,
Deputy Secretary.

Rate Schedule WC-8
Schedule 8 to Tariff
Effective June 1, 2014

UNITED STATES DEPARTMENT OF ENERGY

WESTERN AREA POWER ADMINISTRATION

LOVELAND AREA PROJECTS

COLORADO RIVER STORAGE PROJECT

PACIFIC NORTHWEST-PACIFIC SOUTHWEST INTERTIE PROJECT

CENTRAL ARIZONA PROJECT

PARKER-DAVIS PROJECT

SCHEDULE OF RATES FOR USE UNDER WESTCONNECT REGIONAL

NON-FIRM TRANSMISSION SERVICE

(Approved Under Rate Order No. WAPA-163)

Effective:

The first day of the first full billing period beginning on or after 
June 1, 2014, through May 31, 2019, unless Western withdraws from the 
WestConnect Point-to-Point Regional Transmission Service Participation 
Agreement, and posts notice of such withdrawal on the Open Access Same-
Time Information System (OASIS), prior to May 31, 2019.

Applicable:

This schedule of rates applies to any WestConnect Regional, Non-Firm, 
Point-to-Point Transmission Service that uses a Western Area Power 
Administration Transmission Project (TP), i.e., Central Arizona 
Project, Colorado River Storage Project, Loveland Area Projects, 
Pacific Northwest-Pacific Southwest Intertie Project, and Parker-Davis 
Project.

Rate:

The transmission rates to be used in this formula rate calculation will 
be the applicable TP's in effect hourly, non-firm, point-to-point 
transmission rate as posted on the applicable TP's Web site and on the 
OASIS.

Formula Rate Calculation:

On-peak, hourly, non-firm, point-to-point transmission rate:

[[Page 27302]]

[GRAPHIC] [TIFF OMITTED] TN13MY14.012

Off-peak, hourly, non-firm, point-to-point transmission rate:
[GRAPHIC] [TIFF OMITTED] TN13MY14.013

The converted rates resulting from using this formula will be posted on 
the applicable TP's Web site and on the OASIS and will be used for 
applicable WestConnect Regional Non-Firm Point-to-Point Transmission 
Service transactions only.

[FR Doc. 2014-11026 Filed 5-12-14; 8:45 am]
BILLING CODE 6450-01-P