[Federal Register Volume 79, Number 235 (Monday, December 8, 2014)]
[Notices]
[Pages 72663-72670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28715]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Loveland Area Projects--Rate Order No. WAPA-167

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Order Concerning Firm Electric Rates.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-167 and Rate Schedule L-F10, placing firm electric 
service rates for the Western Area Power Administration (Western) 
Loveland Area Projects (LAP) into effect on an interim basis.

DATES: Rate Schedule L-F10 will be placed into effect on an interim 
basis on the first day of the first full billing period beginning on or 
after January 1, 2015, and will remain in effect until the Federal 
Energy Regulatory Commission (FERC) confirms, approves, and places the 
rate schedule into effect on a final basis ending December 31, 2019, or 
until the rate schedule is superseded.

FOR FURTHER INFORMATION CONTACT: Mr. Bradley S. Warren, Regional 
Manager, Rocky Mountain Region, Western Area Power Administration, 5555 
East Crossroads Boulevard, Loveland, CO 80538-8986, telephone (970) 
461-7201, or Mrs. Sheila D. Cook, Rates Manager, Rocky Mountain Region, 
Western Area Power Administration, 5555 East Crossroads Boulevard, 
Loveland, CO 80538-8986, telephone (970) 461-7211, email 
[email protected].

SUPPLEMENTARY INFORMATION: The existing Rate Schedule L-F9 was approved 
under Rate Order No. WAPA-146 for the period beginning January 1, 2010, 
and ending December 31, 2014.\1\ Under the current rate methodology, 
rates for LAP firm electric service are designed to recover an annual 
revenue requirement that includes investment repayment, interest, 
purchase power, operation and maintenance, and other expenses within 
the allowable period. The total annual revenue requirement for LAP 
remains $84.5 million for firm electric service. In addition, the 
overall capacity and energy charges are not changing, as the existing 
charges in the current rate schedules for firm electric service 
continue to provide sufficient revenue to meet LAP's repayment 
obligations. The Rate Schedule continues to be formula based. An 
incremental upward adjustment to the Drought Adder greater than the 
equivalent of 2 mills/kWh to the Power Repayment Study (PRS) Composite 
Rate will require a public process. The Drought Adder may be adjusted 
downward pursuant to the formula without a public process.
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    \1\ WAPA-146 was approved by the Deputy Secretary of Energy on 
December 14, 2009 (74 FR 67191 (Dec 18, 2009)), and confirmed and 
approved by FERC on a final basis on June 18, 2010, in Docket No. 
EF10-1-000. See United States Department of Energy, Western Area 
Power Administration (Loveland Area Projects), 131 FERC ] 62,247.
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    Rate Schedule L-F9 is being superseded by Rate Schedule L-F10. 
Under Rate Schedule L-F10, the firm capacity charge will remain $5.43/
kWmonth and the firm energy charge will remain 20.71 mills/kWh. The 
Base and Drought Adder components associated with these charges are 
shown in Table 1 below:

                                                        Table 1--Summary of LAP Charge Components
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Existing charges under Rate Schedule L-F9     Provisional charges under Rate Schedule L-F10
                                                                     effective January 1, 2010                       effective January 1, 2015
                                                         -----------------------------------------------------------------------------------------------
                                                               Base        Drought adder                       Base        Drought adder
                                                             component       component     Total charge      component       component     Total charge
--------------------------------------------------------------------------------------------------------------------------------------------------------
Firm Capacity ($/kWmonth)...............................           $3.29           $2.14           $5.43           $3.92           $1.51           $5.43
Firm Energy (mills/kWh).................................           12.54            8.17           20.71           14.95            5.76           20.71
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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-167, LAP firm electric service 
rates, into effect on an interim basis (Provisional Rates).
    The new Rate Schedule L-F10 will be promptly submitted to FERC for 
confirmation and approval on a final basis.

    Dated: December 2, 2014.
Elizabeth Sherwood-Randall,
Deputy Secretary of Energy.

[[Page 72664]]

Order Confirming, Approving, and Placing the Loveland Area Projects 
Firm Electric Service Rates Into Effect on an Interim Basis

    These firm electric service rates for the Loveland Area Projects 
(LAP) were established in accordance with 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 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 project 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 the Administrator of Western Area Power 
Administration (Western); (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 and Definitions

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

 
 
 
Base.........................  A fixed revenue requirement that includes
                                operation and maintenance expenses,
                                investments and replacements, interest
                                on investments and replacements, normal
                                timing purchase power (purchases due to
                                operational constraints, not associated
                                with drought), and transmission costs.
Capacity.....................  The electric capability of a generator,
                                transformer, transmission circuit, or
                                other equipment. It is expressed in
                                kilowatts.
Capacity Charge..............  The charge under the rate schedule for
                                capacity. It is expressed in dollars per
                                kilowattmonth.
Composite Rate...............  The Power Repayment Study (PRS) rate for
                                commercial firm power which is the total
                                annual revenue requirement for capacity
                                and energy divided by the total annual
                                energy sales. It is expressed in mills
                                per kilowatthour and used for comparison
                                purposes.
CROD.........................  Contract Rate of Delivery. The maximum
                                amount of capacity and energy allocated
                                to a Preference Customer for a period
                                specified under a contract.
Deficits.....................  Deferred or unrecovered annual and/or
                                interest expenses.
DOE Order RA 6120.2..........  An order outlining power marketing
                                administration financial reporting and
                                rate-making procedures.
Drought Adder................  A formula-based revenue requirement that
                                includes future purchase power above
                                timing purchases, previous purchase
                                power drought deficits, and interest on
                                the purchase power drought deficits.
Energy.......................  Measured in terms of the work it is
                                capable of doing over a period of time.
                                Energy is expressed in kilowatthours.
Energy Charge................  The charge under the rate schedule for
                                energy. It is expressed in mills per
                                kilowatthour and applied to each
                                kilowatthour delivered to each customer.
Firm.........................  A type of product and/or service
                                available at the time requested by the
                                customer.
FY...........................  Fiscal year_October 1 to September 30.
kW...........................  Kilowatt_the electrical unit of capacity
                                that equals 1,000 watts.
kWh..........................  Kilowatthour_the electrical unit of
                                energy that equals 1,000 watts in 1
                                hour.
kWmonth......................  Kilowattmonth_the electrical unit of the
                                monthly amount of capacity.
mills/kWh....................  Mills per kilowatthour_the unit of charge
                                for energy (equal to one tenth of a cent
                                or one thousandth of a dollar).
MW...........................  Megawatt_the electrical unit of capacity
                                that equals 1 million watts or 1,000
                                kilowatts.
Non-Timing Power Purchases...  Power purchases that are not related to
                                operational constraints such as
                                management of endangered species,
                                species habitat, water quality,
                                navigation, control area purposes, etc.
O&M..........................  Operation and Maintenance.
P-SMBP.......................  The Pick-Sloan Missouri Basin Program.
P-SMBP_ED....................  Pick-Sloan Missouri Basin Program_Eastern
                                Division.
P-SMBP_WD....................  Pick-Sloan Missouri Basin Program_Western
                                Division.
Power........................  Capacity and energy.
Power Factor.................  The ratio of real to apparent power at
                                any given point and time in an
                                electrical circuit. Generally, it is
                                expressed as a percentage.
Preference...................  The provisions of Reclamation Law that
                                require Western to first make Federal
                                power available to certain entities. For
                                example, section 9(c) of the Reclamation
                                Project Act of 1939 (43 U.S.C. 485h(c))
                                states that preference in the sale of
                                Federal power shall be given to
                                municipalities and other public
                                corporations or agencies and also to
                                cooperatives and other nonprofit
                                organizations financed in whole or in
                                part by loans made under the Rural
                                Electrification Act of 1936.
Provisional Rate.............  A rate that has been confirmed, approved,
                                and placed into effect on an interim
                                basis by the Deputy Secretary of Energy.
Revenue Requirement..........  The revenue required by PRS to recover
                                annual expenses (such as O&M, purchase
                                power, transmission service expenses,
                                interest, and deferred expenses) and
                                repay Federal investments and other
                                assigned costs.
 

Effective Date

    The Provisional Rates will take effect on the first day of the 
first full billing period beginning on or after January 1, 2015, and 
will remain in effect until December 31, 2019, pending approval by FERC 
on a final basis.

Public Notice and Comment

    Western followed the Procedures for Public Participation in Power 
and

[[Page 72665]]

Transmission Rate Adjustments and Extensions, 10 CFR part 903, in 
developing these rates. The steps Western took to involve interested 
parties in the minor rate process were:
    1. On April 17, 2014, Western mailed a notice announcing an 
informal public meeting would be held via webinar on May 2, 2014, to 
discuss the rate process for the expiring firm electric service rates 
for LAP. The focus of the webinar was to provide an update on the FY 
2013 PRS, discuss the Base and Drought Adder component true-up, and 
plan for the upcoming rate adjustment process.
    2. A Federal Register notice (FRN), published on August 8, 2014 (79 
FR 46430), announced the proposed rates for LAP and began the 30-day 
public consultation and comment period.
    3. On August 11, 2014, Western mailed letters to all LAP Preference 
Customers and interested parties transmitting the FRN published on 
August 8, 2014.
    4. Western provided a Web page that contains all dates, customer 
letters, presentations, the FRN, and all other information about this 
rate process. The Web page is located at https://www.wapa.gov/rm/ratesRM/2015/default.htm.
    5. During the consultation and comment period, which ended 
September 8, 2014, Western received one comment letter. The formally 
submitted comment has been considered in the preparation of this Rate 
Order.

Comment

Written Comment Received by the Following Organization
Mid-West Electric Consumers Association

Project Description

Loveland Area Projects

    The Post-1989 General Power Marketing and Allocation Criteria, 
published in the Federal Register on January 31, 1986 (51 FR 4012), 
integrated the resources of the P-SMBP--WD and Fryingpan-Arkansas 
Project (Fry-Ark). This operational and contractual integration, known 
as LAP, allowed an increase in marketable resource, simplified contract 
administration, and established a blended rate for LAP power sales. The 
Rocky Mountain Region markets LAP power in northeastern Colorado, east 
of the Continental Divide in Wyoming, west of the 101st meridian in 
Nebraska, and most of Kansas.
    The P-SMBP--WD and Fry-Ark retain separate financial status. For 
this reason, separate PRSs are prepared annually for each project. 
These PRSs are used to determine the sufficiency of the firm electric 
service rate to generate adequate revenue to repay project investment 
and costs during each project's prescribed repayment period. The 
revenue requirement of the Fry-Ark PRS is combined with the P-SMBP--WD 
revenue requirement, derived from the P-SMBP PRS, to develop one rate 
for LAP firm electric sales.

Pick-Sloan Missouri Basin Program

    The P-SMBP was authorized by Congress in Section 9 of the Flood 
Control Act of December 22, 1944, commonly referred to as the Flood 
Control Act of 1944. This multipurpose program provides flood control, 
irrigation, navigation, recreation, preservation and enhancement of 
fish and wildlife, and power generation. Multipurpose projects have 
been developed on the Missouri River and its tributaries in Colorado, 
Montana, Nebraska, North Dakota, South Dakota, and Wyoming.
    In addition to the multipurpose water projects authorized by 
Section 9 of the Flood Control Act of 1944, certain other existing 
projects have been integrated with the P-SMBP for power marketing, 
operation, and repayment purposes. The Colorado-Big Thompson, Kendrick, 
and Shoshone Projects were combined with the P-SMBP in 1954, followed 
by the North Platte Project in 1959. These projects are referred to as 
the ``Integrated Projects'' of the P-SMBP.
    The Flood Control Act of 1944 also authorized the inclusion of the 
Fort Peck Project with the P-SMBP for operation and repayment purposes. 
The Riverton Extension Unit of the Flood Control Act of 1944 Project 
was reauthorized to include the original Riverton Project in 1970.
    The P-SMBP is marketed by two regions. The Rocky Mountain Region, 
with a regional office in Loveland, Colorado, markets the Western 
Division power of P-SMBP through LAP. Western Division power is 
marketed in Colorado, Kansas, Nebraska, and Wyoming. The Upper Great 
Plains Region, with a regional office in Billings, Montana, markets 
power from the Eastern Division of P-SMBP. P-SMBP power is marketed to 
approximately 53 firm power customers by the Rocky Mountain Region and 
approximately 360 firm power customers by the Upper Great Plains 
Region.

Fryingpan-Arkansas Project

    Fry-Ark is a trans-mountain diversion development in southeastern 
Colorado authorized by the Act of Congress on August 16, 1962 (Pub. L. 
87-590, 76 Stat. 389, as amended by Title XI of the Act of Congress on 
October 27, 1974 (Pub. L. 93-493, 88 Stat. 1486, 1497)). The Fry-Ark 
diverts water from the Fryingpan River and other tributaries of the 
Roaring Fork River in the Colorado River Basin on the West Slope of the 
Rocky Mountains to the Arkansas River on the East Slope. The water 
diverted from the West Slope, together with regulated Arkansas River 
water, provides supplemental irrigation and M&I water supplies, and 
produces hydroelectric power. Flood control, fish and wildlife 
enhancement, and recreation are other important purposes of Fry-Ark. 
The only generating facility in Fry-Ark is the Mt. Elbert Pumped-
Storage powerplant on the East Slope.

Power Repayment Study--Firm Electric Service Rate

    Western prepares a PRS each FY to determine if revenues will be 
sufficient to repay, within the required time, all costs assigned to 
LAP. Repayment criteria are based on Western's applicable laws and 
legislation, as well as policies including DOE Order RA 6120.2. To meet 
Cost Recovery Criteria outlined in DOE Order RA 6120.2, revised studies 
and rate adjustments have been developed to demonstrate that sufficient 
revenues will be collected under Provisional Rates to meet future 
obligations. The PRS revenue requirement and Composite Rate remain 
unchanged, as indicated in Table 1.

                        Table 1--Comparison of LAP Revenue Requirement and Composite Rate
----------------------------------------------------------------------------------------------------------------
                                                                      Provisional
                                        Existing requirements    requirements (January        Percent change
                                          (January 1, 2010)             1, 2015)
----------------------------------------------------------------------------------------------------------------
LAP Revenue Requirement (millions $).                    $84.5                    $84.5                        0
LAP Composite (mills/kWh)............                    41.42                    41.42                        0
----------------------------------------------------------------------------------------------------------------


[[Page 72666]]

Existing and Provisional Rates

    Under Rate Schedule L-F10, the firm capacity charge remains $5.43/
kWmonth, and the firm energy charge remains 20.71 mills/kWh. This Rate 
Schedule is formula-based to provide for an annual adjustment to the 
Drought Adder component. An incremental upward adjustment to the 
Drought Adder greater than the equivalent of 2 mills/kWh to the PRS 
Composite Rate will require a public process. The Drought Adder may be 
adjusted downward pursuant to the formula without a public process. The 
overall capacity and energy charges are not changing, as indicated in 
the following Table 2:

                                     Table 2--Comparison of Existing and Provisional LAP Firm Electric Service Rates
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                                                                   Existing charges under Rate       Provisional charges under Rate
                    Firm electric service                      Shedule L-F9 effective  January 1,  Schedule  L-F10 effective  January    Percent change
                                                                              2010                               1, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Firm Capacity ($/kWmonth)....................................                               $5.43                               $5.43                  0
Firm Energy (mills/kWh)......................................                               20.71                               20.71                  0
--------------------------------------------------------------------------------------------------------------------------------------------------------

Under the current rate methodology, rates for LAP firm electric service 
are designed to recover an annual revenue requirement that includes 
investment repayment, interest, purchase power, O&M, and other expenses 
within the allowable period.
    Western is truing up the Base and Drought Adder components included 
in the rate schedule and placing a new rate schedule into effect for 
the 5-year period, beginning January 1, 2015, through December 31, 
2019. The true-up updates the Base components to represent present 
costs and lowers the Drought Adder components to represent present 
drought costs. Over the past 5-year rate period, the P-SMBP costs 
included in the LAP Drought Adder have decreased as the actual deficits 
were less than the projected deficits. Additionally, P-SMBP drought 
costs were repaid ahead of schedule, which decreased the drought 
deficit interest expense. The portion of the LAP Drought Adder 
component coming from Fry-Ark ($200,000) is now going to $0, as Fry-Ark 
did not actually incur any deficits and Fry-Ark is not projecting any 
future Non-timing Power Purchases at this time. All historical drought-
related costs for Fry-Ark have been repaid. In addition, Base costs 
increased during that same period due to a new 5-year cost evaluation 
period, new investments and replacements, and inflationary costs.

Certification of Rates

    Western's Administrator certified that the firm electric service 
rates under Rate Schedule L-F10 are the lowest possible rates 
consistent with sound business principles. The rates were developed 
following administrative policies and applicable laws.

LAP Firm Electric Service Rate Discussion

    Western must establish power rates sufficient to recover O&M, 
purchased power and interest expenses, and repay power investment and 
irrigation aid.
    The Criteria, published in the Federal Register on January 31, 1986 
(51 FR 4012), operationally and contractually integrated the resources 
of the P-SMBP--WD and Fry-Ark (thereafter referred to as LAP). A 
blended rate was established for the sale of LAP firm electric service. 
The P-SMBP--WD portion of the revenue requirement for LAP firm electric 
service rates was developed from the revenue requirement calculated in 
the P-SMBP Ratesetting PRS. The P-SMBP--WD revenue requirement remains 
the same from the previous rate process revenue requirement. The 
revenue requirements for P-SMBP--WD are as follows:

           Table 3--Summary of P-SMBP--WD Revenue Requirements
                                 [$000]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Current Revenue Requirement (Jan 2010):
  (34.80 mills/kWh x 1,988,000,000 kWh)....................      $69,182
Provisional Change (Jan 2015):
  Base: 4.84 mills/kWh x 1,988,000,000 kWh.................        9,622
  Drought Adder: -4.84 mills/kWh x 1,988,000,000 kWh.......       -9,622
                                                            ------------
                                                                       0
Provisional Revenue Requirement:
  (34.80+0.00 = 34.80 mills/kWh x 1,988,000,000 kWh).......       69,182
------------------------------------------------------------------------

    The adjustment to the P-SMBP--ED revenue requirement is a separate 
formal rate process, which is documented in Rate Order No. WAPA-166. 
Rate Order No. WAPA-166 is also scheduled to go into effect on the 
first day of the first full billing period on or after January 1, 2015.

Fry-Ark

    The Fry-Ark portion of the revenue requirement for LAP firm 
electric service rates was developed from the revenue requirement 
calculated in the Fry-Ark Ratesetting PRS. The Fry-Ark revenue 
requirement remains the same as the previous rate process revenue 
requirement. The revenue requirements for Fry-Ark are as follows:

            Table 4--Summary of Fry-Ark Revenue Requirements
                                 [$000]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Current Revenue Requirement (Jan 2010)......................     $15,328
Provisional Change (Jan 2015):
    Base....................................................     200,000
    Drought Adder...........................................    -200,000
                                                             -----------
                                                                       0
Provisional Revenue Requirement.............................      15,328
------------------------------------------------------------------------

    The following table compares LAP existing revenue requirements to 
the proposed revenue requirements:

[[Page 72667]]



              Table 5--Summary of LAP Revenue Requirements
                                 [$000]
------------------------------------------------------------------------
                                          Existing         Provisional
                                       (January 2010)    (January 2015)
------------------------------------------------------------------------
P-SMBP_WD...........................           $69,182           $69,182
Fry-Ark.............................            15,328            15,328
                                     -----------------------------------
    Total LAP.......................            84,510            84,510
------------------------------------------------------------------------

    Under Rate Schedule L-F10, Western will continue to identify its 
firm electric service revenue requirement using Base and Drought Adder 
components. The Base component is a fixed revenue requirement for each 
project that includes annual O&M expenses, investment repayment and 
associated interest, normal timing power purchases, and transmission 
costs. Western's normal timing power purchases are purchases due to 
operational constraints (e.g., management of endangered species 
habitat, water quality, navigation, control area purposes, etc.) and 
are not associated with drought conditions in the Regions. The Base 
component cannot be adjusted by Western without a public process. The 
Drought Adder component is a formula-based revenue requirement that 
includes costs attributable to drought conditions within LAP. The 
Drought Adder component includes costs associated with future Non-
timing Power Purchases to meet firm power contractual obligations not 
covered with available system generation due to a drought, previously 
incurred deficits due to purchased power debt that resulted from Non-
timing Power Purchases made during a drought, and the interest 
associated with drought debt. The Drought Adder component is designed 
to repay Western's drought debt within 10 years from the time the debt 
was incurred, using balloon-payment methodology. For example, the 
drought debt incurred by Western in FY 2009 will be repaid by FY 2019.
    The annual revenue requirement calculation will continue to be 
summarized by the following formula: Annual Revenue Requirement = Base 
Revenue Requirement + Drought Adder Revenue Requirement. Under this 
Provisional Rate, the LAP annual revenue requirement equals $84.5 
million and is comprised of a Base revenue requirement of $69.2 million 
plus a Drought Adder revenue requirement of $15.3 million.
    A comparison of the existing and provisional charge components is 
listed in Table 6.

                                                        Table 6--Summary of LAP Charge Components
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Existing charges under Rate Schedule L-F9     Provisional charges under Rate Schedule L-F10
                                                                    effective (January 1, 2010)                     effective (January 1, 2015)
                  Firm electric service                  -----------------------------------------------------------------------------------------------
                                                                           Drought Adder                                   Drought Adder
                                                          Base component     component     Total charge   Base component     component     Total charge
--------------------------------------------------------------------------------------------------------------------------------------------------------
Firm Capacity ($/kWmonth)...............................           $3.29           $2.14           $5.43           $3.92           $1.51           $5.43
Firm Energy (mills/kWh).................................           12.54            8.17           20.71           14.95            5.76           20.71
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Continuing to identify the firm electric service revenue 
requirement using Base and Drought Adder components will assist Western 
in presenting the effects of the drought within LAP, demonstrating 
repayment of the drought-related costs, and allow Western to be more 
responsive to changes in drought-related expenses. Western will 
continue to charge and bill customers firm electric service charges for 
energy and capacity, which are the sum of the Base and Drought Adder 
components.
    Western reviews its firm electric service rates annually. Western 
will review the Base component after the annual PRS is completed, 
generally in the first quarter of the calendar year. If an adjustment 
to the Base component is necessary, Western will initiate a public 
process pursuant to 10 CFR part 903 prior to making an adjustment.
    In accordance with the original implementation of the Drought Adder 
component, Western will review the Drought Adder component each 
September to determine if drought costs differ from those projected in 
the PRSs. If drought costs differ, Western will determine if an 
adjustment to the Drought Adder component is necessary. Western will 
notify customers by letter each October of the planned incremental or 
decremental adjustment and implement the adjustment in the January 
billing cycle. Although decremental adjustments to the Drought Adder 
component will occur as drought costs are repaid, the adjustments 
cannot result in a negative Drought Adder component. To give customers 
advance notice, Western will conduct a preliminary review of the 
Drought Adder component in early summer and notify customers by letter 
of the estimated change to the Drought Adder component for the 
following January. Western will verify the final Drought Adder 
component adjustment and notify customers by letter each October of any 
planned increase or decrease in this component. Implementing the 
Drought Adder component adjustment on January 1 of each year will help 
keep the drought deficits from escalating, will lower the interest 
expense due to drought deficits, will demonstrate responsible deficit 
management, and will provide prompt drought deficit repayments.
    Western's current and provisional rate schedule is formula-based to 
provide for an annual adjustment to the Drought Adder component. An 
incremental upward adjustment to the Drought Adder greater than the 
equivalent of 2 mills/kWh to the PRS Composite Rate will require a 
public process. The Drought Adder may be adjusted downward pursuant to 
the formula without a public process.

[[Page 72668]]

Statement of Revenue and Related Expenses

    The following Table 7 provides a summary of projected revenue and 
expense data for the Fry-Ark firm electric service revenue requirement 
through the 5-year rate approval period.

                        Table 7--Fry-Ark Comparison of 5-Year Rate Period (FY 2015-2019)
                                          [Total revenues and expenses]
----------------------------------------------------------------------------------------------------------------
                                                                  Existing rate    Provisional      Difference
                                                                     ($000)        rate ($000)        ($000)
----------------------------------------------------------------------------------------------------------------
Total Revenues.................................................         $84,897         $89,012          $4,115
----------------------------------------------------------------------------------------------------------------
Revenue Distribution
Expenses:
    O&M \1\....................................................          25,307          32,322           7,015
    Purchased Power............................................           1,077             691            (386)
    Interest \2\...............................................          20,243          16,080          (4,163)
    Transmission \3\...........................................          20,671          12,663          (8,008)
                                                                ------------------------------------------------
        Total Expenses.........................................          67,298          61,756          (5,542)
Principal Payments:
    Capitalized Expenses (Deficits)............................               0               0               0
    Original Project and Additions \4\.........................          14,214          21,757           7,543
    Replacements \4\...........................................           3,385           5,499           2,114
                                                                ------------------------------------------------
        Total Principal Payments...............................          17,599          27,256           9,657
        Total Revenue Distribution.............................          84,897          89,012           4,115
----------------------------------------------------------------------------------------------------------------
\1\ The increase in O&M expense is due to changes reflected in both Western's and Reclamation's FY15 work plans.
\2\ The decrease in interest expense is primarily due to increased repayment over the 5-year period.
\3\ The decrease in Transmission Expenses is due to the negotiation of a new contract.
\4\ The difference in principal payments is due to increased revenue being available for repayment during the 5-
  year period.

    The summary of P-SMBP--WD revenues and expenses for the 5-year 
Provisional Rate approval period is included in the P-SMBP Statement of 
Revenue and Related Expenses that is part of Rate Order No. WAPA-166.

Basis for Rate Development

    The existing charges for firm electric service in Rate Schedule L-
F9, which expires December 31, 2014, continue to provide sufficient 
revenue to meet the LAP repayment obligations. The total annual revenue 
requirement for LAP remains $84.5 million for firm electric service, 
and the overall capacity and energy charges are not changing. The 
Provisional Rates, under Rate Schedule L-F10, will take effect on the 
first full billing period on or after January 1, 2015, and will remain 
in effect on an interim basis, pending FERC's confirmation and approval 
of the rate schedule or substitute rates on a final basis, through 
December 31, 2019.

Comment

    Western received one comment letter during the public consultation 
and comment period. The comment expressed in this letter has been 
paraphrased, where appropriate, without compromising the meaning of the 
comments.
    Comment: One customer representative supported the rate 
modifications as proposed, and emphasized the need for continued cost 
control regarding the Base component. They stated the Base costs cannot 
grow unabated and replace the shrinking Drought Adder. The customer 
stressed that cost control is of paramount importance.
    Response: Western agrees with the above comment. Western is 
committed to keeping the power rates at the lowest possible rates while 
maintaining sound business principles. All budgeted O&M and capital 
improvements are vetted annually through customer work plan meetings to 
assess the impacts to the rates.

Availability of Information

    All documents related to this action are available for inspection 
and copying at the Rocky Mountain Regional Office, located at 5555 East 
Crossroads Boulevard, Loveland, Colorado. These documents are also 
available on Western's Web page located at http://www.wapa.gov/rm/ratesRM/2015/2015RateAdjustment.htm.

Ratemaking Procedure Requirements

Environmental Compliance

    In compliance with the National Environmental Policy Act (NEPA) of 
1969 (42 U.S.C. 4321-4347), 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 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 January 1, 2015, Rate Schedule L-F10 for the 
Loveland Area Projects of the Western Area Power Administration. This 
rate schedule shall remain in effect on an interim basis, pending the 
Federal Energy Regulatory Commission's

[[Page 72669]]

confirmation and approval of the rate schedule or substitute rates on a 
final basis through December 31, 2019.

    Dated: December 2, 2014.
Elizabeth Sherwood-Randall,
Deputy Secretary of Energy.
Rate Schedule L-F10
(Supersedes Rate Schedule L-F9)
Effective January 1, 2015

United States Department of Energy Western Area Power Administration

Loveland Area Projects Colorado, Kansas, Nebraska, Wyoming

SCHEDULE OF RATE FOR FIRM ELECTRIC SERVICE

(Approved Under Rate Order No. WAPA-167)

Effective:

    The first day of the first full billing period beginning on or 
after January 1, 2015, through December 31, 2019, or until superseded 
by another rate schedule.

Available:

    Within the marketing area served by the Loveland Area Projects.

Applicable:

    To the wholesale power customers for firm electric service supplied 
through one meter at one point of delivery, or as otherwise established 
by contract.

Character:

    Alternating current, 60 hertz, three phase, delivered and metered 
at the voltages and points established by contract.

Formula Rate and Charge Components:

Rate = Base component + Drought Adder component

Monthly Charge as of January 1, 2015, Under the Rate:

    CAPACITY CHARGE: $5.43 per kilowatt of billing capacity.
    ENERGY CHARGE: 20.71 mills per kilowatthour (kWh) of monthly 
entitlement.
    BILLING CAPACITY: Unless otherwise specified by contract, the 
billing capacity will be the seasonal contract rate of delivery.
    Base: A fixed revenue requirement that includes operation and 
maintenance expense, investment repayment and associated interest, 
normal timing power purchases (purchases due to operational 
constraints, not associated with drought), and transmission costs. The 
Base revenue requirement is $69.2 million.
[GRAPHIC] [TIFF OMITTED] TN08DE14.036

Process:

    Any proposed change to the Base component will require a public 
process. The Drought Adder component may be adjusted annually using the 
above formulas for any costs attributed to drought of less than or 
equal to the equivalent of 2 mills/kWh to the LAP Composite Rate. Any 
planned incremental adjustment to the Drought Adder component greater 
than the equivalent of 2 mills/kWh to the LAP Composite Rate will 
require a public process. The Drought Adder may be adjusted downward 
pursuant to the formulas without a public process. A revised Drought 
Adder charge may go into effect January 1 of each year based on the 
formula above. Western will notify the customer annually in October of 
the revised monthly charges. Any change to the Drought Adder component 
will be identified in a revision to charges under this rate schedule.

Adjustments:

    For Transformer Losses: If delivery is made at transmission voltage 
but metered on the low-voltage side of the substation, the meter 
readings will be increased to compensate for transformer losses as 
provided for in the contract.
    For Power Factor: None. The customer will be required to maintain a 
power factor at all points of measurement

[[Page 72670]]

between 95-percent lagging and 95-percent leading.

[FR Doc. 2014-28715 Filed 12-5-14; 8:45 am]
BILLING CODE 6450-01-P