[Federal Register Volume 80, Number 249 (Tuesday, December 29, 2015)]
[Notices]
[Pages 81310-81314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32792]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Central Arizona Project--Rate Order No. WAPA-172

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of final transmission service formula rates.

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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate 
Order No. WAPA-172 and Rate Schedules CAP-FT3, CAP-NFT3, and CAP-NITS3, 
placing transmission service formula rates for the Central Arizona 
Project (CAP) of the Western Area Power Administration (Western) into 
effect on an interim basis. The provisional rates will be in effect 
until the Federal Energy Regulatory Commission (FERC) confirms, 
approves, and places them into effect on a final basis, or until they 
are replaced by other rates. The provisional rates will provide 
sufficient revenue to pay all annual costs, including interest expense, 
and repay required investment within the allowable periods.

DATES: Rate Schedules CAP-FT3, CAP-NFT3, and CAP-NITS3 are effective on 
the first day of the first full billing period beginning on or after 
January 1, 2016, and will be in effect until FERC confirms, approves, 
and places the rate schedules in effect on a final basis through 
December 31, 2020, or until the rate schedules are superseded.

FOR FURTHER INFORMATION CONTACT: Mr. Jack Murray, Vice President of 
Power Marketing, Desert Southwest Customer Service Regional Office, 
Western Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005-
6457, (602) 605-2555, email [email protected].

SUPPLEMENTARY INFORMATION: An FRN was published on July 24, 2015 (80 FR 
44100) announcing the proposed rates for transmission service and 
initiating a public consultation and comment period. On July 29, 2015, 
Western notified all CAP customers and interested parties of the rate 
adjustment and provided a copy of the published FRN. On August 27, 
2015, Western held a public information forum in Phoenix, Arizona, 
explained the proposed rates and potential changes to the proposed 
rates, answered questions, and provided handouts. On September 24, 
2015, Western held a public comment forum in Phoenix, Arizona, to give 
the public an opportunity to comment for the record. No comments were 
received at the forum.
    Previous Rate Schedules CAP-FT2, CAP-NFT2, and CAP-NITS2 for Rate 
Order No. WAPA-124 \1\ were approved by FERC for a 5-year period 
through December 31, 2010. These Rate Schedules were extended through 
December 31, 2012, under Rate Order No. WAPA-153,\2\ and extended again 
through December 31, 2015, under Rate Order No. WAPA-158.\3\ Rate 
Schedules CAP-FT2, CAP-NFT2, and CAP-NITS2 are being superseded by Rate 
Schedules CAP-FT3, CAP-NFT3, and CAP-NITS3. Under Rate Schedule CAP-
FT2, the rate for firm point-to-point transmission service is $13.56 
per kilowatt year (kW-year). The provisional rate for firm point-to-
point transmission service under Rate Schedule CAP-FT3 is $14.88/kW-
year, which represents an increase of 10 percent when compared with the 
existing rate. Under Rate Schedule CAP-NFT2, the rate for non-firm 
point-to-point transmission service is 1.55 mills per kilowatt hour 
(mills/kWh). The provisional rate for non-firm point-to-point 
transmission service under Rate Schedule CAP-NFT3 is 1.70 mills/kWh, 
which represents an increase of 10 percent when compared with the 
existing rate. There will be no changes to the rate formula under CAP-
NITS3.
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    \1\ Rate Order No. WAPA-124 was approved by FERC on a final 
basis on June 29, 2006, in Docket No. EF06-5111-000 (115 FERC ] 
62,326).
    \2\ 76 FR 548 (January 5, 2011).
    \3\ 78 FR 18335 (March 26, 2013).
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    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

[[Page 81311]]

(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 00-001.00F, and in 
compliance with 10 CFR part 903 and 18 CFR part 300, I hereby confirm, 
approve, and place provisional rates for transmission service under 
Rate Order No. WAPA-172 into effect on an interim basis. New Rate 
Schedules CAP-FT3, CAP-NFT3, and CAP-NITS3 will be submitted promptly 
to FERC for confirmation and approval on a final basis.

    Dated: December 21, 2015.
Elizabeth Sherwood-Randall,
Deputy Secretary of Energy.

DEPARTMENT OF ENERGY

DEPUTY SECRETARY

    In the matter of: Western Area Power Administration Rate 
Adjustment for the Central Arizona Project

Rate Order No. WAPA-172

ORDER CONFIRMING, APPROVING, AND PLACING THE CENTRAL ARIZONA PROJECT 
TRANSMISSION SERVICE FORMULA RATES INTO EFFECT ON AN INTERIM BASIS

    These rates 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 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 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. 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:
    Administrator: Administrator for the Western Area Power 
Administration.
    Capacity: The electric capability of a transformer, transmission 
circuit, or other equipment, expressed in kilowatts (kW).
    CAP: Central Arizona Project, one of three related water 
development projects that make up the Colorado River Basin Project.
    Customer: An entity with a contract or service agreement that 
receives service from Western's Desert Southwest Region.
    DOE: United States Department of Energy.
    DOE Order RA 6120.2: A DOE order outlining power marketing 
administration financial reporting and ratemaking procedures.
    Desert Southwest Region: The Desert Southwest Customer Service 
Region of Western.
    FERC: Federal Energy Regulatory Commission.
    Firm: A type of product and/or service that is available at the 
time requested by the customer.
    Formula Rates: A rate which is based upon a formula calculated 
yearly.
    FRN: Federal Register notice.
    Kilovolt (kV): Electrical unit of measure of potential difference 
that equals 1,000 volts.
    Kilowatt (kW): Electrical unit of capacity that equals 1,000 watts.
    Kilowatt hour (kWh): Electrical unit of energy that equals 1,000 
watts in 1 hour.
    Kilowatt month (kW-month): Electrical unit of the monthly amount of 
capacity.
    Kilowatt year (kW-year): Electrical unit of the yearly amount of 
capacity.
    Mill: A monetary denomination of the United States that equals one 
tenth of a cent or one thousandth of a dollar.
    Mills per kilowatt hour (mills/kWh): A unit of charge.
    Non-firm: A type of product and/or service not always available at 
the time requested by the customer.
    O&M: Operation and Maintenance.
    Proposed Rate: A rate that has been recommended by Western to the 
Deputy Secretary of Energy for approval.
    Provisional Rate: A rate that has been confirmed, approved, and 
placed into effect on an interim basis by the Deputy Secretary of 
Energy.
    Reclamation: United States Department of Interior, Bureau of 
Reclamation.
    Western: Western Area Power Administration.

Effective Date

    The new provisional rates will take effect on the first day of the 
first full billing period beginning on or after January 1, 2016, and 
will remain in effect until FERC confirms, approves, and places the 
rate schedules in effect on a final basis through December 31, 2020, or 
until the rate schedules are superseded.

Public Notice and Comment

    Western followed the Procedures for Public Participation in Power 
and Transmission Rate Adjustments and Extensions, 10 CFR part 903, in 
developing these rates. The steps Western took to involve interested 
parties in the rate process were:
    1. An FRN was published on July 24, 2015 (80 FR 44100) announcing 
the proposed rates for transmission service, initiating a public 
consultation and comment period, and setting forth the dates and 
locations of public information and public comment forums.
    2. On July 29, 2015, Western notified all CAP customers and 
interested parties of the rate adjustment and provided a copy of the 
published FRN.
    3. On August 27, 2015, Western held a public information forum in 
Phoenix, Arizona. Western explained the proposed rates and potential 
changes to the proposed rates, answered questions, and provided 
handouts.
    4. On September 24, 2015, Western held a public comment forum in 
Phoenix, Arizona, to give the public an opportunity to comment for the 
record. There were no comments received at this forum.
    5. Western created a CAP rate adjustment Web site to provide 
interested parties with information about this rate adjustment process. 
The Web site is located at https://www.wapa.gov/regions/DSW/Rates/Pages/central-arizona-rates.aspx
    6. On October 6, 2015, Western provided answers to a list of 
questions concerning the proposed rates and posted the answers on the 
CAP rate adjustment Web site.

Project Description

    The CAP is one of three related water development projects that 
make up the Colorado River Basin Project. The others are the Dixie and 
the Upper Basin projects. The CAP was developed for Arizona and western 
New Mexico; the Dixie Project for southeastern Utah; and the Upper 
Basin Project for Colorado and New Mexico.

[[Page 81312]]

    Congress authorized the Colorado River Basin Project in 1968 to 
improve water resources in the Colorado River Basin. Segments of the 
1968 authorization allowed Federal participation in the Navajo 
Generating Station (Navajo), which has three coal-fired steam electric 
generating units with a combined capacity of 2,250 MW. Construction of 
the plant, located near Lake Powell at Page, Arizona, began in 1970 and 
generation began in 1976.
    The 24.3 percent Federal Share of Navajo, or 546,750 kW, is used to 
power the pumps that move Colorado River water through CAP canals. 
Surplus generation is currently marketed under the Navajo Power 
Marketing Plan adopted on Dec. 1, 1987. Surplus Navajo short-term firm 
and non-firm transmission service will be marketed at the CAP 115/230-
kV transmission rate during the term of the rate schedules.

Existing and Provisional Rates

    The existing rates for point-to-point transmission service consist 
of a firm rate and a non-firm rate. The existing rate for firm point-
to-point transmission service under Rate Schedule CAP-FT2 is $13.56/kW-
year. The existing rate for non-firm point-to-point transmission 
service under Rate Schedule CAP-NFT2 is 1.55 mills/kWh. The existing 
rates under Rate Schedules CAP-FT2, CAP-NFT2, and CAP-NITS2 expire 
December 31, 2015.
    The provisional rates will supersede the existing rates and become 
effective on an interim basis on the first day of the first full 
billing period beginning on or after January 1, 2016. The provisional 
rate for firm point-to-point transmission service under Rate Schedule 
CAP-FT3 is $14.88/kW-year. The provisional rate for non-firm point-to-
point transmission service under Rate Schedule CAP-NFT3 is 1.70 mills/
kWh. The provisional rates will result in a rate increase of 10 percent 
when compared to the existing rates. A comparison of the existing and 
provisional rates for transmission service follows:

                      Comparison of Existing and Provisional Rates Central Arizona Project
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                                                                           Provisional rates
          Transmission service                  Existing rates            (effective 1/1/16)          Change
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Firm Point-to-Point.....................  $13.56/kW-year............  $14.88/kW-year............             10%
Non-firm Point-to-Point.................  1.55 mills/kWh............  1.70 mills/kWh............             10%
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Certification of Rates

    Western's Administrator certified that the provisional rates for 
CAP transmission service under Rate Schedules CAP-FT3, CAP-NFT3, and 
CAP-NITS3 are the lowest possible rates consistent with sound business 
principles. The provisional rates were developed following 
administrative policies and applicable laws.

Transmission Rate Discussion

    According to Reclamation law, Western must establish rates which 
provide sufficient revenue to recover annual O&M, purchase power, 
transmission service and other costs, interest expense, and repay 
investments. Western calculates the rates each year to determine if the 
existing rates will provide adequate revenue to repay all power system 
costs within the required time. Repayment criteria are based on 
existing law and applicable policies, including DOE Order RA 6120.2. To 
meet the cost recovery criteria outlined in DOE Order RA 6120.2, a rate 
calculation was completed to demonstrate that sufficient revenues will 
be collected under the provisional rates to meet future obligations.
    The existing rates are insufficient and do not provide adequate 
revenue to cover costs due primarily to the replacement of the aging 
ED2-Saguaro line. Construction of this line started in 2015, and the 
costs will be spread over a 5-year period.
    A secondary factor for the rate increase is a decrease in projected 
sales of long-term firm point-to-point transmission service. The 
provisional rates include the reduction in the sales forecast for 115/
230-kV transmission service over the 5-year cost evaluation period.

Availability of Information

    All brochures, studies, comments, letters, memorandums, and other 
documents that Western used to develop the provisional rates are 
available for inspection and copying at the Desert Southwest Customer 
Service Regional Office, Western Area Power Administration, 615 South 
43rd Avenue, Phoenix, AZ 85009-5313. Many of these documents and 
supporting information are available on Western's Web site at https://www.wapa.gov/regions/DSW/Rates/Pages/central-arizona-rates.aspx.

RATEMAKING PROCEDURE REQUIREMENTS

Environmental Compliance

    In compliance with the National Environmental Policy Act (NEPA) of 
1969, (42 U.S.C. 4321, et seq.), Council on Environmental Quality 
Regulations (40 CFR parts 1500-1508), and DOE NEPA Regulations (10 CFR 
part 1021), Western has determined that this action is categorically 
excluded from the preparation of 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 interim rates confirmed, approved, and placed into effect 
herein, 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 Rate Schedules CAP-FT3, CAP-
NFT3, and CAP-NITS3 to become effective on the first day of the first 
full-billing period beginning on or after January 1, 2016, and to 
remain in effect until FERC confirms, approves, and places the rate 
schedules in effect on a final basis through December 31, 2020, or 
until the rate schedules are superseded.


Dated: December 21, 2015

Elizabeth Sherwood-Randall,

Deputy Secretary of Energy

Rate Schedule CAP-FT3
SCHEDULE 7 to Tariff
(Supersedes Schedule CAP-FT2)

[[Page 81313]]

UNITED STATES DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION

DESERT SOUTHWEST CUSTOMER SERVICE REGION CENTRAL ARIZONA PROJECT

FIRM POINT-TO-POINT TRANSMISSION SERVICE

Effective:

    The first day of the first full billing period beginning on or 
after January 1,
    2016, through December 31, 2020, or until superseded by another 
rate schedule, whichever occurs earlier.

Applicable:

    The transmission customer will compensate the Central Arizona 
Project (CAP) each month for Reserved Capacity under the applicable 
Firm Point-To-Point Transmission Service Agreement and the formula rate 
described herein.

Formula Rate:
[GRAPHIC] [TIFF OMITTED] TN29DE15.008

    A recalculated rate will go into effect every January 1 based on 
the above formula and updated financial and operational data. Western 
will notify the transmission customer annually of the recalculated rate 
on or before December 1. Discounts may be offered from time-to-time in 
accordance with Western's Open Access Transmission Tariff.

Character and Conditions of Service:

    Alternating current at 60 Hertz, three-phase, delivered and metered 
at the voltages and points of delivery established by contract or 
service agreement over the CAP 115/230-kV transmission system.

Adjustment for Reactive Power:

    There shall be no entitlement to transfer of reactive kilovolt 
amperes at delivery points, except when such transfers may be mutually 
agreed upon by the parties and contracting officer or their authorized 
representatives.

Billing:

    Billing determinants for the formula rate above will be as 
specified in the contract or service agreement. Billing will occur 
monthly under the formula rate.

Adjustment for Losses:

    Losses incurred for service under this rate schedule will be 
accounted for as agreed to by the parties in accordance with the 
contract or service agreement. If losses are not fully provided by a 
Transmission Customer, charges for financial compensation may apply.

Unreserved Use:

    Western will assess a charge for any unreserved use of the 
transmission system. Unreserved use occurs when a customer uses 
transmission service that it has not reserved or uses transmission 
service in excess of its reserved capacity. Unreserved use may also 
include a customer's failure to curtail transmission when requested.
    The charge assessed for unreserved use is two times the maximum 
allowable rate for the service at issue as follows: The penalty for a 
single hour of unreserved use is based on the daily short-term rate. 
The penalty for more than one assessment of unreserved use for any 
given duration (e.g., daily) increases to next longest duration (e.g., 
weekly). The penalty for multiple instances of unreserved use (e.g., 
more than one hour) within a day is based on the daily short-term rate. 
The penalty for multiple instances of unreserved use isolated to one 
calendar week is based on the weekly short-term rate. The penalty for 
multiple instances of unreserved use during more than one week in a 
calendar month is based on the monthly short-term rate.
    A customer that exceeds its reserved capacity at any point of 
receipt or point of delivery, or a customer that uses transmission 
service at a point of receipt or point of delivery that it has not 
reserved, is required to pay for all ancillary services provided by the 
Western Area Lower Colorado (WALC) Balancing Authority and associated 
with the unreserved use. The customer will pay for ancillary services 
based on the amount of transmission service used and not reserved.
Rate Schedule CAP-NFT3
SCHEDULE 7 to Tariff
(Supersedes Schedule CAP-NFT2)

UNITED STATES DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION

DESERT SOUTHWEST CUSTOMER SERVICE REGION CENTRAL ARIZONA PROJECT

NON-FIRM POINT-TO-POINT TRANSMISSION SERVICE

Effective:

    The first day of the first full billing period beginning on or 
after January 1, 2016, through December 31, 2020, or until superseded 
by another rate schedule, whichever occurs earlier.

Applicable:

    The transmission customer will compensate the Central Arizona 
Project (CAP) each month for Non-Firm Point-To-Point Transmission 
Service under the applicable agreement and the formula rate described 
herein.

Formula Rate:

Maximum Non-Firm Point-To-Point Transmission Rate = Firm Point-To-Point 
Transmission Rate

A recalculated rate will go into effect every January 1 based on the 
above formula and updated financial and operational data. Western will 
notify the transmission customer annually of the recalculated rate on 
or before December 1. Discounts may be offered from time-to-time in 
accordance with Western's Open Access Transmission Tariff.

Character and Conditions of Service:

    Alternating current at 60 Hertz, three-phase, delivered and metered 
at the voltages and points of delivery established by contract or 
service agreement over the CAP 115/230-kV transmission system.

[[Page 81314]]

Adjustment for Reactive Power:

    There shall be no entitlement to transfer of reactive kilovolt 
amperes at delivery points, except when such transfers may be mutually 
agreed upon by the parties and contracting officer or their authorized 
representatives.

Billing:

    Billing determinants for the formula rate above will be as 
specified in the service agreement. Billing will occur monthly under 
the formula rate.

Adjustment for Losses:

    Losses incurred for service under this rate schedule will be 
accounted for as agreed to by the parties in accordance with the 
contract or service agreement. If losses are not fully provided by a 
transmission customer, charges for financial compensation may apply.

Navajo Transmission Service (500-kV):

    Western will market excess transmission service from the Navajo 
(500-kV) portion of the CAP on a short-term basis at the formula rate 
described herein.

Rate Schedule CAP-NITS3
ATTACHMENT H to Tariff
(Supersedes Schedule CAP-NITS2)

UNITED STATES DEPARTMENT OF ENERGY WESTERN AREA POWER ADMINISTRATION

DESERT SOUTHWEST CUSTOMER SERVICE REGION CENTRAL ARIZONA PROJECT

NETWORK INTEGRATION TRANSMISSION SERVICE

Effective:

    The first day of the first full billing period beginning on or 
after January 1, 2016, through December 31, 2020, or until superseded 
by another rate schedule, whichever occurs earlier.

Applicable:

    The transmission customer will compensate the Central Arizona 
Project (CAP) each month for Network Integration Transmission Service 
(NITS) under the applicable agreement and the formula rate described 
herein.

Formula Rate:
[GRAPHIC] [TIFF OMITTED] TN29DE15.009

A recalculated Annual Transmission Revenue Requirement for Network 
Integration Transmission Service will go into effect every January 1 
based on the above formula and updated financial and load data. Western 
will notify the transmission customer annually of the recalculated 
annual revenue requirement on or before December 1.

Billing:

    Billing determinants for the formula rate above will be as 
specified in the service agreement. Billing will occur monthly under 
the formula rate.

Adjustment for Losses:

    Losses incurred for service under this rate schedule will be 
accounted for as agreed to by the parties in accordance with the 
contract or service agreement. If losses are not fully provided by a 
transmission customer, charges for financial compensation may apply.

[FR Doc. 2015-32792 Filed 12-28-15; 8:45 am]
BILLING CODE 6450-01-P