[Federal Register Volume 82, Number 126 (Monday, July 3, 2017)]
[Notices]
[Pages 30856-30858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13980]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Loveland Area Projects--Rate Order No. WAPA-179

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed firm electric service and Sale of Surplus 
Products rates.

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SUMMARY: The Western Area Power Administration (WAPA) is proposing 
revised rates for the Loveland Area Projects (LAP) firm electric 
service and modifications to the existing rate schedule for Sale of 
Surplus Products. Current firm electric service rates, under Rate 
Schedule L-F10, are in effect through December 31, 2019, and the 
formula rate for the sale of surplus products, under Rate Schedule L-
M1, is in effect through September 30, 2021. LAP consists of the 
Fryingpan-Arkansas Project (Fry-Ark) and the Pick-Sloan Missouri Basin 
Program (P-SMBP)--Western Division (WD), which were integrated for 
marketing and rate-making purposes in 1989.
    WAPA is proposing to lower the overall LAP firm electric service 
charges by 14 percent, as a result of rebalancing the charge components 
in formula-based Rate Schedule L-F10 by reducing the drought adder 
component and increasing the base component. The proposed rates will 
provide sufficient revenue to pay all annual costs, including interest 
expense, and repay investments within the allowable periods. In 
addition, WAPA is proposing to modify Rate Schedule L-M1, which allows 
for the sale of generation and generation-related products in excess of 
LAP's firm electric service obligations, to add ``energy'' as a surplus 
product. WAPA will prepare a brochure providing detailed information on 
these proposed rates prior to the public information forums listed 
below. This brochure will be posted to WAPA's Web site at: https://
www.wapa.gov/regions/RM/rates/Pages/2018-Rate-Adjustment_-Firm-
Power.aspx. If approved, the proposed rates under Rate Schedules L-F11 
and L-M2 would become effective on January 1, 2018, and would remain in 
effect through December 31, 2022, or until superseded. Publication of 
this Federal Register notice begins the formal process for the proposed 
rate adjustment and proposed rate modifications.

DATES: The consultation and comment period will begin July 3, 2017 and 
end October 2, 2017. WAPA will present a detailed explanation of the 
proposed rates and other modifications at public information forums on 
the following dates and times:
    1. August 22, 2017, 9:00 a.m. to 10:30 a.m. MDT, Denver, Colorado.
    2. August 23, 2017, 9:00 a.m. to 10:30 a.m. CDT, Sioux Falls, South 
Dakota.
    WAPA will accept oral and written comments at public comment forums 
on the following dates and times:
    1. August 22, 2017, 11:00 a.m. to no later than 12 noon MDT, 
Denver, Colorado.
    2. August 23, 2017, 11:00 a.m. to no later than 12 noon CDT, Sioux 
Falls, South Dakota.
    WAPA will accept written comments anytime during the consultation 
and comment period.

ADDRESSES: Written comments and requests to be informed of Federal 
Energy Regulatory Commission (FERC) actions concerning the proposed 
rates submitted by WAPA to FERC for approval should be sent to: Michael 
D. McElhany, Acting Regional Manager, Rocky Mountain Region, Western 
Area Power Administration, 5555 East Crossroads Boulevard, Loveland, CO 
80538-8986 or email [email protected]. Information regarding the rate 
process is posted on WAPA's Web site at: https://www.wapa.gov/regions/
RM/rates/Pages/2018-Rate-Adjustment_-Firm-Power.aspx. WAPA will post 
official comments received via letter and email to its Web site after 
the close of the comment period. WAPA must receive written comments by 
the end of the consultation and comment period to ensure they are 
considered in WAPA's decision process.
    Public information and comment forum locations are:
    1. Denver--Embassy Suites, 7001 Yampa Street, Denver, Colorado.
    2. Sioux Falls--Holiday Inn, 100 West 8th Street, Sioux Falls, 
South Dakota.

FOR FURTHER INFORMATION CONTACT: 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] or [email protected].

SUPPLEMENTARY INFORMATION: 

Firm Electric Service

    On December 2, 2014, the Deputy Secretary of Energy approved, on an 
interim basis, Rate Schedule L-F10 under Rate Order No. WAPA-167 for 
the period beginning January 1, 2015, and ending December 31, 2019 (79 
FR 72663-72670 (Dec. 8, 2014)).\1\ This Rate Schedule is formula-based, 
providing for downward adjustments to the drought adder component.\2\ 
On January

[[Page 30857]]

1, 2017, the drought adder component of the LAP effective rate schedule 
was adjusted downward recognizing repayment of drought costs included 
in the drought adder component of the approved formula rates. The 
formula-based drought adder component needs to be adjusted down to zero 
in 2018. Such adjustment can be made using the approved annual drought 
adder adjustment process; however, since any adjustment to the base 
component must be done through a public rate process, WAPA now proposes 
to adjust both the base and drought adder components in Rate Schedule 
L-F10 through a rate adjustment process. WAPA proposes to adjust the 
formula-based drought adder component down to zero in 2018, while the 
base component will be adjusted upward to address present costs. The 
Fry-Ark and P-SMBP Fiscal Year 2016 Power Repayment Studies (PRS) 
revenue requirements and current water conditions are the determining 
factors for this proposed rate adjustment.
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    \1\ FERC confirmed and approved Rate Order WAPA-167 on a final 
basis on June 25, 2015, in Docket No. EF15-4-000. See United States 
Department of Energy, Western Area Power Administration (Loveland 
Area Projects), 151 FERC ] 62,222.
    \2\ The drought adder component is 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. See 72 FR 64061 (November 14, 
2007). The drought adder was added as a component to the energy and 
capacity rates in Rate Order No. WAPA-134, which was approved by the 
Deputy Secretary on an interim basis on November 14, 2007, (72 FR 
64061). FERC confirmed and approved Rate Order WAPA-134 on a final 
basis on May 16, 2008, in Docket No. EF08-5181. See United States 
Department of Energy, Western Area Power Administration (Loveland 
Area Projects), 123 FERC ] 62,137. Western reviews the drought adder 
each September to determine if drought costs differ from those 
projected in the Power Repayment Study and whether an adjustment to 
the drought adder is necessary. See 72 FR at 64065. The drought 
adder may be adjusted downward using the approved annual drought 
adder adjustment process, whereas an incremental upward adjustment 
to the drought adder component greater than the equivalent of 2 
mills/kWh requires a public rate process. See 72 FR at 64065.
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    The proposed annual revenue requirement for LAP firm electric 
service is $64.1 million. The existing charges in the current rate 
schedule are being reduced, as indicated in Table 1:

                     Table 1--Summary of Current and Proposed Revenue Requirement and Rates
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                                                                     Current--
                                                                    under L-F10     Proposed--
                                                                   with adjusted  under L-F11 as
                      Firm electric service                        drought adder   of January 1,  Percent change
                                                                   as of January       2018
                                                                      1, 2017
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LAP Revenue Requirement (million $).............................           $74.5           $64.1             -14
LAP Composite Rate (mills/kWh)..................................           36.56           31.44             -14
Firm Energy Rate (mills/kWh)....................................           18.28           15.72             -14
Firm Capacity Rate ($/kWmonth)..................................           $4.79           $4.12             -14
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    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 annual 
revenue requirement continues to be allocated equally between capacity 
and energy.
    WAPA is proposing to place Rate Schedule L-F11 into effect for the 
5-year period beginning January 1, 2018, through December 31, 2022. The 
proposed adjustment updates the base component with present costs and 
reduces the drought adder component to zero, as the drought-related 
debts are projected to be fully repaid in 2018.
    Base component costs for the P-SMBP--WD have increased primarily 
due to inflationary annual and capital cost increases associated with 
incorporating three new out-year projections into the 5-year cost 
evaluation period into the current rate-setting PRS. Additional details 
of the P-SMBP PRS are explained in the P-SMBP--Eastern Division Rate 
Order No. WAPA-180.
    Base component costs for Fry-Ark have decreased, even though the 
three new out-year projections for annual expenses and capital costs 
within the 5-year cost evaluation period include inflation. This 
decrease is caused by the annual expense projections in the current 
Fry-Ark rate-setting PRS being an average of $0.3 million per year 
lower than the annual expense projections in the previous rate-setting 
PRS. In addition to lower annual expenses, ancillary service revenue 
projections have also increased an average of $1.1 million per year 
over the previous projections; resulting in a net revenue increase of 
approximately $1.4 million per year. This net revenue helps offset the 
revenue requirement for firm electric service.
    The net effect of these adjustments to the drought adder and base 
components results in an overall decrease to the LAP rate. A comparison 
of the current and proposed revenue requirements is shown in Table 2:

                          Table 2--Summary of Current and Proposed Revenue Requirements
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                                                                     Current--
                                                                    under L-F10     Proposed--
                                                                   with adjusted  under L-F11 as
                      Firm electric service                        drought adder   of January 1,  Percent change
                                                                   as of January       2018
                                                                      1, 2017
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LAP Revenue Requirement (million $).............................           $74.5           $64.1             -14
Pick-Sloan--WD..................................................            59.2            50.8             -14
Fry-Ark.........................................................            15.3            13.3             -13
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    As a part of the current and proposed rate schedules, WAPA provides 
for a formula-based adjustment of the drought adder component of up to 
2 mills/kWh. The 2 mills/kWh cap places a limit on the amount the 
drought adder component can be adjusted relative to associated drought 
costs to recover costs attributable to the drought adder formula rate 
for any one-year cycle. Continuing to identify the firm electric 
service revenue requirement using base and drought adder components 
will assist WAPA in the presentation of future impacts of droughts, 
demonstrate repayment of drought-related costs in the PRSs, and allow 
WAPA to be more responsive to changes caused by drought-related 
expenses. WAPA will continue to charge and bill its customers firm 
electric service rates for energy and capacity, which are the sum of 
the base and drought adder components. A comparison of the current and 
proposed components is shown in Table 3:

[[Page 30858]]



                                                        Table 3--Summary of LAP Charge Components
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                                                Existing charges under rate schedule L-F10     Proposed charges under rate schedule L-F11 as
                                               with adjusted drought adder as of January 1,                 of January 1, 2018
                                             ----------------------2017----------------------------------------------------------------------   Percent
                                                               Drought adder                                   Drought adder                    change
                                              Base component     component     Total charge   Base component     component     Total charge
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Firm Capacity (/kWmonth)....................           $3.92           $0.87           $4.79           $4.12              $0           $4.12         -14
Firm Energy (mills/kWh).....................           14.95            3.33           18.28           15.72               0           15.72         -14
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Sale of Surplus Products

    On August 12, 2016, the Deputy Secretary of Energy approved, on an 
interim basis, Rate Schedule L-M1 under Rate Order No. WAPA-174, for 
the period beginning October 1, 2016, and ending September 30, 2021 (81 
FR 56632-56652 (August 22, 2016)).\3\ This Rate Schedule is formula-
based, providing for LAP Marketing to sell LAP surplus energy and 
capacity products. If LAP surplus products are available, as specified 
in the rate schedule, the charge will be based on market rates plus 
administrative costs. The customer will be responsible for acquiring 
transmission service necessary to deliver the product(s) for which a 
separate charge may be incurred. The rate schedule currently allows for 
the sale of reserves, regulation, and frequency response. WAPA is 
proposing to add ``energy'' as a fourth surplus product offered under 
this rate schedule. WAPA is proposing to place Rate Schedule L-M2 into 
effect for the 5-year period beginning January 1, 2018, through 
December 31, 2022.
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    \3\ FERC confirmed and approved Rate Order WAPA-174 on a final 
basis on March 9, 2017, in Docket Nos. EF16-5-000 and EF16-5-001. 
See United States Department of Energy, Western Area Power 
Administration (Loveland Area Projects), 158 FERC ] 62,181.
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Legal Authority

    The proposed rates constitute a major rate adjustment, as defined 
by 10 CFR 903.2(e); therefore, WAPA will hold public information and 
public comment forums for this rate adjustment, pursuant to 10 CFR 
903.15 and 903.16. WAPA will review all timely public comments and make 
amendments or adjustments to the proposals as appropriate. Proposed 
rates will be forwarded to the Deputy Secretary of Energy for approval 
on an interim basis.
    WAPA is establishing firm electric service rates and sale of 
surplus products formula rates under the Department of Energy (DOE) 
Organization Act (42 U.S.C. 7152); the Reclamation Act of 1902 (ch. 
1093, 32 Stat. 388), as amended and supplemented by subsequent 
enactments, particularly section 9(c) of the Reclamation Project Act of 
1939 (43 U.S.C. 485h(c)) and section 5 of the Flood Control Act of 1944 
(16 U.S.C. 825s); and other acts specifically applicable to the 
projects involved.
    By Delegation Order No. 00-037.00B, effective November 19, 2016, 
the Secretary of Energy delegated: (1) The authority to develop power 
and transmission rates to WAPA'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 DOE procedures for public 
participation in power rate adjustments (10 CFR part 903) were 
published on September 18, 1985 (50 FR 37835).

Availability of Information

    All brochures, studies, comments, letters, memorandums, or other 
documents WAPA initiates or uses to develop the proposed rates will be 
available for inspection and copying at the Rocky Mountain Regional 
Office located at 5555 East Crossroads Boulevard, Loveland, Colorado. 
These documents and supporting information will be posted on WAPA's Web 
site as they become available under the ``2018 Rate Adjustment--Firm 
Power'' section located at: https://www.wapa.gov/regions/RM/rates/
Pages/2018-Rate-Adjustment_-Firm-Power.aspx.

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), WAPA is 
in the process of determining whether an environmental assessment or an 
environmental impact statement should be prepared or if this action can 
be categorically excluded from those requirements.

Determination Under Executive Order 12866

    WAPA 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.

    Dated: June 27, 2017.
Mark A. Gabriel,
Administrator.
[FR Doc. 2017-13980 Filed 6-30-17; 8:45 am]
 BILLING CODE 6450-01-P